Tag: banking

Axis Bank raises USD 600 mn via AT1 bonds, BFSI News, ET BFSI

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Axis Bank on Thursday said it has raised USD 600 million (around Rs 4,380 crore) through the sale of sustainability-focused AT1 bonds. The dollar-denominated, Basel III-compliant AT1 notes were finally priced at 4.10 per cent, 0.30 per cent lower than the initial price guidance, the bank said in a statement.

Under the Basel-III capital regulations, banks globally need to improve and strengthen their capital planning processes.

This is the maiden USD AT1 bond by an Indian issuer in a sustainable format and first time that the bank has accessed international bond markets after a 4-year hiatus.

The bank said the issue was oversubscribed 3.8 times ahead of the final pricing announcement and was well diversified across geographies and nearly half of the bonds were allotted to sustainability-focused investors.

The bank has set up a board-level ESG committee and has a sustainable financing framework, the statement said, adding that a second party opinion provider has graded it as ‘Credible & Impactful’.

“This successful transaction, which is also the largest single-tranche USD bond issuance ever for Axis Bank, reflects the faith and confidence that international investors have reposed in the bank’s franchise and robust credit and business model,” its group executive and head of treasury Neeraj Gambhir said.

The issue follows similar AT1 bond issuances by HDFC Bank (USD 1 billion) and SBI (Rs 4,000 crore) done over the last fortnight, which are seen as signs of interest revival in the instrument.

Merchant bankers had on Wednesday said that Bluebay, Blackrock, Fidelity and HSBC Asset Management Company were among the major investors in the issue.

The merchant bankers to the issue include Bank of America, BNP Paribas, HSBC, Citigroup and Standard Chartered Bank.



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BRICS bank NDB admits UAE, Uruguay, Bangladesh as new members, BFSI News, ET BFSI

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By K J M Varma Beijing, Sep 2 (PTI): The New Development Bank (NDB) set up by the BRICS group of nations has admitted the United Arab Emirates, Uruguay and Bangladesh as the first batch of new members as part of its expansion drive, the bank announced on Thursday.

Launched in 2015 by Brazil, Russia, India, China and South Africa (BRICS), a group of major emerging economies, the Shanghai-headquartered bank mobilises resources for infrastructure and sustainable development projects in their respective countries and other developing nations, complementing the existing efforts of multilateral and regional financial institutions for global growth and development.

NDB has initiated its membership expansion and started formal negotiations with prospective members in late 2020, the bank said in a press release.

After a round of successful negotiations, NDB approved the admission of the UAE, Uruguay and Bangladesh as its first new member countries, it said.

“We are delighted to welcome the UAE, Uruguay and Bangladesh to the NDB family. New members will have in NDB a platform to foster their cooperation in infrastructure and sustainable development,” NDB President Marcos Troyjo said.

“We will continue to expand the bank’s membership in a gradual and balanced manner,” he said.

NDB has an authorised capital of USD 100 billion, which is open for subscription by members of the United Nations, the press release said.

Since the beginning of its operations, NDB approved about 80 projects in all of its members, totalling a portfolio of USD 30 billion.

Projects in areas such as transport, water and sanitation, clean energy, digital infrastructure, social infrastructure and urban development are within the scope of the bank, the release said.

Commenting on the admission of the UAE, Obaid Humaid Al Tayer, Minister of State for Financial Affairs of the UAE, said it “represents a new step to enhance the role of the UAE economy on the global stage, especially in light of the great capabilities and expertise that the country possesses in supporting infrastructure projects and sustainable development”.

Uruguay’s economy and finance minister Azucena Arbeleche said the country sees in the NDB a great opportunity to harness cooperation with its member nations, aiming to achieve stronger international integration in trade and cross-border investment flows.

Bangladesh’s finance minister A H M Mustafa Kamal said, “Membership of Bangladesh to NDB has paved way for a new partnership at a momentous time of 50th anniversary of our independence.”

