Category: Banking & Finance

SBI Chairman, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: Although the second wave of the Covid-19 pandemic again brought businesses and economic activities to a standstill, Chairman of the State Bank of India (SBI), Dinesh Kumar Khara has expressed hope that the country’s economy would recover in the ongoing financial year.

The Chairman noted that the global economy contracted by 3.3 per cent in 2020 with the pandemic causing significant loss of lives and livelihood.

The GDP in India contracted by 7.3 per cent in FY2021 and the country experienced a second wave of infections with cases rising rapidly since March 2021, he said while addressing the 66th Annual General Meeting of the bank.

He, however, said that policy measures and the coordinated efforts of the Reserve Bank of India (RBI) and the Centre were directed towards enabling growth on a more durable basis during these difficult times.

“Notwithstanding the second wave of Covid-19, Indian economy, through its resilience, is poised for a recovery in FY2022,” the SBI chief told the shareholders of the bank.

Speaking on the performance of the bank in FY21, he said that although the last fiscal was an exceptionally challenging year for the entire world, the state-run bank was able to function against all odds with minimal disruption for the customers.

“The business continuity plans that were chalked out have worked well for the Bank and this is reflected in various parameters of the Bank’s performance in FY 2021.”

Notably the bank has achieved high level of digitization with share of Alternate Channels in total transactions increasing to 93 per cent in FY2021, thereby converting a challenging situation into an opportunity, the Chairman said.

He said that in the current financial year, SBI will continue to accelerate its digital agenda, adding that the scope and reach of YONO will be expanded further.

“With the rollout of pre-package insolvency for resolution, resumption of courts and formation of National Asset Reconstruction Company, efforts will be in full force to keep the momentum in stressed asset recovery in the current financial year.”

The bank is comfortably placed in terms of growth capital. Opportunities for lending in promising sectors will be explored to diversify the portfolio and contain risk.

“In conclusion, the bank adjusted to the challenges posed by the Covid-19 pandemic and is better positioned to tackle any subsequent wave. I am cautiously optimistic that the performance trajectory of FY2021 will continue in FY2022 as well.”



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AMNS India executes paperless bill discounting transaction in partnership with ICICI Bank, BFSI News, ET BFSI

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New Delhi: AMNS India on Sunday said its has executed “a paperless bill discounting transaction” in partnership with ICICI Bank. Gujarat-based ArcelorMittal Nippon Steel (AMNS) India said it is first such transaction in India.

The end-to-end electronic transaction, comprising digital issuance of letter of credit (LC), advisory and presentment of documents took place among AMNS India, its Baroda-based customer Vijay Tanks and ICICI Bank, the steel maker said in a statement.

“In a step forward for digitising trade payments, AMNS India today (Sunday) announced it has executed the country’s first domestic paperless bill discounting transaction in partnership with ICICI Bank,” it said.

ICICI Bank was the intermediary between the buyer and seller, the statement said.

The bank’s branch in Baroda, Gujarat, issued an LC for the buyer Vijay Tanks, while its branch at Hazira advised and negotiated for the seller AMNS India, it said.

The terms of the LC required AMNS India to digitally present the documents to ICICI Bank evidencing the transaction flow.

In the statement, AMNS India Deputy Chief Financial Officer Amit Harlalka said it is a positive step towards enabling the digitisation of trade payments and provides for better working capital efficiency for the company and trade partners.

“This transaction is seen by many in banking and business as a prelude to the blockchain, a technology even more robust in security, identity and transparency, and which is now being widely studied for possible adoption by Indian banks,” he said.

ICICI Bank Head (Transaction Banking and SME Group) Ajay Gupta said, “We are glad to have partnered with AMNS India to execute India’s first paperless bill discounting transaction. The bank continues to play a pioneering role in re-imagining digital and cashless payments in India.”

This innovative solution has the potential to enable greater velocity of trades at lower cost for customers, AMNS India said.

In paper-based trades, physical goods at times arrive before their supporting documents, leading to corporates incurring demurrage charges. This will be a thing of the past with such digital developments, it said.

AMNS India further said it actively encourages the digitisation of processes across all its work streams from finance to sales to operations.

The COVID-19 pandemic forced companies in steel sector and beyond to manage their manufacturing and administration in different ways, and accelerated the adoption of digital technology, the statement said.



