Month: June 2021

Reserve Bank of India – Press Releases

Press Releases

[ad_1]

Read More/Less


The Reserve Bank of India has today communicated that the applicable average base rate to be charged by Non-Banking Financial Company – Micro Finance Institutions (NBFC-MFIs) to their borrowers for the quarter beginning July 1, 2021 will be 7.98 per cent.

It may be recalled that the Reserve Bank had, in its circular dated February 7, 2014, issued to NBFC-MFIs regarding pricing of credit, stated that it will, on the last working day of every quarter, advise the average of the base rates of the five largest commercial banks for the purpose of arriving at the interest rates to be charged by NBFC-MFIs to their borrowers in the ensuing quarter.

Ajit Prasad
Director   

Press Release: 2021-2022/448

[ad_2]

CLICK HERE TO APPLY

Leave a comment

SBI: You may incur a fee of Rs 15 plus GST on cash withdrawal at SBI ATMs from tomorrow

Personal Finance

[ad_1]

Read More/Less


Planning

oi-Vipul Das

|

Generally known as a zero balance savings account, SBI BSBD (Basic Savings Bank Deposit Account) can be opened by individuals of poorer sections of India with proper KYC documents. SBI Basic Savings Bank Deposit Account comes with a number of perks such as no limit on minimum and maximum balance, basic Rupay ATM-cum-debit card, free NEFT/RTGS service, no account closure charges, no charge for reactivating inactive accounts and so on. SBI, on the other hand, has modified its service charges for cheque book, transfer, certain non-financial transactions, and cash withdrawals from its own ATMs and bank branches. With effect from 1 July 2021, these charges would apply to the SBI BSBD account holders.

You may incur a fee of Rs 15+GST on cash withdrawal at SBI ATMs from tomorrow

Cash withdrawal at SBI ATMs and non-SBI ATMs: According to SBI, BSBD account holders would be eligible for four free cash withdrawals each month at ATMs and bank branches. Every transaction that exceeds the free threshold will be levied a charge of Rs 15 + GST by the bank. This cash withdrawal fee will apply at SBI and non-SBI ATMs.

Cash withdrawal fees at SBI branches: After the first four free cash withdrawals at branch as well as ATM, SBI will recover a service charge of Rs 15 plus GST per transaction, according to the official website of the lender. Non-financial transactions and transfer transactions by BSBD account holders in SBI and non-SBI bank branches would be free of service charge, according to the lender.

In addition, BSBD account holders will enjoy 10 free cheque leaves every financial year from SBI. After the free limit, the bank will incur a fee of Rs 40 plus GST for a 10-leaf cheque book, Rs 75 plus GST for a 25-leaf cheque book, and Rs 50 plus GST for a 10-leaf or part-leaf emergency cheque book. Senior folks, on the other hand, will be excluded from these charges.

Additionally, by keeping the safety of its customers in mind amid the second wave of COVID-19, SBI has also issued contactless service that will help you with your urgent banking needs. On its twitter handle SBI today announced that “Stay safe at home, we are there to serve you. SBI provides you a contactless service that will help you with your urgent banking needs. Call our toll free number 1800 112 211 or 1800 425 3800.”



[ad_2]

CLICK HERE TO APPLY

Leave a comment

Gold Prices See The Highest Monthly Decline In 4 Years: Best Ways To Buy The Yellow Metal

Personal Finance

[ad_1]

Read More/Less


Investment

oi-Roshni Agarwal

|

Gold prices remained steady in the futures market in line with the international trend. In early trade, gold prices on the MCX quoted at Rs. 46,509 per 10 gm. In fact the monthly fall the precious yellow metal has logged for June month has been the steepest. Internationally the decline has been a staggering 7 percent.

Gold Prices See The Highest Monthly Decline In 4 Years: Best Ways To Buy Gold

Gold Prices See The Highest Monthly Decline In 4 Years: Best Ways To Buy The Yel

As per the Reuters report, the steady fall in the price of gold has been on the back of shift in the US Federal Reserve policy stance to hawkish. In the earlier meet this month, the Fed proposed to begin hiking interest rates as early as 2023 as against the earlier proposed 2024.

