Category: Banking & Finance

SBI posts 67% rise in Q2 net to ₹7,627 crore

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Significant improvement in asset quality and lower loan-loss provisions helped State Bank of India  post highest-ever quarterly standalone net profit in the second quarter at ₹ 7,627 crore.

Resolution of the DHFL account, which allowed the  bank to write-back provisions amounting to ₹4,000 crore, also supported SBI’s bottomline.

The net profit in the second  quarter  ended September 30, 2021 was 67 per cent up year-on-year (yoy) vis-a-vis year-ago quarter’s ₹4,574 crore.

Slippages down

Slippages were about 52 per cent lower yoy at ₹4,176 crore in Q2FY22 against ₹15,666 crore in the first quarter (Q1FY22) ended June 30, 2021.

Dinesh Kumar Khara, Chairman, emphasised that the bank could pull back the first quarter’s retail segment slippages.

“This is the reason for the much lower slippages and also the accounts are performing well.

“Also, our ground level forces have also improved collections. Our collection efficiency stands at about 95 per cent,” he said.

The net interest income  was up about 11 per cent yoy to ₹31,184 crore (₹28,181.50 crore in the year-ago quarter).

Other income, including profit/loss on sale of assets, profit/loss on revaluation of investments (net), earnings from foreign exchange and derivative transactions, recoveries from accounts previously written off, dividend income, etc., declined about 4 per cent yoy to ₹8,208 crore (₹8,528 crore).

Loan-loss provisions declined 52 per cent yoy to ₹2,699 crore against ₹5,619 crore.

GNPA position improves

GNPA position improved to 4.90 per cent of gross advances as at September-end 2021 against 5.32 per cent in the preceding quarter.

Net NPAs position too improved to 1.52 per cent of net advances against 1.77 per cent in the preceding quarter.

As at September-end 2021,domestic advances increased about 5 per cent yoy to ₹ 21,56,055 crore. Foreign offices advances were up about 16 per cent yoy to ₹3,74,722 crore.

Within domestic advances, retail personal advances saw a 15 per cent yoy growth; agriculture (about 2 per cent) and SME (about 1 per cent). However, corporate advances de-grew about 4 per cent.

Khara attributed the muted scenario in corporate advances to working-capital limit utilisation continuing to be low.

“However, credit demand appears to be on the rise with increasing economic activities across India. Corporates too have started planning for future investments, which will create demand for credit going forward,” he said, adding that SBI will see an overall credit growth of 9-10 per cent in FY22.

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CFBP gives opinion in 175 cases of banks, recruitment agencies, BFSI News, ET BFSI

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New Delhi, The Central Finger Print Bureau (CFPB) has furnished opinion in 175 cases of banks and recruitment agencies, according to data released by the National Crime Record Bureau (NCRB).

According to the NCRB, 175 cases were sent to the CFPB for examination and to give its opinion in cases received from nationalized banks, recruitment agencies and insurance companies and also received 8,197 convicted Finger Print slips for record and 12,540 arrested Finger Print slips for providing previous criminal history during this year.

The CFPB Delhi helped detecting 118 cases from various agencies in 2020, a National Crime Record Bureau (NCRB) data said.

According to the NCRB, the CFPB furnished opinion on 118 cases received from different agencies like Post office, police agencies like Central Reserve Police Force, recruitment, Staff Selection Commission and banks whereas in 2019-20, the bureau gave an opinion on 90 cases received from different agencies.

In the calendar year-2020, CFPB examined and furnished opinions or reports in 175 document cases received from nationalized banks, recruitment agencies and insurance companies. A total of 57 cases comprising 840 chance prints were also received from various Finger Print Bureau of States and Union Territories for verification, the NCRB said.

The Punjab bureau has the highest number of conviction slips recorded in the year 2020. Majority of the states except Punjab, Maharashtra and Madhya Pradesh have remained underperformers with figures in hundreds and a few thousands whereas the crime rate ranges to tens of thousands.

