Tag: bank of baroda

Two firms cheat banks of Rs 70 cr, CBI lodges cases, BFSI News, ET BFSI

Banking & Finance

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New Delhi, The Central Bureau of Investigation on Friday registered a case against two private firms and its officials for allegedly cheating banks to the tune of Rs 70 crore.

A CBI official said that case has been registered against a Hyderabad (Telangana) based private company, it’s two Directors, a Guarantor, a Nandyal based private firm and a person.

The official said that the private company based in Hyderabad, had in connivance with others, availed loans from Bank of Baroda, Banjara Hills Branch and later diverted the money for some other use and also for personal gains.

“The accused submitted false stock statements with the bank for concealing their irregularities, falsified their account book and willfully defaulted in repayments. By furnishing fake documents, the accused caused a loss of Rs 61 crore to the bank,” the official said.

The official said that after registering a case, they conducted raids at six different places at Hyderabad, Nandyal, Kurnool and were able to recover incriminating documents against the alleged accused.

Another case was registered against six accused, including three private companies, based in Hyderabad.

He said that the company had availed secured over draft facility of Rs 4 crore and LC of Rs 2 crore with a total limit of Rs 6 crore in 2016 for business purpose from the Union Bank of India.

It was further alleged that after availing the loan, the company committed default in its repayment.

It was a violation of the terms of loan agreement and it’s account slipped into Non-Performing Assets(NPA) in 2018. Later, the bank declared them fraud.

Later, it was found that borrowers had diverted and misappropriated the funds and also mortgaged disputed, unidentified property with an intention to cheat bank. Thus, they caused a loss of Rs 8 crore to the bank.

The CBI conducted raids at several locations and have recovered some evidence against the accused.



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Bank of Baroda raises ₹1,997 crore via AT-1 bonds

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Bank of Baroda (BoB) has raised ₹1,997 crore via an issue of Additional Tier 1 bonds at a coupon rate of at 7.95 per cent. Bonds of ₹1 crore are unsecured, rated, listed, subordinated, non-convertible, fully paid-up Basel III compliant perpetual bonds.

Bids of ₹5,308 crore

The public sector bank informed exchanges that it has received total bids aggregating ₹5,308 crore against issue size of ₹2,000 crore. The issuance was finalised for ₹1,997 crore.

The Bank of Baroda has allotted the bonds to 21 investors.

Also see: BoB’s arm launches credit card powered by mobile app

Recently, the Union Bank of India had mopped up ₹2,000 crore via AT-1 bonds on private placement basis at a coupon rate of 8.70 per cent.

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Bank of Baroda arm partners OneCard for a new mobile-first metal card, BFSI News, ET BFSI

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Mumbai: Bank of Baroda’s credit card arm has partnered FPL Technologies-owned start-up OneCard to launch co-branded mobile-first metal credit cards. The internationally card will be issued by BFSL and managed by OneCard on VISA’s Signature platform.

OneCard offers users complete control of the credit card on spends, rewards, limits and payments through the app. The features include lifetime validity, zero joining and annual fee, instant virtual card issuance, instant issuance of reward points, and redemption within the app. It also claims to have the lowest forex fee in the market at just 1%.

Speaking at the launch, Shailendra Singh, MD & CEO, BFSL said, “BFSL is currently on its transformation journey, investing in technology, processes and people. The mobile-first OneCard further bolsters our portfolio of offerings, especially for the young, tech-savvy generation and reinforces our commitment towards unique and differentiated offerings for our customers”

BFSL was established as BOBCARDS in 1994 by Bank of Baroda, to manage the cards business. BFSL issues and manages Bank of Baroda Credit Cards, and is committed to becoming one of the largest Credit Card issuers in the country.

According to Anurag Sinha, Co-founder & CEO, OneCard the pandemic has brought about a drastic shift in consumer sentiments driving a strong inclination towards easy digital payments solutions.



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BoB’s arm launches credit card powered by mobile app

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BOB Financial Solutions Ltd (BFSL), a wholly owned subsidiary of Bank of Baroda (BoB), has partnered with OneCard, to launch a co-branded mobile-first credit card.

The virtual credit card, powered by a mobile app, will be delivered in under three minutes and the metal card will be delivered in three to five days, BFSL and OneCard said in a joint statement.

The internationally valid credit card will be issued by BFSL and managed by OneCard on VISA’s Signature platform.

