Month: August 2021

RBI approves re-appointment of Sandeep Bakhshi as MD and CEO of ICICI Bank

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The Reserve Bank of India has approved the re-appointment of Sandeep Bakhshi as Managing Director and CEO of ICICI Bank with effect from October 15, 2021 till October 3, 2023.

“…the shareholders at the annual general meeting held on August 9, 2019 had already approved the appointment of Bakhshi for a period effective from October 15, 2018 up to October 3, 2023,” the private sector lender said in a stock exchange filing.

Also read: ICICI Bank files cheating case against Karvy Stock Broking

Bakhshi was appointed as MD and CEO of ICICI Bank in October 2018 after the bank’s board had accepted the request of Chanda Kochhar to seek early retirement.

“His appointment will be for a period of five years until October 3, 2023, subject to regulatory and other approvals,” the bank had said at the time.

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Citi considering bitcoin futures trading for some institutional clients, BFSI News, ET BFSI

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Citigroup Inc is considering offering bitcoin futures trading for some institutional clients, a spokesperson for the bank said on Tuesday, citing increased demand in the cryptocurrency space.

Bitcoin prices rose past $50,000 on Monday, after having weathered a crackdown by Chinese authorities on domestic cryptocurrency mining companies earlier this year, as mainstream adoption by corporations and the wider public gathers pace.

Media outlet Coindesk reported earlier on Tuesday that Citi is awaiting regulatory approval to begin trading bitcoin futures on the Chicago Mercantile Exchange, citing a source within the bank.

“Given the many questions around regulatory frameworks, supervisory expectations, and other factors, we are being very thoughtful about our approach,” a Citi spokeswoman said in an email.

“We are presently considering products such as futures for some of our institutional clients, as these operate under strong regulatory frameworks,” she added.

The bank was weighing the option of providing cryptocurrency related services in May, according to a Financial Times report.

Business Insider reported in late July that JPMorgan Chase & Co will allow all of its wealth management clients access to cryptocurrency funds.



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Harvard Business Publishing features successful merger of Indian Bank, Allahabad Bank, BFSI News, ET BFSI

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Indian Bank has been featured in Harvard Business Publishing for its successful merger of Allahabad Bank.

The first-of-its-kind seamless merger of equal-sized Indian banks with prominence in southern and eastern region was recognised and published as a case study.

Curated by Indian School of Business (ISB), the case study encapsulates journey that Indian Bank embarked on to successfully execute the amalgamation process.

‘Merger of Equals’ narrates the entire integration process, which comprised of rigorous strategic planning and execution by Indian Bank, with impetus on the challenges faced and their answers found.

The merger has made Indian Bank a pan-India lender with significant presence in southern, northern and eastern parts of the country.

Padmaja Chunduru, Managing Director and CEO of Indian Bank, said the merger has given Indian Bank a distinct experience of building synergies between two banks with vast legacies.

“We hope this case study will help readers understand the big picture of this exemplary merger,” she said.

The two banks merged efficiently while addressing challenges of human capital, varied cultures and geographic locations. This case of Indian Bank’s merger process can be used by faculty and trainers from various business schools and organisations globally.

Indian Bank is the seventh-largest public sector bank in India with 10 crore customers and 41,557 employees.



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Bank of India plans to raise Rs 3,000 cr equity capital via QIP, BFSI News, ET BFSI

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New Delhi: Bank of India is planning to raise Rs 3,000 crore equity capital through a qualified institutional placement (QIP) offer to fuel business growth and meet regulatory compliance, sources said. “The bank is in the process of raising Rs 3,000 crore through QIP and seven book running lead managers have been appointed for the proposed issue,” sources privy to the development said.

A non-deal roadshow to woo investors concluded on Monday.

The management of the bank participated in one-on-one and group meetings for the roadshow during August 10-23, 2021, the bank said in a filing.

