Category: Banking & Finance

Videocon resolution may be back to square one after NCLAT stay, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


After NCLAT stayed the order of the NCLT of Mumbai Bench, the process of Videocon Industries’s liquidation case may start all over again. Legal experts also believe that SBI-led creditors may not do anything but the bid winner Anil Agarwal’s Twin Star may appeal in Supreme Court against the NCLAT order.

“As of now, NCLAT has stayed the order. The creditors (appellant) were possibly challenging the entire bidding approved by NCLT on the grounds that some procedures might not have been followed, opinions not being considered. Now there are high chances that the entire process can restart,” said Vikas Tomar, Partner, Indian Law Partners.

There are 35 financial creditors of Videocon, of which 19 major creditors, including SBI, Union Bank, IDBI, Central Bank, BOB and ICICI Bank approved the resolution, which includes the 95.85% haircut. But three minority shareholders, Bank of Maharashtra, SIDBI and IFCI rejected the resolution on the ground of low resolution and filed an appeal in NCLAT.

Large versus Minority Creditors versus Bidder

The plea of minority shareholders is heard and the whole case will move in a direction to get more benefits for the financial creditors.

“Banks are normally prepared to take a 60-70 per cent haircut on payments if an insolvency process is initiated. The bid was also rejected on the grounds that they should be compensated upfront and in cash rather than through NCDs. Accepting this bid will just increase the banks’ losses, and now their only option is to call for bids from interested parties,” said Sonam Chandwani. Managing Partners, KS Legal and Associates.

The main ground of the minority shareholders was the low resolution amount.

“The large financial creditors like SBI and others may prefer to keep quiet and wait for the court to do its process. But there are high chances that Anil Agarwal’s Twin Star Technologies may appeal in Supreme Court against NCLAT order,” said a legal expert who did not want to be identified.

There were 11 bidders for Videocon but only three had bid for the whole Videocon’s group assets. The majority of them had bid for only a particular division of the company. Hence on one side, there is a big hope that minority shareholders will recover more, but on the other side there the whole process may take a long time.

The Videocon resolution case has been one of the most dramatic in the IBC process. Starting from Chanda Kochchar, former MD and CEO, ICICI Bank losing her job and facing trials with investigative agencies for irregularities in the giving loans to the group, to the fresh challenge to the resolution process, it has been a bumpy road.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,

HDFC AGM| Home loan demand continues to be strong: Deepak Parekh

Banking & Finance

[ad_1]

Read More/Less


Against the backdrop of the pandemic, Parekh said HDFC had articulated that there are three key monitorables – liquidity, growth and asset quality.

Demand for home loans has remained strong even during the Covid-19 pandemic, Housing Development Finance Corporation (HDFC) chairman Deepak Parekh said on Tuesday at 44th annual general meeting (AGM) of the home financier. Although Parekh acknowledged that lockdown restrictions impacted individual loans, according to him the demand surpassed all expectations, once the restrictions were eased.

“The pandemic has reaffirmed that there can be no greater security in life than a home. The inherent demand for home loans continues to remain strong,” Deepak Parekh, chairman, HDFC, said at the company’s AGM on Tuesday. The latest data from Reserve Bank of India (RBI) also affirms continued home loan growth in the system. Home loans grew 10% year-on-year (y-o-y) to Rs 14.62 lakh crore, as on May 21, 2021, as per RBI.

Even in terms of commercial real estate, most companies have not given up their office premises, Parekh said. With the e-commerce boom, demand for real estate is coming from warehousing and fulfilment centres, he added. Similarly, with the build-up of digital infrastructure, demand for data centres has increased. These are segments of the real estate sector that have the potential to grow immensely, he further added.

Against the backdrop of the pandemic, Parekh said HDFC had articulated that there are three key monitorables – liquidity, growth and asset quality. The corporation has always been prudent in identifying loans where there could be stress and has adequately provided for such loans, he said. Parekh also pointed that asset quality has been challenging for non-individual loans at a systemic level.