Here are the safe and lucrative ways in which investors can bet on gold for a good return:

1. Sovereign Gold Bonds:

The fourth tranche of SGB 2021-22 will open between July 12 and July 16. SGBs can be bought in for a minimum of 1 gm i.e. 1 unit of SGS is equivalent to 1 gm. SGBs are bonds issued by the RBI on behalf of the government of India.

On the basis of the average price of gold in the preceding foztnight, the RBI comes out with the issue price of Soverign gold bonds is decided. It is generally close to the market rates.

SGBs are the safest bet providing investor even with the return of 2.5% interest return per annum which is payable semi-annually. So, this is the only form of gold investment which is interest yielding. Further it is tax exempt, in case the SGBs are held until maturity.

2. Gold ETFs:

The investment in gold as ETF can be highly lucrative if one invests a higher amount and involves in regular trade. Also, these entail a lower cost or expense ratio. Apart from the low cost, one should also consider gold ETFs past performance.

Apart from the investment, this investment can also serve as the collateral and one can secure funds against it if in need.

Further besides the cost associated i.e. payable to the brokerage there is no entry or exit load charges. Also, in the case if Gold ETFs are held for over a year then there is long term capital gains tax on it. But there is no securities, wealth tax or VAT on Gold ETFs.

Outlook for Gold 2021

The pullback in gold has been seen after the Federal Open Market Committee remark which sounded optimistic on the recovery of the US economy.

“Progress on vaccinations has reduced the spread of COVID-19 in the United States. Amid this progress and strong policy support, indicators of economic activity and employment have strengthened,” the statement said.

The gold price sustaining below $1,800 per ounce indicates a “lack of an immediate impetus to buy the yellow metal”, analysts at Canadian bank TD Securities said in a note on Thursday, “as the Fed clarified its reaction function with respect to an upside scenario in inflation, which suggests the Fed isn’t behind the curve by any means.”

The analysts at TD Securities have lowered gold forecast on June 24, expecting prices to drop in the third quarter before turning higher later in the year and into 2022.

GoodReturns.in



[ad_2]

CLICK HERE TO APPLY

Leave a comment

Non-filers of ITR would be subjected to higher TDS & TCS from tomorrow: Check new rules here

Personal Finance

[ad_1]

Read More/Less


Taxes

oi-Vipul Das

|

For individuals who have failed to submit their income tax returns (ITR) for the last two years, the income tax department will apply a higher tax deduction at the source (TDS) rate starting from July 1. Sections 206AB and 206CCA of the Income-tax Act of 1961, which take effect on July 1, 2021, impose a higher TDS/TCS rate for “Specified Person” identified as “a person who has not filed the income tax returns or ITR for both of the two assessment years relevant to the two previous years immediately prior to the previous year in which tax is required to be collected, for which the time limit of filing return of income under sub-section (1) of section 139 has expired; and the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in each of these two previous years,” according to the Notification No. 01 of 2021 of Central Board of Direct Taxes.

Non-filers of ITR would be subjected to higher TDS & TCS from tomorrow

The Income Tax Department has devised a new “Compliance Check” feature for Section 206AB & 206CCAn to enable tax deductors/collectors to determine if an individual is a “Specified Person” as defined by Section 206AB & 206CCA. This feature is accessible at (https:llreport.insight.gov.in) of the Income-tax Department. According to the recent extensions made by the Central Board of Direct Taxes (CBDT), taxpayers now have until July 15 to submit their TDS for the fourth quarter of the fiscal year 2020-21. Only at the beginning of the financial year, TDS deductors and TCS collectors are mandated to confirm the functioning of the PAN of the vendor from whom TDS or TCS is to be deducted or collected.

