Category: Banking & Finance

Poonawalla Fincorp: Consolidated PBT up 151% YoY

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The board of Poonawalla Fincorp Limited (PFL) today announced its unaudited results for the quarter ended September 30, 2021 (Q2FY22).

PFL reported that assets under management grew by ~6 per cent QoQ to ₹15,275 crore, while NIM increased by 104 bps YoY to 9.1 per cent in Q2 of this fiscal (eight per cent in Q2 of FY21), driven largely by a reduction in interest expenses.

“Consolidated PBT was up 151 per cent YoY, increasing from ₹50 crore in Q2FY21 to ₹126 crore in Q2FY22, driven largely by a reduction in interest expenses and credit costs. Collections showed an improving trend from 93.1 per cent in June 21 to 98 per cent in July 21 and further to 99.9 per cent in September 21.

Consequent to improvement in collections in Q2of FY22, gross stage 3 and net stage 3 assets decreased from 5.4 per cent and 2.7 per cent, respectively, as at June 21 to 4.1 per cent and 2.0 per cent, respectively as at September 21 on a consolidated basis. The company has one of the best provision coverage ratios across all three stages. The standard asset coverage ratio as at September 21 stands at 3.4 per cent (3.0 per cent in September 20); Stage 3 asset coverage ratio stands at 52 per cent (38 per cent in September 20).

Liquidity and cost of borrowings

The company continues to maintain a strong liquidity position with around ₹1,700 crore of surplus liquidity, with additional term loan sanctions in the hand of ₹1,750 crore. A significant amount of existing loans were repriced in Q2FY22, with a reduction of over 120 bps. New sanctions received at sub-6.5 per cent. The company’s long-term rating was upgraded by two notches to ‘AA+; Stable’ by Care Ratings following its review process. The short-term rating was retained at the highest level of ‘A1+’.

Revised product focus

Pursuant to the capital infusion and rebranding, the Company launched new products like Personal loans, Loans to Professionals, and SME LAP. Other products at an advanced stage of roll-out are medical equipment loans, small ticket LAP, and co-lending/fintech partnerships.

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Gold in RBI’s forex reserves rise 11% to 744 tonnes

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The Reserve Bank of India’s holding of gold in foreign exchange reserves went up about 11 per cent year-on-year (y-o-y) to 743.84 metric tonnes as on September-end 2021 against 668.25 metric tonnes as on September-end 2020.

However, in value terms, the share of gold in the reserves declined to about 5.88 per cent against about 6.69 per cent in the year-ago period, as per the RBI’s half yearly report – Management of Foreign Exchange Reserves: April-September 2021.

Compared to September-end 2020 share of gold in the reserves (in value terms) at 5.87 per cent, the share rose marginally as on September-end 2021.

While 451.54 metric tonnes (366.91 metric tonnes as on September-end 2020) of gold is held overseas in safe custody with the Bank of England and the Bank for International Settlements (BIS), 292.30 metric tonnes (unchanged) of gold is held domestically.

Import cover

According to the report, at the end of June 2021, the foreign exchange reserves cover of imports decreased to 15.8 months from 17.4 months at March-end 2021. At the end of June 2020, the foreign exchange reserves cover of imports stood at 14.8 months.

The ratio of short-term debt (original maturity) to reserves, which was 17.5 per cent at end-March 2021, declined to 16.8 per cent at June-end 2021. This ratio stood at 20.8 per cent at June-end 2020.

The ratio of volatile capital flows (including cumulative foreign portfolio inflows and outstanding short-term debt) to reserves declined from 69 per cent at March-end 2021 to 65.5 per cent at June-end 2021. This ratio stood at 72.1 per cent at June-end 2020.

As on September-end 2021, of the total foreign currency assets (FCA) – comprising multi-currency assets that are held in multi-asset portfolios – of $573.60 billion ($502.16 billion as on September-end 2020), $383.74 billion ($370.59 billion) was invested in securities, $147.86 billion ($124.16 billion) was deposited with other central banks and the BIS and the balance $42 billion ($7.44 billion) comprised deposits with commercial banks overseas.

During the half-year period under review, reserves increased from $576.98 billion as on March-end 2021 to $635.36 billion as on September-end 2021.

On a balance of payments basis (that is excluding valuation effects), foreign exchange reserves increased by $31.9 billion during April-June 2021 as compared with $19.8 billion during April-June 2020.

Foreign exchange reserves in nominal terms (including valuation effects) increased by $34.1 billion during April-June 2021 as compared with $27.9 billion in the corresponding period of 2020-21.