Also read: Bank of Baroda signs MoU with NCDEX e-Markets

OneCard has been launched by FPL Technologies, a fintech start-up. It allows users to control all aspects of the card, including locking the card, enabling offline and online tractions, enabling domestic and international transactions, and paying the bill from an app.

The statement emphasised that the card comes with benefits such as lifetime validity, zero joining and annual fee, instant virtual card issuance, instant issuance of reward points, and easy redemption among others, within the app.

Shailendra Singh, MD & CEO, BFSL said, “BFSL is currently on its transformation journey, investing in technology, processes and people to ensure we offer best-in-class credit cards to our customers under the Bank of Baroda brand.

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Bank of Baroda to raise up to Rs 2,000 cr via AT1 bonds today

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Last week, Union Bank of India raised Rs 2,000 crore via AT1 bonds at an 8.70% coupon, and the issue has seen full subscription. All AT1 bonds were issued based on regulations amended by Sebi earlier this year.

Bank of Baroda, the country’s second-largest state-owned lender, is planning to raise Rs 2,000 crore through the issuance of Basel-III compliant Additional Tier-I (AT1) bonds on Wednesday.

The offer comprises a base issue of Rs 500 crore with a greenshoe option to retain oversubscription up to Rs 1,500 crore, according to the placement memorandum of the bank.

Funds raised will be utilised for regular business activities and are not meant for financing any particular project. “The bank undertakes that proceeds of the issue shall not be used for any purpose which may be in contravention of the regulations/ guidelines,” the bank said in a notice.

AT1 bonds are types of perpetual debt instruments that banks use to augment their core equity base and, thus, comply with Basel-III norms. The coupon on the AT1 bonds will be set during the bidding on Wednesday on the electronic bidding platform of the National Stock Exchange.

“We expect better coupons on our AT1 bonds compared to other banks which recently raised funds through these securities,” bank officials said.

Market participants expect rates between 7.95% and 8.05% on Bank of Baroda’s bonds. The deemed date of allotment and pay-in date on the bonds is November 26, while the minimum bid lot size is Rs 1 crore with a bid value step size of Rs 1 crore.

The bonds have been rated AA+ with a “stable” outlook by Crisil and Icra on November 17 and November 12, respectively. The bank has appointed IDBI Trusteeship Services and KFin Technologies as debenture trustee and registrar to the issue, respectively. The AT1 bonds have a call option after five years.

Last week, Union Bank of India raised Rs 2,000 crore via AT1 bonds at an 8.70% coupon, and the issue has seen full subscription. All AT1 bonds were issued based on regulations amended by Sebi earlier this year.

As per amended regulations, the residual maturity of the AT1 bonds is 10 years till March 31, 2022, and will be increased to 20 and 30 years over the subsequent six months. From April 2023, the maturity of these bonds will become 100 years from the maturity date.

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PSBs line up local AT-1 bonds issues, but private-sector lenders stay away, BFSI News, ET BFSI

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Public sector banks have started issuing AT-1 bonds in the domestic market more than a year after wriding down of such bonds of Yes Bank spooked the market

However, private sector banks are still keeping away and raising money via the instrument overseas, where interest rates are low.

At present, nearly three-four state-owned including SBI, Union Bank, Canara Bank and Bank of Baroda are looking to raise funds through AT-1 bonds.

In March this year, prodded by the Finance Ministry, the Securities and Exchange Board of India (Sebi) had relaxations in valuation norms. However, the main issues that AT1 bonds will continue to be treated as 100-year bonds stayed. The deemed residual maturity of Basel-III AT-1 bonds would be 10-year until March 31, 2022. Sebi said from April to September 2022, it would be valid at 20 years, and from October 2022 to March 2023, it would have a life span of 30 years. From April 2023, the residual maturity will be 100 years from the date of issuance of the bond.

In September SBI Rs 4,000 crore via additional Tier 1 bonds at a coupon rate of 7.72%, the first such issuance in the domestic market after Sebi issued new rules.

The plan

SBI is weighing options to raise money either through local additional tier-1 securities for the third time in this financial year or rupee-denominated ‘masala’ bonds for overseas investors. Bank of Baroda has approved the issuance of AT1 and AT11 bonds worth Rs3000 crore. Capital Raising Committee of our Bank has today approved the issuance of Basel III Compliant Additional Tier 1 (AT1) / Tier II Bonds for an aggregate total issue size of Rs3000cr in single or multiple tranches,” the bank said earlier this month.

What are AT1 bonds?