TDS rates will be higher than double the rate stated in the pertinent provision of the Income Tax Act, or double the rate or rates in effect, or at a rate of 5%, according to the new TDS regulation. If your overall TDS deduction in the previous year was less than Rs 50,000, or if you have filed your income tax return actively for the past two years, the rules of this section will not pertain to you. Furthermore, where TDS is required to be withheld on salary income (192), lottery income (194B), horse race income (194BB), PF income (192A), trust income (194LBC), and cash withdrawals (194N), the regulations of this section do not pertain.

Furthermore, this new TDS rule will not apply to NRIs who do not have a permanent establishment in India. In order to reduce the compliance burden of the tax deductor or collector the CBDT has also said that “For any further assistance, Tax Deductors & Collectors can refer to Quick Reference Guide on Compliance Check for Section 206AS & 206CCA and Frequently Asked Questions (FAQ) available under “Resources’ section of Reporting Portal. They can also navigate to the “Help” section of Reporting Portal for submitting a query or to get a call back from the Customer Care Team of the Income-tax Department. Customer Care Team of Income-tax Department can also be reached by calling on its Toll-Free number 1800 1034215 for any assistance.”

Story first published: Wednesday, June 30, 2021, 10:15 [IST]



[ad_2]

CLICK HERE TO APPLY

Leave a comment

NARCL may prompt existing ARCs to reorient their business: ARCIL Chief

Banking & Finance

[ad_1]

Read More/Less


 

The National Asset Reconstruction Company Ltd, (NARCL), which is slated to become the mother of all Asset Reconstruction Companies (ARCs), will prompt existing ARCs to change their business orientation and start focussing on buying the stressed retail and MSME assets, according to Pallav Mohapatra, MD & CEO, Asset Reconstruction Company (India) Ltd (ARCIL).

He emphasised that ARCs have a huge business opportunity to buy stressed assets aggregating about ₹1 lakh crore in the retail and micro, small and medium enterprise (MSME) segments.

Stressed assets with principal outstanding of ₹500 crore and above, aggregating about ₹2 lakh crore, are expected to be transferred by lenders to NARCL.

In an interaction with BusinessLine, Mohapatra, who was MD & CEO of Central Bank of India before taking the reins at ARCIL in March 2021, emphasised that there is enough scope for existing ARCs (28 at the last count) to buy stressed assets below ₹500 crore from Banks.

Excerpts

Will the setting up of NARCL, does not diminish the business prospects of existing ARCs?

NARCL’s mandate is basically to acquire stressed assets where the total exposure of the banking sector is more than ₹500 crore.

But I feel there is enough scope for getting the business (buying stressed assets) below ₹500 crore. As of today, most of the ARCs were playing in the big-ticket corporate stressed assets.

Now I feel they will change their orientation and start focusing on stressed retail and MSME assets where the size will increase in the backdrop of the Covid-19 pandemic. It (increase in size) will not be there in the case of corporates to a reasonably large extent. This is because, to a great extent, things have been sorted out. There will be a few cases but not as many as it used to be earlier. So, if the ARCs equip themselves with infrastructure, technology, and human resources skills to handle the stressed retail and MSME assets, that is going to be a very huge business opportunity for ARCs.

How big will the business opportunity be?

The business opportunity will be sufficiently large. The opportunity will be bigger than the total existing Assets Under Management (estimated at about ₹60,000 crore) of all the ARCs put together. This particular pool (of stressed retail and MSME assets) could be about ₹1 lakh crore.

Given that sale of stressed assets by banks to ARCs has been declining in the last couple of years, will ARCIL change tack?

We want to focus more on resolution and recovery of non-performing assets and earn income after some time rather than focusing on earning income from fees or some other structure.

If you look at the Profit & Loss accounts of ARCs, normally there are three channels of income — management fee income (for managing the acquired assets), interest income (arising from restructuring) and when ARCs can recover more than the face value of the Security Receipts, they get an upside income.

