Category: Banking & Finance

Uday Kotak, BFSI News, ET BFSI

Banking & Finance

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Mumbai, May 3 () With the RBI capping top managements’ tenure at lenders, Kotak Mahindra Bank‘s head Uday Kotak on Monday said his current term as the managing director and chief executive is till December 2023 and the board will take a call on succession in due course. Kotak also stressed that the commitment to institution building has been a core value for the entity over the last 36 years of its existence.

The RBI last week capped MD and CEOs’ terms at private sector lenders at 15 years, from October 1 onwards, but has allowed the serving bank heads to complete their current appointments.

Uday Kotak, who is also among the promoters of the lender, has been at the helm for over 17 years already.

“The tenure for me is up to 31st December 2023. So, you are going to see me around as CEO at least till then,” Kotak told reporters at a virtual press conference.

He added that the board and the bank are fully committed to long-term stakeholder value and will do whatever is required to ensure stakeholder and shareholder value for the future.

“The commitment to institution building long term is the core to our values and we will take whatever (step) is necessary to maintain that,” Kotak said.

He added that the journey for the entity started in 1985 as a non-bank finance company with a capital of Rs 30 lakh.

To a question on succession planning, he hinted that the board does not have to wait till the RBI puts a cap, and added that in the current times of COVID-19, it is all the more necessary.

“Any financial institution or any company for that matter always plans for what happens if the senior leader gets run over by a bus. In today’s time, the risk of being affected by COVID is even higher. Therefore, succession planning has to be a continuous process which every institution constantly thinks about,” he noted.

The board will act in a manner which is appropriate and responsible, he added. AA ABM ABM.



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SBI allocates Rs 71 crore for Covid-19 relief, BFSI News, ET BFSI

Banking & Finance

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The State Bank of India (SBI) has allocated Rs.71 crore for various support initiatives to aid the country in combating COVID-19’s second wave. The Bank has set aside Rs. 30 crores to set up ,1000 bed makeshift hospitals, 250 bed ICU facilities and 1,000 bed isolation facilities across some of the worst-hit states. These facilities would be set up in collaboration with government hospitals and Municipal Corporations of the respective cities. The Bank will also contribute Rs. 10 Crore for genome-sequencing equipment / lab and vaccine research equipment / lab to the Government.

Additionally, SBI has allocated Rs.21 crore to all its 17 Local Head Offices to meet citizens’ urgent medical needs, such as procuring life-saving healthcare equipment and improving hospital oxygen supplies. PPE kits, gloves, rations, and cooked meals will be provided by the Bank on a continuous basis. The Bank will spend Rs.10 crore in partnering with NGOs to undertake community-based testing, boosting vaccination campaigns, establishing a helpline for COVID-19-related issues, providing oxygen, and other essential activities.

SBI has also partnered with several hospitals to get its staff vaccinated. In addition, the Bank has decided to cover the cost of vaccinations for its employees and their dependent family members. 60 of the Bank’s training centres throughout the country have been transformed into isolation/quarantine centres for affected employees and their families.

Dinesh Khara, Chairman, SBI said, “We are committed to contribute funds and resources, and reach out to Indian citizens and join in the government’s efforts to combat the virus. I urge everyone to help those in need in every way they can and contribute towards making the country COVID-19 free.”



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Airtel Payments Bank offers 6% per annum interest on deposits of over Rs 1 lakh, BFSI News, ET BFSI

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Airtel Payments Bank on Monday announced its customers will get an increased interest rate of 6 per cent per annum on savings account deposit of over Rs 1 lakh. The move follows Airtel Payments Bank becoming the first payments bank to implement an enhanced day-end savings limit of Rs 2 lakh, as per the Reserve Bank of India (RBI) guidelines, the company said in a statement.

Airtel Payments Bank has over 5.5 crore engaged users across its operations, the statement added.

The interest rate is at 2.5 per cent per annum for a deposit up to Rs 1 lakh.

Announcing the higher interest rate on savings account deposits of over Rs 1 lakh, Anubrata Biswas, CEO of Airtel Payments Bank, said, “RBI’s increased savings deposit ceiling is a major milestone for payments banks as this was a key ask from customers”.

