Category: Banking & Finance

Gold loans: A place to be in, for banks

Banking & Finance

[ad_1]

Read More/Less


Gold loans stood out in banks’ loan portfolio in the first nine months of the current financial year, both in terms of growth and asset quality.

Banks aggressively expanded their loan against pledge of gold ornaments and jewellery (jewel loans) portfolio in the wake of the Covid-19 pandemic.

Gold loans shine as small businesses, borrowers look for ready cash

During the first nine months of FY2021, banks preferred to lend either against highly liquid collateral such as gold or Government guarantee as they feared the economic downturn would affect customers’ ability to repay loans.

State Bank of India’s (SBI) personal gold loan book jumped four times in six months (up to December-end 2020) to stand at ₹17,492 crore.

Mobile app for gold loan launched in Kochi

Gross non-performing assets (GNPAs) of India’s largest bank was only at 0.04 per cent of its gold loan portfolio, per the bank’s analyst presentation. The bank, however, did not disclose the size of its agriculture gold loan in the presentation.

Bank of Baroda’s (BoB) agriculture gold loan portfolio was up 29 per cent year-on-year (yoy) to ₹21,116 crore as at December-end 2020 (₹16,325 crore as at December-end 2019).

“When we look at the agriculture side, nearly 40 per cent of the growth that we see in agriculture has come from gold loans. Gold loans are 20-21 per cent of our total agriculture book.

“…And we do hope that going ahead, 40-50 per cent of agricultural growth will come from gold loans,” Sanjiv Chadha, MD & CEO, BoB, told analysts last month.

Risk-averse market

The gold loan portfolio of Thrissur (Kerala) headquartered CSB Bank jumped about 60 per cent yoy to ₹5,644 crore as at December-end 2020 (₹3,523 crore).

Gold loans accounted for 40 per cent of the private sector bank’s total advances against 30 per cent in the year-ago quarter.

“We will not slow down the gold loan growth. We will increase the growth of the other products so that as a proportion (of total advances), gold loan will go down. I think, this (gold loan portfolio) is only about ₹6,000 crore. There is a big public sector bank, which has ₹70,000 crore of gold loans, so gold loan is a place to be in today,” C VR Rajendran, MD & CEO, CSB Bank, told analysts last month.

Federal Bank’s gold loan portfolio registered a y-o-y growth of 67 per cent and crossed ₹14,000 crore in the third quarter of FY2021, per its third quarter analyst presentation.

The proportion of gold loans in total advances in the case of Karur Vysya Bank (KVB) increased to 23 per cent as at December-end 2020 as against 17 per cent as at December-end 2019.

As at December-end 2020, KVB’s gold loan portfolio stood at ₹12,069 crore (₹8,580 crore)

Karthik Srinivasan, Group Head — Financial Sector Ratings, ICRA, observed that gold prices have been going up and this has been providing comfort to both lenders and borrowers.

“The market is still risk-averse. And banks, especially public sector banks, have been offering gold loans at relatively finer rates. So, that is an option that many people are availing,” he said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , , ,

Srei reports whopping loss of Rs 3,810cr in Q3, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Srei Infrastructure Finance Ltd on Sunday said it has posted a consolidated net loss of Rs 3,810 crore during the third quarter of the current fiscal on account of higher and accelerated provisioning as a prudent measure. The company had reported a net profit of Rs 60 crore in the year-ago period.

Its revenue from operations for the October-December period of the current fiscal stood at Rs 490 crore as against Rs 1,450 crore in the corresponding quarter last year.

The company said its total consolidated provisioning was at Rs 3,100 crore for the period under review and the net worth stood at Rs 296 crore as of December quarter of FY21.

The Kolkata-based company claimed that the COVID-19 pandemic had impacted its recovery, leading to an asset- liability mismatch.

“The current financial year has been one of the most challenging years in our history of more than three decades.

“The COVID-19 induced stress on our asset quality coupled with the credit squeeze in the NBFC sector has created an unprecedented situation. As a matter of prudence…we have decided to increase our provisions significantly,” Srei chairman Hemant Kanoria said.

The lender had in November 2020 said a special audit of the company and its subsidiary, Srei Equipment Finance Ltd, was undertaken by an auditor appointed by the Reserve Bank of India.