Total 26 investors participated in the roadshow including Yes Bank, IDFC Bank, HDFC Treasury, ICICI Prudential Life, Edelweiss, SBI Life, Mirae, Kotak Life, Federal Bank, Marshal Wace, Polunin among others, the bank said.

The purpose of the issue is not only to fuel regular business growth, but also to deploy capital for improving technical platform of the bank, co-lending digital operations, tie-ups with fintech companies, and syncronisation of tech platform with overseas and domestic operations, as per the sources.

The bank will also utilise the proceeds of the QIP for developing app based retail loan applications and offer electronic bill discounting facility, they added.

“Also, Government of India, our promoter is currently holding 90.34 per cent stake in the bank as of June 30, 2021. With the proposed QIP of Rs 3,000 crore, the promoter’s stake will come down to a substantial level and as a result, the compliance with Sebi guidelines of maintaining minimum public shareholding will be ensured,” a source said.

The bank’s asset quality has shown consistent improvement with gross non-performing assets (NPAs) falling to 13.5 per cent as of June 30, 2021 from 13.8 per cent at end-March 2021. The gross NPAs were at 14.8 per cent by end of March 2020 and 15.8 per cent by March 2019.

Besides, the bank has returned to profitability as against back-to-back losses in FY19 and FY20.

Bank of India earned a net profit of Rs 720 crore in June quarter 2021-22. In FY21, there was an overall profit of Rs 2,160 crore. The lender had suffered a net loss of Rs 2,960 crore in FY20 and of Rs 5,550 crore in FY19.

“Around 88 per cent of the gross advances are comprised of A rated and above as well as GGA (government guaranteed advances) segment advances. Most of the bank’s gross advances presently comprise secured and good rated assets.

“The bank’s focus going forward would be towards RAM (retail, agri, MSME) and GGA segments, particularly with the emphasis on the good rated and sovereign guaranteed advances, so that the bank can maintain asset quality in future,” said a source.

Further, the bank has identified total restructuring book of not more than Rs 11,500 crore. Out of this, the bank has restructured Rs 7,300 crore till June 2021 and the rest of the restructuring will be made before the threshold date of September 30, 2021.

“So, together with the restructuring and SMA (special mention accounts) 2 portfolios, the stress loan book stood at less than 3 per cent on gross advances (as on June 2021) and the same is significantly low, in comparison to other peer banks,” they said.



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Why controlling inflation is not the job of the RBI Governor alone, BFSI News, ET BFSI

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In 2021, the focus of policymakers across the globe is to not just recover and sustain growth but also to ensure price stability. Not only emerging economies, but even developed economies are dealing with price pressure. The rising inflation rate has prevented many economies from announcing further stimulus measures. Central banks in some countries have gone for a rate hike even when their own economies have not fully recovered from the pandemic-induced economic crisis.

One of the major contributors for the overall rise in inflation is the surge in commodity prices. Within commodities, rising crude oil prices has burdened oil importing countries including India. In July, India imported $12.89 billion worth of petroleum crude & products (POL). And, in the same month, POL accounted for a share of 27.7 percent of the total imports to the country.

In India, inflation rate, as measured by the Consumer Price Index (CPI), is used as RBI’s monetary policy anchor. Within CPI, fuel and light account for a share of 6.84 per cent. Though the share of fuel in the CPI basket is less than 10 per cent, crude prices have a huge impact on the overall inflation rate. Higher fuel prices have a ripple effect on other commodities. Crude oil is used as a raw material in various sectors, with petrol/diesel used in transportation of goods. When the cost of production goes up, it will be passed on to consumers.

In the current situation, higher prices for goods and services is an additional burden on both the consumers and producers. The Indian economy is still in a nascent stage of recovery. An economy in the recovery stage won’t be able to tolerate a higher inflation rate. Inflation rate in July has cooled off to 5.59 per cent, within the upper tolerance band of 6 per cent. However, we need to closely watch how inflation figures would turn out in the coming months. The fall in the overall inflation rate has been mainly contributed by the decline in food prices. Food inflation declined to 3.96 per cent YoY in July’21 from 5.15 per cent in June’21. Yet, during the same period, fuel and light inflation registered only a marginal decline to 12.4 per cent from 12.6 per cent.