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ADB, India sign USD 100 million loan for agribusiness development in Maharashtra, BFSI News, ET BFSI

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The Asian Development Bank (ADB) and the Government of India on Wednesday signed a USD 100 million loan to promote the agribusiness network to boost farm incomes and reduce food losses in the state of Maharashtra.

Rajat Kumar Mishra, Additional Secretary, Department of Economic Affairs in the Ministry of Finance signed for the Government of India, the agreement for the Maharashtra Agribusiness Network (MAGNET) Project, while Takeo Konishi, Country Director of ADB’s India Resident Mission signed for ADB.

After the signing of the loan agreement, Mishra stated that the project supports agribusiness development in Maharashtra with holistic support to on-farm improvement in productivity, up-gradation of post-harvest facilities and establishing efficient marketing structures to benefit horticulture producers.

“The project will help small and marginal farmers in Maharashtra improve their post-harvest and marketing capacity, reduce food losses, and increase incomes through access to finance, capacity building, and horticulture value chain infrastructure development,” said Konishi.

“The project interventions also align with ADB’s ongoing support to rural sector transformation in the state through mutually complementary projects for improving irrigation efficiency through rural electrification and for enhancing rural connectivity,” he added.

Though Maharashtra produces 11 per cent and 6 per cent of India’s fruit and vegetable production, respectively, and accounts for about 8 per cent of the country’s floriculture exports, most smallholder farmers lack the capital to scale up and do not have direct access to emerging high-value markets. The ADB loan will help provide financing opportunities for farmer producer organizations (FPOs) and value chain operators (VCOs) through matching grants and financial intermediation loans to support 300 subprojects.

The project will upgrade 16 existing post-harvest facilities and construct three new ones to provide individual farmers and FPOs clean, accessible, and sustainable crop storage and processing facilities. It will also build the capacity of FPOs and VCOs on value chain acceleration and post-harvest handling and management, especially those owned and led by women. The project is expected to benefit 200,000 farmers.

ADB will provide a $500,000 technical assistance (TA) grant from its Technical Assistance Special Fund and USD 2 million from the Japan Fund for Poverty Reduction on a grant basis to improve market linkages for FPOs. The TA will establish crop-based centers of excellence networks, promote innovative technologies in agribusiness and agriculture value chains, and support capacity building, including the asset and financial management capabilities of the MAGNET Society and the Maharashtra State Agriculture Marketing Board.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members–49 from the region. (ANI)



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IOB stays on strong profit curve

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Public sector lender Indian Overseas Bank (IOB), which came out of RBI’s PCA framework last month, continues to maintain its profitable growth curve and is working out mid-term plans for branch-cum-manpower expansion

“Since the bank is now allowed to resume its expansion activities, IOB is likely to hire 100 officers and 70 clerks. We are redrawing our manpower policy based on the digitalisation policy. The bank may open 30-40 new branches next fiscal even as we would continue with branch rationalisation exercise. We will come out with our mid-term plan soon,” said Partha Pratim Sengupta, MD & CEO of the bank.

Doubled net profit

Meanwhile, the bank more than doubled its net profit to ₹376 crore for the quarter ended September 30 against ₹148 crore in the same period a year ago, helped by lower provisions.

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The bank’s operating profit grew 5 per cent to ₹1,419 crore against ₹1,346 crore on account of reduction in interest expenditure and higher non-interest income.

Falling interest income

Total income stood at ₹5,376 crore against to ₹5,431 crore. Interest income fell to ₹4,254 crore from ₹4,363 crore while non-interest income was higher at ₹1,121 crore (₹1,068 crore). Net interest margin was lower at 2.43 per cent (2.57 per cent).

“The industry has become more competitive. Almost all bigger banks have reduced their interest rates. So, in this competitive scenario, we need to match the same level. However, our strategy will now be to boost other income to make up for the above,” said Sengupta.

Lower provisions

Total provisions were lower at ₹1,036 crore (₹1,193 crore). Slippages were at about ₹1,400 crore, of which three accounts — including an NBFC — contributed 60–70 per cent.

Also see: Cash is still ‘King’ as digital divide between Bharat and India continues

“These three accounts were known to us and booked as NPA two quarters ago. But, because of the stay in the Court none of the banks could do it. The stay was vacated during the September quarter and we have booked it as NPA. It will not impact the balance sheet as we started doing the provisions right from the day, we identified the stress. As on date, we have provided almost 80 per cent for that account,” he added.