A special audit is typically undertaken if there is a sharp deterioration in the quality of a lender’s book.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Finance Ministry to infuse Rs 3,000 crore in general insurance companies this quarter, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The Finance Ministry will infuse Rs 3,000 crore capital into state-owned general insurance companies during the current quarter in a bid to improve their financial health. Last year, the Union Cabinet headed by Prime Minister Narendra Modi cleared proposal to provide capital support to National Insurance, Oriental Insurance and United India Insurance.

The cabinet had also decided to increase the authorised share capital of National Insurance Company Limited (NICL) to Rs 7,500 crore and that of United India Insurance Company Limited (UIICL) and Oriental Insurance Company Limited (OICL) to Rs 5,000 crore each to give effect to the capital infusion decision.

Recently, the government sought Parliament nod for gross additional expenditure of Rs 6.28 lakh crore for 2020-21 as part of second and final batch of supplementary demands for grants.

This included Rs 3,000 crore for providing additional funds towards recapitalisation of insurance companies.

The infusion will be done after the supplementary demands for grants is passed by Parliament which will reconvene on March 8.

The capital infusion will enable the three public sector general insurance companies to improve their financial and solvency position, meet the insurance needs of the economy, absorb changes and enhance the capacity to raise resources and improve risk management.

Finance Minister Nirmala Sitharaman in the Budget announced privatization of two public sector banks and one general insurance company in 2021-22 beginning April.

In 2017, state-owned companies New India Assurance Company and General Insurance Corporation of India went public.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Non-life insurers direct premium rises by 6.7 per cent in Jan

Banking & Finance

[ad_1]

Read More/Less


Non-life insurance companies registered a 6.7 per cent increase in their gross direct premium collection in January at Rs 18,488.06 crore, according to the IRDAI data.

All non-life insurance companies had underwritten direct premium of Rs 17,333.70 crore in the same month last year.

Among these, 25 general insurance companies witnessed 10.8 per cent increase in their collective premium in the first month of 2021 at Rs 16,247.24 crore as against Rs 14,663.40 crore in January 2020, according to Insurance Regulatory and Development Authority of India (Irdai) data.

Five pure-play or standalone private sector health insurers, however, posted a marginal decline of 1.34 per cent in their premium underwriting at Rs 1,510.20 crore during the month as compared to Rs 1,530.70 crore a year ago.

Notably, there were seven standalone private sector health insurers, however, with the takeover of Reliance Health Insurance portfolio by Reliance General Insurance and the merger of HDFC Ergo Health Insurance with HDFC Ergo General Insurance (wef November 2020), the count decreased to five.

On a cumulative basis, gross premium written by all the non-life insurers during April-January period of FY21 grew by 2.76 per cent to Rs 1,63,670.13 crore as against Rs 1,59,275.33 crore in year ago period.

For general insurers, the cumulative premium till January 2021 rose by 1.91 per cent to Rs 1,40,999.04 crore; stand-alone health insurers witnessed 8.04 per cent increase at Rs 12,108.73 crore.

The premium of two specialised PSU insurers grew by 8.77 per cent to Rs 10,562.36 crore in January.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Three public sector general insurers lose market share in 2019-20: IRDAI report

Banking & Finance

[ad_1]

Read More/Less


The market share of public sector general insurers fell to 38.78 per cent in 2019-20 from 40.52 per cent in 2018-19 although in the life insurance sector, Life Insurance Corporation of India has roughly managed to maintain its market share in the period with only a marginal decline.

“In case of public sector general insurers, all four companies expanded their business with an increase in respective premium collections over the previous year,” said the Annual Report 2019-20 of the Insurance Regulatory and Development Authority of India (IRDAI). The report revealed that the market share of three of the four public sector insurers, except New India Assurance, has decreased from the previous year.

New India grows

The market share of New India marginally increased to 14.19 per cent in 2019-20 from 14.11 per cent in 2018-19.

The market share of United India Insurance, National Insurance and Oriental Insurance declined to 9.27 per cent, 8.08 per cent, and 7.24 per cent in 2019- 20 from 9.69 per cent, 8.93 per cent and 7.79 per cent in 2018-19, respectively.