“We look forward to working closely with NDB to build together a prosperous and equitable world for our next generation as dreamt by our Father of the Nation Bangabandhu Sheikh Mujibur Rahman,” he said. PTI KJV SCY SCY



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Karnataka Bank targets 15% credit growth for 2021-22

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Karnataka Bank Ltd (KBL) expects a credit growth of 15-17 per cent during the current fiscal.

Replying to a query by a shareholder on the sluggish credit growth during 2020-21 at the 97th annual general meeting of the bank on Thursday, Mahabaleshwara MS, Chief Executive Officer and Managing Director of the bank, said KBL utilised the pandemic-affected year 2020-21 for realignment of its credit portfolio.

Portfolio realignment

He said the bank was slightly tilted towards large advances, and it realigned towards retail and mid-corporate advances during 2020-21 by having about 5.99 per cent credit growth under retail, and about 6 per cent in mid-corporate sector.

Terming retail and mid-corporate as focus areas of the bank, he said the bank observed that delinquency is less in these segments, and it would also help the bank on improved yield on advances. Risk is also highly diversified.

Realignment of the portfolio was the reason for the sluggish credit growth during the 2020-21, Mahabaleshwara said.

“Now we have projected a credit growth of 15-17 per cent,” he added.

Increase borrowings limit

The 97th AGM also sought shareholder approval to borrow amounts not exceeding, in aggregate, ₹6,000 crore over and above the aggregate of the paid-up capital of the bank, free reserves and the securities premium.

Terming it as an enabling resolution, Mahabaleshwara said this is a resolution to facilitate the ordinary course of banking business. As of March 31, the total borrowings of the bank was ₹1,764.88 crore against the limit of ₹2,000 crore as approved by shareholders in the 95th AGM held on August 7, 2019. This consists of subordinated tier-2 debt instruments of ₹970 crore raised for the purpose of augmenting capital funds, and refinance availed from eligible financial institutions.

Also see: SBI eyes ₹3 lakh cr in farm credit by FY24

“Although the bank has sufficient liquidity, and does not have borrowings in the immediate future, the bank may consider the refinance option as a competitive tool when interest rates are conducive.

“Here, I also wish to state that as on the date of this meeting, there is no proposal for raising capital via bonds. However, in case, if the bank wishes to explore various options, bonds or debentures route is also kept in mind, considering various financial management aspects,” Mahabaleshwara said.

This resolution is only an enabling resolution in the ordinary course of banking business, he said, adding the existing borrowings of the bank will be subsumed within the proposed limit of ₹6,000 crore.

QIP

Speaking on another resolution seeking shareholder approval to raise equity capital by issuing 15 crore shares through a qualified institutional placement (QIP), Mahabaleshawara said it is an enabling, forward-looking resolution.

As of March 31, the capital adequacy ratio (CAR) of the bank stood at 14.85 per cent, which is well above the minimum regulatory benchmark of 10.875 per cent. He said the bank has been ensuring the ratio remain at least 1 per cent above the minimum regulatory benchmark as a matter of prudence, and added that KBL is well capitalized.

Stating that the board at various intervals has felt the need for on-boarding a few institutional investors, mainly to broad base the shareholding, by having approval of the shareholders for this QIP resolution the board can take a swift decision at the opportune time by thoroughly evaluating the suitability of the investors, pricing and quantity of dilution in the tranches etc., to the best advantage of the bank and its stakeholders.

“The resolution, once approved by the shareholders, will be valid for a period of one year and the board can take an informed decision at an appropriate time as and when the need arises. With this enabling resolution, the bank will be able to save its time and efforts towards obtaining shareholders’ approval via postal ballot,” he added.

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Shanti Lal Jain takes charge as MD & CEO of Indian Bank

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Shanti Lal Jain has assumed charge as Managing Director and Chief Executive Officer of Chennai-headquartered Indian Bank from today.

Prior to this, he served as Executive Director of Bank of Baroda since September 2018, according to a statement.