These are unsecured bonds which have perpetual tenure — or no maturity date. They have a call option, which can be used by the banks to buy these bonds back from investors. AT1 bonds are subordinate to all other debt and only senior to common equity. Mutual funds are among the largest investors in perpetual debt instruments, and hold over Rs 35,000 crore of the outstanding additional tier-I bond issuances of Rs 90,000 crore.

The mutual fund position

Mutual funds, which once used to buy heavily in AT1 bonds, are lukewarm about this asset class after the banking regulator last year ordered that these instruments be written off in Yes Bank’s state-sponsored bailout. Also, on March 10, Sebi had ordered mutual funds to cap ownership of bonds with special features at 10% of the assets of a scheme and value them as 100-year instruments from next month, potentially triggering a redemption wave. Later, the capital markets regulator eased valuation rules but with some riders after the finance ministry asked it to withdraw the directive to mutual funds.

The muted response by MFs had prompted the lenders to tap the overseas market.

Perpetual bond sales by banks have nearly halved to Rs 18,772 crore in FY21 from Rs 34,860 crore three years earlier.



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Net profit rises 24% to Rs 2,088 cr, BFSI News, ET BFSI

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Mumbai: Bank of Baroda reported a 24 per cent growth in standalone net profit mainly due to a 23 per cent increase in other income which includes fees and bad loan recoveries and helped by a fall in provisions as bad loans decreased year on year.

Net Profit of Rs 2,088 crore in the quarter ended September 2021 from Rs 1,679 crore a year earlier. Other income increased to Rs 3,579 crore from Rs 2910 crore last year.

The rise in other income made up for the tepid growth in net interest income (NII) which is the main income the bank earns by giving loans. NII increased 2 per cent to Rs 7566 crore largely as the cost of deposits fell to 3.52 per cent in September 2021 from 3.99 per cent a year ago and covered up for a 6 per cent fall in total interest earned.

A 2 per cent year-on-year fall in provisions also helped the bank’s bottom line. Provisions fell to Rs 2754 crore from Rs 2811 crore a year ago and was lower than the Rs 4005 crore reported in June 2021.

Gross NPA ratio improved to 8.11 per cent in September 2021 from 9.14 per cent a year ago.

CEO Sanjiv Chadha said the worst of slippages was over and asset quality trends will only become better.

“We had guided for credit costs of 1.5% to 2% with likely trends on the lower of the range as we are sticking to our guidance this year … credit costs have come down, recoveries have improved and margins have been steady,” Chadha said.

Recoveries increased to 3,246 crore including 1,246 crore from written-off accounts and higher than the total recoveries of 1,981 crore reported in the same quarter last year. As with other major banks, BoB was helped by a 877-crore recovery from DHFL.

Total loan book increased 2% to 7.34 lakh crore from 7.19 lakh crore a year earlier mainly due to a 10% rise in retail loans led by a 33% growth in personal loans and a 23% growth in auto loans. Corporate loan book remained flat after a 10% drop in the first quarter ended June.

Chadha said though the corporate growth has been tepid for more than a year, he expects some demand to come in the second half of the fiscal as sectors like cement, steel, green energy and electric vehicles expand capacities.

Retail mortgages make up 64% of the bank’s 1.35 lakh total retail loans with high growth businesses like personal loans making less than 5% of the book.

Chadha expects the bank’s loan growth to be close to double digits this year led by growth in retail loans and the bank will continue to grow the high-risk auto and personal loan businesses with caution using credit appraisals, and will have a preference for its own customers than outsiders.



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Bank of Baroda Q2 net profit rises 24% to Rs 2,0888 crore backed by other income

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During the reporting quarter, Bank of Baroda’s global gross advances rose 2.10% on year to Rs 7.34 lakh crore. Retail loans, that accounted for Rs 1.23 lakh crore of total loans, grew 10.3% on year, while corporate loans amounting to 2.73 lakh crore grew 0.3%.

State-owned Bank of Baroda on Wednesday reported a 24.4% year-on-year rise in net profit for the quarter ended 30 September to `2,088 crore, backed by higher other income. The lender had reported a net profit of Rs 1,209 crore in the June quarter.

The lender’s other income, which includes fees from third party products, treasury income and others, rose 23% on year to Rs 3,579 crore. During the reporting quarter, Bank of Baroda’s global gross advances rose 2.10% on year to Rs 7.34 lakh crore. Retail loans, that accounted for Rs 1.23 lakh crore of total loans, grew 10.3% on year, while corporate loans amounting to 2.73 lakh crore grew 0.3%.

