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The board of directors of Kotak Mahindra Bank will meet on March 12 to consider and approve the declaration and payment of dividend on 1,00,00,00,000 Nos. 8.1 per cent Non-Convertible Perpetual Non-Cumulative Preference Shares, the bank said in a regulatory filing on Monday.
The record date fixed for the purpose of payment of dividend is March 19, it further said.
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The microfinance industry is slowly inching towards pre Covid levels, both in terms of disbursements as well as the quality of portfolio. Disbursements in Q3 FY21 was around 96 per cent of the same period last year.
In the 36th issue of the Micrometer, MFIN (Microfinance Institutions Network) said that disbursements are expected to reach normal levels by the end of Q4 FY21 on the back of increased demand for loans.
The gross loan portfolio (GLP) of the microfinance industry stood at ₹2,32,648 as on December 31, 2020, an increase of around 10 per cent against ₹2,11,302 crores as on December 31, 2019.
Sequentially, loan disbursals during the October to December 2020 quarter jumped by over 90 per cent to ₹59,507 crore compared to ₹31,261 crore during Q2 FY21. The number of loans disbursed also doubled to 1.79 crore (0.88 crore), signifying steady progress towards normalcy.
The GLP of NBFC-MFIs grew by nearly 11 per cent at ₹74,712 crore as on December 31, 2020, compared to ₹67,255 crore in the same period last year. Sequentially, it increased by five per cent, compared to ₹71,147 crores as on September 30, 2020.
“It is heartening that the green shoots seen at the end of Q2 have proved to be true and sector disbursements are reaching almost at pre-Covid levels, backed by increased demand for loans to restart livelihoods. The disbursements during Q3 FY21 are around 96 per cent of Q3 FY20, indicating that it should reach normal levels by the end of Q4 FY21,” said Alok Misra, CEO and Director, MFIN, in a press statement.
There has also been an improvement in liquidity and the industry has been receiving funding support, both by way of debt and equity.
NBFC-MFIs received a total of ₹10,876 crores in debt funding, which is over 10 per cent higher compared to ₹9,854 crore in Q2 FY21.
Total equity of the NBFC-MFIs grew by nearly 17 per cent to ₹18,077 crores as on December 31, 2020, compared to ₹15,508 crore in the same period last year.
“The lenders and investors continue to show full confidence in the sector as evident by the debt funding going up 10.4 per cent compared to the previous quarter and equity moving up 16.6 per cent compared to the corresponding quarter last year,” Misra said.
Despite geographical variation, the portfolio quality is moving in the range of around 88-92 per cent.
The microfinance industry serves around 5.83 crore unique borrowers with 10.50 crore loan accounts.
The average loan disbursement per account for Q3 FY21 stood at ₹34,070, which is almost 19 per cent higher compared to ₹28,620 in the same period last year.
Banks hold the largest share of the portfolio in micro-credit, with a total loan outstanding of ₹97,956 crore, accounting for around 42 per cent of the total advances. NBFC-MFIs account for around 31 per cent at ₹72,128 crore, small finance banks hold around 17 per cent at ₹39,062 crore, NBFCs account for another nine per cent, and other MFIs account for around one per cent of the total loan portfolio.
In terms of regional distribution of GLP, east and north east account for 41 per cent of the total NBFC-MFI portfolio; south 27 per cent, west 14 per cent, north 11 per cent; and central eight per cent.
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Rating agency Crisil, on Monday, said its credit ratio (upgrades to downgrades) has been inching closer to 1 between October and February this fiscal, with a recovery in demand that has led to “guarded optimism” about the credit quality of India Inc.
“These five months saw as many as 244 upgrades compared with 208 for the whole first half,” it said, adding that downgrades continue to be material because the end of moratorium on debt servicing has impacted vulnerable companies.
According to Subodh Rai, Chief Ratings Officer, Crisil Ratings, the improvement in credit ratio was driven by more upgrades in moderately resilient sectors such as construction, engineering and electricity generation, which got support from the relaxation of lockdown, revival in demand and higher commodity prices.
“In comparison, the credit ratio for the first half had fallen to a decadal low of 0.54,” he said.
The agency said the turnaround has been sharper in investment-linked sectors such as construction and engineering, and consumption-linked sectors such as packaging. The credit ratio in these sector has already doubled, compared with the first half, supported by macroeconomic revival.
