Tag: bank of baroda

CEO, BFSI News, ET BFSI

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Mumbai: The merger of Vijaya Bank has given Bank of Baroda a lead in retail lending, particularly loans against jewellery, which rose 35% to be one of the fastest-growing segments last year. Bank of Baroda has also recorded nearly Rs 1,000 crore of savings following the three-way merger and is in line to achieve savings of Rs 10,000 crore over five years.

Bank of Baroda MD & CEO Sanjiv Chadha told TOI the lender completed the integration of 2,898 branches of erstwhile Vijaya Bank and Dena Bank with itself in December last year. Since then the bank has got the benefits of economies of scale and branch rationalisation. “There were 1,300 branches that were closed where there was an overlap, expenses on account of rent and taxes have come down in absolute terms,” said Chadha. He added that the merger has also reduced the need for fresh hiring.

Another cost-saving has been in interest expenses. “The ratio of low-cost current and savings account (CASA) deposits of the merging banks was lesser than that of standalone Bank of Baroda. As a result of the merger, BoB’s CASA dropped from 40% to 36%. We have not only retrieved what we have lost but moved ahead with a CASA ratio of 43%,” said Chadha. While Vijaya Bank’s business has given Bank of Baroda a leg up in retail, Dena Bank has consolidated its position in Western India particularly Gujarat.



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Bank of Baroda clocks Q1 profit of Rs 1,209 crore, BFSI News, ET BFSI

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New Delhi, State-owned Bank of Baroda (BoB) on Saturday reported a standalone profit of Rs 1,208.63 crore during the quarter ended June 2021, helped by decline in bad loans provisioning. The bank had posted a net loss of Rs 864 crore in the same quarter a year ago.

Total income moderated marginally to Rs 20,022.42 crore from Rs 20,312.44 crore in the same quarter a year ago, BoB said in a regulatory filing.

The bank’s asset quality improved with the gross non-performing assets (NPAs) falling to 8.86 per cent of the gross advances as on June 30, 2021, from 9.39 per cent by the end-June 2020. However, net NPA ratio rose to 3.03 per cent from 2.83 per cent as on June 30, 2020, the bank said.

As a result, total provisions and contingencies for the quarter eased to Rs 4,111.99 crore from Rs 5,628 crore a year ago.

Provisioning Coverage Ratio including floating provision stood at 83.14 per cent as on June 30, 2021.

A penalty of Rs 41.75 lakh has been imposed on the bank by Reserve Bank of India for the quarter ended June 30, 2021, it said.

As per the Reserve Bank of India (RBI) circular, the bank has opted to provide the liability for frauds over a period of four quarters, it said.

Accordingly, the carry forward provision as on June 30, 2021 is Rs 349.45 crore which is to be amortised in the subsequent quarters by the bank, it said.



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Bank of Baroda back in black; logs ₹1,209-crore profit in Q1

Banking & Finance

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Bank of Baroda (BoB) is back in the black in the first quarter of FY22, reporting a standalone net profit of ₹1,209 crore on the back of robust growth in other income and decline in provisions towards bad loans and standard assets.

The public sector bank had reported a net loss in both the year ago quarter (₹864 crore) and the preceding/ Q4FY21 quarter (₹1,046 crore). NIM improvesNet interest income (difference between interest earned and interest expended) was up 16 per cent year-on-year at ₹7,892 crore (₹6,816 crore in the year ago quarter).

Other income, comprising commission, exchange & brokerage, treasury income and recoveries in written-off accounts, jumped 63 per cent yoy to Rs 2,970 crore (Rs 1,818 crore).

Sanjiv Chadha, MD & CEO, said “The operating profit has shown a very sharp uptick, moving up nearly 41 per cent (to ₹5,707 crore). With the provisioning also contained, the net profit moved up to more than ₹1,200 crore.”

“.…The asset quality has been fairly resilient, with sequential lowering of gross NPAs as well as net NPAs by a tad. The improvement in the corporate credit cycle should benefit the bank as we forward.”

Global net interest margin improved to 3.04 per cent in the Apri-June quarter against 2.52 per cent in the year ago period.

Provisions, including towards bad loans and standard assets, declined 23 per cent yoy to ₹4,112 crore (₹5,349 crore).

The Bank made additional provision of ₹373 crore during the quarter ended June 30, in compliance with RBI’s June 7, 2019, circular on “Prudential Framework for Resolution of Stressed Assets issued guidelines for implementation of Resolution Plan”.