At this juncture, both the central and state governments should consider ways to reduce the burden arising from increasing fuel prices. The RBI Governor has explicitly stated on many occasions the need for coordinated action between the Centre and states on tax reduction on fuel prices. Presently, the central government levies an excise duty of Rs 32.9 per litre on petrol while the VAT levied by state governments vary. A reduction in the excise duty and VAT could lead to an increase in disposable income in the hands of the common man. This, in turn, could improve consumer sentiments and prevent the heating up of the economy.

In India, controlling the inflation rate is not just the RBI’s job. The factors contributing to rising inflation in the country calls for a concerted effort from the central bank and Centre/state governments.



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Finance Ministry exploring insurance bonds as alternative to bank guarantees, BFSI News, ET BFSI

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The government is considering to introduce insurance bonds as an alternative to bank guarantees, Finance Secretary T V Somanathan said here on Tuesday. Somanathan made the announcement during a meeting between industry captains and Finance Minister Nirmala Sitharaman, who is on a two-day visit to the financial capital.

“Government is exploring on instituting insurance bonds as alternatives to bank guarantees,” an official statement said.

Bank guarantees are usually asked for while extending a loan and typically require a collateral. An insurance bond is also a surety but it does not require any collateral.

As per reports last year, insurance regulator Irdai was also looking at the option of insurers offering surety bonds in the context of road projects.

Sitharaman, who met the industry captains in the evening, said the government is committed to working towards ensuring policy certainty, adding that the regulators also have a key role in ensuring the same.

She said the government is working with the regulators on this “important issue”, as per the statement.

The finance minister emphasised the importance of ‘India’s own equity capital’ while addressing the industry and assured government facilitation for sunrise sectors and startups.

Revenue Secretary Tarun Bajaj said his department was working on tax-related issues of startups and sought industry inputs on the same.

Sitharaman also assured the industry of addressing issues related to competitiveness, including high power tariffs, and matters related to cumbersome regulatory compliances, the statement said.

The economy is moving gradually from a bank-led lending model to a more market-based finance model and the operationalisation of the Development Finance Institution (DFI) will ensure long-term lending for projects, Sitharaman said.

The DFI will increase competition for banks and also improve their efficiency, the statement quoted her as saying.

In the meeting, which comes in the wake of a controversy caused by her cabinet colleague Piyush Goyal’s reported remarks about disenchantment with the industry for not keeping the nation’s interest in mind, Sitharaman said, “This government believes in listening, working and responding and would extend all possible support.”

Tata Steel’s T V Narendran said for growth to take deep roots, sustained demand is critical, and the immediate source of demand has to be government expenditure.

Narendran also recommended frontloading of the committed capital expenditure, especially on infrastructure, adding that the first quarter’s handsome revenues create a room for the same, as per the statement.

On the issue of arbitration awards being appealed, Somanathan said there is a need for a behaviourial change and added that the government trusts wealth creators.

The constraint on vaccination is on the supply side and the same is likely to be addressed soon, he further said.

Sitharaman met officials from income tax, Goods and Services Tax (GST) and customs departments in two separate meetings in what is her maiden visit to the financial capital since the second wave of COVID-19.

She is scheduled to address chiefs of state-run banks at a meeting on Wednesday.



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Sitharaman to meet CEOs of public sector banks today, BFSI News, ET BFSI

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New Delhi: Union finance minister Nirmala Sitharaman will meet heads of public sector banks (PSBs) on Wednesday to review the financial performance of the lenders and progress made by them in supporting the pandemic-hit economy, sources said.