Our focus is to basically increase the proportion of the upside income. This will have beneficial effects — one is there will be a better churning of the capital in ARCs; second, they will also be earning income, with the upside income going straightaway to P&L; and third is it will be good for the economy as such because there will be recovery and resolution.

So, instead of focusing on earning management fees, which will cover our capital investment, we are looking at earning income, as far as possible, by doing resolution and recovery.

Banks want to sell stressed assets on all cash basis but capital could be constraint for ARCs. How do you deal with this situation?

Banks want all-cash deals because of the non-redemption of SRs. If they know that ARCs are going to redeem the SRs as well as give them upside income, why will they not sell their stressed assets for a mix of cash and SRs?

From the capital and availability of funds point of view, ARCIL doesn’t have a problem. Even if there is a funding gap, we always try to get some investor. If we are doing a 100 per cent cash deal with a bank, we try to pay 100 per cent to the bank. But when it comes to our capital deployment, we try to make it 15 per cent or a maximum of 20-25 per cent, and we always get an investor who will put the money. Now, the advantage of this is that since the investor is putting in 75-85 per cent of the money, they will be very keen on resolution of the assets. The investors will not be keen that the ARC is earning the management fees they have to pay for. They will have regular interaction with the ARC because they want a return on their money. And investors are keen to work with those ARCs that have a very fair, open and transparent business model.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,

Reserve Bank of India – Press Releases

Press Releases

[ad_1]