Slippages were lower at ₹5,129 crore in the reporting quarter against ₹11,655 crore in the preceding quarter. The slippages came mainly from MSME (42.5 per cent of the slippages), retail (24 per cent),and agriculture (21 per cent).NPAs declineGross non-performing assets (GNPAs) declined by ₹3,642 crore during the reporting quarter to stand at ₹63,029 crore as at June-end 2021. The Bank recovered ₹530 crore from the defunct Kingfisher Airlines account.

Gross NPA position improved a tad to 8.86 per cent of gross advances as at June-end 2021 against 8.87 per cent as at March-end 2021.

Net NPA position too improved to 3.03 per cent of net advances as at June-end 2021 against 3.09 per cent as at March-end 2021.

Global deposits declined a shade (0.34 per cent yoy) to ₹9,31,317 crore. However, the proportion of low-cost current account, savings account (CASA) increased to 43.21 per cent of domestic deposits against 39.49 per cent in the year ago quarter.

Global gross advances were down 3.40 per cent yoy to ₹7,11,487 crore, with retail advances growing about 12 per cent, agriculture about 9 per cent and MSME about 7 per cent. However, corporate advances contracted about 12 per cent yoy.

Bank of Baroda (BoB) is back in the black in the first quarter of FY22, reporting a standalone net profit of ₹1,209 crore on the back of robust growth in other income and decline in provisions for bad loans.

The public sector bank had reported a net loss in both the year ago quarter (₹864 crore) and March quarter (₹1,046.50 crore).

Net interest income (difference between interest earned and interest expended) was up 16 per cent year-on-year at ₹7,892 crore (₹6,816 crore in the year-ago quarter).

Other income, comprising commission, exchange & brokerage, treasury income and recoveries in written-off accounts, jumped 63 per cent yoy to ₹2,970 crore (₹1,818 crore).

Provisions, including towards bad loans, declined 23 per cent yoy to ₹4,112 crore (₹5,349 crore).

Additional provision

The bank said it has made additional provision of ₹373 crore in June quarter in compliance with RBI’s June 7, 2019 circular on “Prudential Framework for Resolution of Stressed Assets issued guidelines for implementation of Resolution Plan”.

Gross non-performing assets (GNPAs) declined by ₹3,642 crore during the reporting quarter to ₹ 63,029 crore as of June-end.

Gross NPA position improved a tad to 8.86 per cent of gross advances as at June-end 2021 against 8.87 per cent as at March-end 2021.

Net NPA

Net NPA position too improved to 3.03 per cent of net advances as at June-end 2021 against 3.09 per cent as at March-end 2021.

The number of borrower accounts where modification (restructuring) were sanctioned as per RBI’s circular (May 5, 2021) circular on “Resolution Framework – 2.0: Resolution of Covid-19 related stress of individuals and small business” was sanctioned and implemented stood at 8,544 and the aggregate exposure to such borrowers was ₹665 crore.

The bank has purchased PSLC (Priority Sector lending Certificates) of ₹3,500 crore under the category of Small and Marginal Farmer and sold PSLC of ₹1,000 crore under the category Micro Enterprises during the current quarter.

Deposits declined a tad (0.34 per cent yoy) to ₹9,31,317 crore. Advances were down 2.66 per cent yoy to ₹6,68,382 crore.

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Financial creditors’ insolvency plea valid even after three years, rules SC, BFSI News, ET BFSI

Banking & Finance

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The Supreme Court has ruled that plea by a financial creditor for initiation of insolvency resolution process against a corporate debtor before the adjudicating authority will not get time barred on the ground that it had been filed beyond a period of three years from the date of declaration of the loan account as NPA.

A two-judge bench set aside an order of National Company Law Appellate Tribunal (NCLAT) by which it had said that application under section 7 of Insolvency and Bankruptcy Code (IBC) of Dena Bank (now Bank of Baroda) for initiation of insolvency process was time barred.

The bench said, “To sum up, in our considered opinion an application under Section 7 of the IBC would not be barred by limitation, on the ground that it had been filed beyond a period of three years from the date of declaration of the loan account of the Corporate Debtor as NPA, if there were an acknowledgement of the debt by the Corporate Debtor before expiry of the period of limitation of three years, in which case the period of limitation would get extended by a further period of three years”.

