Category: Banking & Finance

Indian women took more home loans during pandemic, BFSI News, ET BFSI

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Home is where the heart is, and it is also where the Indian women seem to be putting their money.

Indian women are availing more credit in the form of home loans compared to personal loans and auto loans, according to a study by CRIF High Mark.

As of December-end 2020, about 29 per cent of the Rs 20.6-lakh crore home loan market was accounted for by women.

Maharashtra retains the top position in women home loan borrowers, with an outstanding portfolio of Rs 1,37,845 crore as of December 2020 against an outstanding of Rs 1,31,591 crore a year ago. The book size of home loans availed by women in Karnataka is Rs 65,012 crore as against Rs 60,731 crore a year ago. For Tamil Nadu, it is Rs 65,005 crore against Rs 61,215 crore a year ago.

Compared to other loan segments

Women accounted for 16 per cent each in the case of personal loans (market size of Rs 5.95-lakh crore) and auto loans (Rs 4.58-lakh crore), the CRIF study said.

“Indian women are availing more credit in the form of home loans as compared to personal and auto loans,” it said.

Home loan ticket size

Also, the average home loan and auto loan ticket size of women is higher when compared to their male counterparts, as per an analysis by credit information bureau CRIF High Mark.

The average home loan ticket size for women was higher at Rs 16.69 lakh in December 2020 (Rs 16.38 lakh as of December-end 2019) against Rs 14.71 lakh (Rs 14.45 lakh a year ago) for men. “Size of home loans borrowed by women is 13 per cent higher than those borrowed by men, both having seen a growth of 2 per cent over the last year,” it said.

Being prudent

The average size of loan borrowed by women continues to be smaller than that borrowed by men, while the average auto loan size borrowed by women is 8 per cent higher than that borrowed by men. The share of top five states in the personal loan portfolio outstanding for women has increased by 18 per cent over the previous year, and women borrowers from southern states have higher credit book size as compared to western and northern states, it said.

The break-up

A total of 1.8 crore loans – split into 18 lakh auto loans, 15 lakh home loans and 1.5 crore personal loans – were given out in the first three quarters of 2020-21, it said, adding that this was 40 per cent lower than the 2.97 crore in the year-ago period.

In terms of the value of loans disbursed to women borrowers, public sector banks have had the largest share observed over the past four quarters, followed by NBFCs and private banks, it said.

Maximum loans are given to women in the age group 26-35 having a share of 40 per cent in the overall disbursements in the year 2020, it said, adding that 6.26 crore women borrowers have a credit history as of now.



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Banks to see 15% plus credit growth in FY22-25 period: ICICI Securities

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India Inc, after undergoing a phase of deleveraging over the past few years, is now better positioned and confident to embark on the path of re-leveraging, according to ICICI Securities.

Indian financiers, too, have fortified themselves with ample liquidity/ capital buffer to tap the emerging opportunity, said research analysts Kunal Shah, Renish Bhuva and Chintan Shah.

They observed that Year-To-Date (YTD) growth of 2.2 per cent suggests bank credit growth in FY21 will settle upwards of 5 per cent (at least 3-4 per cent accretion is witnessed in February/March historically).

Post that, the analysts expect 9-10 per cent credit growth in FY22. Recovery in economic activity and derivative effect of increased investments and corporate/government spending on consumption will sustain the momentum of 15 per cent plus growth over FY22-25

Gold loans shine

In a report, ICICI Securities said Banks’ gold loan portfolio has seen 67 per cent compounded annual growth rate (CAGR) growth over the past 2 years and is also up 65 per cent YTD and 132 per cent YoY to ₹43,100 crore.

The report attributed this largely to focus of banks towards secured lending products post loan-to-value (LTV) relaxation.

NBFCs

The analysts said service segment credit (led by lending to non-banking finance companies/NBFCs and financial services) is now gathering pace – up 1.6 per cent YTD/8.4 per cent YoY.

Lending to NBFCs and financial services was up 2.6 per cent MoM/10 per cent YoY.

Loans to public financial institutions have jumped 79 per cent YTD/151 per cent YoY, while lending to housing finance companies (HFC) has shrunk 31 per cent YTD (flat YoY).

“This clearly shows banks’ lending preference more towards public institutions than HFCs.

