Dhanlaxmi Bank Q2 net declines 74pc at Rs 3.66cr on soaring bad assets, BFSI News, ET BFSI

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Dhanlaxmi Bank on Friday reported a nearly 74 per cent plunge in its net profit to Rs 3.66 crore in quarter ended in September 2021 as provisions rose due to a spike in bad loans. The private sector bank had posted a net profit of Rs 14.01 crore in the corresponding period a year ago.

Total income of the bank during the July-September period of 2021-22, however, grew to Rs 266.59 crore from Rs 249.66 crore in the same period of 2020-21, Dhanlaxmi Bank said in a regulatory filing.

Interest income was down at Rs 229 crore in Q2FY22 from Rs 243.97 crore in Q1FY21, even as the other income was higher at Rs 37.58 crore, as against Rs 5.69 crore.

Provisions for the bad loans and contingencies for the reported quarter rose to Rs 22.40 crore from Rs 4.29 crore in September 2020.

The bank’s gross non-performing assets (NPAs) rose to 8.67 per cent of the gross advances as of September 30, 2021, from 6.36 per cent in the year-ago same period.

However, sequentially from gross NPAs were down compared to 9.27 per cent in June 2021 quarter. Value-wise, the gross NPAs were worth Rs 604.15 crore, up from Rs 448.72 crore.

Net NPAs too rose to 4.92 per cent (Rs 329.55 crore) from 1.66 per cent (Rs 111.45 crore).

“During the quarter ended September 30, 2021, NPA for which provision had already been made amounting to Rs 7,786 lakh has been technically written off,” the bank said.

Provision coverage ratio (including technical write off) as of September 30, 2021 is 74.18 per cent, it added.



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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

–IANS

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Report, BFSI News, ET BFSI

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-By Ishwari Chavan

The Indian banking sector is likely to witness a fresh phase of consolidation over the medium term, between FY22 and FY24, primarily driven by large private sector banks, according to a report by Acuite Ratings and Research.

Given the current buoyancy in equity markets, there is now a significant opportunity for large Indian private banks for inorganic growth through acquisition of smaller private banks that continue to face headwinds or even public sector banks where the government is considering a disinvestment, the report said.

The banking sector saw its first phase of consolidation involving public sector banks over the period 2017-20, with an intent to enhance their competitiveness, capital position and operational efficiency. Post this, there are twelve PSBs, including seven large ones and five smaller ones against 27 in 2017.

Market share

While PSBs have been enjoying a dominant market share since nationalisation of banks in 1969, they have witnessed a steady drop in both credit and deposit market share over the last one decade, the report said.

This was further accelerated over the last five years, with the impact of the Asset Quality Review (AQR) and the subsequent spike in NPAs in the banking sector.


Share of Public Vs Private Sector Banks in Outstanding Credit
Source: Acuite Ratings and Research

Over the last five years, the market share of state-owned banks has dropped by around 10% in both deposits and advances due to asset quality, resultant profitability and capital challenges.

This market share has been largely taken over by private banks, who have cemented their market position through easier access to capital, along with technological initiatives.


Share of Public Vs Private Sector Banks in Outstanding Deposits
Source: Acuite Ratings and Research

Domination of large private banks

Given investors’ confidence, large as well as some select mid-sized private banks have been able to raise funds through capital markets.

Despite repercussions from COVID, larger and few mid-sized private banks have been able to raise capital through equity (QIP) snd Tier I/II bonds in FY21 and H1FY22.

Large banks have been reporting double-digit growth rates on an average over the last five years due to a comfortable capital cushion, which can shield them from any asset quality stress.

Despite some improvement in profitability during FY21, small-size private banks continue to have low return on assets, reflecting their vulnerability in a challenging environment. These banks have also been facing difficulties in raising capital.

Furthermore, their ability to bring about a structural improvement in their lending and deposit profile is uncertain due to limitations in their geographical franchise, the report said.


Size Wise ROAA Trend of PVBs
Source: Acuite Ratings and Research



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RBI Committee, BFSI News, ET BFSI

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Multiple factors have led to sub-optimal performance of the asset reconstruction companies (ARCs) in the country, said the Reserve Bank Of India (RBI) Committee.

