Category: Banking & Finance

Federal Bank Q4 net profit up 58.6%

Banking & Finance

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Private sector Federal Bank recorded its highest ever quarterly net profit of ₹477.81 crore in the quarter ended March 31.

On an annual basis, it was a 58.6 per cent increase compared to a net profit of ₹301.23 crore in the fourth quarter of 2019-20.

For the full fiscal 2020-21, Federal Bank reported a 3.08 per cent increase in its net profit to ₹1,590.30 crore as against ₹1,542.78 crore in 2019-20.

Its net interest income grew 16.8 per cent to ₹1,420.37 crore in the fourth quarter of 2020-21 versus ₹1,216.02 crore in the same period in the previous fiscal.

Net interest margin increased by 19 basis points on a year-on-year basis to 3.23 per cent in the fourth quarter last fiscal.

Other income however fell 34.5 per cent to ₹465.37 crore in the January to March 2021 quarter, as against ₹711.11 crore in the previous fiscal.

Provisions fell 57.3 per cent to ₹242.33 crore in Q4 as against ₹567.5 crore a year ago.

Gross non performing assets rose to ₹4,602.39 crore or 3.41 per cent of gross advances as on March 31, 2021 as compared to 2.84 per cent a year ago.

Net NPAs eased to 1.19 per cent of net advances as on March 31, from 1.31 per cent last year.

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SBI’s New Delhi Main Branch opens 13,729 FCRA accounts

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State Bank of India’s New Delhi Main Branch (NDMB) has opened 13,729 Foreign Contribution (Regulation) Act (FCRA) accounts till date. This branch was designated to open FCRA accounts by Ministry of Home Affairs (MHA) in October 2020.

Out of the total 22,598 active FCRA Associations, 17,611 entities (NGOs and Associations) approached SBI for opening of FCRA Accounts, India’s largest bank said in a statement.

Nasscom seeks FCRA norms waiver to improve fund inflows for Covid19

“The bank has already opened accounts of 78 per cent of the applicants. The rest of the accounts shall also be initiated once their pending documentation formalities are completed,” the bank said.

New provision in Act

The FCRA Act regulates the acceptance and utilisation of foreign contribution by individuals, associations and companies. Also, a new provision — that makes it mandatory for all non-government organisations and associations to receive foreign funds in a designated bank account (SBI’s New Delhi Main Branch) — has been inserted in the Act.

All SBI branches are authorised to receive Account Opening Application from FCRA Associations. The branches submit those forms and documents to the NDMB through email.

Now, another tool for SBI to resolve stress

“In many cases the documentation was conducted in multiple branches to enable signatories at different locations,” the statement said.

Functionaries of FCRA Associations can process their account-opening formalities from their nearest SBI branch without having to visit the NDMB.

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Dai-ichi Life Insurance Company appoints Abhay Tewari as MD & CEO

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Star Union Dai-ichi Life Insurance Company Ltd has announced the appointment of Abhay Tewari as Managing Director and Chief Executive Officer.

SUD LIFE is a joint venture of Bank of India, Union Bank of India and Dai-ichi Life Insurance Company Limited, Japan. Tewari joined as Appointed Actuary of SUD LIFE in the year 2014 and was holding the position of Joint President and Chief Actuary until he is elevated as MD & CEO.

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Credit Suisse offers ₹7.5-cr additional aid to Concern India Foundation, GiveIndia

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Credit Suisse has committed an additional ₹7.5 crore in aid to Concern India Foundation and GiveIndia, to provide financial assistance to hospitals in Mumbai, Pune, Delhi and Bangalore, to help India in its fight against the Covid-19 pandemic.

The financial aid would be utilised to procure critical medical supplies, oxygen and ICU equipment for the hospitals treating Covid-19 patients, it said in a statement.

Credit Suisse is also raising funds from its staff for GiveIndia’s India Covid Response Fund, which will then be matched by the bank through a separate donation. The campaign has already raised more than ₹2.8 crore of additional support so far.

Mickey Doshi, CEO India, Credit Suisse, said, “We are deeply concerned and anguished by the impact of the second wave of Covid-19 in India. Our thoughts are with our impacted colleagues and their loved ones, and with our clients and local communities. Credit Suisse stands in solidarity with everyone in the country during these extremely difficult times. The aid to Concern India and GiveIndia should help in procuring critical medical supplies and equipment for hospitals. This support is our small effort, alongside the notable endeavours of the rest of India Inc. as well as the Indian government, towards ensuring that our healthcare ecosystem gets all the help it possibly can during this unprecedented crisis”.

These initiatives follow the bank’s earlier ₹4.5-crore grant to Concern India Foundation and United Way Mumbai in April 2020, for the procurement of essential equipment at seven hospitals in Mumbai and Pune.