It said that the impugned judgement and order of NCLAT is unsustainable in law and facts and allowed the appeal of Dena Bank.

The case

Dena Bank has moved the top court in appeal against December 18, 2019 order of NCLAT setting aside an order of March 21, 2019 passed by NCLT, Bengaluru admitting the application of the bank for initiation of insolvency proceedings against company Kaveri Telecom Infrastructure Limited and its director C Shivakumar Reddy.

By a letter dated December 23, 2011 the Bank had sanctioned term loan and Letter of Credit Cum Buyers’ Credit in favour of the company, with an upper limit of Rs 45 Crores.

The said term loan was to be repaid in 24 quarterly instalments of Rs 187.50 lakhs, which were to commence two years after the date of disbursement, and the entire term loan was to be repaid in eight years, inclusive of the implementation period of one year and the moratorium period.

On September 20, 2013 the corporate debtor defaulted in repayment of its dues to the bank and the loan account of the company was therefore declared Non Performing Asset (NPA) on December 31, 2013

The rationale

The bench said that there is no bar in law to the amendment of pleadings in an application under Section 7 of the IBC, or to the filing of additional documents, apart from those initially filed along with application under the provision of the IBC in Form-1.

“In the absence of any express provision which either prohibits or sets a time limit for filing of additional documents, it cannot be said that the adjudicating authority committed any illegality or error in permitting the appellant bank to file additional documents,” it said.

The top court, however, said that depending on the facts and circumstances of the case, when there is inordinate delay, the adjudicating authority might, at its discretion, decline the request of an applicant to file additional pleadings and/or documents, and proceed to pass a final order.

“In our considered view, the decision of the adjudicating authority to entertain and/or to allow the request of the appellant bank for the filing of additional documents with supporting pleadings, and to consider such documents and pleadings did not call for interference in appeal,” it said.

Fresh cause of action

The top court said that a judgment and/or decree for money in favour of the financial creditor, passed by the DRT, or any other Tribunal or Court, or the issuance of a Certificate of Recovery in favour of the financial creditor, would give rise to a fresh cause of action, to initiate proceedings under Section 7 of the IBC for initiation of the Corporate Insolvency Resolution Process, if the dues remain unpaid.

It said that in the instant case the balance sheets and financial statements of the Corporate Debtor for 2016-2017, constitute acknowledgement of liability which extended the limitation by three years, apart from the fact that a Certificate of Recovery was issued in favour of the appellant bank in May 2017.

It said that the National Company Law Tribunal (NCLT), Bengaluru had rightly admitted the application of the bank by its order dated March 21, 2019.

Limitation Act

It said that there is no specific period of limitation prescribed in the Limitation Act, 1963, for an application under the IBC, before the NCLT but an application for which no period of limitation is provided anywhere else in the Schedule to the Limitation Act, is governed by Article 137 of the schedule of the said Act.

“There can be no dispute with the proposition that the period of limitation for making an application under Section 7 or 9 of the IBC is three years from the date of accrual of the right to sue, that is, the date of default,” it said.



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IOB asks Union Bank to buy its stake in Malaysian bank, BFSI News, ET BFSI

Banking & Finance

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Indian Overseas Bank (IOB) has asked the Union Bank of India to buy its 35 per cent holding in India International Bank, Malaysia, a top IOB official said on Tuesday.

The India International Bank was originally a three-way joint venture between the Bank of Baroda (40 per cent stake), the IOB (35 per cent) and Andhra Bank (25 per cent). The Andhra Bank was taken over by the Union Bank of India as a part of the megabank merger scheme last year.

“We have asked Union Bank of India to buy our stakes. The valuation exercise is going on,” IOB Managing Director & CEO Partha Pratim Sengupta told reporters.

According to him, the IOB had decided to exit the Malaysian joint venture as part of its plan to come out of the Reserve Bank of India‘s (RBI) Prompt and Corrective Action (PCA) fold.

Though Sengupta said the IOB is expecting to be out of the PCA fold as it fulfills the RBI’s conditions, the decision to exit the India International Bank continues to hold.

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As markets soared, PSBs raised a record Rs 58,700 via debt, equity, BFSI News, ET BFSI

Banking & Finance

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Make hay while the sun shines. As the stock market soared during the pandemic, public sector banks raised a record Rs 58,700 crore from markets in FY2020-21 through a mix of debt and equity to enhance the capital base.

Series of successful QIP reflect the confidence of both domestic and global investors in PSBs and their potential.