States of Andhra Pradesh and Kerala have topped the list with the highest number of chance prints developed in a calendar year. Telangana, Tamil Nadu, Uttar Pradesh and Karnataka have developed a significant number of chance prints during the year. Delhi is the only union territory to have developed a large number of chance prints.

Record slips of those convicted for Murder, Grievous Hurt, Attempt to Murder and Rape are the highest in number as compared to other IPC heads whereas the search slips recorded also demonstrate a sharp rise in crimes such as kidnapping, abduction and assault on women, the CFPB data said.

The data also revealed that states such as Maharashtra, Madhya Pradesh and Gujarat have recorded the highest number of arrestee slips. Only Panjab, Tamil Nadu, Rajasthan and UP examined more than 100 document cases.

In a murder case registered in a Police Station in Delhi on March 13, 2020, Delhi Police gave a finger print for search for the details of the suspect to the Central Finger Print Bureau to identify the culprit. The Bureau found identical right thumb impression of the accused, who was arrested in the same case. The finger print expert opinion not only helped local police in solving a Murder case but also provided them scientific and infallible evidence against the culprit.

The CFPB Delhi also helped detect cases pertaining to the examination of questioned documents of the candidates who appeared in the written examination. In most cases, the prints were of very poor quality posing difficulty in examination with an additional pressure of time from the Staff Selection Commission (SSC) to furnish the expert opinion on a priority basis. Despite all the odds, the experts showed full dedication displaying the best professional skills, and the impersonation in the cases was established.

The Bureau received 56 document cases from CISF’s Eastern Zone Headquarters at Patna, one case from Force unit at Singrauli in Madhya Pradesh regarding impersonation in recruitment. In these cases, the Admission Certificates (Commission’s Copy) bearing questioned left hand thumb finger prints were received to be compared with the specimen finger prints present on the document of the suspected candidates.

Most of the questioned prints were of extremely poor quality but the specimen prints were of decipherable quality. The questioned left hand thumb fingerprints were compared carefully and thoroughly with specimen prints of suspected candidates by experts of CFPB and established conclusive impersonation.

Similarly, nine document cases regarding alleged misappropriation of the government money were received by CFPB from Post offices, Bhiwani in Haryana wherein withdrawal vouchers of various depositors bearing fingerprints were received to be compared with the specimen fingerprints present on relevant claim forms and written statements of the depositors. Luckily, most of the questioned prints were of decipherable quality but the specimen prints were of slightly poor quality. Finally, the specimen prints of decipherable quality were selected for examination and the impersonation in the cases was established by CFPB experts.

–IANS

ams/skp/



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Bank credit picks pace as economy revives, BFSI News, ET BFSI

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Lenders are seeing a pick-up in loan demand with demand from medium sized firms and retail borrowers as the economy is slowly coming back on track as COVID restrictions ease.

Bank credit rose 6.8 per cent in October compared to 5.1 per cent in the same period a year ago, according to the latest figures released by the Reserve Bank of India on Wednesday. Outstanding credit amounted to Rs 110.5 lakh crore as of October 22, up Rs 7 lakh crore over a year.

The pick up in loan demand is largely due to the push from government schemes even as large corporates and top rated borrowers continue to rely on capital markets and the overseas markets where they manage to raise funds at much cheaper rates. India’s Weighted Average Lending rates were at 7.20% in September, according to the RBI data. At the same time, the average rates for triple-A rated five-year corporate bonds were at 6% and at 5.29% for three-year maturity, show Bloomberg data compiled by ETIG

The latest data on sectoral flow of credit offtake that lending to Medium sized firms rose 49 per cent year-on-year to Rs 1.75 Lakh crore as of end September compared to the same period a year ago. Much of the lending is reckoned to be under the government’s Emergency Credit Line Guarantee Scheme (ECLGS) MSME sector, under which the government provides 100% Guarantee to banks in respect of eligible credit facility extended by it to its borrowers.