Read More/Less


(Amount in ₹ crore, Rate in Per cent)
  Volume
(One Leg)		 Weighted
Average Rate 		Range
A. Overnight Segment (I+II+III+IV) 4,10,488.23 3.23 0.01-3.45
     I. Call Money 6,932.98 3.14 1.90-3.40
     II. Triparty Repo 3,08,897.65 3.22 3.15-3.26
     III. Market Repo 94,157.60 3.25 0.01-3.40
     IV. Repo in Corporate Bond 500.00 3.45 3.45-3.45
B. Term Segment      
     I. Notice Money** 70.00 3.03 2.65-3.30
     II. Term Money@@ 254.00 – 3.00-3.80
     III. Triparty Repo 0.00 – –
     IV. Market Repo 110.00 3.05 3.05-3.05
     V. Repo in Corporate Bond 0.00 – –
  Auction Date Tenor (Days) Maturity Date Amount Current Rate /
Cut off Rate
C. Liquidity Adjustment Facility (LAF) & Marginal Standing Facility (MSF)
I. Today’s Operations
1. Fixed Rate          
     (i) Repo          
    (ii) Reverse Repo Tue, 29/06/2021 1 Wed, 30/06/2021 4,01,344.00 3.35
    (iii) Special Reverse Repo~          
    (iv) Special Reverse Repoψ          
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo          
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo          
3. MSF Tue, 29/06/2021 1 Wed, 30/06/2021 130.00 4.25
4. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs)£          
5. Net liquidity injected from today’s operations
[injection (+)/absorption (-)]*		       -4,01,214.00  
II. Outstanding Operations
1. Fixed Rate          
     (i) Repo          
    (ii) Reverse Repo          
    (iii) Special Reverse Repo~ Fri, 18/06/2021 14 Fri, 02/07/2021 960.00 3.75
    (iv) Special Reverse Repoψ Fri, 18/06/2021 14 Fri, 02/07/2021 40.00 3.75
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo Fri, 18/06/2021 14 Fri, 02/07/2021 2,00,009.00 3.50
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo          
3. MSF          
4. Long-Term Repo Operations# Mon, 17/02/2020 1095 Thu, 16/02/2023 499.00 5.15
  Mon, 02/03/2020 1094 Wed, 01/03/2023 253.00 5.15
  Mon, 09/03/2020 1093 Tue, 07/03/2023 484.00 5.15
  Wed, 18/03/2020 1094 Fri, 17/03/2023 294.00 5.15
5. Targeted Long Term Repo Operations^ Fri, 27/03/2020 1092 Fri, 24/03/2023 12,236.00 4.40
  Fri, 03/04/2020 1095 Mon, 03/04/2023 16,925.00 4.40
  Thu, 09/04/2020 1093 Fri, 07/04/2023 18,042.00 4.40
  Fri, 17/04/2020 1091 Thu, 13/04/2023 20,399.00 4.40
6. Targeted Long Term Repo Operations 2.0^ Thu, 23/04/2020 1093 Fri, 21/04/2023 7,950.00 4.40
7. On Tap Targeted Long Term Repo Operations€ Mon, 22/03/2021 1095 Thu, 21/03/2024 5,000.00 4.00
  Mon, 14/06/2021 1096 Fri, 14/06/2024 320.00 4.00
8. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs)£ Mon, 17/05/2021 1095 Thu, 16/05/2024 400.00 4.00
  Tue, 15/06/2021 1095 Fri, 14/06/2024 490.00 4.00
D. Standing Liquidity Facility (SLF) Availed from RBI$       17,313.80  
E. Net liquidity injected from outstanding operations [injection (+)/absorption (-)]*     -1,00,403.20  
F. Net liquidity injected (outstanding including today’s operations) [injection (+)/absorption (-)]*     -5,01,617.20  
G. Cash Reserves Position of Scheduled Commercial Banks
     (i) Cash balances with RBI as on 29/06/2021 6,16,488.38  
     (ii) Average daily cash reserve requirement for the fortnight ending 02/07/2021 6,19,074.00  
H. Government of India Surplus Cash Balance Reckoned for Auction as on¥ 29/06/2021 0.00  
I. Net durable liquidity [surplus (+)/deficit (-)] as on 04/06/2021 8,57,660.00  
@ Based on Reserve Bank of India (RBI) / Clearing Corporation of India Limited (CCIL).
– Not Applicable / No Transaction.
** Relates to uncollateralized transactions of 2 to 14 days tenor.
@@ Relates to uncollateralized transactions of 15 days to one year tenor.
$ Includes refinance facilities extended by RBI.
& As per the Press Release No. 2019-2020/1900 dated February 06, 2020.
* Net liquidity is calculated as Repo+MSF+SLF-Reverse Repo.
# As per the Press Release No. 2020-2021/287 dated September 04, 2020.
^ As per the Press Release No. 2020-2021/605 dated November 06, 2020.
€ As per the Press Release No. 2020-2021/520 dated October 21, 2020, Press Release No. 2020-2021/763 dated December 11, 2020 and Press Release No. 2020-2021/1057 dated February 05, 2021.
¥ As per the Press Release No. 2014-2015/1971 dated March 19, 2015.
£ As per the Press Release No. 2021-2022/181 dated May 07, 2021.
~ As per the Press Release No. 2021-2022/177 dated May 07, 2021.
ψ As per the Press Release No. 2021-2022/323 dated June 04, 2021.
Ajit Prasad
Director   
Press Release: 2021-2022/447

[ad_2]

CLICK HERE TO APPLY

Leave a comment

RBI imposes penalties on 4 cooperative banks, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The Reserve Bank on Tuesday said it has imposed penalties on four co-operative banks, including a Rs 112.50 lakh fine on Hyderabad-based Andhra Pradesh Mahesh Co-operative Urban Bank, for contravention of certain regulatory directions. A penalty of Rs 62.50 lakh has been imposed on The Ahmedabad Mercantile Co-operative Bank, Ahmedabad; Rs 37.50 lakh on SVC Co-operative Bank, Mumbai; and Rs 25 lakh on Saraswat Cooperative Bank, Mumbai.

The penalty on Andhra Pradesh Mahesh Co-operative Urban Bank was for non-compliance with directions issued by RBI contained in Master Directions on ‘Interest Rate on Deposits’ and ‘Know Your Customer’.

The Ahmedabad Mercantile Co-operative Bank has been penalised for violation of norms contained in Master Directions on ‘Interest Rate on Deposits’.

