Kolkata, Nov 22 (PTI) All India Bank Officers Confederation (AIBOC) on Monday said it will hold a protest programme against the government’s move to privatise public sector banks (PSBs) in Delhi later this month during the winter session of Parliament. AIBOC general secretary Soumya Datta said the government is likely to introduce the bank privatisation Bill in the winter session of Parliament scheduled to commence from November 29.
The government’s move is not based on sound economic logic, but purely a political decision to hand over the banks to “crony capitalists”, Dutta claimed.
Privatising the PSBs will hurt priority sectors of the economy and credit flow to self-help groups (SHGs), he asserted.
Around 70 per cent of the country’s total deposits are with the PSBs, he said alleging that handing them over to private capital will put the common man’s money deposited with these banks into jeopardy.
To protest against this move of the government, AIBOC will start ‘Bharat Yatra’ on November 24, which will culminate at Jantar Mantar in New Delhi on November 29, Dutta said.
He claimed that selling of PSBs to private bodies will lead to financial exclusion and not inclusion.
Finance minister Nirmala Sitharaman in her budget speech had announced that the government will make strategic divestment in two PSBs this fiscal.
Mumbai: The Reserve Bank of India (RBI) has detailed a draft scheme for the merger of sick Punjab and Maharashtra Cooperative (PMC) Bank with the newly-formed Unity Small Finance Bank Ltd (USFB), more than two years after PMC was put under restrictions on account of fraud that led to a steep deterioration in the networth of the bank.
According to the scheme, deposits of up to 5 lakh can be claimed by depositors over a period of three to 10 years.
The scheme says depositors can claim up to 50,000 at the end of three years, 1 lakh at the end of four years, 3 lakh at the end of five years and 5.50 lakh at the end 10 years.
It may be recalled that the RBI had doubled the amount depositors can withdraw from PMC Bank to 1 lakh from 50,000 in June 2020, allowing more than 84% of the depositors to withdraw their entire account balance. RBI said the above limits are for depositors over and above the withdrawals already made.
According to this schedule, the entire remaining deposits of PMC Bank depositors will be paid back within 10 years from the date the central government notifies this scheme of amalgamation.
Further, the central bank has clarified that interest on these deposits shall not accrue after March 31, 2021 for five years.
“No further interest will be payable on the interest bearing deposits of transferor bank for a period of five years from the appointed date. Provided further that interest at the rate of 2.75% per annum shall be paid on the retail deposits of the transferor bank (PMC), which shall be remaining outstanding after the said period of five years from the appointed date. This interest will be payable from the date after five years from the appointed date,” RBI said.
According to the scheme, 80% of uninsured institutional deposits will be converted into perpetual non-cumulative preference shares (PNCPS) of Unity SFB with dividend of 1% per annum payable annually.
After 10 years from the appointed date, Unity SFB may consider additional benefits for PNCPS holders either in the form of providing a step-up in coupon rate or a call option, upon receipt of approval from RBI.
The remaining 20% of the institutional deposits will be converted into equity warrants of Unity SFB at a price of `1 per warrant. These equity warrants will further be converted into equity shares of the Unity SFB at the time of the initial public offer when it goes for one.
“In respect of every other liability of the transferor bank (PMC), the transferee bank (Unity) shall pay only the principal amounts, as and when they fall due, to the creditors in terms of the agreements entered between them prior to the appointed date or the terms and conditions agreed upon,” RBI said.
“Our shareholders have committed capital of over `3,000 crore through cash and warrants, which will be utilised to build a strong foundation for the bank, hire the right talent and bring best-in-class technology,” Unity Small Finance Bank said in a statement.
In June, RBI had given an in-principle nod to Unity SFB, a joint venture of Centrum Financial Services and Resilient Innovations that runs BharatPe, to take over PMC.
MUMBAI: Retail depositors with over Rs 15 lakh in Punjab and Maharashtra Cooperative (PMC) Bank will have to wait for 10 years to get all their money back. The timeline is in terms of a resolution plan drawn up by the RBI, which involves the defunct cooperative lender’s amalgamation with the newly formed Unity Small Finance Bank (SFB).