In addition consumer durable loans have risen by 40 per cent compared to 14.9 per cent in the same period a year ago, with borrowers taking advantage of the reduced interest rates. With the government’s renewed thrust on the social sector, lending to infrastructure more than doubled to Rs 1323 crore in September from Rs 1081 crore a year ago.

On the liability side, the pace of deposit pick-up has slowed down to 9.9 per cent compared to 10.1 per cent in the same period a year ago. But deposit growth still continues to outpace the credit growth. In absolute terms banks raised almost double the amount of deposits at Rs 14 lakh crore than the amount they lent during the period.



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RBI set to monitor digital banking and cyber security, asks banks to be vigilant too, BFSI News, ET BFSI

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RBI will soon launch a web-based supervisory system that will enable off-site and on-site monitoring of modern functions like digital banking, cyber security, said RBI deputy governor MK Jain. At the same time banks need to be careful in complying with rules and invest in technologies to meet the supervisory challenges as they experiment with new services in the post COVID world though ultimately its governance standards, business model, risk culture, and assurance functions will decide how well it fares in the long run, he said.

“For continuous engagement with supervised entities, a web-based and an end-to-end workflow automation system has been developed ( by RBI)” said Jain in a keynote address at a summit. It has various functionalities including inspection, compliance and incident reporting for cyber security, etc. with a built-in remediation workflow, time tracking, notifications and alerts, Management Information System reports and dashboards. “This is being launched shortly”.

With the proliferation of digital banking, cyber security has become an extremely important area of supervisory concern. To address this concern, the Reserve Bank has developed a model-based framework for assessing cyber risk in banks using various risk indicators, risk incidents. ” Cyber drills are conducted based on hypothetical scenarios”.

While a lot is being done in the cyber security space, these risks are continuously evolving in the dynamic environment we operate in, and hence there should be constant vigil and continuous enhancements of IT systems, warned Jain.

Globally, fintechs are challenging banks with more convenient offerings, better reach and lower cost to customers. Besides, developments in areas artificial intelligence, robotics and chat advisory, digitalisation, Distributed Ledger Technology, quantum computing, cloud arrangements, data analytics, new ways of remote, though have their benefits but are also generating new risks, Jain warned. Also, climate change, KYC / AML, cyber security, virtual currencies as well as increasing reliance on outsourcing are some of the other major challenges that will need to be addressed, he said.

Banks need to be agile and creative to stay ahead of the digital curve, but banks will have to align their products in compliance with existing laws and regulations. ” Financial institutions would need to experiment with new technologies and tailor their products and services in alignment with business strategy and in compliance with existing laws and regulations” Jain said. “Leveraging on technology will also require enhanced financial investments, building expertise and capacities, proper resource allocation and further strengthening of the operational capabilities”.



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As India pledges net-zero emissions, banks move to form common ESG framework, BFSI News, ET BFSI

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With India agreeing to achieve net-zero emissions by 2070, the onus is on banks to promote green finance. The Indian Banks’ Association is looking to create a common framework for environmental, social and governance (ESG) issues while carrying out credit assessment and include climate risk as part of their risk management policy, according to a report.

Banks have always been the backbone of India’s economic growth, and as the country pivots to sustainable growth, the banking sector will have to accelerate green lending, SBI Chairman Dinesh Khara had said earlier.

“A formal definition of green finance in India would enable more precise tracking of finance flows to the green sectors, which in turn would help design effective policy regulations and institutional mechanisms directed towards increasing both public and private investment in green sectors,” Khara had said.

Green finance definition

India’s green finance definition could be formed through a combination of adopting international practices, developing a set of principles for green economic activities and obtaining stakeholders’ views, he suggested.

“Unless banks are able to provide adequate credit to green projects and measure risk in their portfolio, the bank’s depositors and shareholders will continue to carry ESG (environmental, social and governance) risk that can erode returns.”

To support acceleration and green financing, he said, a number of structural changes will be needed in the traditional lending approach, including evaluation and certification of the green credentials of each project and understanding of the corporate road map to achieve net zero.