“NBFCs, after having consolidated for almost 2 years now, significantly deleveraging the balance sheet by running down high risk profile assets, are now more confident to pursue growth opportunities in a risk-calibrated manner,” the analysts said.

Consequently, bank lending to NBFCs should stabilise in FY22 rather than decelerate like FY21.

Retail credit

Retail credit is now inching closer towards double-digit mark (6.7 per cent YTD/9.1 per cent YoY) – housing, credit card, vehicle have picked up buoyancy over the past couple of months, per the report.

It assessed that one of the key segments that has retraced faster than anticipated is credit card – outstanding up 5 per cent YoY, now up 7.6 per cent YTD building over almost 14 per cent YTD decline in May 2020.

ICICI Securities noted that despite strong real estate sales and spike in registrations in housing projects, there has not been much traction in housing portfolio till January 2021.3.7

Housing (including priority sector lending) is up 7.7 per cent YoY and 1.7 per cent MoM, while YTD growth stands at 5.9 per cent which is not significant considering the strong traction seen in real estate deals, it added.

Vehicle loans led by improved sales amidst festive demand is up 2.5 per cent MoM, 6.9 per cent YTD and 7.0 per cent YoY.

MSME sector

The report said the MSME (micro, small and medium enterprise) sector was under a prolonged downcycle of credit growth over the past few quarters.

The sector saw momentum July 2020 onwards, post the introduction of the Emergency Credit Line Guarantee Scheme (ECLGS) by the government as an aid to MSMEs, which were in trouble, it added.

Banks, in particular Public Sector Banks, extended full support to MSMEs which resulted in MSME credit book jumping 33 per cent in a period of seven months to ₹1.27 lakh crore from ₹96,000 crore in June 2020. In terms of YoY growth, it is up 19.1 per cent and up 20.5 per cent YTD.

The report said the agriculture sector is leading the credit growth momentum with 9.5 per cent YTD/10 per cent year-on-year (YoY) growth (1.8 per cent month-on-month/ MoM).

Industry credit

Industry credit is still lagging with YTD decline of 4.3 per cent (down 1.3 per cent YoY). However, downward trajectory in industry credit (particularly large industries) has been arrested since past three quarters and there is a marginal MoM uptick since November.

The analysts underscored that the key sectors that are deleveraging continuously include telecom and other infra, construction, metals and petroleum. On the other hand, textiles, chemical, plastics, paper products have gathered credit momentum.

“However, with revival in consumer demand and rise in government spending, we believe industry growth can emerge as a key driver for credit growth in coming years.

“We believe industry growth can emerge as a key driver for credit growth with 6 per cent growth in FY22 and 13-15 per cent growth over FY23-25,” the analysts said.

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Data sharing, cybersecurity top concern areas for banks, customers: Deloitte

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Data sharing, cybersecurity and data protection have emerged as the top concern areas for the banks as well as customers, according to a Deloitte’s report on open banking.

“About 70 per cent survey respondents feel that greater emphasis should be made towards data protection by institutions,” said the report ‘Open banking: Unleashing the power of data and seizing new opportunities’.

Deloitte said the insights in the paper are supported by extensive research, past work, and credentials, complemented by a survey to understand customer needs with 400 plus respondents across age groups and population codes.

The report further said more than 80 per cent of respondents are uncomfortable in sharing the transaction history of accounts, hinting towards a need for all financial institutions (FIs) to assure customers that their data is secure.

Observing that not only banks, but even customers are wary of data sharing, it said, “Cybersecurity and data protection are the top concern areas across all age groups, followed closely by wariness towards third-party access to data and transparency on data usage”.

Over the years, the value of data has reached unprecedented levels. Countries, globally, are empowering customers with access to institutions of their choice, while jurisdictions are witnessing various approaches to open banking strategy and implementation based on regulatory favourability and industry maturity.

FIs, it said, also have realised that they are now custodians and not owners of data and are trying to move to alternative revenue streams after receiving customer consent.

Sandeep Sonpatki, Partner, Deloitte India said the onset of the pandemic has given a boost to welcome digital and API based banking in India with most salaried respondents already being highly comfortable with digital banking.

