Tag: bank of india

Bank of India cuts home, vehicle loan rates, BFSI News, ET BFSI

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State-run Bank of India on Sunday announced a cut in its interest rates on home and vehicle loans by 35 basis point and 50 basis points, respectively.

With this cut, the interest rate on home loans starts at 6.50 per cent against earlier 6.85 per cent, and at 6.85 per cent against 7.35 per cent prior on vehicle loans, the bank said in a release.

This special rate, which is effective from October 18, 2021, till December 31, 2021, is available for customers applying for fresh loans and also for those seeking transfer of loans, it said.

The lender said it has also waived processing charges for both home and vehicle loans till December 31, 2021.

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At least seven lenders, including Axis Bank, HDFC Bank and ICICI Bank harness GIFT City facilities, BFSI News, ET BFSI

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At least seven lenders, including Axis Bank, HDFC Bank and ICICI Bank, are harnessing the GIFT City facilities to mark a robust Indian presence in the non-deliverable forward (NDF) currency derivatives market, potentially paving the way for eventual currency convertibility that’s considered a draw-card for overseas investments. Average daily volumes in over-the-counter trades at Gujarat GIFT City surged to an estimated $1.5-2 billion from $100-200 million about a year ago, four bankers told ET.

Among the other major participants in the NDF trade are State Bank of India, IndusInd Bank, Kotak Mahindra and Standard Chartered, executives said. “Daily average volumes have surged for offshore OTC NDF trades during the onshore time,” said Bhaskar Panda, executive vice president at HDFC Bank. “This has helped bridge gaps between offshore and onshore prices bringing in relative stability in the exchange rate. This in turn will help attract foreign investors, who always prefer full currency market convertibility.” IndusInd, Kotak and SBI didn’t comment.

The differential between one-month onshore and offshore forwards trade is now less than a paise, which would have been about four-five paise in normal circumstances. A wider differential encourages speculators to tap arbitrage opportunities short-selling rupees or dollars, a potential source for heightened volatility. The one-month Rupee Options Volatility index is now at 4.51 percent versus 7.63 percent nearly a year ago, show data from Financial Benchmarks India (FIBIL). “Axis Bank IBU Branch has been playing a significant role in the NDF markets at GIFT City,” said Lalit Jadhav, CEO – Axis Bank IBU Branch, GIFT City.

“We have a full-fledged Treasury Desk with robust risk controls and look at trading opportunities in this segment which can potentially help reduce volatility and drive price convergence between offshore and on-shore markets.” Before local banks were allowed to tap the NDF market at GIFT City, the Reserve Bank of India was unable to control NDF moves on the rupee-dollar. Now, the central bank even directs private banks along with traditional public sector lenders to buy or sell units, which is known as NDF market intervention.

“NDF business would be one of the core pillars of our business strategy at GIFT City that provides an excellent platform to meet the global banking needs,” said Anupam Verma, head – international banking unit, IFSC GIFT City, ICICI Bank. RBI had permitted Indian banks, which hold a licence to operate in the International Financial Services Centre in GIFT City – Ahmedabad, to participate in the NDF market from June 1 in 2020. “The liquidity has significantly improved in the NDF market at GIFT City with large local banks transacting,” said Anindya Banerjee, currency analyst at Kotak Securities.

“We are gradually moving towards full capital account convertibility making our exchange rate easily available.” RBI deputy governor T Rabi Shankar Thursday called for a preparedness to meet challenges related to full capital account convertibility as foreign investors get full access to India’s debt market under a dedicated route meant for global bond index inclusion.

“A key aspect of currency convertibility is integration of financial markets,” Shankar said at the fifth Foreign Exchange Dealers’ Association of India (FEDAI) annual day. “An effort has already commenced in the interest rate derivative segment.” “NDF-onshore spreads have substantially narrowed after allowing Indian banks into the NDF space,” he said.



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Bank of India announce rate cut on home loan, vehicle loan interest rates

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Bank of India (BoI) on Sunday announced a 35 basis points (bps) reduction in home loan interest rate and a 50 bps reduction in vehicle loan interest rate. The new interest rates are effective from October 18, 2021 till December 31, 2021.

Following the reduction, home loan interest rates will start at 6.50 per cent against the current rate of 6.85 per cent and vehicle loan interest rates will start at 6.85 per cent against 7.35 per cent. One basis point is equal to one-hundredth of a percentage point.