RBI‘s stance

The Reserve Bank of India also feels there is a need to mainstream green finance and devise ways for incorporating environmental impact into commercial lending decisions.

Addressing climate risk in the financial sector should be the joint responsibility of stakeholders as it would affect the resilience of the financial system in the long run, RBI Deputy Governor M Rajeshwar Rao said recently.

“As the risks and opportunities and financial impact arising from climate change vary across jurisdictions, this poses unique considerations for emerging economies like India. The challenge before us is to mainstream green finance and think of ways to incorporate the environmental impact into commercial lending decisions while simultaneously balancing the needs of credit expansion, economic growth and social development,” Rao said.

He noted that the global understanding of the systemic impact of climate change on the economy and the financial system as also its resultant impact on financial stability is evolving and, accordingly, the responses of central banks and supervisors around the world have also been developing.

RBI’s efforts

The RBI has been talking about green finance for many years and has taken various steps towards it. It has pushed, on the lines of corporate social responsibility for private companies, the concept of ESG principles into financing aspects. In April, the RBI joined the Network for Greening the Financial System (NGFS) in April 2021.

The NGFS, launched in December 2017 at the Paris One Planet Summit, is a group of central banks and supervisors from across the globe to share the best practices and contribute to the development of the environment and climate risk management in the financial sector. It is an institutional yet voluntary membership, which will also help mobilise mainstream finance to support the transition toward a sustainable economy.

“The RBI expects to benefit from the membership of NGFS by learning from member central banks and regulators and contributing to the global efforts on green finance and the broader context of environmentally sustainable development,” Rao had said in the speech.

NGFS and the Basel Committee on Banking Supervision’s Task Force on Climate-related Financial Risks (TFCR). RBI being a Basel Committee member was already part of TFCR.



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Upset over deal with Axis Bank, Spandana MD Gangireddy quits

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Another spat between an investor and founder has erupted after the recent dispute between promoters of Zee Entertainment and Invesco. Spandana Sphoorty Financial’s Founder and Managing Director Padmaja Gangireddy has resigned from the microfinance lender following a disagreement with private equity investor Kedaara Capital over a proposal to sell the company to Axis Bank. Reddy has 17 per cent stake in the company while Kedaara holds 45 per cent.

According to Gangireddy, Kedaara wants to sell the country’s second-largest microfinance entity to Axis Bank at a throwaway price. “I opposed underselling of the company to Axis Bank at a throwaway price. While other MFIs were acquired at 4.75x and 3,5x BV multiples in the past few months, Kedaara wanted to sell Spandana at 1.6x, which is one-third of other company’s valuation. They are hell-bent on selling the company for their personal benefits,” Gangireddy said in a letter to the employees.

While Axis and Kedaara are yet to comment on Gangireddy’s claims, the company said in a statement that the board of directors has accepted Gangireddy’s resignation. KR Kamath, former Chairman & Managing Director of Punjab National Bank and board member of Spandana, will chair the management committee. “The board confirmed the hiring of an eminent industry veteran as its new MD & CEO,” the statement said without naming the executive. Industry sources said that Shalabh Saxena, MD & CEO of Bharat Financial Inclusion Ltd, could be appointed as the new CEO of Spandana.

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Visa invites startups in Asia Pacific to build next generation digital payment capabilities

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Payments major Visa is looking for startups from across the Asia Pacific to join the second cohort of their accelerator program.

“The Visa Accelerator Program focuses on helping startups in Asia Pacific expand their business into new markets with a strong emphasis on identifying commercial opportunities for the startups to collaborate with Visa and its extensive network of bank, merchant and government partners in the region,” it said in a statement on Wednesday.

With increased expectations for digital-first experiences from consumers and businesses, startups in the 2022 cohort will tackle some of the most pressing financial and technological opportunities in Asia Pacific such as simplifying and expanding money movement between consumers, businesses and governments and delivering new innovative payment methods such as digital currencies through the development and adoption of blockchain, it further said.