A Post-graduate in Commerce, and a qualified Chartered Accountant, Company Secretary and CAIIB, Jain joined Allahabad Bank in 1993 in middle management cadre. In a career spanning more than 25 years in banking, he handled critical portfolios. Previously, he had worked in a range of industries for over six years.

He has served as Chief Financial Officer, Chief Risk Officer and headed IT department of Allahabad Bank.

Later, he led team Mumbai as Field General Manager (West) and was responsible for Maharashtra, Gujarat and Goa operations having business of about ₹50,000 crore.

Earlier to this, he has served in several branches and administrative offices of the Bank, pan India. Prior to joining Allahabad Bank, he worked in various industries for about 6 years.

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Kotak Mahindra Bank sells 20 crore shares in Airtel Payments Bank for Rs 295 cr, BFSI News, ET BFSI

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New Delhi, Sep 1 (PTI) Kotak Mahindra Bank on Wednesday said it has completed the sale process of over an 8 per cent stake in Airtel Payments Bank to Bharti Enterprises for Rs 294.80 crore. On Tuesday, the bank had informed about entering into a share purchase agreement for the sale of 20 crore equity shares (nearly 8.57 per cent shareholding) of Airtel Payments Bank (APBL) to Bharti Enterprises.

“We now wish to inform you that the bank has completed the aforesaid transaction on August 31, 2021, for an aggregate sale consideration of Rs 294.8 crore,” Kotak Mahindra Bank said in a regulatory filing.

Kotak had bought these shares for Rs 200 crore in tranches during 2016 and 2017.

APBL was incorporated on April 1, 2010, and commenced operations as a payments bank from November 23, 2016. The company’s turnover was Rs 627.19 crore in FY20.

Shares of Kotak Mahindra Bank closed at Rs 1,745.80 apiece on BSE, down 0.49 per cent from the previous close.



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Shanti Lal Jain assumes charge as MD & CEO of Indian Bank, BFSI News, ET BFSI

Banking & Finance

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Shanti Lal Jain assumed charge as Managing Director and Chief Executive Officer of Indian Bank on 1st September 2021.

Earlier Bank Of Baroda had announced that Shanti Lal Jain would cease to be its executive director from September 1, due to his appointment as the MD & CEO of Indian Bank for a tenure of 3 years.

Jain’s appointment is extendable based on his performance by upto two years, or till attaining the age of superannuation (i.e.January 31, 2024), the order said.

With more than 25 years of experience in banking, Jain possesses rich experience in critical portfolios. He joined Allahabad Bank in 1993 in the Middle Management cadre. As a General Manager, he has served as the Chief Financial Officer, Chief Risk Officer and headed the IT department of the Bank.

Later, he led the Mumbai team as Field General Manager (West) and was responsible for Maharashtra, Gujarat and Goa Operations having business of around Rs 50000 Crores. Prior to joining Allahabad Bank, he worked in various Industries for about 6 years.

Jain holds a Postgraduate Degree in Commerce, with Professional Qualification of Chartered Accountant, Company Secretary and CAIIB.



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Yes Bank appoints Atul Malik & Rekha Murthy as Non-Executive Directors, BFSI News, ET BFSI

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YES BANK has announced the appointment of Atul Malik and Rekha Murthy as Non-Executive Directors, effective from August 30, 2021. The decision comes pursuant to approval of the Board of Directors, based on the recommendation of the Nomination & Remuneration Committee of the Board.

Malik is a veteran banker with more than 30 years of widespread experience. He is presently serving as a Senior Advisor to TPG for their financial services portfolio. He represents TPG as the Chairman of UBC, one of the largest private sector banks in Sri Lanka.

Previously, Malik was a Senior Advisor to General Atlantic for their financial services portfolio. He has also served as the CEO of Maritime Bank, one of the largest private banks in Vietnam from 2012 to 2015.

Prashant Kumar, Managing Director & CEO, YES BANK, said, “We are pleased to welcome the two new Non-Executive Directors to the Board. Their global experience in driving significant business growth, exhaustive knowledge of the industry, and professional expertise in advising large international enterprises will be invaluable as we continue to strengthen and grow Yes Bank.”