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RBI hunts for entity that can develop multimedia publicity material for awareness campaign, BFSI News, ET BFSI

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MUMBAI: Seeking to accelerate its general awareness campaign, the Reserve Bank of India (RBI) has started looking for an entity that can develop multimedia publicity material in 14 languages.

The pan-India campaign to educate the general public about the essential rules and regulations will be launched in Hindi, Assamese, Bangla, Gujarati, Kannada, Malayalam, Marathi, Oriya, Punjabi, Sindhi, Tamil, Telugu and Urdu besides English.

The media mix, according to an RBI document, will include traditional as well as new media.

Besides newspapers, magazines, radio, television channels and cinema halls, the campaign will also cover digital media, web portals and social media, the RBI said while inviting applications from advertising agencies for designing the creatives for the awareness campaigns.

“The public awareness campaigns of RBI will be full-fledged multimedia, multilingual, pan-India level campaigns. The objective of the campaigns is to create general awareness among citizens of India about the RBI regulations and other initiatives,” said the request for proposal (RFP) in this regard.

Financial inclusion and education are two important elements in the RBI’s developmental role.

Towards this, the central bank has created a critical volume of literature and has uploaded on its website in 13 languages for banks and other stakeholders to download and use. As per the RBI website, the aim of the initiative is to create awareness about financial products and services, good financial practices, going digital and consumer protection.

The central bank runs a media campaign ‘RBI Kehta Hai’, is an initiative to educate the public about its regulations which are aimed at enhancing the quality of customer service in banks.

The number of followers of the Reserve Bank’s Twitter handle @RBI surpassed the one million mark touching 1.15 million as of March 31, 2021, signifying the “largest following among the central banks” of the world, said the RBI’s annual report.

During 2021-22, the apex bank aims to use public awareness programmes, social media presence and other channels of communication to further deepen engagement with the society.



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Cabinet secy-led panel holds crucial meeting on bank privatisation, BFSI News, ET BFSI

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New Delhi, Jun 27 () Inching a step closer to privatisation of two public sector banks, a high-level panel headed by the cabinet secretary recently held a meeting to thrash out various regulatory and administrative issues so that the proposal could be placed with the group of ministers on disinvestment or Alternative Mechanism (AM) for approval. Pursuant to the announcement made by Finance Minister Nirmala Sitharaman in her 2021 budget speech, the NITI Aayog has suggested a couple of bank names for privatisation to the Core Group of Secretaries on Disinvestment headed by Cabinet Secretary in April, sources said.

The meeting of the high-level panel deliberated on the recommendation of the NITI Aayog on Thursday June 24, sources said, adding the panel would after tying up all loose ends will send the names of the shortlisted PSU banks to AM for consideration.

Headed by the cabinet secretary, the members of the panel include secretaries in the departments of Economic Affairs, Revenue, Expenditure, Corporate Affairs and Legal Affairs, as well as the secretary of administrative department. The panel also has the Department of Public Enterprises, Department of Investment and Public Asset Management (DIPAM) secretary as its member.

According to sources, the panel also examined issues pertaining to protection of interests of workers of banks which are likely to be privatised.

Following a clearance from AM, it will go to the Union Cabinet headed by the Prime Minister for the final nod. Changes on the regulatory side to facilitate privatisation would start after the cabinet approval.

Central Bank of India and Indian Overseas Bank are reported to be probable candidates for privatisation.

The government has budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including two PSU banks and one insurance company, during the current financial year. The amount is lower than the record budgeted Rs 2.10 lakh crore to be raised from CPSE disinvestment in the last fiscal.

In her Budget Speech on February 1, Sitharaman had announced that the government proposes to take up the privatisation of two public sector banks (PSBs) and one general insurance company in the year 2021-22.

“Other than IDBI Bank, we propose to take up the privatisation of two public sector banks and one general insurance company in the year 2021-22,” she had said.

The government last year consolidated 10 public sector banks into four and as a result, the total number of PSBs came down to 12 from 27 in March 2017. The government has merged 14 public sector banks in the last four years.

Last year in April, the government effected the biggest ever consolidation exercise in the public sector banking space when six PSU lenders were merged into four in a bid to make them globally competitive. DP CS ANZ MKJ



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RBI restricts continuous tenure of UCB MDs to 15 years, BFSI News, ET BFSI

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Mumbai: The Reserve Bank of India has limited the maximum continued term of managing directors and whole-time directors (WTD) of urban cooperative banks (UCBs) to 15 years in a series of steps taken to ensure professional management of these institutions that have often been found undertaking non-transparent activities right at the top.

