Category: Banking & Finance

DBS in ‘advanced talks’ to buy Citi’s consumer banking business in India

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Citi, which recently announced plans to exit consumer banking operations in 13 markets, is understood to be in talks with a number of foreign lenders, including DBS Bank, for its India business.

Sources close to the development said Citi is keen to exit its India consumer banking operations soon and would like to sell the entire set-up in one go.

“Talks with DBS Bank are at an advanced stage and they are keen to take up the entire consumer banking operation,” said a person familiar with the development.

Citi declined to comment to an email query sent by BusinessLine on the issue.

“At this juncture, the details are still unclear. However, we have always been open to exploring sensible bolt-on opportunities in markets where we have a consumer banking franchise (India, Indonesia, China and Taiwan) and where we can overlay our digital capabilities to serve our customers better,” a DBS spokesperson said in response to an email query by BusinessLine.

Separately, many banks are understood to be keen on Citi’s credit card business in India, which had 26.4 lakh customers as of February 2020.

Why DBS?

DBS Bank India Limited is first among large foreign banks to start operating as a wholly-owned, locally incorporated subsidiary in India and has been keen on expanding its operations in the country.

In November, Lakshmi Vilas Bank was also amalgamated with DBS Bank India, giving it access to a large customer base.

However, it could take at least six months for any transaction to be finalised, according to analysts.

According to a report by JM Financial, Citi’s Indian consumer business has a sizeable presence, with retail loans totalling about ₹3,200 crore.

“It needs to be seen whether all these businesses will be sold together or piecemeal. Also, payment consideration, in cash vs stock, will be a critical determinant to decide the eventual buyer. Since Citi functions in India through a “branch route” versus a wholly-owned subsidiary (like DBS Bank), the transaction will mostly be asset sale. In our view, the process could take 6-12 months until a final winner emerges,” it said.

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HDFC Bank deploys mobile ATMs across India, BFSI News, ET BFSI

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Mumbai, HDFC Bank on Saturday said it has deployed mobile ATMs across India to assist customers during the lockdown.

“At restricted, sealed areas, the ‘Mobile ATMs’ will eliminate the need for general public to move out of their locality to withdraw cash,” the bank said in a statement.

“During the lockdown last year, HDFC Bank successfully deployed mobile ATMs in over 50 cities and facilitated lakhs of customers in availing cash to meet their exigencies.”

Accordingly, customers can conduct over 15 types of transactions using the ‘Mobile ATM’, which will be operational at each location for a specific period.

The ‘Mobile ATM’ will cover 3-4 stops in a day.

“We hope our mobile ATM will provide a great support for people who want to avail basic financial services without having to venture far from their neighbourhood,” said S. Sampathkumar, Group Head – Liability Products, Third Party Products and Non-Resident Business at HDFC Bank.

“This service will also be of great help to all the healthcare workers, and other essential service providers who have been working tirelessly to combat the pandemic.”

–IANS

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Karnataka Bank aims to grow at 12 pc in FY22, BFSI News, ET BFSI

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New Delhi, Apr 24 () Karnataka Bank on Saturday said it is targeting to grow its business at 12 per cent to over Rs 1.42 lakh crore in the current fiscal year and will gradually increase the share of retail loan in its portfolio. In a communication to shareholders, the bank said it strives to see 2021-22 as a year of excellence on the back of its healthy business growth, ‘Cost-Lite’ liability portfolio and strengthened fundamentals.

“For the new Financial Year, the Bank is planning to grow its business at a moderate 12 per cent to take the total business turnover (i.e. total of Deposits and Advances) to around Rs 1,42,500 crore,” it said.

As a realignment strategy in its advances portfolio, the private sector lender said it has been eyeing credit exposure of minimum 50 per cent to retail, 35 per cent to mid corporates and not more than 15 per cent to large corporates.

The intent is to minimise the concentration on large corporate borrowers and to ensure continued sustainability, it said.

“The bank has been moving towards the said direction in a sustainable manner. Besides, the yield on the retail and mid corporate advances has been better than the large corporates and also, the risk is widespread across the portfolio than that of concentration in the case of large corporate exposure,” Mahabaleshwara M S, Managing Director & CEO, Karnataka Bank said.

He said COVID-19 came as a challenge in 2020-21 along with the “M-cap related misleading campaign against the private sector banks, including our bank by a section of media”.