The ARC framework was designed to allow originators to focus on their core function of lending, by removing sticky stressed financial assets from their books.

It was also designed to help borrowers revive their businesses, which protects the viable and productive assets of the economy and often ensures a better return to banks and financial institutions (FIs).

Accordingly, the Committee constituted to “Review the working of ARCs said multiple factors behind the sub-optimal performance of the sector such as vintage NPAs being passed on to ARCs, lack of debt aggregation, non-availability of additional funding for stressed borrowers, difficulty in raising of funds by the ARCs on their balance sheet, among others.”

“Also, ARCs have lacked focus on both recovery and acquiring necessary skill sets for holistic resolution of distressed borrowers.”

The RBI Committee cited data which showed that the performance of the ARCs has been lacklustre, both in terms of ensuring recovery and revival of businesses.

“Banks and other investors could recover only about 14.29 per cent of the amount owed by borrowers in respect of stressed assets sold to ARCs during the FY 2004-2013 period.”

“Similarly, data shows that approximately 80 per cent of the recovery made by ARCs has come through deployment of measures of reconstruction that do not necessarily lead to revival of businesses.”

Considering the challenges impacting the performance of the ARC sector, the Committee recommended sale of stressed assets by lenders at an earlier stage to allow for optimal recovery by ARCs.

“In this respect, the Committee highlights the need for regulatory clarification on sale of all categories of special mention accounts (SMAs) to ARCs.”

“Further, as a measure to incentivise lenders to sell their financial assets to ARCs at an early stage of stress, the committee recommends a dispensation to lenders, on an ongoing basis, to amortise the loss on sale, if any, over a period of two years.”

Besides, it called for a higher threshold of investment in SRs by lenders below which provisioning on SRs held by them may be done on the basis of Net Asset Value (NAV) declared by the ARC instead of the IRACP norms.

In addition, the Committee among other measures, recommended the creation of an online platform for sale of stressed assets.

“Infrastructure created by the Secondary Loan Market Association (SLMA) may be utilised for this purpose.”

–IANS

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BSE joins hand with HDFC Bank to promote startup, SME listing, BFSI News, ET BFSI

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New Delhi, Leading stock exchange BSE on Tuesday said it has collaborated with private sector lender HDFC Bank to further encourage and promote the listing of startups and small and medium enterprises (SMEs) across India. Through this pact, HDFC Bank and BSE will evaluate banking and lending solutions for startups, undergoing listing process on startups and SME platform, the exchange said in a statement.

HDFC Bank will identify potential startups as well as SMEs and help them to partner with intermediaries like merchant bankers, chartered accountants and lawyers to list on BSE.

Both the parties have agreed to conduct and participate in joint outreach activities and contribute to each other’s publications on the startup ecosystem in India.

“Through this MoU (Memorandum of Understanding), we aim to resolve funding constraints for startups and SMEs in India. BSE along with HDFC Bank shall work together to create a sustainable ecosystem for startups and SMEs,” Ajay Thakur, Head, BSE SME and startups, said.

“Startups are reimagining and reshaping the world we live in. At HDFC Bank, we are committed to developing, strengthening and collaborating with the startup community and ecosystem in the country,” said Iqbal Singh Guilani, SVP, Retail Branch Banking, HDFC Bank.

BSE became the first stock exchange to get approval from markets regulator Sebi and had launched its SME platform in March 2012.

So far, 353 companies listed on the BSE SME Platform have raised Rs 3,732 crore from the market, and the total market capitalisation of such firms stood at Rs 38,538 crore. Out of 353 companies, 117 have migrated to BSE Main Board.

BSE is the market leader in this segment, with a market share of 61 per cent.



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Union Bank of India sees 3-fold jump in net profit to Rs 1,526 cr in Sept quarter, BFSI News, ET BFSI

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New Delhi, Nov 2 : State-owned Union Bank of India on Tuesday reported a nearly three-fold jump in its standalone net profit to Rs 1,526.12 crore for the September 2021 quarter. The lender had posted a net profit of Rs 516.62 crore in the corresponding quarter of the previous financial year.

Its total income during July-September 2021 rose to Rs 20,683.95 crore as compared with Rs 20,182.62 crore in the year-ago period, the bank said in a regulatory filing.