In the latest directions given by the RBI on appointment, re-appointment and termination process of MD and WTD of UCBs, the apex bank has said that an individual will be eligible for re-appointment as MD/WTD in the same bank even after finishing continuous 15-year tenure but only after a minimum gap of three years, subject to meeting other conditions.

Moreover, during this three-year cooling period, the individual shall not be appointed or associated with the bank in any capacity, either directly or indirectly.

In general, the RBI has directed that the tenure of MD/WTD shall not be for a period more than five years at a time subject to a minimum period of three years at the time of the first appointment unless terminated or removed earlier, and shall be eligible for re-appointment. The performance of MD/WTD shall be reviewed by the Board annually, the apex bank said.

The UCBs shall ensure that the following ‘fit and proper’ criteria are fulfilled by the person being appointed as MD. The MD shall function under the overall general superintendence, direction and control of the Board of Directors (BoD).

With regard to age, the RBI has said that the person at the top of UCBs should not be below the age of 35 years and above the age of 70 years at any time during his/her term in office. But, within the overall limit of 70 years, as part of their internal policy, individual bank Boards are free to prescribe a lower retirement age, the RBI said.

To run the operations professionally, the person should also have adequate educational qualifications. He/she should be a graduate, preferably, with Qualification in banking/ co-operative banking or Chartered/Cost Accountant/MBA (Finance); or Post-graduation in any discipline.

They must also have a combined experience of at least eight years at the middle/senior management level in the banking sector, including the experience gained in the concerned UCB, or non-banking finance companies engaged in lending (loan companies) and asset financing.

The person should not be engaged in any other business or vocation or beholding the position of a Member of Parliament or State Legislature or Municipal Corporation or Municipality or other local bodies. He/she should also not be a director of any company other than a company registered under section 8 of the Companies Act, 2013. The RBI has given a long list of propriety criteria to ensure only the right candidate is appointed for the post.

The RBI also said that UCBs shall constitute a “Nomination and Remuneration Committee (NRC)” consisting of three directors from amongst the Board of Directors (BoD) and nominate one among them as Chairman of the NRC.



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Covid-19 impact: Federal Bank provides about 400 part-time jobs in Kerala

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Federal Bank on Saturday said it has provided 400-odd part-time jobs with a monthly salary of Rs 18,000 at its branches in Kerala so far, in a bid to help those who lost their employment due to the Covid-19 pandemic.

Designated as ‘Covid Wardens’, these people were hired to manage crowds, provide masks and sanitiser to the public visiting the branches in the State, it said.

The livelihood enhancement project was started as part of its corporate social responsibility (CSR) initiative in August 2020 and is continuing even now.

Federal Bank Chief Human Resource Officer Ajith Kumar K K said, “This is a part-time job given to tide over the situation, not a full-time employment.” The bank hired these people at a monthly salary of Rs 18,000 per month. About Rs 6 crore has been spent towards salary in the last 10 months, he said.

Since many had lost jobs due to the pandemic in the State there were requests for creating part-time jobs from several agencies and organisations.

“We thought of finding a way to provide livelihood to people who lost jobs due to the pandemic and help them tide over the economic hardship. That’s why we decided to hire such people,” he added.

Kumar further said crowd management at branches had become a big issue during the pandemic as the Kerala government has restricted entry of not more than five people at a particular time.

“Therefore, we thought hiring part-time ‘Covid Wardens’ will be helpful to both. We provided jobs to about 400-odd people in Kerala,” he said.

Hiring was done in Kerala because the State was having many positive cases at that time and moreover the footfall in branches were also high.

Whereas in other states, ‘Covid Wardens’ were not hired as there were security guards managing the crowd at bank branches, Kumar added.

Asked if the initiative will continue, Kumar said the bank will discontinue if the Covid-19 positivity rate falls below five per cent in a particular locality.

“We are keeping a close watch on positivity rate in the state,” he said.

Kumar also mentioned that the needy people were hired irrespective of their education qualification through reputed agencies and organisations, and the salary is being paid through these agencies.

Although there is a jobless situation in many sectors due to the pandemic, the bank however cannot take care of all jobless people, Kumar said. He added, “We are playing our small part under our CSR initiative.”

The Kochi-based Federal Bank said it spent the entire allocated CSR funds of Rs 35 crore during the 2020-21 fiscal. The bank expects the CSR budget for the current year would be around Rs 40 crore.