Regarding the Supreme Court‘s order on not levying any interest on loans during March-August period of 2020, the lender said it already made ex-gratia payment of difference between compound interest and simple interest for these six months to the eligible borrowers in accordance with RBI directive.

In case of remaining accounts, the penal or compound interest charged on the borrower accounts may have to be refunded and adjusted towards next installment due within a reasonable time from the date of Supreme Court order dated March 23, 2021.

“Further, with the vacation of stay order, NPA marking has also resumed,” it said.

Mahabaleshwara said in spite of turbulent banking environment and unforeseen hurdles, the bank has been able to sail through 2020-21.

On the way forward, he said the bank is striving hard to see Karnataka Bank among the top three in the peer group by focussing on a healthy, consistent, sustainable and remunerative business and by continuing the efforts in recovery process. KPM ANU ANU



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After KPMG, DmKH & Co appointed as another forensic auditor of Srei

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The Kolkata-headquartered Srei group owes nearly Rs 18,000 crore to as many as 15 lenders, including SBI, Axis Bank and UCO Bank.

After the appointment of KPMG as a forensic auditor of Srei Infrastructure Finance as proposed by its lenders for proposed debt realignment plans, the company has also hired another forensic auditor, DmKH & Co, as per the advice of the independent directors as good governance.

Notably, the Reserve Bank of India (RBI) appointed an auditor in November last year to conduct a special audit of Kolkata-based NBFC Srei Infrastructure Finance and its wholly-owned subsidiary Srei Equipment Finance (SEFL), one of the major players in the construction and mining equipment financing space.

Earlier, Srei proposed a debt restructuring as it stated that the outbreak of Covid-19 created an unprecedented situation and payments of its borrowers had been stuck. The lenders, however, proposed appointment of a forensic auditor before approving the debt realignment plans. And, accordingly, they named KPMG for conducting the forensic audit.

In a stock exchange filing on Saturday, Srei Infrastructure Finance said, “This is to inform that the board at its meeting held on April 23, 2021, noted the appointment of KPMG Assurance and Consulting Services LLP and DmKH & Co. as the Forensic Auditors of the company as advised by the bankers as step towards the proposed debt realignment plan and by the Independent Directors of the company as good governance respectively.”

Srei has a consolidated debt of around Rs 20,000 crore from Indian banks and around Rs 10,000 crore through bonds and from other financial institutions. Last month, the board of Srei Equipment Finance (SEFL) had constituted a Strategic Coordination Committee (SCC), comprising of Independent Directors, to coordinate, negotiate and conclude discussions with potential strategic and/or private equity investors, to raise fresh capital for the business in consultation with the management.

On Saturday, SEFL said it has received an expression of interest (EoI) for capital infusion from US-based Cerberus Global Investments B.V. Earlier, SEFL also received EoIs for capital infusion of about USD 250 million from US-based multi-strategy investment firm Arena Investors LP and Singapore-based global financial services company Makara Capital Partners. “SEFL has proceeded with discussions with both Arena Investors and Makara Capital and the company’s Strategic Coordination Committee, chaired by independent director Malay Mukherjee, is currently engaged in discussions with the private equity (PE) funds to bring capital into the business,” according to statement issued.

Significantly, Srei Equipment Finance had approached National Company Law Tribunal (NCLT), Kolkata with a Scheme of Arrangement which proposes arrangement with six types of creditors i.e., secured debenture holders, unsecured debenture holders, secured external commercial borrowings (ECB) holders, unsecured ECB holders, perpetual debt instrument (PDI) holders and individual debenture holders (including such debt transferred from SIFL pursuant to slump exchange). “The Scheme of Arrangement broadly proposes moratorium in terms of coupon payments during January 1, 2021 to June 30, 2021 along with postponement of redemption dates based on the type of creditor,” Care Ratings said in a note on the company on March 6, 2021. Consequent to the Scheme of Arrangement proposed by the company, NCLT, Kolkata passed an order dated December 30, 2020.

As per the NCLT order, the meeting of secured debenture trustees/holders, unsecured debenture trustees/holders, secured ECB lenders, unsecured ECB lenders, PDI holders, debenture trustees representing individual debenture holders will be held on May 15, May 29, June 12, June 26, July 10, July 24, 2021, respectively for the purpose of their considering, and if thought fit, approving, with or without modification, the said Scheme of Arrangement, according to the Care Ratings note.