This special rate, which is part of the festive offer, is available for customers applying for fresh loans and also for those seeking transfer of loans, the public sector bank said in a statement.

Processing charges have also been waived for both home and vehicle loans till December-end 2021.

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RBI clears re-appointment of Amitabh Chaudhry as MD of Axis Bank, BFSI News, ET BFSI

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The Reserve Bank on Thursday approved re-appointment of Amitabh Chaudhry as managing director of private sector Axis Bank for a period of three years.

The extended three-year term would be effective from January 1, 2022, Axis Bank said in a regulatory filing. ”The Reserve Bank of India vide its letter dated October 14, 2021, has approved the re-appointment of Amitabh Chaudhry as the Managing Director & CEO of the bank, with effect from January 1, 2022 till December 31, 2024,” it said.

The board of the bank had in April approved the extension of his tenure for further period of three years subject to regulatory clearance.

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RBI says reviewing ATM outage circular after bank’s feedback, BFSI News, ET BFSI

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The Reserve Bank of India on Friday said that it was reviewing its recent scheme on ATM replenishment whereby the regulator put in place mechanisms to penalise lenders. The central bank deputy governor T Rabi Shankar said that they had received inputs from banks and were in the process of reviewing it.

“The idea behind the penalty on outages in ATMs was to ensure that these services are available as much as possible in areas where the attention to ATMs is less, which is largely rural and semi-urban areas,” Shankar said. “We have received various feedback, some positive while some raise concerns. There are issues specific to location (of ATMs). We are trying to take all the feedback and have a review and see how best it can be implemented.”

ET was the first to report in its September 9 edition that lenders had approached the RBI seeking relaxation in its scheme citing issues of replenishing ATMs in rural geographies that could significantly push up costs and make business unviable.

In August, the banking regulator directed banks and white label ATM operators to strengthen systems that will allow them to monitor the availability of cash in ATMs and ensure timely replenishment to avoid cash-out situations. As part of the circular, a penalty of Rs 10,000 per ATM will be levied in the event of a cash-out situation for more than 10 hours in a month.

Banks were of the view that cash availability will drop as they go deeper in rural geographies as the cost to set up and maintain ATMs is high.

“Cost of transportation for ATM fitted notes is very high in rural India because of the distance between ATMs and the sparse network,” a banker said on the condition of anonymity. “Generally cash management companies and ATM service providers visit once in a few days to replenish cash and fix other tech or hardware issues.”

Banks have been slowly reducing ATM presence as they operationalise overall costs. Recently, Small finance bank Suryoday decided to shut down all its 26 automated teller machines, giving customers the option to use their debit cards on other banks’ ATMs, becoming the first domestic lender to completely do away with such machines. The small finance bank is formulating a strategy where it would offer its customers 5-7 transactions free per month when they use the ATM network of other banks to withdraw cash.

At the end of August there were 2.13 lakh ATMs in the country up from 2.09 lakh same time last year, a meagre growth of 1.5%. On the flip side the micro-ATMs have grown to 4.94 lakh as against 3.07 lakh in August last year, a rise of over 60%.

In order to make the business more viable the RBI recently increased the interchange fee on ATM transactions from Rs 15 to Rs 17. ATM interchange is the charge paid by the bank that issues the card (issuer) to the bank where the card is used to withdraw cash (acquirer).

In addition to this, the cap on fee that can be charged to the customer, which is capped at Rs 20 per transaction, was also increased to Rs 21.



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NTPC REL signs first green term loan pact of Rs 500 cr with Bank of India, BFSI News, ET BFSI

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State-run power giant NTPC on Thursday said its arm NTPC Renewable Energy Ltd (NTPC REL) has signed the first green term loan agreement of Rs 500 crore with Bank of India. The green term loan agreement is for its two solar projects in Rajasthan and Gujarat.

NTPC REL has signed its first Green Term Loan agreement of Rs 500 crores at a very competitive rate with a tenor of 15 years with Bank of India on September 29, 2021 for its 470 MW solar project in Rajasthan and 200 MW solar project in Gujarat, a company statement said.

A green loan is a type of loan instrument that enables borrowers to finance projects that have an environmental impact.