“New India, which collected direct premium of ₹26,813 crore, once again remained as the largest general insurance company in India,” it further revealed.

The market share of private general insurers increased to 48.03 per cent in 2019-20 from 47.97 per cent in the previous fiscal.

Life Insurance

The market share of LIC remained at 66.22 per cent in 2019-20 marginally lower than the 66.42 per cent in the previous year, the report showed.

The market share of private insurers slightly increased from 33.58 per cent in 2018-19 to 33.78 per cent in 2019-20.

In terms of number of new policies issued, LIC witnessed a growth of 2.3 per cent in 2019-20 while the private sector registered a decline of 4.05 per cent compared to the previous year. Overall during 2019-20, life insurers issued 2.88 crore new individual policies, out of which LIC issued 2.18 crore policies (75.91 per cent) and the private life insurers issued 69.50 lakh policies (24.09 per cent), the report showed.

Insurance penetration

Insurance penetration also increased in 2019-20 in both the life and general segments.

After a small decline in 2018 to 2.74 per cent, life insurance penetration increased to 2.82 per cent in 2019.

The penetration of non-life insurance sector in the country has gone up from 0.56 per cent in 2001 to 0.94 per cent in 2019.

[ad_2]

CLICK HERE TO APPLY

Leave a comment

Three public sector general insurers lose market share in 2019-20: IRDAI report

Banking & Finance

[ad_1]

Read More/Less


The market share of public sector general insurers fell to 38.78 per cent in 2019-20 from 40.52 per cent in 2018-19 although in the life insurance sector, Life Insurance Corporation of India has roughly managed to maintain its market share in the period with only a marginal decline.

“In case of public sector general insurers, all four companies expanded their business with an increase in respective premium collections over the previous year,” said the Annual Report 2019-20 of the Insurance Regulatory and Development Authority of India (IRDAI). The report revealed that the market share of three of the four public sector insurers, except New India Assurance, has decreased from the previous year.

New India grows

The market share of New India marginally increased to 14.19 per cent in 2019-20 from 14.11 per cent in 2018-19.

The market share of United India Insurance, National Insurance and Oriental Insurance declined to 9.27 per cent, 8.08 per cent, and 7.24 per cent in 2019- 20 from 9.69 per cent, 8.93 per cent and 7.79 per cent in 2018-19, respectively.

“New India, which collected direct premium of ₹26,813 crore, once again remained as the largest general insurance company in India,” it further revealed.

The market share of private general insurers increased to 48.03 per cent in 2019-20 from 47.97 per cent in the previous fiscal.

Life Insurance

The market share of LIC remained at 66.22 per cent in 2019-20 marginally lower than the 66.42 per cent in the previous year, the report showed.

The market share of private insurers slightly increased from 33.58 per cent in 2018-19 to 33.78 per cent in 2019-20.

In terms of number of new policies issued, LIC witnessed a growth of 2.3 per cent in 2019-20 while the private sector registered a decline of 4.05 per cent compared to the previous year. Overall during 2019-20, life insurers issued 2.88 crore new individual policies, out of which LIC issued 2.18 crore policies (75.91 per cent) and the private life insurers issued 69.50 lakh policies (24.09 per cent), the report showed.

Insurance penetration

Insurance penetration also increased in 2019-20 in both the life and general segments.

After a small decline in 2018 to 2.74 per cent, life insurance penetration increased to 2.82 per cent in 2019.

The penetration of non-life insurance sector in the country has gone up from 0.56 per cent in 2001 to 0.94 per cent in 2019.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

DHFL posts net loss of Rs 13,095.38 crore in Q3

Banking & Finance

[ad_1]

Read More/Less


Dewan Housing Finance Corporation Ltd posted a consolidated net loss of Rs 13,095.38 crore in the third quarter of the fiscal year as against a net profit of Rs 934.31 crore in the same period a year ago.

For the quarter ended December 31, 2020, total revenue from operations of DHFL was Rs 2,206.58 crore as against Rs 2,431.81 crore in the corresponding quarter last fiscal.

According to the notes to the results for the third quarter, additional transactions of Rs 1,03,984 lakh were identified and reported to stock exchanges and National Housing Bank.