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NEFT upgrade: Service will not be available for about 14 hrs till 2 pm on May 23

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The National Electronic Funds Transfer (NEFT) service will not be available from 12:01 AM to 2 PM on Sunday, May 23, 2021, as the Reserve Bank of India (RBI) will undertake a technical upgrade of the service.

The Central bank, in a statement, said the upgrade is targeted to enhance the performance and resilience and is scheduled after the close of business on May 22, 2021.

RBI asked member banks to inform their customers to plan their payment operations accordingly.

The Real Time Gross Settlement (RTGS) system, which is used to send and receive funds of ₹2 lakh and above, will continue to be operational as usual during this period.

The advantages of NEFT for funds transfer or receipt include round the clock availability on all days of the year; near-real-time funds transfer to the beneficiary account and settlement in a secure manner; positive confirmation to the remitter by SMS/e-mail on credit to beneficiary account; and no charges to savings bank account customers for online NEFT transactions.

While there is no minimum amount for NEFT transactions, the maximum amount is Rs 10 lakh.

RBI had completed a technical upgrade for RTGS on April 18, 2021.

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SBI’s New Delhi Main Branch opens over 13,000 FCRA accounts, BFSI News, ET BFSI

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The New Delhi Main Branch (NDMB) of State Bank of India (SBI) has opened 13,729 Foreign Contribution (Regulation) Act (FCRA) accounts till date. This branch was designated to open FCRA accounts by Ministry of Home Affairs (MHA) in October 2020.

Out of the total 22598 active FCRA Associations, 17611 entities (NGOs and Associations) approached SBI for opening of FCRA Accounts. The bank has already opened accounts of 78% of the applicants. The rest of the accounts will be initiated once their pending documentation formalities are completed.

The lender said, “SBI in co-ordination with MHA and Department of Financial Services (DFs) also devised a Standard Operating Procedure (SOP) to open and operate the FCRA Account, which is available on bank’s website and FCRAONLINE – an e-governance initiative by MHA. Further the NDMB of SBI conducted as many as 28 webinars to prepare and guide FCRA Associations about opening of FCRA Accounts.”

The bank said that all the SBI branches are authorized to receive Account Opening Application from FCRA Associations. The branches submit those forms and documents to the NDMB through email. In many cases the documentation was conducted in multiple branches to enable signatories at different locations. It also said that through its robust network of branches, functionaries of FCRA Associations can process their account opening formalities from their nearest SBI branch without having to visit the NDMB.

The Foreign Contribution (Regulation) Amendment Bill, 2020 was introduced in Lok Sabha on September 20, 2020. The Act regulates the acceptance and utilisation of foreign contribution by individuals, associations and companies. Also a new provision – that makes it mandatory for all non-government organisations and associations to receive foreign funds in a designated bank account (SBI’s New Delhi Main Branch) – was inserted.



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Power finance companies likely to be promoters of the bad bank, BFSI News, ET BFSI

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The National Asset Reconstruction Company (NARC), or the bad bank, is likely to be promoted by Power Finance Corporation and Rural Electrification Corporation.

While all major public sector banks will invest in the NARC, they will be holding a stake of below 10%. The power finance companies will hold more than 10%

The Reserve Bank of India is reluctant to allow banks to float another ARC to which they will sell their bad loans.

Padmakumar M Nair, Chief General Manager of Stressed Assets Resolution Group at SBI, will head the National Asset Reconstruction Company Ltd, the proposed bad bank for taking over stressed assets of lenders.

Nair has been picked up for the CEO post of the proposed bad bank NARCL as he has a long exposure of handling resolution of stressed assets. He will be joining the company on a deputation basis for the moment. Finance Minister Nirmala Sitharaman in the budget for 2021-22 had announced that an asset reconstruction company or a bad bank would be set up to consolidate and take over existing stressed assets of lenders and undertake their resolution. A bad bank refers to a financial institution that takes over the bad assets of lenders and undertakes resolution.

Most of the large public sector banks in India have a stake in an existing ARC. SBI is the largest shareholder in Arcil with IDBI Bank, ICICI Bank and Punjab National Bank holding a significant stake. Another firm Asrec is owned by Indian Bank, Bank of India, Union Bank and LIC.

The bad bank

Nine banks and two non-bank lenders, including the State Bank of India (SBI), Punjab National Bank (PNB) and Bank of Baroda (BoB), are coming together to jointly invest Rs 7,000 crore of initial capital in a proposed bad bank that aims to help extract funds stuck in bad loans. Two other state-run financiers of power projects will also own stock in the bad bank.

Canara Bank, Union Bank of India and Bank of India will join their larger state-run peers as investors in the bad bank. ICICI Bank, Axis Bank and Life Insurance Corp of India-owned IDBI Bank are also among the shareholders. State-owned Power Finance Corp and Rural Electrification Corp will also be equal shareholders in the new company.