Lower NPA ratios

Gross NPA ratio fell to 10.66 per cent from 13.04 per cent in the same quarter a year ago and 11.48 in the preceding quarter. Net NPA ratio stood at 2.77 per cent, down from 4.30 per cent in Q2FY21 and 3.15 per cent in Q1FY22. Its provision coverage ratio improved to 92 per cent from 91.56 per cent in the preceding quarter.

Deposits increased to ₹250,890 crore in Q2FY22 against ₹242,941 crore in the year-ago quarter while gross advances stood at ₹1,46,940 crore (₹1,35,469 crore).

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Wipro bags tech transformation engagement from Kerala State Co-op Bank, BFSI News, ET BFSI

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New Delhi, Oct 27 (PTI) IT firm Wipro on Wednesday said it has secured a multi-year contract from Kerala State Co-operative Bank (also known as Kerala Bank). Kerala Bank currently runs 15 different core banking environments with five core banking solutions.

“As part of this multi-million-dollar strategic engagement, Wipro will implement a consolidated, common core banking system for the bank, provide over 20 allied solutions, aimed at streamlining technology adoption and enabling a superior customer experience,” a statement said.

Wipro will also set up a Data Centre, Disaster Recovery Centre, Near DR (Disaster Recovery) and command centre, implement the latest Reserve Bank of India cybersecurity frameworks, and provide facility management services for five years, it added.

“We see IT modernisation as the key driver for achieving business transformation and growth. An integrated IT landscape comprising of best-in-class Core Banking and allied solutions will not only enable seamless information flow but will also help achieve high performance and scalability in our operations,” Rajesh AR, GM (IT and Digital Banking) at Kerala Bank, said.

Wipro is currently engaged with over 100 DCCBs across 12 states in India. Wipro has consolidated its position across all Banking segments in India, including Schedule Commercial Banks, Regional Rural Banks, Co-operative Banks and the latest Small Finance and Payment Banks.

“Wipro has been engaged with Kerala Bank and is providing core banking services to multiple District Co-operative Central Banks (DCCB) for many years. This extensive experience uniquely positions us to deliver this complex programme, which redefines customer experience while ensuring security for clients of Kerala Bank,” Wipro Head – BFSI India (SRE) Sanjay Jaireth said.

In a separate statement, Wipro said it is partnering with Micro Focus to launch the Legacy Migration and Modernisation Lab, collaborating with Amazon Web Services (AWS).

This lab, hosted at Wipro’s AWS Launchpad in Parramatta, Australia, will allow companies in Australia and New Zealand to experience a hands-on demonstration of tools and accelerators that can help optimise mainframe application capabilities for the cloud, it added.

The lab combines the strengths and technical expertise of Wipro, Micro Focus, and AWS to help customers become agile, reduce operational costs and mitigate application-modernisation risks to enable a cloud-ready IT ecosystem, the statement said.

These advanced capabilities will also help companies innovate faster and drive better business results, it added.

In addition, the lab will serve as a training ground for testing mainframe app-modernisation scenarios, allowing businesses to conduct training, and demonstrate proof of concepts in real-time. PTI SR BAL BAL



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Union min, BFSI News, ET BFSI

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Guwahati, Union Minister of State for Finance Bhagwat Kishanrao Karad on Wednesday said 57 new bank branches will be set up in Assam by March next year to bring more people under the ambit of banking. At an event to launch a ‘credit outreach programme’ here, Karad said the central government is taking all possible steps to expedite the economic development of the Northeastern region.

“By March 31, 2022, we will have 57 new branches of various banks. This step has been taken as Assam has less number of branches against its population as per the standard norm and people are facing difficulties because of this,” he added.

Considering the problems of the people, Prime Minister Narendra Modi has taken various initiatives to accelerate the economic growth of the northeast and Jammu and Kashmir, he said.

Karad said, “I have come to visit Assam, Manipur, and Tripura to assess the economic issues faced by the common man. We will try to solve the problems of these states.”

He expressed happiness over Assam achieving satisfactory results in implementing various financial schemes such as Mudra Loan and Kishan Credit Card among others.

“The state’s economic growth is directly related to financial literacy. If people are literate about financial aspects, only then overall economic growth will be achieved,” Karad said. PTI TR

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Yes Bank | Dish TV: NCLT allows Dish TV to file its response in requisition notice of Yes Bank, BFSI News, ET BFSI

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The Mumbai-bench of the National Company Law Tribunal (NCLT) on Wednesday allowed Dish TV time till November 15 to file its response in a petition filed by Yes Bank, the company’s largest shareholder.