With an “attractive” interest rate on deposit sums above one lakh, Airtel Payments Bank is making banking proposition even more rewarding, Biswas added.

“Our unmatched footprint of 5,00,000 banking points and a global first secure and simple experience delivered digitally, Airtel Payments Bank offers a market-leading proposition for both the urban digital and the rural underbanked customer,” Biswas pointed out.

The new interest rate regime is an important addition to the bank’s suite of solutions.

Customers can open an Airtel Payments Bank account within minutes with a video call from the Airtel Thanks app.

The bank offers a digital savings account – Rewards123, which offers more value to customers when they transact digitally using the account.



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Digital payments slow down in April as virus transmission accelerates, BFSI News, ET BFSI

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The slowdown in the economic activity due to lockdowns and restrictions in April echoed in the digital payment transactions in April.

The growth of digital payments slowed in April over March, remained higher than in February, according to a report.

The Unified Payments Interface (UPI) transactions dropped from the Rs 5­lakh crore peak in March to Rs 4.93 lakh crore via 264 crore transactions.

The Immediate Payment Service (IMPS) saw 32.29 crore transactions worth Rs 2.99­lakh crore in April as against 36.31 crore transactions of Rs 3.27 lakh crore in March.

Bharat Bill pay platform processed 3.51 crore transactions worth ₹Rs 5,201.92 crore in April as against 3.52 crore payments amounting to Rs 5,195.76 crore in March.

As the movement of people and goods slowed, the FASTags, AePS transactions through the NETC saw a sharp decline in April at 16.43 crore transactions worth Rs 2,776.9 crore. It was 19.32 crore transactions worth Rs 3,086.32 crore in March.

The Aadhaar enabled Payment System saw 7.42 crore transactions valued at Rs 22,139.05 crore in April as against 7.78 crore payments worth Rs 22,697.82 crore in March.

Last fiscal

UPI transaction volumes surged 43.2% in the first quarter of the last fiscal, 98.5% in the second quarter 104.6% in the third and 112.5% in the fourth quarter.

While IMPS volumes degrew 9.6% in Q1, they rose 26% om Q2. 40.5% in the third quarter and 42.9% in the fourth quarter.

National Automated Clearing House (NACH) volumes grew 32.8 in the first quarter, 13 in second, 0.9 in third while they degrew 10.2 in the fourth.

BBPS volumes grew 66% in Q1, 103.2 in Q2, 84.4 in Q3 and 102.7 in Q4 while National Electronic Toll Collection, the NHAI’s Fastag system logged 83.9 growth in Q1, 249.2 in Q2, 195 in Q3 and 75.3 in the fourth quarter.

On the other hand, RTGS volumes degrew 26.2 in Q1, logged 3.1 in Q2, 10.2 in third and 31.1 in the fourth quarter.

NEFT volumes degrew 3.9% in the first quarter, grew 9.8 in second, 23.2 in third, 17.8 in the fourth quarter.



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IDBI Bank back in black in FY21 after 5 years, posts profit of Rs 1,359 cr, BFSI News, ET BFSI

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LIC-controlled IDBI Bank turned profitable in the fiscal ended in March 2021 after five years, posting a net profit of Rs 1,359 crore for the year. In 2019-20, the lender had posted a net loss of Rs 12,887 crore.

IDBI Bank is back in black after five years, said the lender.

In the last quarter of the fiscal year 2020-21, the bank reported a nearly four-fold jump in its net profit to Rs 512 crore, IDBI Bank said in a release. The bank had posted a profit of Rs 135 crore in the year-ago quarter.

The bank, which came out of the RBI‘s prompt corrective action (PCA) framework earlier in March this year, said its turnaround strategies led to the transformation.

Total income during Q4FY21 rose to Rs 6,969.59 crore from Rs 6,924.94 crore in the same period of 2019-20.

The full year income, however, was down at Rs 24,557 crore as against Rs 25,295 crore.

Gross NPA (non-performing asset) ratio improved to 22.37 per cent as on March 31, 2021 as against 27.53 per cent in the year-ago period. Net NPA improved to 1.97 per cent from 4.19 per cent, IDBI Bank said.

The bank said its recovery from technically written off accounts improved to Rs 269 crore in Q4FY21 as against Rs 105 crore in the third quarter FY21.