“However, 69.3 per cent of respondents in our survey felt that greater emphasis should be placed on data protection by the institutions, which makes it very crucial for banks embarking on a journey to develop API-enabled products and services, to have a well-defined roadmap to produce demand-driven solutions and to remain ahead of the curve while maintaining the principles of customer-centricity, security, and trust,” he said.

The report further said access to data can be leveraged by FIs for lead generation, cross-selling products, risk assessment, pre and post delinquency management, collections strategy, and product development; potentially leading to significant business augmentation, asset quality improvement, operational efficiency, and cost optimisation.

Open banking, the report said, is perceived quite differently across jurisdictions. Some have gone ahead to create a regulator-driven, well-defined framework such as the UK and Australia; while others have followed a more market-driven approach such as India.

The bottom line, however, is providing customers control over sharing their information and servicing them through a targeted, data-driven approach, it added.

Open banking also offers scope to increase customer onboarding at remote locations through quick, paperless documentation, verification, and alternate credit risk assessments.

With the onset of Covid-19 and the focus towards digitisation, the report said it believes the next 12-24 months will see a significant shift towards open banking amongst Indian FIs. Companies will invest in building core capabilities to address customers’ immediate needs.

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IndusInd Bank promoters’ stake increases marginally

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The shareholding of IndusInd Bank promoters in the private sector lender has increased marginally to 16.56 per cent.

According to a regulatory filing by the bank, promoter stake as a percentage of total voting rights was at 15.2 per cent for the period ended February 18, 2021.

As on December 31, 2020, the stake of the promoters stood at 14.67 per cent. Their shareholding as a percentage of total number of shares of IndusInd International Holdings has risen to 12.62 per cent from 11.24 per cent as on December 31, 2020.

The stake of IndusInd Ltd has increased to 3.94 per cent for the period ended February 18, 2021 from 3.43 per cent at the end of the December 2020 quarter.

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LIC to sell stake in IDBI Bank to ease process of disinvestment

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Life Insurance Corporation of India (LIC) has agreed to shed its shareholding in IDBI Bank, a move which will give a boost to the government to completely exit from the IDBI Bank and also ease the process of its strategic disinvestment.

However, it is for LIC to decide on the quantum of stake it would like to part with to aid this process.

As on December 30, 2020, LIC holds 49.24 per cent of stake in LIC while 45.48 per cent is with the Central Government.

A senior official told BusinessLine that LIC is ready to sell shares. The government intends to complete the process in FY21-22. Keeping that in mind, amendments have been proposed in the Finance Bill 2021. The Finance Bill will be taken up for consideration and passage during second leg of the Budget Session, starting Monday.

LIC was brought in when IDBI Bank was in trouble, but now the government thinks that phase is over. Accordingly, they now want LIC to offload its holding. Initially, LIC was hesitant, as it believed that the government had to ask the insurance major to sell stakes.

Special relaxation

Clauses 152, 153, of the Finance Bill seek to amend the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003. Once amendments are approved, The Industrial Development Bank of India Limited shall be deemed to have obtained a (Banking) license under Section 22 of Banking Regulation Act, which will be a condition precedent to disinvestment of government’s stake in the Bank resulting in receipts to government.

In an interview to BusinessLine, Financial Services Secretary Debashish Panda had said, “as a board-run organisation, LIC has its own principles to decide about investment and sale. Whatever they do, they will do it in the interest of policy holders. So, when they are going to off load their stake, it is in their realm … I think LIC would also sense that while government is also disinvesting, it also has a mandate from the insurance regulator to bring down its holding in IDBI Bank to 15 per cent over a period of time. Now, if the government is disinvesting, this means a sizeable, strategic chunk will be available to a potential investor. It could be an attractive proposition and may fetch a better price.”

LIC taking over IDBI was made possible on account of special relaxation provided by the insurance regulator, The Insurance Regulatory and Development Authority of India (IRDAI). The regulations restrict insurer’s holding at 15 per cent stake in a single firm. Also, an insurer cannot have ownership in any non-insurance company. The Reserve Bank of India does not allow non-banking entities to have more than 10 per cent stake in a bank.

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Canara Bank retains MCLR rates

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Canara Bank has retained its marginal cost of funds based lending rate (MCLR) on loans/advances across all tenors with effect from March 7.