As of March 31, 2021, gross non-performing loans of HDFC stood at Rs 9,759 crore, constituting 1.98% of the loan portfolio. Its assets under management grew by 10% to Rs 5,69,894 crore as of March 31, 2021. Housing Finance major had reported a 42% y-o-y growth in its net profit to Rs 3,180 crore during the March quarter (Q4FY21). The lender is set to announce its June quarter (Q1FY22) earnings on August 2, 2021.

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 , , , , ,

Bajaj Finance net rises 4% to ₹1,002 crore in Q1

Banking & Finance

[ad_1]

Read More/Less


Bajaj Finance reported a four per cent increase in its consolidated net profit for the first quarter of the fiscal at ₹1,002 crore from ₹962 crore a year ago.

For the quarter ended June 30, 2021, its net interest income grew eight per cent to ₹4,489 crore against ₹4,152 crore in the first quarter of last fiscal.

“Interest income reversal for the quarter was ₹451 crore in the first quarter of the fiscal compared to ₹306 crore a year ago,” Bajaj Finance said in a statement on Tuesday.

Loan losses and provisions for the quarter was ₹1,750 crore against ₹1,686 crore a year ago.

“During the quarter, the company has done accelerated write-offs of about ₹113 crore of principal outstanding on account of Covid-19 related stress. The company holds a management overlay and macro provision of ₹483 crore as of June 30, 2021,” Bajaj Finance said.

Gross non-performing assets and net NPA as of June 30, 2021 stood at 2.96 per cent and 1.46 per cent respectively, as against 1.4 per cent and 0.5 per cent as of June 30, 2020.

It booked new loans amounting to ₹46.3 lakh in the first quarter of this fiscal as against ₹17.5 lakh a year ago.

The company acquired 18.8 lakh new customers in the first quarter this fiscal compared to 5.3 lakh in the first quarter of last fiscal.

The board of directors of Bajaj Finance also approved the appointment of Pramit Jhaveri, as an additional and independent director for a five-year period effective August 1, 2021, subject to approval of shareholders.

Jhaveri is Advisor, Premji Invest and Senior Advisor, PJT Partners. He was previously Chief Executive Officer of Citibank Indiafrom 2010 to 2019.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

Bajaj Finance net rises 4% to ₹1,002 crore in Q1

Banking & Finance

[ad_1]

Read More/Less


Bajaj Finance reported a four per cent increase in its consolidated net profit for the first quarter of the fiscal at ₹1,002 crore from ₹962 crore a year ago.

For the quarter ended June 30, 2021, its net interest income grew eight per cent to ₹4,489 crore against ₹4,152 crore in the first quarter of last fiscal.

“Interest income reversal for the quarter was ₹451 crore in the first quarter of the fiscal compared to ₹306 crore a year ago,” Bajaj Finance said in a statement on Tuesday.

Loan losses and provisions for the quarter was ₹1,750 crore against ₹1,686 crore a year ago.

“During the quarter, the company has done accelerated write-offs of about ₹113 crore of principal outstanding on account of Covid-19 related stress. The company holds a management overlay and macro provision of ₹483 crore as of June 30, 2021,” Bajaj Finance said.

Gross non-performing assets and net NPA as of June 30, 2021 stood at 2.96 per cent and 1.46 per cent respectively, as against 1.4 per cent and 0.5 per cent as of June 30, 2020.

It booked new loans amounting to ₹46.3 lakh in the first quarter of this fiscal as against ₹17.5 lakh a year ago.

The company acquired 18.8 lakh new customers in the first quarter this fiscal compared to 5.3 lakh in the first quarter of last fiscal.

The board of directors of Bajaj Finance also approved the appointment of Pramit Jhaveri, as an additional and independent director for a five-year period effective August 1, 2021, subject to approval of shareholders.

Jhaveri is Advisor, Premji Invest and Senior Advisor, PJT Partners. He was previously Chief Executive Officer of Citibank Indiafrom 2010 to 2019.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

HFCs seek nod to impose pre-payment fee

Banking & Finance

[ad_1]

Read More/Less


With banks offering home loan interest rates at an all-time low, housing finance companies are feeling the pain as many of their customers are opting for balance transfers. The attrition rate for HFCs in terms of customers undertaking balance transfers is between seven per cent and 10 per cent, according to industry players.