As per the RBI, it imposed penalty on SVC Co-operative Bank for non-compliance with directions on ‘Interest Rate on Deposits’ and ‘Frauds Monitoring and Reporting Mechanism’.

Saraswat Cooperative Bank was penalised for non-compliance with directions on ‘Interest Rate on Deposits’ and ‘Maintenance of Deposit Accounts’.

The penalties, the RBI said, have been imposed for based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

RBI sets July 30 deadline for banks to move current accounts, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The Reserve Bank of India (RBI) has set a deadline of July 30 for banks to give up current accounts of all companies where their exposure is below a cut-off decided by the regulator.

RBI communicated this in a letter to banks a fortnight ago, two senior bankers told ET.

The move, initiated more than a year ago, could trigger a migration of many lucrative current accounts – which lower a bank’s fund cost and cash management business – from MNC banks to public sector lenders and some of the large private sector Indian banks.

According to the new rule, a bank with less than 10% of the total approved facilities – which include loans, non-fund businesses like guarantees, and daylight overdrafts (or intra-day) exposure – to a company is barred from having the client’s current account.

“RBI is probably upset that banks are taking a long time to shift the accounts. But the delay may also be because several PSU banks may not be ready with the technology. Now, RBI can’t direct companies which have been doing business with a bank for years to move to another bank. At one point many MNC banks and companies had opposed it, but they have realised that it’s fait accompli,” said a banker.

Notified in August 2020, the regulation after a review was expected to be implemented by January 31, 2021.

Backed by a former chairman of the country’s largest lender State Bank of India and some of the PSU bankers, the regulation stems from the belief that errant corporate borrowers will find it tougher to divert funds if their current and collection accounts lie with lending banks.

Regulation doesn’t cover MFs, insurers
It’s aimed at curbing the practice of companies who run current accounts to collect sale proceeds and other receivables with banks outside the lending consortium to delay loan servicing.

Over the years, some of the MNC banks, without being large lenders, had put in place technology to integrate fund flows between a large company and its customers, vendors and associates. Besides enjoying the float, the relationship with the corporate opened an opportunity to cross-sell products to group companies. Significantly, it was a strategy to earn fees without committing larger capital for loans, and the risk of some turning into NPAs.

However, the present rule, said another banker, could also impact a few smaller Indian banks, including state-owned lenders. Some large private banks, who are in favour of the rule, have been raising their exposure above the 10% threshold to retain the current accounts. As per the rule, a bank having a current account with less than 10% exposure will be required to move funds to another bank which meets the exposure rule. The 10% rule does not pertain to regulated entities like mutual funds and insurers.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Banks, experts pin hopes on bad bank to cut NPA pile, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The National Asset Reconstruction Company (NARC) is likely to help banks cut their bad loan piles.

The bad bank and healthy provisioning buffers against doubtful advances should help India’s banks mitigate the impact of delinquencies and asset quality slippages in the aftermath of the second Covid wave, according to Boston Consultancy Group.

The formation of National Asset Reconstruction Co Ltd will help lenders keep up the momentum of recovery in stressed assets in 2021-22 (Apr-Mar), State Bank of India Chairman Dinesh Kumar Khara said.

Along with the resumption of courts and the roll-out of pre-package for resolution through the insolvency law, this will help banks make judicious use of recovery options, Khara said.

The NARC would help reduce sticky assets exposure to 1.8% – 2.3% of total loans, BCG said.

Asset quality is still a major concern for many Indian banks even as nonperforming assets (NPA), on average, could be contained, the global consultancy firm said.

Asset quality

“The second wave of the coronavirus pandemic poses risk to asset quality even as banks retain healthy provisioning buffers,” it said.

Banks have identified 22 bad loans totaling Rs 89,000 crore to be transferred to the NARC in the initial phase.

The State Bank of India plans to transfer bad loans worth around 200 bln rupees to NARCL.