 

“The company has made provisions as per NHB guidelines on provisioning pertaining to fraud accounts,” it said.

Further, investments by way of unsecured Inter Corporate Deposits including interest receivable amounting to Rs 4,02,973 lakh are outstanding as on December 31, 2020.

 

“As no securities are available to the company, the provision of the entire outstanding amount has been made as a prudent measure,” it said.

DHFL’s total wholesale portfolio amounting to Rs 53, 16,4 70 lakh has been “fair valued” as on December 31, 2020 at Rs. 9,85,320 lakh, with the resulting fair value loss aggregating Rs 43,31,150 lakh.

Of this, fair value loss of Rs 24,05,166 lakh has been accounted up to September 30, 2020 and balance loss of Rs 19,25,984 lakh has been charged to the Statement of Profit and Loss for the quarter ended December 31, 2020, the notes further said.

The Committee of Creditors of DHFL has voted for the resolution plan submitted by Piramal Enterprises Ltd.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

Loan recovery: Ministry gives more power in the hands of NBFCs

Banking & Finance

[ad_1]

Read More/Less


The Finance Ministry has operationalised a budget announcement that lowered the minimum loan size eligible for debt recovery by NBFCs under the SARFAESI law to ₹ 20 lakhs from the existing level of ₹ 50 lakhs.

This move could come in handy for large non-banking finance companies (NBFCs) with a minimum asset size of ₹ 100 crore for making loan recovery under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002.

Such NBFCs can now take recourse to SARFAESI law for loan sizes at minimum ₹ 20 lakhs or more, implying that home loans to lower to middle-income groups as well as loans extended as Loans against Property (LAP) for small and medium businesses would also get covered for recovery using this route is case of defaults, said industry observers.

SARFAESI empowers banks and financial institutions to attach pledged assets of the borrower in the event of non-payment of dues by the borrower.

It may be recalled that late former Finance Minister Arun Jaitley had in the 2015-16 Budget announced that certain NBFCs would be allowed to use SARFAESI to make recoveries of defaulted loans.

Starting then with NBFCs having asset size of ₹ 500 crore and above and for loan sizes of ₹ 1 crore and above, the government had year-after-year been lowering the threshold. Now in the latest budget, this facility has been given for loan sizes of ₹ 20 lakh and above from a level of ₹ 50 lakh prescribed in last year’s Budget.

Reacting to the latest move of the Department of Financial Services in the Finance Ministry, Raman Aggarwal, Co-Chairman, Finance Industry Development Council (FIDC) told BusinessLine that such threshold has been there only for NBFCs and not banks. NBFCs should be allowed to enforce security through SARFAESI for any loan amount.

“We welcome this step. But FIDC has been representing for some time that there should not be any limit or threshold. Even the U.K.Sinha Committee on MSMEs had recommended that there should not be any thresholds. It goes against MSME lending as such lending is usually small ticket sized lending”, he said.

Srinath Sridharan, Independent markets commentator, said: “It is common place to find SME/MSME borrowers using the route of Loan Against Property (LAP) to fund their businesses. In that light, this reduced threshold amount of ₹ 20 lakh for initiating SARFAESI proceedings could hurt genuine business borrowers who have used LAP for lack of other SME funding.

Seen with the lens where the threshold for SME defaults to be taken under IBC proceedings was moved to ₹1 crore, this quantum need to be relooked, in toto along with the IBC threshold”.

[ad_2]

CLICK HERE TO APPLY

Leave a comment ,

NPAs to be nebulous owing forbearance dispensations, restructuring schemes: CARE

Banking & Finance

[ad_1]

Read More/Less


Non-performing assets (NPAs) of Banks this year would tend to be a bit nebulous due to the various forbearance dispensations that have been given besides the restructuring schemes that have been introduced, according to CARE Ratings.

Banks, however, have been more proactive in terms of being cognizant of the regulatory environment and the fact that there could be an increase in quantum of NPAs once normalcy returns.

“This would affect not just corporate loans but also those pertaining to the SME (small and medium enterprise) segment and retail borrowers,” the credit rating agency said in a note.