“As the world transitions from a pandemic to an endemic state, there is great demand for digital-first experiences that shape new thinking around digital currencies and open data. And many startups have developed new innovations to tap these opportunities,” said Chris Clark, regional president, Asia Pacific, Visa.

Applications open on Wednesday and close on January 9, 2022, with the program commencing in mid-April 2022.

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RBI to identify vulnerabilities in business models of supervised entities’

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The Reserve Bank of India (RBI) on Wednesday published its ‘Statement of Commitment to Support Greening India’s Financial System – Network for Greening the Financial System (NGFS)’ whereby it will explore how climate scenario exercises can be used to identify vulnerabilities in supervised entities’ (SEs) balance sheets and integrate climate-related risks into financial stability monitoring.

Identifying vulnerabilities

The central bank will also identify vulnerabilities in SEs’ business models and gaps in capabilities for measuring and managing climate-related financial risks.

As part of its Statement of Commitment to Support Greening India’s Financial System-NGFS, the RBI said it will build awareness about climate-related risks among regulated financial institutions and spread knowledge about issues relating to climate change and methods to deal with them accordingly.

The central bank’s commitment takes into account national commitments, priorities and complexity of the financial system.

The RBI had joined the Central Banks and Supervisors NGFS as a member on April 23, 2021, to benefit from the membership of NGFS by learning from and contributing to global efforts on green finance.

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Lenders expect pick up in credit demand in H2FY22

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Most lenders are hopeful of improved customer sentiments and higher disbursements in the second half of the fiscal with a drop in Covid-19 infections and normalisation of economic activities.

Second-quarter results of private banks and non banking finance companies indicated improved sentiments and higher disbursements. Most lenders said they expect a pick-up in corporate loans as well in the second half of the fiscal.

“Most private banks demonstrated a steady recovery in loan growth, led by the retail, SME and business banking portfolios. Most banks also reported a decline in gross and net non-performing assets ratio due to higher recoveries/upgrades during the quarter,” said a report by Motilal Oswal.

In the second quarter of the fiscal, all NBFCs exhibited a sharp improvement in disbursements which had been impacted by the second Covid wave in the prior quarter, it further said.

HDFC Bank reported a 15.5 per cent increase in its total advances as of September 30, 2021 to ₹11,98,837 crore from a year ago while ICICI Bank reported 17 per cent growth in advances on a year-on-year basis.

“Festive season demand is much higher than what we saw last fiscal. Further, typically the second half of the year is busier in terms of disbursements. We expect that with the economy opening up and hopefully no third wave, loan demand should pick up further, especially in the fourth quarter of the fiscal,” explained a senior bank executive.

NBFC performance

Mahindra & Mahindra Financial Services reported that in October 2021, the business continued its momentum with disbursement of about ₹2,650 crore, which is a 20 per cent y-o-y growth.

“In the absence of a third wave, (we are) quite confident about the second half of the year on growth, risk and financial metrics,” Bajaj Finance said in its investor presentation for the second quarter of the fiscal, adding that under such circumstances, it expects quarterly AUM growth rate to be strong for the rest of the year.

Bajaj Finance had reported a 75 per cent jump in new loans booked during the second quarter at 63.3 lakh from 36.2 lakh in the second quarter last fiscal.

Credit growth has seen some pick-up in recent weeks. Data with the Reserve Bank of India shows that on a y-o-y basis, non-food bank credit growth accelerated to 6.8 per cent in September 2021 as compared to 5.1 per cent in September 2020.

Credit growth to industry picked-up to 2.5 per cent in September 2021 from 0.4 per cent in September 2020. Credit growth to the services sector decelerated to 0.8 per cent in September 2021 from 9.2 per cent in September 2020, mainly due to contraction in credit growth to NBFCs, trade and commercial real estate. However personal loans grew by 12.1 per cent in September 2021 as compared to 8.4 per cent a year ago.

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