In a post earnings conference, managing director and chief executive officer Sanjiv Chadha said since big businesses are returning to normalcy and companies are starting to make maximum capacity utilisation, the outlook for corporate credit growth looks positive. Chadha said the bank’s credit growth will likely be in the range of 7 to10% in the current financial year, in line with the industry.

On the liabilities side, the bank’s total deposits stood at Rs 9.59 lakh crore as on September-end, higher 0.5% on year. Global low-cost current account and savings account (CASA) ratio stood at 41.70% as on September 30, higher than 36.71% a year ago.

As a result of sluggish loan growth, BoB’s net interest income—difference between interest earned and expended—grew 2.1% on year to Rs 7,566 crore in the reporting quarter. Global net interest margin, on the other hand, grew to 2.85% in the reporting quarter from 2.78% in the corresponding period a year ago.
The lender’s asset quality improved in the reporting quarter with the gross non-performing assets (NPAs) falling to Rs 59,504 crore as on September-end from Rs 65,698 crore a year ago. The bank saw fresh slippages of Rs 5,223 crore in the reporting quarter.

In percentage terms, Bank of Baroda’s gross NPA ratio improved to 8.11% as on September-end from 9.14% last year. Net NPA ratio, however, rose 32 basis points on a yearly basis to 2.83% as on September 30.

The bank’s management stated that its total restructured loan book stood at Rs 20,500 crore as on September-end and that only 20% of these accounts were under the doubtful special mention account-1 and special mention account-2 category.

The provision coverage ratio, including technically written off accounts, stood at 83.42% as on September-end, lower than 85.35% a year ago. Further, the bank’s credit cost, as on September-end, stood at 1.46%. The bank has maintained 1.5%-2% credit cost guidance for the current financial year.
Bank of Baroda’s capital adequacy ratio stood at 15.55%.

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Bank of Baroda reports 24% year-on-year rise in Q2 standalone net

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Bank of Baroda (BoB) reported a 24 per cent year-on-year (YoY) increase in second quarter standalone net profit to ₹2,088 crore from ₹1,679 crore in the year-ago quarter on robust growth in non-interest income.

Net interest income (difference between interest earned and interest expended) edged up 2 per cent YoY to ₹7,566 crore (₹7,410 crore in the year ago quarter).

Non-interest income, including commission-exchange-brokerage, forex income, trading gains, and recovery from technically written-off accounts rose 23 per cent YoY to ₹3,579 crore (₹2,910 crore).

NPAs improve

For the reporting quarter, the public sector bank made provisions of ₹2,600 crore towards non-performing assets (NPAs) and bad debts written-off, up 14 per cent YoY from ₹2,277 crore in the year ago period.

Fresh slippages were a tad higher at ₹5,223 crore (₹5,129 crore). Reduction in NPAs via recovery, upgrdation and write-offs was at ₹9,327 crore (₹9,836 crore).

Also see: Bank of Baroda signs MoU with NCDEX e-Markets

Gross NPA position improved to 8.11 per cent of gross advances as at September-end 2021 against 8.86 per cent in the preceding quarter. Net NPA position too improved to 2.83 per cent of net advances from 3.03 per cent.

Domestic gross advances grew 2.99 per cent YoY to ₹6,23,368 crore. This came mainly on the back of growth in retail (auto, personal, gold, education and home loans), agriculture and MSME advances. Overseas gross advances declined 2.68 per cent YoY to ₹1,10,665 crore.

Also see: Banks make higher-than-required provisions for Srei Group exposure

Domestic deposits increased by 3.43 per cent YoY to ₹8,64,603 crore. Overseas deposits declined 19.90 per cent YoY to ₹94,881 crore

BoB’s second quarter consolidated net profit increased by about 22 per cent YoY to ₹2,168 crore (₹1,771 crore).

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Bank of Baroda signs MoU with NCDEX e-Markets

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Bank of Baroda has signed a Memorandum of Understanding (MoU) with NCDEX e Markets Ltd (NEML) to become a “clearing bank” for handling financial transactions in the NeML market place and procurement/auction platform.

NEML, a wholly-owned subsidiary of agricultural commodity exchange, NCDEX, is an online commodities spot market and services company.

Jagdish Tungaria, Zonal Head, Mumbai, BoB, said: “This tie-up opens up multiple opportunities for both institutions. The bank will partner with agriculture marketing federations and other procurement agencies across the country and increase its presence in agri e-commerce through its wide network across the country.

Mrugank Paranjape, MD and CEO, NEML, said this tie-up will help NeML members across the country to further their agriculture businesses.

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