Provisions for bad loans and contingencies were raised to Rs 2,457 crore during the reported quarter as against Rs 1,584 crore.

The bank said it has made Covid-related provisions of Rs 363 crore at the end of March 2021.

IDBI Bank shares traded at Rs 36.25 on BSE, up 2.69 per cent from the previous close.



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Motilal Oswal PE buys minority stake in Fincare Small Finance Bank for about ₹185 crore

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Motilal Oswal Private Equity (MOPE) has picked up a minority stake in Fincare Small Finance Bank for $25 million (about ₹185 crore) through a secondary acquisition. The deal provides partial exit to True North Fund V LLP, one of the key investors in the firm.

The deal was done by India Business Excellence Fund–III, a fund managed and advised by MOPE, it said in a statement.

Vishal Tulsyan, Managing Director and CEO of MOPE, said: “Over the past decade microfinance has established itself as an asset class with potential for high growth and profitability. Based on our assessment, a small finance bank is the best platform to capitalise on this opportunity.”

“Fincare has established itself as a pioneer in this space with its focused approach towards efficient last mile distribution of financial products and services. The enormous white space available for retail banking in India combined with the strong execution capabilities of the Fincare management team makes this partnership quite exciting for us,” he added.

Fincare Small Finance Bank is a Bengaluru-based MFI-NBFC turned small finance bank. Before converting into a small finance bank, the microfinance lender was largely conducting business from two entities – West India based Disha Microfin and South India-based Future Financial Services.

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Kotak Mahindra Bank Q4 net profit up 33%

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Private sector lender Kotak Mahindra Bank posted a 32.8 per cent jump in its standalone net profit for the quarter ended March 31, 2021 at ₹1,682.37 crore.

Its standalone net profit was ₹1,266.6 crore in the fourth quarter of 2019-20.

For the full fiscal 2020-21, the lender’s standalone net profit increased by 17.11 per cent to ₹6,964.84 crore versus ₹5,947.18 crore in 2019-20.

Its net interest income grew by 7.9 per cent to ₹3,843 crore in the fourth quarter of last fiscal as against 3,560 crore in the same period in the previous fiscal.

Net interest margin was down at 4.39 per cent from 4.72 per cent a year ago.

Other income increased by 30.9 per cent to ₹1,949.53 crore in the January to March 2021 quarter versus ₹1,489.39 crore a year ago.

Provisions increased by 12.6 per cent to ₹1,179.41 crore in the fourth quarter last fiscal as against ₹1,047.47 crore in the corresponding period in the previous fiscal.

The bank did not make any Covid-19 related provisions in the fourth quarter of the fiscal and retained the Covid-19 provision at ₹1,279 crore.

Gross non performing assets increased to ₹7,425.51 crore or 3.25 per cent of gross advances as on March 31, 2021 as against 2.25 per cent a year ago. Net NPAs also rose 1.21 per cent of net advances as on March 31, 2021 versus 0.71 per cent a year ago.

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IDBI Bank’s Q4 net profit soars to ₹512 crore

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Mumbai, May 3

IDBI Bank’s standalone net profit soared almost four times in the fourth quarter (Q4 FY21) to ₹512 crore against ₹135 crore in the year-ago period.

The profitability in the reporting quarter comes on the back of a robust 37.5 per cent increase in net interest income and a ₹300 crore write back of provision for tax on account of income tax refund for earlier year.

Net interest income (difference between interest earned and interest expended) rose to ₹3,240 crore (₹2,356 crore in the year-ago quarter).

Non-interest income, comprising fee-based income, trading income and other income, was down 11 per cent year-on-year (yoy) to ₹1,181 crore (₹1,326 crore).

Non-performing asset (NPA) provisions were down 26 per cent yoy to ₹1,120 crore (₹1,511 crore).

We will try to grow our business in a very calibrated way: IDBI Bank CEO

However, in the reporting quarter, the bank made an additional Covid-19-related provision for second wave amounting to ₹500 crore.

During the quarter, the bank also made an additional provision of ₹908.43 crore over and above the IRAC norms in respect of certain borrower accounts in view of the inherent risk and uncertainty of recovery in these identified accounts

So, overall provisions rose 36 per cent yoy to ₹2,367 crore (₹1,738 crore).