But in low-resilience sectors such as hotels and resorts, real estate developers and airport operators, downgrades continue to outpace upgrades due to their discretionary nature and leveraged balance sheets.
Akshay Chitgopekar, Director, Crisil Ratings, said: “We maintain a cautiously optimistic outlook on credit quality for the near to medium term, supported by normalisation of economic activity, good agriculture performance and sustained rural demand, and the Budget proposal to infrastructure investments.”
He, however, warned of a second wave of pandemic – especially with mutations that undermine the effectiveness of vaccines – leading to containment measures can derail the ongoing recovery.
According to Crisil, other downside risks to the outlook include slower-than-anticipated demand growth, especially for services, continuing job losses, and sub-par implementation of the growth-oriented fiscal measures in the Union Budget.
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Private sector RBL Bank is eyeing aggressive branch expansion over the next few years, and plans to open at least 75 new branches annually.
“We have always, at the maximum, done 30 to 40 branches, except for a year or two when we did 55 to 60 branches. But now, we have agreed to do upwards of 75 branches a year for the next two-three-four years,” said Surinder Chawla, Head, Branch Banking, RBL Bank.
As on December 31, 2020, the lender had about 403 branches and hopes to end this fiscal with about 425 branches.
In an interaction with BusinessLine, Chawla noted that with branches come multiple new customers and also the opportunity to cross-sell.
Explaining the strategy for the branch expansion, he said, “As a bank, we are very small right now in terms of our network, which is not even present in some Capital cities of the country. So, we have a bit of catch-up to do.”
With the Covid-19 pandemic and lockdown, the lender has also invested significantly in digital technologies.
“What digital does is, first, it increases the catchment area for the branch; second, it can give a significant fillip in terms of cost savings for operations; and three, in terms of acquisition, it can get a much higher number of scale of customers than what one would get only from the branches,” said Chawla.
“Adding a branch actually serves multiple purposes for our customers; it gives us liability granular, it gives us stability, it gives a fee,” he said.
RBL Bank has also been working on increasing granularity of retail deposits and retiring high-cost chunky money, he further noted.
“Our retail has been growing very well. On the retail side, we are going to end the year at about 60 per cent growth on the CASA,” he said, adding that the bank has also overcome issues that emanated after the YES Bank crisis last year when there was a flight of deposits from many private banks.
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HDFC Bank on the occasion of International Women’ Day has announced the launch of a dedicated programme for mentoring women entrepreneurs by women leaders at the bank.
Under the SmartUp Unnati programme, over the next one year, senior women leaders from HDFC Bank will mentor women entrepreneurs in helping them achieve their goals, HDFC Bank said in a statement on Monday.
“This programme is available only to existing customers and will initially target more than 3,000 women entrepreneurs associated with the bank’s SmartUp programme,” it further said.
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75% of retailers surveyed as part of report said that women in the age group of 31-40 years were amongst the most digitally adept, followed by females between the ages of 20-30. Further, the age group of 20-30, also contributed to 25% of all women consumer for financial services, in urban and metro centres.
Other widely used forms of payment methods, apart from Cash and AePS include the United Payment Interface (UPI) and Debit Cards, which saw usage preferences ranging from 5-15%, amongst varying age groups. At retail touch points, popular services availed by females included cash withdrawals, mobile recharges and bill payments, with the transactions being conducted by women in the age bracket of 31-40 years of age and 20-30 years of age, respectively.
It was further found that more than 76% of women operated their bank account themselves, primarily for cash withdrawal and cash deposits. Notably, more evolved services such as insurance and bachat khata found few takers, with less than 5% and 12% usage, respectively.
Further findings revealed by the report include that 32% of women visiting kiranas and retail outlets for financial tranactions had access to smartphones and were also active users of IM app Whatsapp.
Anand Kumar Bajaj, Founder, MD & CEO, PayNearby, commenting on the findings said “The study showed that post COVID, the awareness among women customers to save for the rainy day have substantially gone up, with more than 32% of women customer indicating this as a priority for them. However, informal savings at home still seems to be the trend, with less than 12% of women customer showing awareness for a formal savings product,” adding “To bring change and inculcate the habit of formal savings in every household, we require coordinated efforts from all stakeholders, and at PayNearby our commitment towards that continues unabated.”