Provisionings for bad loans and contingencies fell to Rs 3,723.76 crore, against Rs 4,242.45 crore a year ago.

The bank’s asset quality improved with the gross non-performing assets falling to 12.64 per cent of the gross advances by the end of September 2021, from 14.71 per cent by the end of September 2020.

In terms of value, the gross non-performing assets (NPAs) were worth Rs 80,211.73 crore, down from Rs 95,796.90 crore.

However, net NPAs increased slightly to 4.61 per cent (Rs 26,786.42 crore), from 4.13 per cent (Rs 23,894.35 crore) a year ago.

On a consolidated basis, the bank reported a net profit of Rs 1,510.68 crore in July-September 2021, a jump of 183 per cent from Rs 533.87 crore in the year-ago quarter.

Its consolidated total income rose to Rs 21,621.87 crore, from Rs 20,910.91 crore a year ago.

Shares of Union Bank of India on Tuesday closed at Rs 49.40 apiece on the BSE, up 5.89 per cent from the previous close.



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Private banks’ NPAs fall in Q2 as economy charts recovery path, BFSI News, ET BFSI

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With the economy opening up, the asset quality of private banks improved in the September quarter. Further, banks efforts in reducing slippages, improved collections, better recoveries from written off accounts and RBI mandated loans recast also helped banks keep a lid on NPAs.

While the year on year NPA figures of most banks were higher than the last quarter’s figures, they are not comparable as after the Supreme Court‘s stay on classifying loans that were standard as on August 31 from NPAs banks had reported NPAs under proforma figures.

The drop

HDFC Bank, India’s largest private sector lender, reported a drop in gross non-performing assets (GNPAs) to Rs 16,346 crore during July-September against Rs 17,099 crore in the preceding quarter. Provisions and contingencies also dropped to Rs 3,924.70 crore during the quarter compared with Rs 4,830.84 crore in the June quarter. GNPA ratio fell to 1.35 per cent as of September from 1.47 per cent in the June quarter. It was 1.08 per cent in the same quarter, a year ago.

ICICI Bank‘s gross non-performing assets fell to 4.82 per cent of gross advances as on September 30, against 5.15 per cent in the June quarter. Net NPAs (bad loans) also fell to 0.99 per cent from 1.16 per cent sequentially in the September quarter.

Federal Bank‘s asset quality improved on a sequential basis as gross NPA came at 3.24% as against 3.50% in the previous quarter. Its net NPA stood at 1.12% from 1.23% quarter-on-quarter (QoQ). However, the gross NPA during the year-ago quarter stood at 2.84% whereas net NPA at 0.99%. Provisions (other than tax) and contingencies declined to Rs 245 crore as against Rs 543 crore in the previous quarter and Rs 532 crore in the year-ago quarter.

Axis Bank and Kotak Bank

Axis Bank’s gross NPAs came in at 3.53% in the second quarter, lower than 3.85% in the June quarter and 4.18% in the previous year period. Meanwhile, the net NPA ratio during the quarter stood at l.08%.

Kotak Mahindra Bank’s gross NPAs during the second quarter stood at 3.19% compared with 3.56% in the June quarter. However, it was higher than 2.70% in the year-ago quarter. Meanwhile, the net NPA improved to 1.06% versus 1.28% on a sequential basis, and remained flat on a year-on-year basis.

What Crisil says

GNPAs of banks will rise to 8-9 per cent this fiscal, well below the peak of 11.2 per cent seen at the end of fiscal 2018, with the COVID-19 relief measures such as restructuring dispensation, and the Emergency Credit Line Guarantee Scheme (ECLGS) helping limit the rise, according to CRISIL Ratings.

GNPAs as at March-end 2021 had declined to 7.5 per cent against 8.2 per cent as at March-end 2020.

With about 2 per cent of bank credit expected under restructuring by the end of this fiscal, stressed assets ― comprising gross NPAs and loan book under restructuring ― should touch 10-11 per cent (against March-end 2021 estimate of about 9 per cent), the credit rating agency said.