The report also said that bad loans sold to asset reconstruction companies (ARCs) as a proportion of banking system stressed assets increased to about 34% at the end of FY20, up from 25% in FY18, with banks taking a much higher haircut on these sales.

Haircuts on sales to ARCs have risen to 66% in FY20 compared to 62% in the prior financial period, it said.

The bad bank

The bad bank was proposed in the Union Budget for 2021-22.

In the last financial stability report released in January, the central bank said that banks’ gross non-performing assets may rise to 13.5% by September 2021 from 7.5% as of September 2020. In the event of extreme stress, the ratio could rise to 14.8%.

Former Reserve Bank of India deputy governor Rakesh Mohan has also warned that higher stress on assets in the banking system threatens financial stability.

Recoveries through various channels have bounced back to about 16% in FY20 from decadal lows of about 10% in FY16 before the pandemic struck.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

Global banks announce bumper dividends, but Indian peers face a cap, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Global wall street banks are hiking dividend payouts after US Federal Reserve gave them go-ahead last week after annual stress test results. However, the Indian bank shareholders have to wait has curbed banks’ dividend-paying ability in the financial year 2020-21 citing the impact of an ongoing second wave of coronavirus.

Morgan Stanley, JPMorgan, Bank of America, Goldman Sachs and Wells Fargo said on Monday they were hiking their capital payouts after the US Federal Reserve gave them a clean bill of health following their annual “stress tests”.

Analysts and investors had expected the country’s largest lenders to start issuing as much as $130 billion in dividends and stock buybacks from next month after the Fed last week ended emergency pandemic-era restrictions on how much capital they could give back to investors.

Morgan Stanley

Morgan Stanley delivered the biggest surprise to investors, saying it would double its dividend to 70 cents a share in the third quarter of 2021.

The Wall Street giant also said it would increase spending on share repurchases.

Morgan Stanley CEO James Gorman said in the announcement that the bank could return so much capital because of the excess it has accumulated over several years. The action, he said, “reflects a decision to reset our capital base consistent with the needs we have for our transformed business model.”

Bank of America

Bank of America Corp said it will hike its dividend by 17% to 21 cents a share beginning in the third quarter of 2021, and JPMorgan Chase & Co said it will go to $1.00 a share from 90 cents for the third quarter.

Goldman Sachs Group said it planned to increase its common stock dividend to $2 per share from $1.25.

Wells Fargo

Wells Fargo & Co, which has built up capital more rapidly than rivals due in part to a Fed-imposed cap on its balance sheet, said it plans to repurchase $18 billion of stock over the four quarters beginning in September.

The repurchase target amounts to nearly 10% of its stock market value and is line with expectations from analysts.

Wells Fargo, which for years has been trying to move past a series of costly mis-selling scandals, said it was doubling its quarterly dividend to 20 cents a share, consistent with analyst expectations.

“Since the COVID-19 pandemic began, we have built our financial strength … as well as continuing to remediate our legacy issues,” CEO Charlie Scharf said in a statement.

“We will continue to do so as we return a significant amount of capital to our shareholders,” Scharf added.

Citigroup

Citigroup, meanwhile, confirmed analysts’ estimates that a key part of its required capital ratios had increased under the stress test results to 3.0% from 2.5%.

A hike of that size will limit Citigroup’s share buybacks, versus its peers, a report from analyst Vivek Juneja of JPMorgan shows. Juneja expects Citigroup will have the lowest capital return of big banks he covers.

Citigroup CEO Jane Fraser said the bank will continue its “planned capital actions, including common dividends of at least $0.51 per share” and buying back shares in the market.

In India

The Reserve Bank of India has curbed banks’ dividend-paying ability in the financial year 2020-21 citing an ongoing second wave of coronavirus that comes with an economic cost.

“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, the Reserve Bank of India said in April.

“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 prescribed,” it said.

Private lender HDFC Bank has announced that the board has declared a dividend of Rs 6.50 per share for the year ended 31 March 2021.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,
1 … 3 4 5 6 7 … 100