The bank has been implementing CSR initiatives for the last 10 years through the Federal Bank Hormis Memorial Foundation.

Among other CSR initiatives, the bank has spent Rs 4 crore on setting up a separate 100-bed ward with ICU facility in a hospital in Kochi. It is operating an outreach programme ‘Sanjivini Vehicle’ in five districts to create awareness about vaccination.

Besides, the bank provides scholarships for higher studies to 150 students, supplies to select health institutions, equipment required for treatment of neurological disabilities besides running skill academies to train local youth.

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In Covid year, banking sector sees record profit of Rs 1 lakh crore, BFSI News, ET BFSI

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Mumbai: The banking sector has recorded its highest ever profits of Rs 1,02,252 crore in FY21, a year when the economy was battered by the pandemic. This is a significant turnaround compared to a net loss of nearly Rs 5,000 crore for the industry in FY19.

Two banks — HDFC Bank and SBI — contributed half of the industry’s profits. Of the total profits, HDFC Bank at Rs 31,116 crore accounted for 30%, an 18% increase over the previous year. The country’s largest lender SBI accounted for another 20% at Rs 20,410 crore. The third-highest was ICICI Bank, which earned Rs 16,192 crore, more than double what it earned in the previous year. Private banks also gained market share as public sector banks (PSBs) went slow in lending.

The biggest turnaround was among PSBs which reported a collective net profit for the first time in five years. Only two of the 12 PSU banks — Punjab & Sind Bank and Central Bank of India — reported a net loss for the year. In the private sector, Yes Bank remained in the red with a net loss of Rs 3,462 crore as it continued to make provisions. However, for banks in the red, the losses were lesser than what they reported in the previous year.

The single biggest reason for PSBs to post such a Rs 57,832-crore turnaround was the end of their legacy bad loan problem. This burden reached a peak after the RBI forced banks to classify 12 large defaulting accounts, followed by another 40 accounts, as non-performing assets and initiate bankruptcy proceedings. Given the size of these exposures, the move resulted in loans worth Rs 4 lakh crore turning bad. By March 2020, banks had completed making provisions for most of these loans. Additional provisions were offset by large recoveries from earlier written-off accounts, and banks stopped bleeding.

According to rating agency ICRA, the profits for the current year were the windfall gains on bond portfolios of public banks account, which contributed two-thirds of their profits before tax in FY21. The rating agency added that barring SBI, profit from the sale of bonds exceeded the pre-tax profits of all other public banks. The profit from bond sales was higher than the Rs 20,000-crore capital infused by the government in FY21.

The value of government bonds rises when interest rates fall. The RBI’s aggressive move to keep rates low has reduced interest income but provided huge gains in treasury income. The year 2020-21 was also a year of consolidation for the 10 public sector banks that merged into four. Last year, the merging entities recorded huge losses in the fourth quarter before the merger, which contributed to the Rs 26,015-crore loss among PSU banks in FY20. This year, the acquiring banks made profits with Indian Bank topping the list at Rs 3,004 crore followed by Union Bank at Rs 2,905 crore.



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ED, BFSI News, ET BFSI

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A State Bank of India (SBI)-led consortium that lent loans to fugitive businessman Vijay Mallya on Friday received Rs 5,824.5 crore in its accounts after shares of UBL, earlier attached under the anti-money laundering law, were sold recently, the ED said. Mallya is accused in a multiple banks loan default case of about Rs 9,000 crore.

The disputes resolution tribunal (DRT) had sold these shares on June 23 after the Enforcement Directorate had transferred shares worth about Rs 6,624 crore of UBL to the SBI-led consortium on the directions of a special PMLA court that is hearing the case involving Mallya in Mumbai.

These shares were attached under the Prevention of Money Laundering Act (PMLA) by the ED, a central probe agency.

“Today, SBI led consortium received Rs 5824.5 crore in its account from the sale of shares of United Breweries Limited.”

“The sale had taken place on 23.06.2021 as sequel to the transfer of the shares to the Recovery Officer by ED,” the central agency tweeted.

The rest of the shares worth about Rs 800 are “expected” to be sold and realised in the accounts of the SBI-led group of banks by June 25, it had earlier said.

The ED had issued a statement on Wednesday stating that about 40 per cent of the money lost by banks in alleged frauds perpetrated by fugitive businessmen Nirav Modi, Mehul Choksi and Mallya has been recovered so far due to its “swift” action in attaching and freezing their assets.