NTPC REL, a 100 per cent subsidiary of NTPC Ltd, currently has a renewable project portfolio of 3,450 MW of which 820 MW projects are under construction and 2,630 MW projects have been won for which PPAs (power purchase agreements) are pending to be executed.

NTPC had incorporated NTPC Renewable Energy Ltd with the Registrar of Companies, NCT of Delhi & Haryana on October 7, 2020, to undertake renewable energy business.

NTPC is taking various steps to make its energy portfolio greener by adding significant capacities of renewable energy sources.

By 2032, the company plans to have 60GW capacity through renewable energy sources constituting nearly 45 per cent of its overall power generation capacity as per its official portal.



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NTPC REL signs first green term loan pact of Rs 500 cr with Bank of India, BFSI News, ET BFSI

Banking & Finance

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State-run power giant NTPC on Thursday said its arm NTPC Renewable Energy Ltd (NTPC REL) has signed the first green term loan agreement of Rs 500 crore with Bank of India. The green term loan agreement is for its two solar projects in Rajasthan and Gujarat.

NTPC REL has signed its first Green Term Loan agreement of Rs 500 crores at a very competitive rate with a tenor of 15 years with Bank of India on September 29, 2021 for its 470 MW solar project in Rajasthan and 200 MW solar project in Gujarat, a company statement said.

A green loan is a type of loan instrument that enables borrowers to finance projects that have an environmental impact.

NTPC REL, a 100 per cent subsidiary of NTPC Ltd, currently has a renewable project portfolio of 3,450 MW of which 820 MW projects are under construction and 2,630 MW projects have been won for which PPAs (power purchase agreements) are pending to be executed.

NTPC had incorporated NTPC Renewable Energy Ltd with the Registrar of Companies, NCT of Delhi & Haryana on October 7, 2020, to undertake renewable energy business.

NTPC is taking various steps to make its energy portfolio greener by adding significant capacities of renewable energy sources.

By 2032, the company plans to have 60GW capacity through renewable energy sources constituting nearly 45 per cent of its overall power generation capacity as per its official portal. PTI KKS KKS DRR DRR



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CRISIL upgrades Bank of India’s Tier-I Bonds rating

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CRISIL Ratings has upgraded its rating on the Tier-I bonds (under Basel III) of Bank of India (BoI) to ‘AA/Stable’ from ‘AA-/Stable’. The credit rating agency has also assigned its ‘AA+/Stable’ rating to the public sector bank’s ₹1,800 crore Tier-II bonds (under Basel III).

The upgrade in the rating of Tier-I bonds (under Basel III) factors in improved position of BoI to make future coupon payments, supported by an adjustment of accumulated losses with share premium account, and the improved capital ratios, CRISIL said in a statement.

“Pursuant to the adjustment, the eligible reserve to total assets ratio for the bank has improved,” it added.

Additionally, as per the Department of Financial Services Gazette notification of March 23, 2020, referred to as Nationalised Banks (Management and Miscellaneous Provisions) Amendment Scheme, 2020, the bank still has share premium reserves which can be utilised to set off any losses in future, and this supports the credit profile of Tier-I (under Basel III) instruments.

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“However, any substantial depletion of the share premium account or any regulatory changes to appropriation of the share premium account pertaining to adjustment of accumulated losses are key monitorables,” CRISIL said.

The agency emphasised that supported by the regular capital infusion made by the government of India (GoI) and higher accrual, BoI’s capital ratios have improved, as reflected in Tier-1 and overall capital to risk-weighted adequacy ratio (CRAR) of 12 per cent and 15.1 per cent, respectively, as on June 30, 2021 as against 9.5 per cent and 12.8 per cent, respectively, as on June 30, 2020 (12.0 per cent and 14.9 per cent, respectively, as on March 31, 2021).

Further, the recent qualified institutional placement (QIP) of ₹2,550 crore in August 2021, should also support the capital position.

The overall ratings continue to reflect the expectation of strong support from the majority stakeholder, GoI, and the established market position and comfortable resource profile of the bank. “These strengths are partially offset by weak asset quality and modest earnings profile,” the agency said.

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HDFC Bank, plots path to double retail loans, BFSI News, ET BFSI

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HDFC Bank, India’s largest private lender, plans to double the amount of loans it makes to retail borrowers over the next couple years as consumer demand ramps up from a pandemic-induced slowdown.