The meeting with MD and CEOs of PSBs assumes significance given the importance of the banking sector in generating demand and boosting consumption. Recently, the finance minister had said the government is ready to do everything required to revive and support economic growth hit by the Covid-19 pandemic.

The meeting is expected to take stock of the banking sector and progress on the restructuring 2.0 scheme announced by the Reserve Bank of India (RBI), the sources said, adding that banks may be nudged to push loan growth in productive sectors.

The revamped 4.5 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) would also be reviewed during the meeting likely to be held in Mumbai, the sources said.

Besides, the finance minister is expected to take stock of the bad loans or non-performing assets (NPAs) situation, and discuss various recovery measures by banks, they said.

As a result of the government’s strategy of recognition, resolution, recapitalisation and reforms, NPAs have shown a declining trend, from 7,39,541 crore on March 31, 2019 to 6,78,317 crore on March 31, 2020 and further to 6,16,616 crore as on March 31, 2021 (provisional data).

At the same time, comprehensive steps were taken to control and to effect recovery in NPAs, which enabled PSBs to recover 5,01,479 crore over the last six financial years, the government informed Parliament recently.

Besides, Sitharaman is expected to declare the results of Ease 3.0 Index for 2020-21, they said, adding that PSBs would be rated on various indexes for the year. PTI



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Harvard Business Publishing features merger of Allahabad Bank, Indian Bank as a case study

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This case study of Indian Bank’s merger process can be used by faculty and trainers from various business schools and organisations, globally.

Indian Bank has featured in the Harvard Business Publishing for its successful merger with Allahabad Bank. The first-of-its-kind seamless merger of equal-sized Indian banks, with prominence in the southern and eastern regions of the country, has been well recognised and published by Harvard Business Publishing as a case study.

Curated by Indian School of Business (ISB), this unique case study titled ‘Merger of Equals: The Amalgamation Story of Indian Bank and Allahabad Bank’ encapsulates the remarkable journey that Indian Bank embarked on to successfully execute the amalgamation process.

‘Merger of Equals’ narrates the entire integration process, which comprised rigorous strategic planning and execution by Indian Bank, with special focus on the challenges faced and their answers found. The merger has made Indian Bank a pan-India lender, with significant presence in southern, northern and eastern parts of the country.

A release by Indian Bank said the amalgamation exercise ‘Project Sangam’ entailed a three-pronged approach on product / process, employee-customer communication and IT integration. The synergy benefits of the merger have started reflecting in terms of cost efficiencies as evidenced in the decline in cost-to-income ratio of the bank (40.86% for QE June 2021). The integration of IT operations and systems have also resulted in economies of scale through vendor rationalisation, finer pricing on AMCs and improved operational efficiencies.

Padmaja Chunduru, MD and CEO of Indian Bank, said, “We are privileged to witness our amalgamation process featured in the leading publication of one of the most prestigious institutions of the world. This is a testimony to the constant dedication and sincerity of the entire Indian Bank team which helped achieve this strategic merger. We would like to take this opportunity to thank ISB and Harvard Business Publishing for acknowledging the efforts of Indian Bank.

The merger has given Indian Bank a distinct experience of building synergies between two banks with vast legacies. We hope this case study will help readers understand the big picture of this exemplary merger.”
The two banks merged efficiently while addressing the challenges of human capital, varied cultures and geographic locations.

This case study of Indian Bank’s merger process can be used by faculty and trainers from various business schools and organisations, globally.

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.



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Harvard Business Publishing features merger of Allahabad Bank, Indian Bank as a case study

Personal Finance

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This case study of Indian Bank’s merger process can be used by faculty and trainers from various business schools and organisations, globally.

Indian Bank has featured in the Harvard Business Publishing for its successful merger with Allahabad Bank. The first-of-its-kind seamless merger of equal-sized Indian banks, with prominence in the southern and eastern regions of the country, has been well recognised and published by Harvard Business Publishing as a case study.