The fundraise

This included Rs 4,500 crore raised by Mumbai-based Bank of Baroda from qualified institutional placement (QIP). Punjab National Bank mobilised Rs 3,788 crore through share sale on a private placement basis during the financial year ended March 31, 2021.

At the same time, Bengaluru-based Canara Bank raised Rs 2,000 crore from QIP, as per data collated from regulatory filings.

In addition, 12 PSBs raised funds from Tier I and Tier II bonds taking the total fund mobilisation to Rs 58,697 crore, highest amount garnered in any financial year.

Government reforms

Various reforms undertaken by the government including recognition, resolution and recapitalisation resulted in progressive decline in non-performing assets (NPAs) and subsequent rise in profit.

NPAs of PSBs had declined to Rs 7,39,541 crore as on March 31, 2019, Rs 6,78,317 crore on March 31, 2020 and further to Rs 6,16,616 crore as on March 31, 2021 (provisional data). Provision Coverage Ratio (PCR) at the same time increased sequentially to a high of 84 per cent.

As a result, PSBs in aggregate recorded a profit of Rs 31,816 crore, highest in five years, despite 7.3 per cent contraction in economy in 2020-21 due to COVID-19 pandemic.

The primary reason for PSBs to post such a Rs 57,832-crore turnaround from a loss of Rs 26,015 crore in 2019-20 to a combined profit of Rs 31,816 crore was the end of their legacy bad loan problem.

At the same time, comprehensive steps were taken to control and to effect recovery in NPAs, which enabled PSBs to recover Rs 5,01,479 crore over the last six financial years.

Credit growth

Overall credit growth of Scheduled Commercial Banks (SCBs) has remained positive for 2020-21 despite a contraction in GDP (-7.3 per cent) due to the COVID-19 pandemic.

As per the RBI data, gross Loans and Advances of SCBs increased from Rs 109.19 lakh crore as of March 31, 2020, to Rs 113.99 lakh crore as of March 31, 2021.

Further, as per RBI data of loans to agriculture and allied activities, micro, small and medium enterprises, housing and vehicles have witnessed a year-on-year growth of 12.3 per cent, 8.5 per cent, 9.1 per cent and 9.5 per cent respectively during the year.



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Bank of Baroda, U GRO Capital launch co-lending platform ‘Pratham’

Banking & Finance

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Bank of Baroda and fintech platform U GRO Capital have launched a co-lending platform Pratham, under which ₹1,000 crore loan will be disbursed to the MSME sector in the country.

Commencements of loan disbursements under Pratham mark the 114th Foundation Day of Bank of Baroda, U GRO Capital — tech-focussed small business lending platform — said in a release on Wednesday.

“Pratham, a ₹1,000 crore co-lending programme, will allow the MSMEs to avail customised lending solutions at a competitive rate of interest with a significant reduction in turn-around time, it said.

The loan amount ranges from ₹50 lakh to ₹2.5 crore to be offered at an interest rate starting from 8 per cent with a maximum tenure of 120 months, it said.

“We believe that forging such partnerships is the way forward and collaborative efforts leveraging individual entities’ expertise are of utmost importance to take co-lending to MSME segment to the next level. This is a significant advancement in the same direction,” said Vikramaditya Singh Khichi, Executive Director, Bank of Baroda.

Support to MSMEs

The co-lending programme resonates with the bank’s intent to extend support to more micro, small and medium enterprises (MSMEs), he said.

The partnership with Bank of Baroda will enable the company to support more MSMEs in the remotest locations, and to help them revive and grow, Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital, said.

With technology and sectoral expertise, U GRO Capital will solve the unsolved credit needs of such small businesses, he said.

Pratham requires minimum documentation for loan, said the company.

Company’s proprietary developed platform GRO-Xstream allows faster turnaround time, with an in-principle approval issued within 60 minutes, U GRO Capital said.

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U GRO Capital ties-up with Bank of Baroda for co-lending, to disburse over Rs 1000 crore, BFSI News, ET BFSI

Personal Finance

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U GRO Capital, a BSE listed, technology-enabled small business NBFC, today announced the launch of a co-lending partnership for micro, small and medium enterprises (MSME) with Bank of Baroda, one of the largest banks in India. Termed as ‘Pratham’, the loan disbursements have commenced on the occasion of Bank of Baroda’s 114th Foundation Day. The program has been launched under the Reserve Bank of India’s revised co-lending guidelines.