The resolution of PMC Bank through private investment using the SFB licence route is the first time such an exit option has been adopted for stakeholders in a failed bank.
Institutional depositors, including cooperative housing societies and cooperative credit societies which have deposits in the bank, will end up taking a haircut. The resolution plan envisages 80% of their funds being converted into perpetual non-cumulative preference shares with a dividend of only 1% per annum. After 10 years, the bank can decide if it wants to increase the dividend or repay investors. The remaining 20% of institutional funds will be converted into equity warrants of Unity SFB at Re 1 per warrant. These warrants will be converted into shares whenever Unity SFB floats a public issue. For retail investors, interest at the rate of 2.75% will be paid on deposits that are outstanding after five years from the date of notification of the scheme.
The draft proposals will be finalised and implemented through a government notification after taking into account suggestions and objections up to December 10, 2021. Going by experience, major changes are unlikely under the scheme as there is a huge gap between the assets and liabilities of the bank due to large-scale fraud and there are no other bidders to take over the business.
“Given the financial condition of the PMC Bank, and in the absence of proposals for capital infusion, the bank was not viable on its own. In that event, the only course of action could have been the cancellation of its licence and taking it for liquidation, wherein depositors would have received payment up to the insurance ceiling of Rs 5 lakh,” the RBI said.
Unity SFB, which has been promoted by Centrum and Bharat Pe, said that 96% of all depositors will get immediate access to their deposits and 99% will get paid in full by the 5th year. It added that the scheme saves the bank from liquidation and protects the interest of stakeholders.
“The draft scheme provides much-needed relief and clarity to over 1,100 PMC Bank employees, who will remain employed and continue uninterrupted service to clients,” the statement said. It added that the bank was operationalised in record time after RBI’s approval on October 12, 2021. “Our shareholders have committed capital of over Rs 3,000 crore through cash and warrants which will be used to build a strong foundation for the bank,” the SFB said.
Punjab National Bank on Monday said there had been no breach of its systems or pilferage of personal data of customers and account holders. The state-run lender, in a statement, said it had thoroughly checked its systems and that the reported attempt of perpetrator was monitored and checked.
“PNB has implemented stringent security controls in all our ICT (information and communications technology) systems,” said the bank, adding that it has deployed data leak prevention solutions which prevent any unauthorised data to be sent through email.
Cyber security firm CyberX9 had said that a vulnerability in the server of Punjab National Bank exposed the personal and financial information of its about 180 million customers for about seven months and that the bank fixed the vulnerability when CyberX9 notified PNB through CERT-In and NCIIPC.
More than 30 lakh customers came forward to settle their credit this festive season. Credit given per active merchant went up by 23%, a report by OkCredit revealed.
The oldest form of ‘Buy Now Pay Later‘ has been a part of the small and medium sized businesses space, where customers who buy from local stores do not pay upfront, but pay later. These merchants usually keep an account for their customers, and the customers repay the bills later.
Such merchants added 1 million customers during the period, repayments were up 12% than average, and merchants booked 15% growth during the two-week festive period, it said.
Digital payments have played a huge role in helping mom and pop stores recover credit. As per the report, the number of credit lines settled digitally have gone up by 100% since last year, showing adoption of online payments in digital book keeping. There has been a 70% increase in retail small and medium sized businesses adopting a digital solution to manage their books.
Merchants in eateries, school supplies, travel, jewellery and kirana shops saw the highest growth. On an overall basis, transactions have grown by 20% compared with the festive season a year ago.
Each merchant category on OkCredit has seen an increase in customers. The most significant growth has been witnessed by retailers in the following categories :- 1) School supplies and stationary – 39% 2) Travel agencies – 26% 3) Eateries – 25% 4) Gold & Jewellery – 17% 5) Electronics – 12%
The increased repayments and growth in retail small and medium sized businesses (SMBs) also point to a healthy recovery in the economy, especially in tier-2 and tier-3 towns, as these towns account for a significant chunk of OkCredit’s merchant base, the report said.