Uncertainty is declining and demand is improving as businesses seek to bolster growth after Covid-19, Arvind Kapil, the bank’s country head for retail assets, said in an interview. It’s an opportunity to reverse the declining share of loans to this segment of the market that was needed to preserve asset quality, he said.

“We are planning to double our retail assets book in a focused manner,” Kapil said. “I can sense a robust demand at ground level. I run businesses and I am giving you a feel of what I see.”

Of the bank’s total Rs 11.5 trillion ($156 billion) loan book, Kapil is in charge of retail borrowing worth 3.7 trillion rupees, which is expected to reach almost 8 trillion rupees within the next two years.

If successful, that would mark a sharp turnaround from its strategy a year ago when the bank slowed down its retail lending to protect its asset quality as the pandemic led to millions of job losses and businesses closures.

HDFC Bank’s retail lending share as portion of its total fell to 47 per cent in March, the lowest in at least five years from an average of 54 per cent to 55 per cent previously. The bank, which is also the nation’s most valuable, has the lowest bad-loan ratio among peers, and now wants to focus on unsecured loans for salaried workers, vehicle loans and government business.

“We are taking a pretty aggressive positioning to grow our retail loan book,” Kapil said. “We want to accelerate on segments where we can maintain the asset quality and offer the best return on assets.”

HDFC Bank, plots path to double retail loans
The Mumbai-based lender’s retail loans grew around 9.3 per cent slower than its overall book’s 14.4 per cent in the June quarter. That’s sharply lower than its peers like State Bank of India’s 16.5 per cent and ICICI Bank’s 20 per cent growth in that portfolio. Still, the lenders also saw a spike in bad loans in retail lending in the June quarter after an unexpected and more deadly new wave of the virus ripped through India. Since then, loan collections have improved and, for HDFC Bank, are back to pre-pandemic levels, Kapil said.

“The results of doubling our business will be more visible early next financial year,” he said. “We will balance our top-line growth with our return on assets objective.”



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BoI, Union Bank, PNB may gain most from bad bank, BFSI News, ET BFSI

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The National Asset Reconstruction Company (NARCL) will have maximum impact on loan books of Bank of India (BoI), Union Bank and Punjab National Bank (PNB), which will sell over 1% of their loans to the bad bank. According to rating agency Crisil, the bad bank, or NARCL, will lower the NPA level of banks by 20-25% over time.

However, the immediate impact on the bottom line will be limited as lenders who sell loans in the first phase will receive just around Rs 2,700 crore upfront cash payment as against the Rs 90,000 crore of bad loans they sell to the corporation. Also, investing in the security receipts issued by NARCL will not increase the capital requirement of banks due to the government guarantee.

Of the Rs 2 lakh crore of bad loans to be transferred to NARCL, around Rs 30,600 crore will be guaranteed for five years. NARCL will pay 15% of whatever amount the loans are valued at, in cash. The remaining 85% will be paid using security receipts. According to a Jefferies report, the government guarantee will keep the security capital neutral as without the guarantee banks will have to set aside funds towards provisions. A sovereign guarantee being risk-free does not attract similar capital requirements.

“For the guaranteed part, banks will recognise the value as an investment but that will not require any capital for 5 years as there is government guarantee. For non-guaranteed part, banks might not recognise value until actual recovery is made,” the Jefferies report said.

According to the report, of the first lot, SBI will be transferring the biggest chunk of loans at Rs 20,000 crore. However, given the size, the sale will be only 0.8% of its loan book. While BoI, Union Bank and PNB will be selling much less at Rs 5,500 crore, Rs 7,800 crore and Rs 8,000 crore, their loans will be a much bigger chunk of their balance sheet. For BoI, the loans sold will be 1.5% of its book, 1.3% for Union Bank and 1.2% for PNB, Jefferies said.

“The sovereign guarantee will cushion security receipt investors against potential lower recoveries. This could, in turn, potentially enable the development of a secondary market in security receipts, which has proved elusive so far,” said Crisil senior director and deputy chief ratings officer Krishnan Sitaraman.

The loans sold to the bad bank include Rs 22,500-crore exposure to Videocon Oil Ventures, where SBI is the lead bank. Another large account is Union Bank-led account of Amtek Auto, which has Rs 9,014 crore of bank loans. IDBI is the lead banker in three large accounts — Reliance Naval, Jaypee Infra and GTL.



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