‘Pratham’, a ₹1000 crore co-lending program will allow the MSMEs to avail customized lending solutions at a competitive rate of interest with a significant reduction in turn-around time. The loan amount ranges from ₹ 50 lakh to ₹ 2.5 crores to be offered at an interest rate starting from 8% with a maximum tenure of 120 months.

Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital said, “It gives us immense pleasure to launch one of our most significant programs ‘Pratham’ and sign the co-lending agreement with Bank of Baroda under RBI’s revised guidelines. It is a reiteration of the value and trust that the bank places on our ability to leverage sectoral expertise and technology to solve the unsolved credit need of the MSMEs. We look forward to nurturing this essential relationship in our bid to support more MSMEs in the remotest locations, to help them revive and grow.”

Vikramaditya Singh Khichi, Executive Director, Bank of Baroda said, “We are glad to have joined hands with U GRO Capital by way of this co-lending program, which resonates with our intent to extend support to more MSMEs. We believe that forging such partnerships is the way forward and collaborative efforts leveraging individual entities’ expertise are of utmost importance to take co-lending to the MSME segment to the next level. This is a significant advancement in the same direction.”



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U GRO Capital, Bank of Baroda in tie-up for ₹1,000-crore MSME co-lending

Banking & Finance

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U GRO Capital on Wednesday announced the launch of a co-lending partnership for micro, small and medium enterprises with Bank of Baroda.

Called Pratham, it is under Reserve Bank of India’s revised co-lending guidelines.

It is a ₹1,000-crore co-lending programme that will allow MSMEs to avail customised lending solutions at a competitive rate of interest with a significant reduction in turn-around time, U GRO Capital said in a statement.

U GRO Capital launches GRO Micro, adds 25 branches

The loan amount ranges from ₹50 lakh to ₹2.5 crore and will be offered at an interest rate starting from 8 per cent with a maximum tenure of 120 months.

Accessible at nine locations

“We believe that forging such partnerships is the way forward and collaborative efforts leveraging individual entities’ expertise are of utmost importance to take co-lending to MSME segment to the next level,” said Vikramaditya Singh Khichi, Executive Director, Bank of Baroda.

MSMEs including the recently added wholesale and retail traders under priority sector can avail credit through this programme, which is accessible at nine locations.

A call to preserve the ‘value’ of MSMEs at any cost

“The partnership is a reiteration of the value and trust that the bank places on our ability to leverage sectoral expertise and technology to solve the unsolved credit need of the MSMEs,” said Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital.

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RBI penalises SBI, 13 other banks for non-adherence to NBFC lending rules

Banking & Finance

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The banks were also called out on not adhering to restrictions and provisions on loans as well as advances and reporting to the central database on large exposures.

The Reserve Bank of India (RBI) has penalised 14 banks including State Bank of India, IndusInd Bank, Bandhan Bank and Bank of Baroda for non-compliance of various lending norms. RBI found that these lenders were non-compliant with certain provisions of directions that the regulator had issued on lending to Non-Banking Financial Companies (NBFCs). The banks were also called out on not adhering to restrictions and provisions on loans as well as advances and reporting to the central database on large exposures.

In view of this, RBI levied a penalty of Rs 2 crore on Bank of Baroda. For Central Bank of India, IndusInd Bank, Credit Suisse AG, Bandhan Bank, Indian Bank, Bank of Maharashtra, Utkarsh Small Finance Bank, Karur Vysya Bank, Karnataka Bank, South Indian Bank, Punjab and Sind Bank, and Jammu & Kashmir Bank, the regulator has levied a fine of Rs 1 crore. State Bank of India, on the other hand will have to pay a penalty of Rs 50 lakh.

“A scrutiny in the accounts of the companies of a Group was carried out by RBI and it was observed that the banks had failed to comply with provisions of one or more of the aforesaid directions issued by RBI and/or contravened provisions of the Banking Regulation Act, 1949,” RBI said in a statement. The regulator said it had issued notices to these banks seeking show cause as to why RBI should not impose penalty on them for non-compliance.

After examining the replies received from the banks along with oral submissions made in the personal hearings, RBI concluded the imposition of monetary penalty on these banks.

“The penalties have been imposed in exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with sections 46 (4) (i) and 51 (1), of the Banking Regulation Act, 1949, as applicable. This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers,” RBI added.

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