Gaurav Kunwar, Cofounder & CPO at OkCredit says, “We wanted to measure category-wise impact of the Diwali shopping season among retail SMBs. It was heartening to see credit recovery being high, in places such as Kerala, Tamil Nadu, Manipur, it was 30% higher than rest of the country.”
Merchants in states such as Kerala and Karnataka have seen 8% growth in business. The North-Eastern states have seen the highest growth, topped by Manipur where transactions per merchant increased by 22%.
A majority of loans disbursed digitally by NBFCs were personal loans, followed by loans classified as ‘others’. These primarily include consumer finance loans.
The overall volume of loan disbursements through the digital mode grew more than twelve-fold between 2017 and 2020 to Rs 1.42 lakh crore from Rs 11,671 crore, the Reserve Bank of India (RBI) working group on digital lending apps said in its report.
The panel’s findings were based on data received from a sample of lenders representing 75% and 10% of the total assets of banks and non-banking financial companies (NBFCs) respectively as on March 31, 2020. The report observed that lending through the digital mode relative to the physical mode is still at a nascent stage in case of banks (Rs 1.12 lakh crore via the digital mode vis-à-vis Rs 53.08 lakh crore via the physical mode). In case of NBFCs, a higher proportion of lending (Rs 0.23 lakh crore via the digital mode vis-à-vis Rs 1.93 lakh crore via the physical mode) is happening through the digital mode.
“In 2017, there was not much difference between banks (0.31%) and NBFCs (0.55%) in terms of the share of total amount of loan disbursed through digital mode whereas NBFCs were lagging in terms of total number of loans with a share of 0.68% vis-à-vis 1.43% for banks. Since then, NBFCs have made great strides in lending through digital mode,” the group said in the report.
Private sector banks and NBFCs with shares of 55% and 30% respectively, are the dominant entities in the digital lending ecosystem. The share of NBFCs rose to 30.3% in 2020 from 6.3% in 2017, indicating their increasing adoption of technological innovations, the report said. During the same period, public sector banks also increased their share significantly to 13.1% from 0.3%. The working group attributed the prominent role of NBFCs in fostering digital modes of lending to the flexible regulatory regime they are subjected to.
The major products disbursed digitally by banks were found to be personal loans, followed by small and medium enterprises (SME) loans. A few private sector banks and foreign banks are also offering buy now pay later (BNPL) loans through the digital route.
A majority of loans disbursed digitally by NBFCs were personal loans, followed by loans classified as ‘others’. These primarily include consumer finance loans. “Even though the amount disbursed under BNPL loans is only 0.73% (banks) and 2.07% (NBFCs) of the total amount disbursed, the volumes are quite significant indicating a large number of small size loans for consumption,” the report said.
Unity SFB shall have time up to 20 years from the appointed date to repay the amount received from DICGC towards payment to the insured depositors, which can be done in one installment or in several instalments.
The Reserve Bank of India (RBI) on Monday released the draft scheme for the amalgamation of Punjab and Maharashtra Co-operative (PMC) Bank with Unity Small Finance Bank (SFB). The scheme envisages a full payout for depositors with deposits of over Rs 5 lakh over a period of 10 years.
Unity SFB, promoted jointly by Centrum Financial Services and BharatPe owner Resilient Innovation, will have to transfer the amount received from the Deposit Insurance and Credit Guarantee Corporation (DICGC) to all eligible depositors of PMC Bank an amount equal to the balance in their deposit accounts up to Rs 5 lakh, within a 90-day period, as was notified by the DICGC in September.
For depositors who hold more than Rs 5 lakh in deposits, the payout for the additional amount will be made in a staggered manner. Up to Rs 50,000 will be paid over the next two years, up to another Rs 1 lakh after three years, up to Rs 3 lakh after four years, up to Rs 5.5 lakh after five years, and any remaining amount will be paid after 10 years.
After March 31, 2021, no further interest will be payable on the interest-bearing deposits of PMC Bank for a period of five years. In respect of balances in any current account or any other non-interest bearing account, no interest shall be payable to the account holders. Interest will accrue at the rate of 2.75% per annum shall be paid on the retail deposits of PMC Bank, which remain outstanding after the five year-period. This interest will be payable from the date after five years from the appointed date, or the date of notification of the scheme by the government.