Curated by Indian School of Business (ISB), this unique case study titled ‘Merger of Equals: The Amalgamation Story of Indian Bank and Allahabad Bank’ encapsulates the remarkable journey that Indian Bank embarked on to successfully execute the amalgamation process.

‘Merger of Equals’ narrates the entire integration process, which comprised rigorous strategic planning and execution by Indian Bank, with special focus on the challenges faced and their answers found. The merger has made Indian Bank a pan-India lender, with significant presence in southern, northern and eastern parts of the country.

A release by Indian Bank said the amalgamation exercise ‘Project Sangam’ entailed a three-pronged approach on product / process, employee-customer communication and IT integration. The synergy benefits of the merger have started reflecting in terms of cost efficiencies as evidenced in the decline in cost-to-income ratio of the bank (40.86% for QE June 2021). The integration of IT operations and systems have also resulted in economies of scale through vendor rationalisation, finer pricing on AMCs and improved operational efficiencies.

Padmaja Chunduru, MD and CEO of Indian Bank, said, “We are privileged to witness our amalgamation process featured in the leading publication of one of the most prestigious institutions of the world. This is a testimony to the constant dedication and sincerity of the entire Indian Bank team which helped achieve this strategic merger. We would like to take this opportunity to thank ISB and Harvard Business Publishing for acknowledging the efforts of Indian Bank.

The merger has given Indian Bank a distinct experience of building synergies between two banks with vast legacies. We hope this case study will help readers understand the big picture of this exemplary merger.”
The two banks merged efficiently while addressing the challenges of human capital, varied cultures and geographic locations.

This case study of Indian Bank’s merger process can be used by faculty and trainers from various business schools and organisations, globally.

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.



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Slippages this fiscal will be little below FY21 level: City Union Bank chief

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Credit growth achieved in the first quarter of FY22 was at 5% on a year-on-year basis, mainly coming from gold loans and the non-agri gold loans.

City Union Bank (CUB) has said the bank’s overall slippages to closing advances for FY 22 would be slightly below that of the previous fiscal year while it may be more front-loaded with increased slippages in the first two quarters and substantially lesser sticky loan accumulation in the subsequent quarters of the current financial year.

The bank will complete the entire surplus Covid provision in the second quarter, after which slippages would also reduce while the recoveries from the existing NPAs would increase because of the improvement in the court processes, particularly in taking possession and selling of the properties through SARFAESI action.

At a recent earnings conference call, N Kamakodi, MD & CEO of CUB, said the total incremental slippages will be slightly better than the last financial year. The bank is expecting a better recovery in the second half of the current financial year, resulting in gross and net NPAs at the year-end being at a shade lower than the last year.

“We had a slippage of Rs 482 crore in the first quarter of financial year 2022 and slippages were front loaded in tune with our expectations. We feel it should be moderating going forward and we still expect overall slippages for financial year 2022 will be flattish or less than whatever we saw in financial year 2021,” he said.

During FY21, the bank had restructured about Rs 990 crore of MSME accounts and about Rs 595 crore of non-MSME accounts through Covid resolution framework. Apart from this, prior to Covid, it had restructured an amount of Rs 242 crore under MSME and Rs 22 crore under non-MSME accounts. “Thus, the percentage of restructured accounts outstanding as on March 31, 2021, stood at Rs 1,849 crore comprising about 5% to closing advances,” he said.

On the recovery front, Kamakodi said the bank has been engaging with the borrowers and asking them to sell their other collateral in order to reduce the outstanding, so that the existing business will be sustainable enough to take care of their cash flows.

Credit growth achieved in the first quarter of FY22 was at 5% on a year-on-year basis, mainly coming from gold loans and the non-agri gold loans.

“We are keeping our eyes and ears open to the grass root level. If we see things are stabilising and also the risk of further Covid waves gets eliminated, we will ascertain whether we should be in a position to shift before the year- we will get that clarity post Diwali,” Kamakodi said when asked about the likely further acceleration in credit growth.

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.

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