Accordingly, the tenor linked MCLRs of the bank is as under: Overnight MCLR – interest rate 6.70 per cent, one-month MCLR – interest rate 6.70 per cent, three-month MCLR – interest rate 6.95 per cent, six-month MCLR – interest rate 7.30 per cent and one-year MCLR – interest rate 7.35 per cent. Repo Linked Lending Rate (RLLR) continues to be at 6.90 per cent.

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IDBI Bank doggedly pursuing a second attempt to sell Sholay fame Minerva theatre

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IDBI Bank seems to be doggedly pursuing the sale of a plot of land, where the iconic Minerva Theatre (of “Sholay” fame) once stood, in South Mumbai. The Bank has launched a second attempt to sell the land in the current calendar year.

In its latest bid to sell the land, the bank has lowered the reserve price for the freehold plot (15,975 square feet) on Dr Dadasaheb Bhadkamkar Marg (popularly known as Lamington Road) to ₹52 crore from ₹57.87 crore in January 2021.

The Bank said the rectangular plot owned by it is ideal for residential/ boutique commercial use. The blockbuster movie “Sholay” ran for five years on the trot from 1975 at Minerva Theatre.

The plot has been on the block for the last many years, but the Bank did not receive bids that passed muster.

IDBI Bank floated a request for a proposal (RFP) to sell this commercial property on January 4, 2021, with date of submitting offers/bids being January 25, 2021. It extended the last date for submission of offers/bids to February 22, 2021.

The Bank has once again floated an RFP (March 5, 2021) for the aforesaid property. The last date for submission of offers/bids is March 16, 2021. It has specified that bids cannot be submitted by a consortium of bidders.

Banks seem to be facing an uphill task in selling commercial properties in Mumbai, going by the experience of IDBI Bank (in respect of Minerva Theatre) and a consortium of banks led by State Bank of India (in respect of the sale of Kingfisher House to partly recover exposure to the defunct Kingfisher Airlines).

The aforementioned development comes in the backdrop of the slowdown in domestic economic activity, which started in 2018-19, and the downturn in the commercial real estate market in the last three-four years.

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G-Sec yields may soften temporarily if last two weekly auctions are cancelled: ICRA

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Government Security (G-Sec) yields could soften temporarily as the Government of India’s (GoI) fiscal deficit may undershoot FY2021 Revised Estimate (RE) by ₹50,000 crore to ₹90,000 crore, possibly resulting in cancellation of the final two G-Sec auctions, according to credit rating agency ICRA.

ICRA observed that the yield for the 5.85 G-Sec 2030 has risen by more than 35 basis points (bps) since its introduction, to 6.23 per cent intra-day as on March 5, 2021, with an uptick in the recent weeks.

This increase in yields is mainly due to higher-than-expected fiscal deficit and borrowings of GoI for FY2021 and FY2022, a rise in US Treasury yields and hardening crude oil prices.

 

“In our assessment, there could be a modest upside to the GoI’s tax revenues, whereas its non-interest non-subsidy revenue expenditure may trail the Revised Estimate (RE) for FY2021. Therefore, the GoI’s fiscal deficit in FY2021 may end up undershooting the RE of ₹18.5 lakh crore by ₹50,000 crore to ₹90,000 crore,” said ICRA in a study.

Accordingly, the agency projected the fiscal deficit in FY2021 at ₹17.6-18.0 lakh crore or 9-9.2 per cent of GDP (as per ICRA’s nominal GDP forecasts), lower than the 9.5 per cent of GDP included in FY2021 RE.

“Based on this, we assess a lower borrowing requirement of the GoI in the remainder of this fiscal year. However, given the substantial devolvement in Friday’s auction, it remains unclear whether the GoI will choose to cancel the last two weekly auctions of Government of India security (G-sec) with a planned amount of ₹49,000 crore, instead of carrying forward larger cash balances,” ICRA’s economists Aditi Nayar, Yash Panjrath, Aarzoo Pahwa and Tiasha Chakraborty said.

If the final two G-Sec auctions for March 2021 are cancelled, ICRA expects the yield for the benchmark 5.85 GS 2030 may temporarily soften from the current levels (6.2324 per cent) to 6.10-6.15 per cent in the remainder of this month.