Gross non-performing asset (NPA) position improved to 22.37 per cent of gross advances against 27.53 per cent in the year-ago quarter. Net NPAs declined to 1.97 per cent of net advances against 4.19 per cent.

In the reporting quarter, net interest margin (NIM) improved to 5.14 per cent (annualised) against 3.80 per cent in the year-ago quarter. Cost-to-income ratio improved to 34.87 per cent from 49.12 per cent.

As of March-end 2021, total deposits increased by 4 per cent yoy to ₹2,30,898 crore and total advances were down 6 per cent yoy to ₹ 1,61,901 crore.

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Net profit rises 33% YoY, below estimates; asset quality improves, BFSI News, ET BFSI

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MUMBAI: Kotak Mahindra Bank on Monday reported a 33 per cent year-on-year rise in net profit to Rs. 1,682 crore for the quarter ended March, missing analysts’ estimates by a wide margin. Sequentially, the lender’s net profit fell on account of a rise in provisions.

The lender reported 8 per cent on-year growth in net interest income to Rs. 3,843 crore for the quarter, which was also below Street’s estimate.

The private sector lender reported a slight improvement in asset quality as gross non-performing assets ratio stood at 3.25 per cent for the quarter compared with 3.27 per cent in the previous quarter on a proforma basis. Similarly, the net NPA ratio fell to 1.21 per cent, from 1.24 per cent in the previous quarter.

The lender has accounted for all the non-performing loans that were not recognised in previous quarters due to the Supreme Court’s standstill on reporting of bad loans till August 31.

Till December 31, with respect to cases not considered NPAs, the bank had considered a full hit for provisions and income as provisions for advances. After the Supreme Court’s order, the bank retrospectively reversed income and consequently adjusted provisions and contingencies, Kotak Mahindra Bank said in an exchange filing.

The private sector lender said that it has retained Covid-19 related provisions at Rs. 1,279 crore at the end of the quarter.

Kotak Bank reported mere 2 per cent growth in loans for the quarter ended March to Rs 2.23 lakh crore, reflecting the impact of the management’s conservative approach adopted since the beginning of the Covid-19 pandemic.

Kotak Bank’s net interest margin stood at 4.39 per cent in the quarter, lower than 4.72 per cent in the year-ago period.

Kotak Bank’s operating performance was firm as operating profit rose 25 per cent on a year-on-year basis to Rs. 3,407 crore.

The lender’s provisions and contingencies at the end of the quarter stood at Rs. 1,179 crore, which was higher than the Rs. 1,047 crore reported a year ago. On a sequential basis, the metric more than doubled from Rs. 419 crore.

The bank also declared a final dividend of 90 paise per share.



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SBI allocates ₹71 crore for Covid support initiatives

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State Bank of India (SBI) has allocated ₹71 crore to undertake various support initiatives to help the country combat the second wave of Covid-19.

This includes ₹30 crore for setting up 1,000 bed makeshift hospitals for Covid-19 patients in some of the worst affected states, India’s largest bank said in a statement.

“These facilities would be set up in collaboration with government hospitals and Municipal Corporations of the respective cities.

“SBI is in talks with various designated authorities to explore partnerships for setting up makeshift hospitals,” it added.

Additionally, a sum of ₹21 crore has been allocated to the Bank’s 17 local head offices (LHOs) to address the urgent medical needs of the citizens at the local level by way of life-saving healthcare equipment, oxygen supply to hospitals, Covid-19 care centres, ambulances to transport Covid-19 patients, PPE kits, masks, and providing food relief.

As per the statement, “The Bank will also spend ₹10 crore in partnering with NGOs to undertake community-based testing, strengthening vaccination drives, creating helpline for Covid-19 related matters, providing oxygen supply and other critical activities.

“The Bank will also contribute ₹10 crore for genome-sequencing equipment / lab and vaccine research equipment / lab to the Government.”

Dinesh Khara, Chairman, SBI, said: “We are trying our best to make a small contribution to society in the fight against the second wave. We are committed to contribute funds, resources and reach out to the citizens of India and also join in the Government’s efforts in fighting the virus.

“I urge everyone to offer their support in any form to the people in need and contribute towards making the country Covid-19 free.”

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