As for institutional depositors, 80% of the uninsured deposits outstanding in various accounts to the credit of each institutional depositor of PMC Bank shall be converted into perpetual non-cumulative preference shares (PNCPS) of Unity SFB with a dividend of 1% per annum payable annually. After 10 years from the appointed date, the transferee bank may consider additional benefits for such PNCPS holders either in the form of providing a step up in the coupon rate or a call option, after taking the RBI’s approval.
The remaining 20% of the uninsured institutional deposits will be converted into equity warrants of Unity SFB at a price of one rupee per warrant. These equity warrants will further be converted into shares of Unity SFB at the time of the initial public offer (IPO) of the bank. The price for the conversion will be determined at the lower band of the IPO price.
In respect of every other liability of PMC Bank, Unity SFB shall pay only the principal amounts, as and when they fall due, to the creditors in terms of the agreements entered between them prior to the appointed date or the terms and conditions agreed upon.
Unity SFB shall have time up to 20 years from the appointed date to repay the amount received from DICGC towards payment to the insured depositors, which can be done in one installment or in several instalments. “The transferee bank shall create a reserve account in its books and make periodical transfers to it as may be approved by Reserve Bank, for the purpose of discharging its liability towards DICGC in accordance with the provisions of this Scheme,” the draft said.
We have an adequate CRAR of 32-34% and we think we can leverage it more.
Manappuram Finance reported an 8.8% year-on-year decline in its consolidated net profit for the second quarter despite consolidated assets under management increasing 5.7% YoY to Rs 28,421.63 crore. VP Nandakumar, MD & CEO, talks to Rajesh Ravi on the company’s performance and future outlook. Excerpts:
Net profit has declined YoY despite AUM reporting an increase?
The loan portfolio declined during the first quarter and we started growing only after the first half of the second quarter. Secondly, we lowered our pricing when targeting large ticket sizes. Earlier, it was uniform pricing for all loans. To ensure sustained growth, we changed our strategy. Cost also increased as employees are back and travelling. We also increased our publicity expenses and incentives.
Do you mean that there will be margin compression going forward due to competition?
Competition is seen only in larger ticket sizes of Rs 5 lakh and above. We were losing in that segment due to competition. With the new pricing strategy, we are gaining ground, but our yield may come down by 2%. This will be compensated with higher branch efficiency. We have an adequate CRAR of 32-34% and we think we can leverage it more.
What is the outlook for the quarter and the fiscal?
We are giving guidance of 20% in AUM and 20% in Return on equity (ROE). The decline in profitability is a temporary phenomenon and our ROE may go slightly below 20% for a while before bouncing back. We aim not only for profitability but also growth and this ensures the sustainability of the company. Profitability will improve in one or two quarters.
NPA has increased during Q2.
NPA has moved up and we have provided for it in anticipation. There was no surprise. NPA will come down going forward.
How is new customer acquisition? There is a tight competition in the gold loan sector.
Demand is good and we are able to achieve growth every day due to the new strategy. The collection is also improving even in the non-gold sector. Acquisition of new customers is back to the pre-pandemic level.
What about the cost of funds? Do you feel that it has bottomed out?
No, it has not bottomed out. Still, there is room for lowering the cost of fund. Our legacy NCD cost is around 10%, while our average borrowing cost is below 8%. For incremental borrowing, our cost will come down further.
Average LTV of your gold loan portfolio?
The average LTV of our portfolio is 64% according to current gold price.
How are your non-gold businesses doing? Will the share of non-gold businesses increase in coming quarters?
In microfinance, collections are seen improving and it has reached 93% in Q2. It may touch 96% in Q3. The resilience of the microfinance industry is evident despite the pandemic. In one or two years, we may have to raise capital for growth. Some of the segments which we wish to grow are affordable home lending and commercial vehicle financing.
What about the expansion of branches?
We have given application for opening 100 new branches. We are strong in south, and there are ample opportunities in north, east and western parts of the country.