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SBI Cards and Payment Services Ltd (SBI Card) on Monday said it plans to raise up to ₹2,000 crore through issuance of debt securities in one or more tranches.
A meeting of the board of directors of the company is scheduled to be held on Friday (March 12) to consider and approve raising of funds by way of issuance of non-convertible debentures, aggregating up to ₹2,000 crore, SBI Card said in a regulatory filing.
Also read: Rama Mohan Rao Amara appointed MD and CEO of SBI Card
The funds will be raised in one or more tranches over a period of time, it said.
Stocks of SBI Card were trading at ₹1,068.15 apiece on BSE, up 0.93 per cent from its previous close.
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About 20 per cent of the total, who are into garment-making overcame the shortfall in demand by adding new lines of activities like making masks with the help of working capital from the bank. (Representational image: IE)
The pandemic-ravaged months have taken a heavy toll on everyone and especially on women, who sadly were the first set of people in many households to take a hit on their careers – either due to a job loss or by opting out to help at home. But those who have engaged closely with women in their journey during the pandemic seem to have witnessed powerful stories of hope and entrepreneurship.
“Women may have been the worst-hit during the pandemic but we found them redefine entrepreneurial zeal and not only were they able to supplement shortfalls in their household incomes but were quick to adopt and pivot businesses to new realities,” says Jayshree Vyas, the managing director of SEWA Bank, a leading Gujarat-based cooperative bank, focused only on women – especially those that are either day-wage earners, migrant labour or running small businesses. SEWA stands for Shri Mahila Sewa Sahakari Bank.
Vyas does point out that there were challenges galore for all, including banks and that SEWA Bank was no exception. “Despite keeping the bank operations on, as it was categorized as essential services, and with all the challenging of skeletal staff attendance and physical distancing precautions, the bank in this challenging year has managed to grow its total balance sheet,” says Vyas. “While maintaining the revenue and profitability growth will be a challenge, our total balance sheet size has increased from Rs 425 crore pre-pandemic to around Rs 500 crore currently and we have added 30,000 new depositors,” she says.
What stands out during the pandemic months, she says, is the way in which its borrowers, who are all women, responded. About 20 per cent of the total, who are into garment-making overcame the shortfall in demand by adding new lines of activities like making masks with the help of working capital from the bank. Another 20 per cent of who are into foods-related businesses, sought access to working to build home-made foods and help in transportation linkages for home delivery. What has been new learning for Vyas was the financial prudence of women migrant labour. “About 30 per cent of our total members (the term she uses for borrowers) are migrant labour. Almost all of them have returned and almost 98 per cent of them have repaid their loans too,” says Vyas. She therefore finds, if you give women access to the capital they can come up with new ways to approach the business or pivot it to a new reality,” says Vyas. For instance, knowing that many people were managing without maids at home and doing their own cleaning and swapping, took to making long-handled brooms and supplying locally. In fact, Vyas says the desire to augment household income and to focus on savings was so strong that in just during the months of lockdown we saw around 5,000 new accounts open up in some of the worst affected areas with women seeking access to capital and to new saving options. SEWA Bank, where vegetable vendors make up to 30 per cent of total members, has 80 per cent of its total membership in urban areas and the rest in rural areas. It operates in six districts of Gujarat, including Ahmedabad, where it is headquartered.
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Indian banks’ improved financial metrics do not fully reflect the impact of the coronavirus pandemic, cautioned Fitch Ratings.
The global credit rating agency expects both impaired loans and credit costs to rise as forbearance and easy-liquidity conditions ease even as it projected India’s real GDP growth at 11 per cent in FY22.
Also read: RBI allows AD Cat-I Banks to post and collect margin in India
Fitch believes the state-led banks are more vulnerable than private banks, given their participation in relief measures, while their earnings and core capital buffers are weak.
The agency observed that the operating environment remains challenging as the banking sector tries to balance a gradually recovering economy with preserving moderate loss-absorption buffers.
Indian banks’ aggregate non-performing loan (NPL) ratio fell to 7.2 per cent by end-December 2020 (end-March 2020: 8.5 per cent).
Fitch said NPLs exclude unrecognised impaired loans under judicial stay, restructured loans, loans under watch and loans overdue by 60 plus days, which formed 4.2 per cent of loans.