Subsequently, the bond yields would take cue from the domestic inflation trajectory, upcoming borrowing calendar of the GoI for H1 (first half) FY2022 and the State governments for Q1 (April-June) FY2022, magnitude of Open Market Operations (OMOs), as well as global factors such as movement in US treasury yields, crude oil prices, and overall risk sentiment.

Yields may remain elevated

Based on the available trends, the agency expects the headline CPI inflation to average around 6.1 per cent in FY2021, before easing to 4.5 per cent in FY2022, while remaining above the mid-point of the Monetary Policy Committee’s (MPC’s) current target range of 2 per cent to 6 per cent. ICRA anticipates that the MPC will leave the repo rate unchanged in 2021.

Given the large supply of dated G-sec and state development loans (SDL) that is expected in FY2022 (aggregate net supply projected at ₹16.0-16.5 lakh crore), yields may remain elevated in the absence of sizeable and frequent market operations.

In ICRA’s view, the benchmark yield may rise during Q1 FY2022, to as much as 6.35 per cent by the end of the quarter.

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Bank lending activity now stronger than last year; credit growth at 6.6% in February

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The credit growth of banks ranged between 6.5% to 7.2% in April 2020.

Banks gave out credit at a faster rate during the fortnight ending February 12, as compared to the same period last year, helped by an increase in retail loans. The bank credit growth was recorded at 6.6%, marginally higher from the 6.4% recorded last year, a report by CARE Ratings showed. With this, the credit growth is back in the range that was last seen during the early months of the pandemic. The credit growth of banks ranged between 6.5% to 7.2% in April 2020.

Bank credit growth strong

Bank credit during the fortnight ended February 12 stood at Rs 107 lakh crore, up from Rs 105 lakh crore at the end of December 2021 but at par with the previous fortnight ending January 29. “The retail, agriculture and allied segment have driven overall credit growth in January 2021 growing by 6.7% and 9.5% respectively,” the report showed. The retail segment accounted for 29% of the total credit, against the 28.1% share recorded in the year-ago period. Industrial segment, however, had the largest piece of the pie accounting for 29.6% of the total credit. The services sector accounted for 28% of the total.

“Trade and tourism, hotels and restaurant segment registered a (credit) growth of 15.7% and 8.9% respectively,” the report said. The professional services segment registered a de-growth of 25%, computer software segment too registered de-growth, making them the only two segment to slip.

Mutual fund redemptions aid deposit growth

Deposits with banks have also increased during the period under review. “Deposit growth increased during the fortnight ended February 12, 2021, compared with 11.1% growth registered during the fortnight ended January 29, 2021, and also as compared with the previous year,” CARE Ratings said. The report further added that the outflows in debt mutual fund and equity mutual fund could support the rise in bank deposits. Of these deposits, time deposits grew at 89% while demand deposits account for the remaining 11%.

With deposit growth outpacing credit growth in the banking system, liquidity remained in a surplus position. “The outstanding liquidity in the banking system as of February 26 aggregated Rs 6 lakh crore, higher than a month ago level of Rs 5.76 lakh crore,” the report said.

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Indian Bank to divest stake in asset reconstruction JV ASREC India, BFSI News, ET BFSI

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State-owned Indian Bank on Friday said it will divest stake in joint venture entity ASREC (India) Ltd as part of asset monetisation exercise. The bank holds a 38.26 per cent stake in ASREC (India) Ltd.

As part of the monetisation of the bank’s non-core assets, the board of directors of the bank in its meeting held on March 5, 2021, accorded in-principle approval for partial/full divestment of the bank’s stake in joint venture ASREC (India) Ltd, Indian Bank said in a regulatory filing.

ASREC is an asset reconstruction company in which Bank of India, Union Bank of India, LIC and Deutsche Bank are the shareholders.

The company was granted a certificate of registration by the Reserve Bank of India in October 2004 to carry out activities under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002.

The company’s authorised equity capital was Rs 125 crore and the aggregate paid-up equity and other equity was Rs 146.01 crore as of March 31, 2019, according to its website.

ASREC acquires non-performing assets (NPAs) from the banks/financial institutions at mutually agreed prices with the objective to maximise the returns through innovative resolution strategies.

In March 2017, the finance ministry had advised the state-owned banks to prepare a list of their non-core assets and look at disposing of them at an opportune time. KPM BAL



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