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Q4 performance: ICICI Bank net profit up 261% y-o-y

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The average current account deposits increased (CASA) by 34% y-o-y. Average savings account deposits increased by 21% y-o-y during Q4FY21.

ICICI Bank on Saturday reported a 261% year-on-year (y-o-y) rise in its net profit at Rs 4,402 crore in the March quarter (Q4FY21) on the back of healthy interest income and reduced provisioning.

The operating profit of the lender increased 15.6% y-o-y to Rs 8,540 crore.

The interest income (NII) increased 17% y-o-y and 5.24% quarter-on-quarter (q-o-q) to Rs 10,431 crore.

Provisions for the lender declined 51.7% y-o-y to Rs 2,883 crore.

However, the bank has made an additional Covid-19 related provision of Rs 1,000 crore in the March quarter. The provision coverage ratio stood at 77.7% at the end of March, 2021.

Sandeep Batra, executive director, ICICI Bank, said, “The growth in business banking continued to be robust,leveraging the bank’s distribution network and digital platforms such asInstaBIZ and Trade Online.”

The credit card spends in Q4-2021 increased substantially over Q3FY21 driven by spends across electronics, wellness and jewellery categories, he added. Speaking on the impact of the current wave of Covid-19, Batra said, “There has been a bit of a slowdown in the current quarter, but these are still early days as yet.”

The net interest margin (NIM) of the lender declined 3 basis points (bps) y-o-y at 3.84%, but increased 17 bps sequentially.

The asset quality of the lender deteriorated a bit during the March quarter, after the standstill on declaring non-performing assets was lifted by the apex court. Gross non-performing assets (NPAs) ratio of the lender increased 58 bps to 4.96%, compared to 4.38% in the previous quarter.

Similarly, net NPAs ratio increased 51 bps to 1.14% from 0.63% in the December quarter. During the quarter, the gross NPA additions, excluding borrowers in the proforma NPAs as of December 31, 2020, were Rs 5,523 crore, Batra said . “Recoveries and upgrades, excluding recoveries from proforma NPAs, write-offs and sale, from non-performing loans were at 2,560 crore in Q4 FY21,” he added.

Advances grew 14% y-o-y to Rs 7.33 lakh crore. The retail loan portfolio grew by 20% y-o-yand 7% sequentially. “The growth in the performing domestic corporate portfolio was about 13% y-o-y driven by disbursements to higher crated corporates and public sector undertakings (PSUs) across various sectors to meet their working capital and capital expenditure requirements,” the bank said.

Deposits saw a robust growth of 21% y-o-y at Rs 9.32 lakh crore. The average current account deposits increased (CASA) by 34% y-o-y. Average savings account deposits increased by 21% y-o-y during Q4FY21.

The fee income of the lender increased 6% y-o-y to Rs 3,815 crore. There was a treasury loss of Rs 25 crore in Q4FY21,compared to a profit of Rs 242 crore during the same quarter last year. The treasury loss in the March quarter reflects the increase in yields on fixed income and government securities, the bank said.

The capital adequacy ratio of the lender stood at 19.12% and tier-1 capital adequacy ratio of 18.06% at the end of the March quarter.

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Staff of Regional Rural Banks to receive arrears of wage-revision soon

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Nearly one lakh employees working in Regional Rural Banks (RRBs) can expect their arrears of pay revision and allowances soon.

The Department of Financial Services, Ministry of Finance, has directed the boards of RRBs to make payment of arrears after approval of respective boards subjected to certain norms, according to a circular dated April 20.

Previously, in a circular issued on April 1, the government had directed the RRB to pay wage revision arrears in two instalments at six month’s interval with the first instalment to be released in the last quarter of FY2021-22.

However, the ministry has received several representations from employees’ unions of RRBs and it was reported that RRBs had made ‘substantial’ provision for payment of arrears in their books of accounts.

“The matter has been since reviewed in consultation with Nabard,’’ the Ministry said while explaining the reasons behind the new directive.

As per the revised norms, those RRBs having a Credit to Risk-weighted Assets Ratio (CRAR) of more than nine per cent as on March 31, 2021 may pay the wage revision arrear liability from their own resources in appropriate number of instalments to be independently approved by the respective boards of directors of the concerned RRB.

The RRBs having CRAR less than nine per cent may pay arrears in four equal instalments during current financial year or more than four instalments as decided by the boards of RRBs keeping in the position relating to capital, liquidity, provisions made towards wage revision and other liabilities in the RRBs concerned, the circular said.