It underscored that average contingency reserves of 0.7 per cent of loans are inadequate to absorb heightened stress, although private banks are well above the average.
Fitch sees high risk of a protracted deterioration in asset quality with more pressure on retail and stressed SMEs loans (8.5 per cent of loans, 1.7 per cent state guaranteed).
Credit growth was weak at 4.5 per cent in the first nine months of the financial year ending March 2021 (9MFY21), in line with Fitch’s expectations, as banks remained risk averse.
Fitch said private banks are better poised to tap growth opportunities in 2021 as their higher contingency reserves offer better earnings and capital resilience.
The state-led banks’ average buffer between pre-provision profits and credit costs is only 160 basis points (bps) versus 340 bps at private banks, it added.
Fitch assessed that state-led banks also have limited core capital buffers (average common equity Tier 1 ratio: 9.8 per cent) in the event of further asset stress, which is unlikely to be remediated solely via the state’s planned capital injections of $5.5 billion (0.7 per cent of risk-weighted assets) in FY21 and FY22.
Also read: India needs to make efforts to get rating upgrade in line with fundamentals: CEA
The agency emphasised that the plan is well below its estimated capital requirement of $15 billion to $58 billion under varying stress scenarios.
The strategy to either not lend or lend only to capital-efficient sectors is likely to continue as low market valuations leave state-led banks with limited scope to access fresh equity on their own, it added.
Fitch said the faster-than-expected GDP rebound in 3QFY21 (October-December 2020) is positive, but many sectors continue to operate well below capacity.
In addition, the decline in private consumption (3QFY21: -2.4 per cent), and reports of rising urban utility bill defaults and social security withdrawals point towards stress among retail customers.
Fitch believes that the SME sector faces a litmus test in FY22 as short-term credit support extended in FY21, which, in its view, deferred the recognition of stress, comes up for refinancing.
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Three persons are in the race to being elected as a shareholder director in Punjab National Bank (PNB), the country’s second largest public sector bank, at the upcoming extraordinary general meeting (EGM) of shareholders on March 17.
The Board of Directors of PNB had, at its meeting held on Friday, found three candidates — out of total nominations of four persons received by the bank as of March 2 — as “fit and proper” for being elected as a shareholder director of the bank, sources said.
PNB convenes EGM to elect a 2nd shareholder director to its Board
The three persons, all aged 66 years, who are in the fray are Gautam Guha (from New Delhi), Padmanabhan A A (from Chennai) and Ramesh Chandra Agrawal (from Prayagraj), they added. All the three have experience in the area of banking.
PNB is now looking to rope in its second shareholder director on the strength of a recent Finance Ministry decision empowering Public Sector Bank (PSB) boards to act on the decisions that remained held up at various board-level committees due to lack of quorum arising from vacancies or recusal by existing directors.
PNB to raise ₹2,500 cr via AT-1 bonds by March 15: CEO
A shareholder director is one who is elected from among shareholders other than the Central government. A public sector bank has two main categories of shareholders — Central government and ‘other shareholders’ (public shareholders). In India, all the public sector banks are listed entities although none of them are registered as companies under the Companies Act. There is separate legislation to govern the Board composition of such PSBs.
The elected shareholder director is finally appointed by the Nomination and Remuneration Committee (NRC) of the bank Board concerned. PNB currently does not have the requisite NRC strength and is therefore looking to get another shareholder director through Board approval route after election of such a director by the shareholders of the bank at an EGM.
PNB has moved to get another shareholder director after its recent nearly ₹3,788-crore qualified institutional placement (QIP), which saw the Centre’s shareholding in the bank drop from 85.59 per cent to 76.87 per cent. With the Centre’s shareholding coming down, PNB became technically eligible to have two shareholder directors.
Having an additional shareholder director on a Board is useful for banks like PNB as all shareholder directors are counted as independent directors for the purpose of compliance with SEBI regulations for listed entities.
In public sector banks, there are executive directors appointed by Central government, there is government nominee director (official of Central government), there is an RBI nominee director, two employee directors (representing workmen and officers) and other directors (shareholder directors).
This will be the second shareholder director for PNB besides Asha Bhandarker, who was elected on September 12, 2018, for a period of three years.
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