Yes Bank had sought NCLT’s direction to the company’s board to call for an extraordinary general meeting (EGM) of the shareholders to vote on removal of MD & CEO Jawahar Goel and four other directors.

In May last year, Yes Bank invoked promoters’ pledged shares in Dish TV to own 25.63% stake in the DTH company.

On September 3rd, the bank sent a requisition notice to the company’s board to convene a special meeting of the shareholders to reconstitute the board and sought the removal of Goel from the company and induction of seven new directors.

Goel is the brother of Subhash Chandra, founder promoter of the erstwhile Essel Group.

Chandra’s Zee Entertainment Enterprises is currently fighting a similar takeover battle in the NCLT and the Bombay high court against its largest shareholder Invesco.

Meanwhile, after Dish TV board declined the requisition for EGM, Yes Bank moved to the tribunal seeking a special shareholders meeting.

Appearing for Dish TV, senior counsel Navroz Seervai sought time to file the reply in the matter, stating that the company wanted to respond on “merit, jurisdiction and maintainability”.

Referring to the Bombay high court order in the ZEE Vs Invesco matter, he said, “Yesterday, in a similar matter the Bombay High Court has passed an order. We also want to put that on record. The order clarified that NCLT has no jurisdiction to entertain this kind of plea.”

The bench, headed by Suchitra Kanuparthi and Anuradha Bhatia allowed Dish TV time till November 15 to file its response in the matter and has posted the case for further hearing to November 23.

Senior counsels Darius Khambata and JP Sen, representing Yes Bank in the case, also sought time to file their rejoinder to the Dish TV reply.

The tribunal also allowed the lender to file a response to Dish TV’s reply before the next date of hearing.

The private lender has sought tribunal’s intervention to direct the company to either provide shareholder details – so it can call the meeting on its own – or instruct it to set a date for an EGM.

“Owing to YBL (Yes Bank) being a banking company and its shareholding in the Company (Dish TV) being a consequence of invocation of pledges, there are certain embargos under the provisions of the Banking Regulation Act, 1949 read with Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, because of which the said resolutions cannot be placed before the shareholders,” said Dish TV in its exchange filing on October 13, at the time of rejecting the requisition request of the bank.

ET, in its September 24 report stated that the dispute between Goel and Yes Bank over corporate governance and fund-raising plans was escalating and was reaching the courts.

The bank wants to dissolve the entire board and removal of the promoter family, as it believes that the board is functioning in cahoots with the minority shareholders (that is the promoters), who should not have representation on the board.

Dish TV, which has been trying to raise funds since some time, had decided to go ahead with a Rs 1,000 crore rights issue to be able to invest for acquiring new customers, in set-top-boxes (STBs) and on marketing and promotions.



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After 6 years, we are in for fresh start, says Partha Pratim Sengupta, MD & CEO of Indian Overseas Bank| INTERVIEW

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Indian Overseas Bank (IOB), which recently came out of the prompt corrective action (PCA) by the RBI, says it will chalk out strategies to accelerate growth. Partha Pratim Sengupta, MD & CEO, says since some earlier curbs have been done away with, the bank will be looking at expanding branches or restructuring some of them. Excerpts from his virtual interaction with the media:

What are the bank’s plans post exiting the PCA?

After being in PCA for almost six years, we are now looking for a fresh start to grow more in the coming quarters and definitely the bank would be much stronger in future. Since the restrictions on branch opening, recruitment of human resources and CSR activities have been removed, we will look at taking actions on those fronts. There has been no recruitment in the past six years, and the bank’s staff strength came down to around 22,000 from 28,000. In a couple of months, we will be revamping our branch expansion and recruitment policies.

What were the factors that contributed to the good performance in the second quarter?

It has been an overall growth, I won’t say a particular segment has given growth. It has been equitably distributed among retail, agri, MSME and corporate segments. If you  look at the performances of the past quarters, we have been steadily growing. Due to the Covid-19 impact, the economic growth of the country got muted and hence there was no scope for credit growth on the bank side. But post the vaccination drive, we are seeing positive outlook on the economic front.
Your net interest margin (NIM) declined during this quarter.

NIM, on a q-o-q basis has gone up, but yes, on a y-o-y basis, it has declined to 2.43% from 2.57. In the June quarter, our NIM was at 2.34%. If you look at the interest rates, almost all the bigger banks have reduced the interest rates.