Therefore, HFCs are in discussion the Reserve Bank of India as well as the National Housing Bank seeking permission to impose a pre-payment penalty on customers who transfer their loan account.

“Housing finance companies spend time, effort, and money in originating and acquiring customers. Many choose to leave within six months to a year of the loan being disbursed as they are lured away by banks with cheaper interest rates,” said the head of a housing finance company.

“For customers, such a competitive interest rate regime is certainly a good thing and beneficial for them. That is why the regulators have also not taken any action,” he noted.

Lower interest rates

Banks such as Kotak Mahindra Bank and State Bank of India offer home loans at as low as 6.65 per cent and 6.75 per cent, respectively. On the other hand, HFCs collect interest between 7.45 per cent and 10 per cent.

It is difficult for HFCs to offer lower interest rates to existing customers as that would constitute the account to be considered as restructured.

Challenge for HFCs

“This is a bigger challenge for smaller and affordable housing companies as larger HFCs and banks are able to offer lower rates. We take the risk and give loans to first-time buyers who later go for a balance transfer. About 95 per cent of demand for housing is from the economically weaker section and lower income group, which is what affordable housing finance companies cater to,” said Pavan K Gupta, CEO, Muthoot Housing Finance.

HFCs should be allowed to charge a pre-payment penalty in case the customer moves in the first two-and-a-half to three years, Ravi Subramanian, Managing Director and CEO, Shriram Housing Finance, had said in a recent interview to BusinessLine.

He had, however, said the low-interest rates being offered by banks are not much of an issue as not many of HFCs’ target customers are not able to meet the conditions set by banks.

HDFC Chairman Deepak Parekh, too, had highlighted the challenge for HFCs to retain customers amidst low-interest rates being offered by a number of banks as well as increased loan amounts.

“Another niggling point for HFCs is the retention of customers. Lenders are susceptible to losing their existing customers to other players who often lure them through lower interest rates or increased loan amounts. As there are no prepayment penalties on floating rate loans, a lender can take over a home loan rather effortlessly,” he had said in a letter to shareholders.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

Kotak Mahindra Bank signs MoU with the Indian Navy for Salary Account, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Kotak Mahindra Bank and the Indian Navy announced today that they have signed a Memorandum of Understanding (MoU) for Salary Account.

The MoU will enable the bank to offer its Salary Account proposition to all personnel of the Indian Navy – both serving and retired. Kotak Mahindra Bank will also offer special Salary Account benefits to the Indian Navy.

The signing was jointly chaired by Commodore Neeraj Malhotra (Commodore Pay and Allowances) Indian Navy and Ms. Parminder Varma, Business Head – Corporate Salary, Kotak Mahindra Bank in New Delhi.

The features include enhanced personal accident insurance cover for both on-duty and off-duty incidents

Parminder Varma, Business Head – Corporate Salary, Kotak Mahindra Bank said, “The Indian Navy is amongst the country’s most respected and admired institutions and for us at Kotak, it is a privilege to be able to serve them and to have them bank with us. The Kotak Salary Account provides a range of privileges and we have further personalised our offering, keeping in mind the requirements of the Indian Navy personnel and their families. With a full suite of products, we will support the Indian Navy with all their banking requirements, backed by quality customer service and digital-first solutions.”



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

‘Significant impact on profitability of Indian banking system’

Banking & Finance

[ad_1]

Read More/Less


There could be a significant impact on the profitability of the Indian banking system as the inflation data for May and June 2021 breached the Reserve Bank of India’s (RBI) target corridor, in turn exerting pressure on the long-term yield curve, according to India Ratings and Research (Ind-Ra).

Retail inflation remained above the monetary policy committee’s upper threshold of 6 per cent for the second successive month in June at 6.26 per cent against 6.30 per cent in May.

A 100 basis points (bps) upward shift in the yield curve could impact the pre-provisioning operating profit (PPOP) of public sector banks (PSBs) by 8 per cent and that of private banks by 3.2 per cent, Ankit Jain, Senior Analyst, Ind-Ra, said in a note.

The impact on the overall banking system, could be 5.8 per cent. One basis point is equal to one-hundredth of a percentage point.