When contacted, V Arvind, Chairman, Telangana Grameena Bank (TGB) said the decision will benefit employees as boards can decide on payment of arrears as early as possible. “There are 45 RRBs in the country and almost half of them have CRAR of above 9 per cent,” he added.

There are nearly one lakh employees working in RRBs. The effective date of pay revision is November 1, 2017. The pay has been revised to the tune of ₹12-15 per cent across difference categories and RRBS.

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Strategy to ‘conserve, emerge stronger’ helped Karnataka Bank during pandemic: MD

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Karnataka Bank Ltd (KBL) has said that its strategy to ‘conserve, consolidate and emerge stronger’ has done wonders during the Covid pandemic-driven crisis.

In a letter to the shareholders, Mahabaleshwara MS, Managing Director and Chief Executive Officer of KBL, said the resilience of KBL was well exhibited during the pandemic-driven crisis. The Covid-19 business prescription of KBL — ‘conserve, consolidate and emerge stronger’ — has done wonders, he said, adding the bank has been able to contain the expenditure significantly, improve the operational efficiency, realign the credit portfolio by focusing on retail and mid-corporates so as to ensue sustainability, and develop cost-lite deposit portfolio with CASA share of more than 31 per cent, etc.

The digital transactions of the bank stood at an all- time high exceeding 90 per cent. “Now, in terms of our digital capability, we are almost on par with any new generation banks,” he said.

 

Advances

On the advances portfolio realignment strategy, he said the bank has been eyeing to have its credit exposure of minimum of 50 per cent to retail, 35 per cent to mid-corporates and not more than 15 per cent to large corporates so as to minimise the concentration on large corporate borrowers and to ensure continued sustainability.

The bank has been moving towards this direction in a sustainable manner due to the continuous efforts made by it. The yield on the retail and mid-corporate advances has been better than the large corporates, and the risk is wide-spread across the portfolio than that of concentration in the case of large corporate exposure, he said.

Aatma Nirbhar Bharat Abhiyan

Stating that the bank actively participated in the stimulus schemes of the government under the Aatma Nirbhar Bharat Abhiyan, he said it acted swiftly in extending the moratorium benefits, sanctioning of guaranteed emergency credit line loans to the needy and eligible borrowers and also acted quickly on MSME restructuring exercise etc., in a war footing way.

Referring to the Supreme Court order which said that there shall not be any charge of interest on interest / compound interest / penal interest for the period during the moratorium (from March 1 2020 to August 31 2020) on the loans from any of the borrowers even above ₹2 crore, he said the bank had already made ex-gratia payment of difference between compound interest and simple interest for the above six months to the borrowers in specified loan accounts as per the communications received from the Government of India dated October 23 2020 and the RBI Circular dated October 26 2020.

“In the case of remaining accounts, compound interest / penal interest on interest charged on the borrower accounts may have to be refunded and adjusted towards next instalment due within a reasonable time from the date of Supreme Court order dated March 23 2021. Further, with the vacation of Stay Order, NPA marking has also resumed,” he said.

FY 2021-22

For 2021-22, the bank is planning to grow its business at a moderate 12 per cent to take the total business turnover to around ₹1,42,500 crore. With a healthy business growth, ’cost-lite’ liability portfolio, strengthened fundamentals etc., the year 2021-22 should be an ‘Year of Excellence’ for Karnataka Bank, he added.

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ICICI Bank Q4 profit surges 260% to ₹4,402 cr

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Private sector lender ICICI Bank’s standalone net profit more than doubled by 260.4 per cent to ₹4,402.61 crore in the quarter ended March 31, 2021 with a robust increase in net interest income.

Its standalone net profit was ₹1,221.36 crore in the fourth quarter of 2019-20.

On a standalone basis, ICICI Bank’s net profit grew 104 per cent to ₹16,193 crore in 2020-21 from ₹7,931 crore in 2019-20.

Also read: ICICI Bank, SBI Cards see robust growth in credit cards

For the quarter ended March 31, 2021, the bank’s net interest income increased by 17 per cent to ₹10,431 crore from ₹8,927 crore in the same period a year ago.

The net interest margin was 3.84 per cent in the fourth quarter of 2020-21 compared to 3.67 per cent in the quarter ended December 31, 2020 and 3.87 per cent a year ago.

Non-interest income, excluding treasury income, grew three per cent to ₹4,137 crore in the quarter under review.