Referring to the Reserve Bank of India’s (RBI) Gross NPA projection in its latest Financial Stability Report, CARE said even the baseline scenario, which also considers the withdrawal of the regulatory dispensation, is quite high. These stress scenarios will get reflected in a sharp increase in the slippage ratio, it added.

As per the latest (January 2021) FSR, GNPA ratio of scheduled commercial banks (SCBs) could rise to 13.5 per cent by September 2021 from 7.5 per cent in September 2020 under the baseline scenario.

Cumulative provisions

Cumulative provisions made by Banks for the year (which includes for NPAs among others) was around Rs 1.78 lakh crore in these three quarters.

Per CARE’s assessment, the picture so far this year has been positive with a tendency for gross NPAs to move down both in terms of amount as well as ratio of outstanding credit.

“There was a contrarian movement in June after which there has been a decline. The decline in NPAs indicates negative slippage ratio — incremental NPAs to outstanding credit at the start of quarter,” the agency said.

GNPAs of 30 Banks rose from 7.94 per cent of gross advances as at March-end 2020 to 8.20 per cent as at June-end 2020. However, GNPAs declined to 7.72 per cent as at September-end 2020 and 7.01 per cent as at December-end 2020.

Referring to RBI’s Report, the agency said it had indicated that as of September 2020, the gross NPA ratio was above 20 per cent for gems and jewellery and construction sectors and above 15 per cent for mining and engineering. For industry it was 12.4 per cent.

“Retail had a ratio of 1.7 per cent which can be an area of concern going ahead. Further, large borrowers had a gross NPA ratio of 11.3 per cent,” it added.

Distribution of GNPAs

As per CARE’s analysis of the third quarter results of 30 Banks, only HDFC Bank had GNPA of less than 1 per cent. Eleven Banks had GNPA in the 1-4 per cent range and 7 banks had GNPAs in the 5-10 per cent range.

Five Banks had GNPAs in the 10-15 per cent range and 2 Banks had GNPAs in the 15-20 per cent range. Only one Bank had GNPA above 20 per cent.

The positive development is that all of them witnessed a decline in the gross NPA ratio during this period, the agency said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Indiabulls Housing Finance net at Rs 329 cr, aims to raise disbursements via co-lending

Banking & Finance

[ad_1]

Read More/Less


The company’s finance cost is down 17% y-o-y and 5% q-o-q to Rs 1,706 crore.

Indiabulls Housing Finance (IBH) on Friday reported a sequential increase of 2% in its net profit at Rs 329 crore despite higher provisions. However, the net profit fell 40% on a year-on-year (y-o-y) basis. The expected credit loss provisions jumped 79% quarter-on-quarter (q-o-q) and 61% y-o-y to Rs 846 crore. Its net interest income (NII) improved 8% sequentially to Rs 809 crore, but declined 18% on a y-o-y basis. The company aims to increase disbursements through co-lending partnerships.

Ashwini Kumar Hooda, deputy managing director (DMD), Indiabulls Housing Finance, said that retail disbursements have crossed Rs 2,500 crore this quarter. “We are in process of finalising three more co-origination partners and increase our disbursements further,” he said. The lender’s asset quality showed an improvement during the December quarter. Gross non-performing assets (NPAs) ratio improved 23 basis points (bps) to 1.75%, compared to 1.98% in the previous quarter. IBH has not classified any NPAs since August 31, 2020, due to the interim order of the Supreme Court. “On a proforma basis, gross NPAs stood at 2.44%” the lender said.

The company’s finance cost is down 17% y-o-y and 5% q-o-q to Rs 1,706 crore. Similarly, total expenses came down 25% y-o-y and 4% sequentially to Rs 2,077 crore. The lender said that access to funding has normalised. Since April 2020, IBH has raised total funding of Rs 28,119 crore. “The company’s liquidity buffer, including undrawn available sanctions, stood at Rs 17,105 crore at the end of Q3FY21, representing 24% of its balance sheet loan book,” the lender said.

The mortgage lender also said that it is fully matched for all granular buckets for 10 years and beyond. The company has a positive balance across all buckets, and will have a positive net cash of Rs 13,965 crore one year, hence, at the end of December, 2021. The capital adequacy ratio of the lender remained at 30.5%, maintaining the same levels of September quarter.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,
1 … 474 475 476 477 478 … 540