Mallya, who fled to the UK, is being probed by the ED and the CBI for a Rs 9,000 crore alleged bank fraud linked to the operations of his now defunct Kingfisher Airlines.

On Wednesday, the ED had said the banks had “recovered” Rs 1,357 crore by a similar sale of shares in the case against Mallya.

The liquor baron has lost his case against extradition to India and as he has been denied permission to file appeal in the UK Supreme Court, his extradition to India has become final, the ED had said.

Commenting on the development, Union Finance Minister Nirmala Sitharaman had tweeted on Wednesday that “Fugitives & economic offenders will be actively pursued; their properties attached & dues recovered.”



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LIC, SBI Life, Canara Bank pick up stakes in Indian Bank, BFSI News, ET BFSI

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NEW DELHI: Life Insurance Corporation (LIC), SBI Life and Canara Bank were among the top investors picking up stakes in Indian Bank under a QIP, according to a regulatory filing.

The country’s largest and the only state-owned life insurer, LIC, picked up 17.80 per cent of the shares issued under the qualified institutional placement (QIP), which closed on Thursday.

It was followed by SBI Life Insurance (11.87 per cent), SBI Mutual Fund and its various schemes (11.87 per cent), Societe Generale and its various schemes (9.74 per cent) and Canara Bank subscribing to 5.93 per cent of the shares offered in the issue, according to the regulatory filing by Indian Bank.

Indian Bank raised a total of Rs 1,650 crore in its QIP of shares, which were issued at Rs 142.15 apiece.

The state-owned lender said it allotted 11,60,74,569 new equity shares to the eligible qualified institutional buyers (QIBs) in the issue that opened on June 21 and closed on June 24.

In March this year, its board’s committee on capital raising had given approval for raising equity capital aggregating up to Rs 4,000 crore through QIP in one or more tranches.

Indian Bank’s shares closed at Rs 148.35 apiece on the BSE, up 0.64 per cent from the previous close.



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RBI prescribes qualifications for MDs, WTDs of urban cooperative banks, BFSI News, ET BFSI

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The Reserve Bank on Friday prescribed educational qualifications and ‘fit and proper’ criteria for managing directors (MDs) and whole-time directors (WTDs) of primary urban cooperative banks and barred MPs and MLAs from these posts.

Issuing the guidelines for appointment of MDs and WTDs, the RBI said MPs, MLAs and representatives of municipal corporations will not be eligible to hold such positions in the primary urban cooperative banks (UCBs).

It further said the MD/WTD should be a post graduate or have qualifications in finance discipline. He or she could be either chartered/cost accountant, MBA (finance) or have a diploma in banking or cooperative business management.

The person should not be below 35 years of age or more than 70 years, it added.

“The person shall have a combined experience of at least eight years at the middle/senior management level in the banking sector (including the experience gained in the concerned UCB) or non-banking finance companies engaged in lending (loan companies) and asset financing,” the notification said.

Besides MPs, MLAs and representatives of municipal corporations and local bodies, persons engaged in business, trade or having substantial interest in any company too will not be eligible for appointment to such positions.

Regarding the tenure of appointment, it said the person can be appointed for a maximum of five years and will be eligible for re-appointment.

However, it said the MD or WTD will not hold the post for more than 15 years. After that, the person, if necessary, may be re-appointed after a three-year cooling period.

It further said the “UCBs whose existing MD/CEO has completed a tenure of five years may approach RBI either to seek re-appointment of the incumbent, if he/she is eligible, or for appointment of a new MD/CEO, within a period of two months…”.

In case a UCB decides to terminate the services of MD/ WTD before the expiry of tenure, it will have to seek prior approval of the Reserve Bank.

The directions are applicable to all Primary (Urban) Co-operative Banks, the RBI said.

In a separate circular, the RBI mandated the appointment of Chief Risk Officer (CRO) by UCBs with asset size of Rs 5,000 crore and above.

It is necessary that every UCB focuses its attention on putting in place appropriate risk management mechanism commensurate with its business profile and strategic objectives, it said.

“In this connection, it has been decided that all UCBs having asset size of Rs 5,000 crore or above, shall appoint a Chief Risk Officer (CRO). The Board must clearly define the CRO’s role and responsibilities and ensure that he/she functions independently,” the circular said.

The CRO should have direct reporting lines to MD/CEO or Board or the Risk Management Committee of the Board (RMC), it added.



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