The asset transfer

The Indian Banks’ Association (IBA) has identified 102 corporate bad loans, totalling to Rs 2 lakh crore, where the amount outstanding in each is over Rs 500 crore that can be transferred to the proposed National Asset Reconstruction company (NARC) or bad bank.

It has asked its member banks asked members to identify large loans where they are lead bankers and get approval from co-lenders so that these loans can be sold to a National Asset Reconstruction company.

The loans identified by IBA include NPAs in a variety of industries — including oil, steel, cement and roads, with many admitted under the insolvency process. These loans are almost fully provided for over the years and they exclude the ones where there is fraud involved or those currently under liquidation. About 75% of the lenders by value need to approve to transfer the loans to an ARC.



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RBI, BFSI News, ET BFSI

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RBI said that NEFT service will not be operational from 00:01 hrs to 14:00 hrs on Sunday, May 23, 2021. A technical upgrade of NEFT, targeted to enhance the performance and resilience, is scheduled after the close of business of May 22, 2021

However, The RTGS system will continue to be operational as usual during this period. Similar technical upgrade for RTGS was completed on April 18, 2021.

NEFT Members will continue to receive event update(s) through NEFT system broadcasts.

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RBI opposes IBC suspension even as demand from banks, industry grows, BFSI News, ET BFSI

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The Reserve Bank of India RBI is not in favour of a fresh suspension of the Insolvency and Bankruptcy Code (IBC) in view of the resurgence in Covid infections shutting down parts of the economy again.

The central bank is of the view that suspension will only show lower non-performing assets. While the government has to take a final decision, the widespread distress after the restrictions may weigh on its mind.

Officials feel the demand was being amplified by a section of the industry that was facing stress even before the pandemic hit India. Besides, by all accounts, the corporate performance has been encouraging up to the March quarter and the assessment is that the recovery this time will be faster than last year, given that businesses have not completely shut down and supply chains remain open.

Growing clamour

Lenders, however, want suspension of the Insolvency and Bankruptcy Code, which was reanimated on March 24 after being suspended for a year.

Banks were planning to petition the government to keep the IBC process under suspension to help companies restructure their finance to face the renewed vigour of the pandemic, according to a report.

Also, the court proceedings are hampered due to the pandemic with courts hearing only urgent matters.

Experts are seeking an extension of IBC to 3-6 months and taking a call after that depending on the situation.

Growing stress

The corporate sector has pitched for a fresh suspension, arguing that there will be additional stress in the wake of the lockdown announced across most states to check the surge in cases, which are still rising by over three lakhs daily.

Industry body Assocham has urged the government to reimpose a moratorium on taking debt-ridden firms to the NCLT under the IBC till December this year following the severe second wave of coronavirus. In a representation to the Finance Ministry, the chamber said that given the increasing pressure on businesses, it would be imperative to extend the NCLT (National Company Law Tribunal) moratorium to ensure that the pandemic “does not wreak havoc” on the economy.

The Indian hotel industry has taken a hit of over Rs 1.30 lakh crore in revenue for the fiscal year 2020-21 due to the impact of the COVID-19 pandemic, the Federation of Hotel & Restaurant Associations of India (FHRAI) said on Sunday.

The apex industry body said it has submitted representation to the Prime Minister and a few other union ministers urging immediate support from the government to save the hospitality sector from imminent collapse and has requested for several fiscal measures for this.



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Covid kills over 1,000 bank employees as virus ravages India

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Indian banks have lost more than a thousand employees and many more are infected, according to an industry body, underscoring the heavy toll that the virus has taken in the Asian country battling the world’s worst coronavirus crisis.

“We have lost more than 1,000 colleagues already,” S. Nagarajan, General Secretary of the All India Bank Officers’ Association told Bloomberg News over phone on Saturday. “Bank employees are frontline workers and the virus is affecting them.”

With more than 24 million people infected in India and over 266,200 dead amid the world’s fastest-growing outbreak, the bulk of Indian States are in a lockdown with strict stay-at-home orders. But the banking sector is slotted as an essential service and partially exempt from the lockdown orders. Lenders are allowed in some cases to call as much as 50% of their workforce in bank branches to avoid any disruption in banking services.

C.H. Venkatachalam, General Secretary of the All India Bank Employees Association — the largest body of bank workers — told the moneycontrol.com website that 1,200 employees had died due to the virus. “Not all banks are forthcoming in sharing the details and compensation policies for the families of those who died due to this virus,” Venkatachalam said.

Venkatachalam was not immediately available to Bloomberg for comments.

The Press Trust of India on Friday reported that Debasish Panda, a senior federal government bureaucrat wrote to State authorities urging them to vaccinate bank and insurance employees against COVID on a priority basis.

India, which is facing a severe vaccine shortage, has administered more than 180 million COVID shots so far. At this rate, it will take a projected 2.5 years to cover 75% of the population with a two-dose vaccine, according to Bloomberg’s vaccine tracker.

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