The Pre-Bid meeting for the captioned tender was held on November 22, 2021 at 11.00 A.M in conference room, Estate Office, MRO. The meeting was attended by officials of Estate Department. Two firms participated in the pre-bid meeting namely –
a. M/s Kompress India Pvt Ltd
b. M/s Safeage Security Products Pvt Ltd
2. All the terms and conditions were explained to the firms and The following queries were raised by the participants and clarified:
Sl.No
Query Raised
Clarification
1.
Whether MSME bidders are exempted from paying Earnest Money Deposit (EMD).
MSEs are exempted from submission of EMD only in cases where the estimated cost of procurement (Goods, Services or Work Contracts) is upto Rs. 10 Lakh (including all taxes, duties etc.). In the extant case, the estimated cost of the tender is more than Rs. 10 lakh and therefore submission of EMD is compulsory.
3. Both the firms have agreed with the tender terms and conditions.The technical specifications have been explained to the tenderers and have understood the same and agreed in principle.The meeting ended with Thanks.
This telecommunications stock on a YTD basis has generated return of 957 percent, while 1-year return comes in at . The price of the penny scrip just 6 months back as on May 22 was at a mere Rs. 12.5 per share, implying huge gains of 572% considering last traded price of Rs. 84.05 per share on the NSE. In an otherwise weak market, the scrip hit 52-week high price today (November 22, 2021) on Bharti Airtel’s announcement of new hiked tariff rates for prepaid connections.
Though the scrip saw intermittent correction and traded range bound between July to October, it again saw sharp momentum after this period.
In May this year, reports suggesting that Tata Sons will provide the necessary support system to revive Tata Tele and in the new form called Tata Tele Business Services (TTBS)- the company will extend services to SMEs, provided a boost to the company’s stock price. Importantly, the company’s retail mobile services were transferred to Bharti Airtel more than 2 years back in July 2019.
On November 10, 2021, the company clarified on price movement and said “…. we have always promptly intimated of any events, information, etc. required to be disclosed under Regulation 30 of the Sebi Regulations, 2015 and will continue to do so in future as and when any such event or information occurs in the Company. At this stage there is nothing further to disclose”.
Care Rating in its latest report reaffirm its rating on the company’s long and short term term bank facility etc. Also the continuing backing by Tata Sons- the company’s promoter suggests that it shall take all necessary steps to cover up any liquidity crisis for the following next year.
Tata Tele is a small cap company that offers an array of telephony services including mobile, fixed wireless phones (FWP), public telephone booths & wireline services. To cater to the Indian youth, the company offers services under the brand name Virgin Mobile.
2. Proseed India:
From a price of Rs. 1.75 per share as on May 23, 2021 almost 6 months back, the scrip has climbed to a price of Rs. 84.15 currently. This amounts to a staggering 6-month return of 4709 percent. The stock’s YTD and 1-year return are 15,200 and 23,943 percent, respectively. The stock on October 10 hit a price of Rs. 156.55 and since then has been losing ground.
Note the gains in the stock price are not in sync with the company’s financials and this company is indeed a loss making entity. From last several quarters, the company is logging zero sales, while the last time it registered sales worth Rs. 0.54 crore was for the Q3 period of Fy19.
For the just concluded quarter, the company’s loss widened YoY to Rs. 0.46 crore as against Rs. 0.09 crore during the same period a year ago. Sequentially also the company’s net loss increased by a steep 53 percent. Major shareholding in the company is of 3 promoters who have 97 percent stake in the firm as at the end of the September quarter. For the last concluded Fy, the company registered a profit to the tune of 12.67 crore.
Proseed India underwent the corporate insolvency process (CIRP) under the Insolvency and Bankruptcy Code, following which the NCLT allowed for its resolution plan in December end.
Founded in 1991, the Hyderabad-Telangana based company formerly known as Green Fire Agri Commodities Limited is a leading Agri Bio Technology company. The company’s specialities are in the field of Agri-Biotechnology nurturing farming community for increasing yield potential of the crops.
Disclaimer:
The stocks discussed above are penny stocks that carry a higher risk and hence may even offer a higher reward. Nevertheless, the story above just points to the potential run up in these stocks that even contradicted their financials. Note readers should not construe it to be a call to buy the above listed stocks.
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