What were the slippages during the second quarter? Any plans to raise capital?

We had a slippage of Rs 1,400 crore, contributed by two to three companies. Out of it, 60 to 70% was borne out of an NBFC. The bank had made around 80% provisions on these accounts. The bank is not anticipating any major slippages in the coming quarters, whatever slippages had happened were from the watch list. On the capital front, the bank would be raising up to Rs 1,000 crore during Q4 to meet tier-II capital norms.

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Bank, card firms receive 2 million auto-debit mandates after RBI order, BFSI News, ET BFSI

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Banks and card networks have received nearly two million auto-debit mandates after the Reserve Bank of India (RBI) made it mandatory from October 1 to take prior consent of a customer before debiting their accounts.

Most of the recurring payments are linked to credit cards, while such a facility is not available in most places for debit cards.

In August, total credit card transactions stood at 19 million, and debit card transactions at 358.5 million. In value terms, credit cards were at Rs 77,732.94 crore and debit cards at Rs 64,351.52 crore.

The readiness

State Bank of India, Axis Bank, HDFC Bank, Yes Bank, American Express, Bank of India, Bank of Baroda, ICICI Bank, HSBC, RBL Bank, IndusInd Bank and Kotak Mahindra Bank have implemented the recurring payment framework for their customers.

Canara Bank, Punjab National Bank and Standard Chartered Bank are making necessary system changes to allow e-mandates based transactions.

Service providers such as Razorpay, Billdesk, PayU have come up with solutions to help card issuers, customers, and merchants to register their mandates on their customised platforms. BillDesk has set up SI Hub, PayU has created Zion while Razorpay has set up MandateHQ.

RBI’s auto-debit rule

Under the new auto-debit rules that kicked in on October 1, there are no automatic recurring payments for services like recharge, utility bill as the additional factor of authentication (AFA) has now become mandatory.

To ensure safety and security of card transactions, the central bank had, in December last year, directed all banks that processing of recurring transactions (domestic or cross-border) using cards or Prepaid Payment Instruments (PPIs) or Unified Payments Interface (UPI) under arrangements/practices not compliant with AFA would not be continued beyond March 31, 2021.

However, non-readiness of some of the players had forced the RBI to extend the deadline on recurring payment till September 30. The rule is applicable to all types of recurring payments like utility bills, phone recharge, DTH and OTT, among others.

As per the guidelines, banks will send a one-time password (OTP) to customers for payments above Rs 5,000.



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Indian Overseas Bank net profit spurts 154%; bad assets decline

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The bank has made required provisioning in advances in specific accounts so as to improve net NPA.

Indian Overseas Bank (IOB) on Wednesday reported a 154% jump in its net profit to Rs 376 crore for the second quarter, compared with Rs 148 crore in the corresponding quarter of the previous fiscal. The bank, which has just exited the prompt corrective action framework, has attributed the good set of numbers to strong performance in all relevant parameters.

Partha Pratim Sengupta, MD & CEO, said there has been a marked reduction in bad assets. Net NPA stood at 2.77% which was within the prescribed RBI guidelines, while gross NPA reduced by Rs 286 crore. The gross NPA ratios improved to 10.66% from 13.64% QoQ. The provision coverage ratio improved to 92%, against 91.56% in the previous quarter. The bank has made required provisioning in advances in specific accounts so as to improve net NPA.

Sengupta said the bank had total cash recovery of Rs 831.77 crore which includes recovery from tech write off of Rs 428.61 crore, against Rs 751.97 crore (including recovery from tech write off of Rs 233.74 crore) in June 2021.

The CASA improved to 42.57% , against 40.26% in the same period last year. Total CASA increased from Rs 92,436 crore to Rs 1, 06,806 crore while savings bank registered a 11.48% Y-o-Y growth.

Interest income stood at Rs 4, 254 crore for the quarter, against Rs 4,363 crore. The bank recorded a lower net interest margin (NIM) of 2.43% as against 2.57% in the corresponding quarter of the last fiscal.

Total business stood at Rs 4,90.408 crore, compared with Rs 4,78,365 crore in the year-ago period. Total deposits stood at Rs 2,50,890 crore, against Rs 2,42,941 crore as on June 30, 2021.

Gross advances stood at Rs 1,46,940 crore during the latest quarter, compared with Rs 1,38,944 crore as on June 30, 2021. The bank increased its exposure to the retail and agri sectors and rebalanced advances by consciously reducing the stressed sector in the corporate segment.

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