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Fino Payments Bank IPO subscribed 87% on Day 2 of offer, BFSI News, ET BFSI

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The initial public offer of Fino Payments Bank Limited was subscribed 87 per cent on the second day of subscription on Monday. The IPO received bids for 99,90,600 shares against 1,14,64,664 shares on offer, according to exchanges data.

The retail individual investors (RIIs) category was subscribed 4.65 times and that of non-institutional investors 10 per cent.

The initial public offer (IPO) comprises a fresh issue of up to Rs 300 crore and an offer for sale of up to 1,56,02,999 equity shares.

The price range for the offer is Rs 560-577 per share.

Fino Payments Bank had on Thursday said it has garnered Rs 539 crore from anchor investors.

At the upper end of the price band, the initial share sale is expected to fetch Rs 1,200.3 crore.

Proceeds from the fresh issue would be used towards augmenting the bank’s Tier-1 capital base to meet its future capital requirements.

Fino Payments Bank or FPBL is a scheduled commercial bank serving the emerging Indian market with its digital-based financial services.

The company is a fully-owned subsidiary of Fino Paytech, a pioneer in technology-enabled financial inclusion solutions.

Fino Paytech is backed by investors like Blackstone, ICICI Group, Bharat Petroleum and International Finance Corporation (IFC).

Axis Capital, CLSA India, ICICI Securities and Nomura Financial Advisory and Securities are the managers of the offer. PTI SUM BAL BAL



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Banks with 95% cards implement RBI order on recurring payments, BFSI News, ET BFSI

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A month after the RBI’s fresh rules on mandates for recurring card payments kicked in, banks accounting for over 95% of credit cards in the market are compliant with the new system. Over 20 lakh e-mandates have been registered by cardholders with a host of merchants.

According to payment industry sources, the banks whose credit cards are eligible for new standing payment mandate include SBI, 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. Several banks have enabled the mandate for both debit cards as well as credit cards.

Automatic recurring payments also require the merchant to be on-boarded to the new e-mandate framework. The compliant businesses include most of the OTT (over-the-top) streaming platforms, private life & general insurance companies, global IT giants like Google, Facebook, Microsoft and McAfee, as well as some edtech companies.

Interestingly, Indian cardholders who have registered with overseas service providers, having payment gateways abroad, are not subject to the new rules. This is because the RBI has no jurisdiction to impose second-factor authentication in those markets. It is up to the customer to disable international transactions on their cards.

What has facilitated the fast on-boarding of merchants is IT solutions like SI Hub developed by BillDesk and Mandate HQ developed by Razorpay. However, some domestic banks like Canara Bank & Punjab National Bank and Standard Chartered Bank were until last week in the process of making the necessary system changes.

According to the sources, card-based recurring transactions are 2.5% in terms of the number of transactions and 1.5% in terms of the value of the total card payments done in the country. On average, approximately 75% of domestic recurring transactions are of values of up to Rs 5,000. The corresponding figure for cross-border recurring transactions is approximately 85%.



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Yes Bank appoints Sharad Sharma non-executive director, BFSI News, ET BFSI

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New Delhi, Yes Bank on Monday said it has appointed Sharad Sharma as a non-executive director with effect from November 1, 2021. “Sharad Sharma has been co-opted as non-executive director of the board of the bank with effect from November 1, 2021, to broad base the board,” Yes Bank said in a release.

The decision comes vide a notification from the Finance Ministry under the ‘Yes Bank Ltd Reconstruction Scheme 2020‘.

Sharma will continue to hold his office until an “alternate board” is constituted by the bank in accordance with the procedure laid down in its Memorandum and Articles of Association, Yes Bank said in a regulatory filing.

He will be eligible to be appointed on the “alternate board” to be constituted under the Scheme with the approval from shareholders in due course, it said.

Sharma is a career banker with 40 years of experience in the banking industry.

He was Managing Director of State Bank of Mysore during the period from August, 2012 to April 2016, where he was seconded from State Bank of India (SBI). He joined Union Bank of India as a probationary officer in 1975 before joining SBI as PO in September, 1977.

Sharma held various assignments across all fields of a banking organisation, including exposure to international banking, when he was posted in SBI’s 100 per cent owned Canadian banking subsidiary.

His major interest has been primarily in the corporate and SME banking segment. PTI KPM MR MR



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