Provisions stood at ₹2,883.47 crore for the fourth quarter of 2020-21 versus ₹5,967.44 crore in the corresponding quarter in 2019-20.

During the fourth quarter of 2020-21, the bank utilised contingency provision totalling ₹3,509 crore towards proforma NPAs as of December 31, 2020.It also made additional Covid-19 related provisions of ₹1,000 crore during the fourth quarter of 2020-21.

Asset quality was stable. Gross non-performing assets stood at ₹41,373.42 crore or 5.33 per cent of gross advances as on March 31, 2021 as against 4.72 per cent as on December 31, 2020 and 6.04 per cent as on March 31, 2020.

Net NPAs were 1.24 per cent of net advances as on March 31, 2021 versus 1.54 per cent a year ago.

Dividend announced

The board also recommended a dividend of ₹2 per equity share of face value of ₹2 each, subject to requisite approvals.

The board of directors also approved fund raising by way of issuances of debt securities including by way of non-convertible debentures in domestic markets up to an overall limit of ₹20,000 crore by way of private placement and issuances of bonds/notes/offshore certificate of deposits in overseas markets up to $1.50 billion in single/multiple tranches for a period of one year, from the date of passing of resolution by the board.

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Profit surges 261% to Rs 4,403 crore, misses Street estimates, BFSI News, ET BFSI

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NEW DELHI: ICICI Bank on Saturday reported a 261 per cent year-on-year (YoY) rise in net profit at Rs 4,403 crore compared with a profit of Rs 1,221.40 crore in the corresponding quarter last year.

Analysts in an ET NOW poll had projected the profit figure at Rs 4,980 crore.

Net interest income (NII) for the quarter rose 17 per cent YoY to Rs 10,431 crore compared with Rs 8,927 crore in the year-ago quarter. ET NOW poll had forecast the NII figure at Rs 10,306 crore.

The net interest margin (NIM) for the quarter came in at 3.84 per cent compared with 3.67 per cent in December quarter and 3.87 per cent in the year-ago quarter.

The bank made a net provision of Rs 2,883 crore for the quarter, which included Rs 1,000 crore in Covid-related provisions. The private lender had made provisions worth Rs 5,967 crore in the year-ago quarter.

“During Q4, the bank utilised contingency provision amounting to Rs 3,509 crore towards proforma NPAs as of December 31, 2020, as these loans have now been classified as per the RBI guidelines. Further, the bank made additional Covid-19 related provisions of Rs 1,000 crore during Q4-2021,” it said.



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BoM aims to resolve 20-25 stressed MSME loans under pre-packaged resolution process, BFSI News, ET BFSI

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MUMBAI: State-owned Bank of Maharashtra is looking at resolving 20-25 stressed micro, small and medium enterprise (MSME) accounts under the pre-packaged insolvency resolution process, a senior bank official said.

Earlier this month, the government had introduced a pre-packaged insolvency resolution process for stressed MSMEs by amending the insolvency law.

Under a pre-packaged process, main stakeholders such as creditors and shareholders come together to identify a prospective buyer and negotiate a resolution plan before approaching the National Company Law Tribunal (NCLT).

“With the outbreak of the COVID crisis, the stress on hospitality, luxury retail, tour operators, lodging and restaurant operators has increased considerably. I expect around 20-25 stressed MSME accounts to be resolved under the pre-packaged insolvency resolution regime in the coming months,” Bank of Maharashtra’s general manager (credit – large and mid corporate, MSME) Sanjay Rudra said.

He was speaking at a webinar organised by MVIRDC World Trade Center, Mumbai and All India Association of Industries.

He said under the pre-packaged insolvency resolution system, the government has given an opportunity for MSMEs to resolve their stress at an early stage while holding control over their business.

“Now, MSMEs should maintain complete transparency in the whole resolution process to regain trust and confidence of lenders,” Rudra said.

Speaking at the webinar, AZB & Partners cofounder Bahram N Vakil said MSME promoters should file for resolution with the NCLT only after having a robust base plan.

“If the promoters could come out with a resolution plan with a minimum possible haircut for operational creditors and if it is also acceptable to the committee of creditors, then the chances of such plans being challenged in the Swiss challenge auction are less,” he added.

Emphasising that MSME promoters and bankers should work on a reasonable price discovery of the underlying asset, Vakil pointed out that more often, the fair value estimation of the underlying asset is the sore point of litigation among contending parties.



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