Ind-Ra assessed that the 100 bps movement in the yield curve would impact the common equity tier 1 of PSBs by 28 bps and that of private banks by 13 bps; while for the overall banking system, the impact could be 22 bps year-on-year (yoy).

The note said this has been taken on a post-tax basis, without considering the banks’ ability to reclassify their trading book and a likely partial offset from lower pension costs.

Three cycles of yield curve expansion

On analysing the past interest rate cycles, Ind-Ra has observed there have been three cycles of a yield curve expansion FY05 onwards, showing a strong inverse correlation between treasury income and interest rate movement.

Furthermore, the sensitivity seen for PSBs was much higher than that for private banks.

Ind-Ra said during the first cycle, treasury income contribution to PPOP reduced to 3.4 per cent in FY07 from 21.3 per cent in FY05, while it reduced to 3.2 per cent in FY12 from 15.3 per cent in FY10 in the second cycle and to 5.6 per cent in FY19 from 22.5 per cent in FY18 during the third cycle.

Also, the sensitivity was similar for private banks; however, the volatility in PPOP and PAT (profit after tax) was limited due to a lower share of trading book than that for PSBs till FY14 and stronger operating profit buffers.

Nonetheless, private banks were also impacted in the FY18-FY19 cycle during which the treasury income fell to 3.3 per cent from 9.7 per cent of PPOP and to 9.3 per cent from 25.8 per cent of PAT.

Muted credit offtake

With the credit offtake remaining muted since FY17, banks have been maintaining a balance between holding higher statutory liquidity ratio (SLR) and carrying interest rate risk, also taking on risk by giving out loans in a falling interest rate environment, the note said.

Post the first covid wave, the RBI further extended the dispensation of allowing banks to hold more than 25 per cent of their total investments under the held for trading investment category, subject to them holding up to 22 per cent in the form of SLR (statutory liquidity ratio) securities, it added.

While the limit for holding SLR securities had already been increased to 22 per cent from 19.5 per cent earlier, the RBI in its February Monetary Policy Committee meet has further extended the window for these holdings till March 2023 and a phased wind down thereafter by December 2023.

[ad_2]

CLICK HERE TO APPLY

Leave a comment

Economic recovery is underway but credit growth remains tepid: Deepak Parekh

Banking & Finance

[ad_1]

Read More/Less


HDFC Ltd Chairman Deepak Parekh on Tuesday expressed confidence that the country’s macroeconomic fundamentals are strong and recovery is underway.

“Owing to the second wave, the Indian economy is likely to mirror a similar trend seen in 2020-21, where the first half of the financial year is weaker and the second half is significantly stronger,” Parekh said at the annual general meeting of HDFC Ltd.

However, while parameters such as foreign exchange reserves and capital markets are strong, he underlined that key laggard remains overall credit growth which continues to remain tepid.

Parekh also said the inherent demand for home loans continues to be strong and even in commercial real estate, most companies have not given up on their office space in the pandemic.

He also noted that there are segments of real estate with immense potential to grow.

“With the e-commerce boom, demand for real estate is coming from warehousing and fulfilment centres,” he said, adding that with the build-up of digital infrastructure, demand for data centres have increased.

The demand for housing has also continued to be strong after the easing of the national lockdown and was for both affordable housing and high-end properties.

“Asset quality has been challenging for non-individual loans at a systemic level. the corporation has always been prudent in identifying loans where there could be stress and has adequately provided for such loans,” Parekh further said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

ICICI Bank launches co-branded credit card with HPCL, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


ICICI Bank today announced the launch of a co-branded credit card with Hindustan Petroleum Corporation Limited (HPCL) to enable users to get benefits and reward points for using multiple credit cards in one. Named ‘ICICI Bank HPCL Super Saver Credit Card’, it is powered by VISA and offers benefits to customers on their everyday spends on fuel as well as other categories including electricity and mobile, departmental stores like Big Bazaar and D-Mart, and e-commerce portals, among others.

Sudipta Roy, Head, Unsecured Assets, ICICI Bank said, “We are delighted to partner with HPCL to launch the ‘ICICI Bank HPCL Super Saver Credit Card’. Typically, similar credit cards offer accelerated benefits on spends in one category. This card breaks that barrier as it enables customers to save on every transaction that they make. This truly makes the card a ‘super star’ of savings,”

HPCL Executive Director, Retail, S K Suri, said “HPCL is very happy to partner with ICICI Bank to launch ‘ICICI Bank HPCL Super Saver Credit Card’ with unique offerings and rewards to enhance customer experience. This credit card will help in promoting the digital payment ecosystem at retail outlets and meet the expectations of the customers with its innovative offerings. The customer will also get additional loyalty points when they use this card on our HP Pay App.”

Customers can apply for the ‘ICICI Bank HPCL Super Saver Credit Card’ through the Bank’s internet banking platform or the mobile banking app, iMobile Pay. They get a digital card in a 100% contactless and paperless manner. Further, customers can manage their transaction settings and credit limit conveniently on the iMobile Pay app.

Additionally, they can upgrade their existing ICICI Bank credit card to ‘ICICI Bank HPCL Super Saver Credit Card’ using iMobile Pay and internet banking. The PAYBACK points are credited to the customer’s PAYBACK account which is auto-created at the time of issuance of the card. Customers can then redeem these points as per their choice on the PAYBACK website, ‘HP Pay’ app, or at PAYBACK partners stores/website. They can also redeem the PAYBACK points for purchasing fuel at HPCL retail outlets.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,

About 96% of Rs 2.45 lakh crore recovered under IBC resolutions came from top 100 accounts, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Amid the rising furore over huge haircuts taken by lenders in high-value resolutions under the Insolvency and Bankruptcy Code, the government has said that financial creditors, including banks, realised Rs 2.45 lakh crore from approved resolution plans for 394 corporate insolvency resolution cases under the Insolvency and Bankruptcy Code as on June 30.

Of which Rs 2.37 lakh crore came through approved resolution plans of top 100 CIRPs, which is over 36 per cent of the admitted claims.

About 4,540 cases were admitted for the corporate insolvency resolution process under IBC until June 30, 2021.

About 240 companies liquidated till December 2020 had outstanding claims of Rs 33,086 crore, while their assets were valued at Rs 1,099 crore.
Overall, banks recovered Rs 14.18 lakh crore during the last three fiscals, raising the percentage of recovery to their gross NPA from 13.1 per cent in FY18 to 15.1 per cent in FY19. However, the recovery ratio has dropped 12.8 per cent in FY21 from 15.8 per cent in FY20 in the backdrop of the pandemic.

Recovery rate

The recovery rate of IBC has fallen to 39.3% as of March 2021 from 46% as of March 2020. Of the total outstanding amount of Rs 1.32 lakh crore, only around Rs 25,944 crore was recovered in fiscal 2021, or a rate of 19.7%.

There has been a delay in the liquidation of companies. As of December 2020, around 69% of the liquidations were going on for more than one year, while in the case of 26% of companies the process was on for more than two years.

Economic downturn

With huge capacity unutilised in the economy, companies are not looking to add more capacity, which is impacting the sale process at IBC. Barring sectors like steel where the product cycle has seen a turnaround, assets in other sectors such as textiles are not seeing much interest. While steel assets such as Essar Steel and Bhushan Steel were snapped up, those such as Alok Textiles were sold for much less.

The pandemic has increased operational challenges for the various parties involved in a CIRP, which resulted in limited cases yielding a resolution plan. The suspension of new proceedings under the IBC for the entire FY21 resulted in a sharp slowdown in the resolution process.

The slow judicial process in India allows the resolution processes to drag on, this was the same reason for slow recovery under SICA or RBBD.

Litigations by promoters not wanting to let the company out of their hands is also delaying the IBC process.

Lenders wanting to avoid delay in the recovery process and erosion of value are striking settlement deals with promoters, which defeats the purpose of the legislation.

Fiscal 2022 hopes

Financial creditors could realise about Rs 55,000 crore to Rs 60,000 crore in FY2022 through successful resolution plans from the IBC, estimates rating agency Icra. The higher realisation by the financial creditors would depend on the successful resolution of 8-9 big-ticket accounts, with more than 20% of estimated realisation for the year could be from these alone.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,
1 … 248 249 250 251 252 … 540