Murthy possesses 30 years of extensive global experience in the Technology sector across India, Asia Pacific and the USA. She has held senior and country leadership roles at leading global companies such as IBM, Harvard Business School Publishing, Wyse Technology, SAP, PeopleSoft, Digital Equipment Corporation and Korn Ferry International, the statement added.

Currently, she is engaged with start-ups in an advisory role and as a mentor.

“Ms. Rekha Murthy’s extensive background in technological transformation and change management along with Mr. Atul Malik’s wide-ranging experience as a veteran banker are ideal for accelerating the organization’s transformation – by advancing innovation, developing strategic alliances and elevating customer experience,” added Kumar.



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NCLT orders freeze of Venugopal Dhoot, Videocon’s senior management’s assets, BFSI News, ET BFSI

Personal Finance

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It may not end for defaulting promoters with losing their companies. Their assets are at risk too.

The National Company Law Tribunal (NCLT) has ordered a countrywide search and freeze of the assets of Venugopal Dhoot, his wife, his company and the firm’s chief financial officer as well as company secretary.

The order was in response to a petition filed by the Ministry of Corporate Affairs (MCA) against the bankrupt group. The MCA’s move comes in the wake of banks being able to recover only 4% of their admitted claims of Rs 64,838 crore under the bankruptcy process.

The government had approached the tribunal under Section 241 and 242 of the Companies Act, which empowers the MCA to act if there is a fraud, misfeasance or persistent negligence.

Notices to be served

Responding to the petition, the tribunal has instructed the MCA to serve notices to disclose on affidavit moveable and immovable properties/assets, including bank accounts, owned by them in India or anywhere in the world. It also
directed the Central Depository Services (CDSL) and National Securities Depository (NSDL) to freeze all securities held by the respondent, which include the Dhoots, the company and senior management.

The Central Board of Direct Taxes has also been asked to disclose the information it has in its possession of all the respondents.

Bank accounts, lockers to be frozen

The Indian Banks Association has been directed to facilitate disclosures of the details of the bank accounts, lockers owned by the respondents and such bank accounts and lockers also be frozen with immediate effect.

Finally, the MCA has been instructed to write to state governments and Union Territories to identify and disclose all details of immovable properties held by the respondents.

Despite receiving a bid for only 4% of the admitted debt, which was close to the liquidation value, lenders had agreed to sell Videocon to Twin Star, a Vedanta company.

Unlike enforcement authorities that have sweeping powers, banks under insolvency can only pursue assets of the company that has gone bankrupt. The sale was, however, stalled as the appellate tribunal granted a stay following an appeal from Bank of Maharashtra — a dissenting creditor. In its order on Wednesday, the NCLT said, “This bench is

surprised with the manner in which the financial institution has come forward to grant loans to a sinking ship and again come forward to file petition under Section 7 of IBC and again supports this petition. This certainly rises the eyebrows of the common man in the public.”

Personal guarantees

In July, banks had approached the National Company Law Tribunal for invoking personal guarantees of promoters of 17 defaulting companies.

The defaulting promoters include those of Punj Lloyd, Amtek Auto, ABG Shipyard, Videocon, Varun Shipping, and Lanco, according to reports.

Armed with a Supreme Court order, banks are looking to invoke personal guarantees of tycoons from Venugopal Dhoot to Kapil Wadhawan to recover unpaid loans from their delinquent firms



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PNB waives service charge, processing fee on retail products, BFSI News, ET BFSI

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Punjab National Bank on Tuesday said it has waived all service charges and processing fee on retail products as part of its festival season offering. Punjab National Bank (PNB) has launched a festival bonanza offer to enhance the availability and affordability of credit to customers, it said in a release.

PNB now offers an attractive interest rate starting from 6.80 per cent on home loans and 7.15 per cent on car loans, it said.

In the festive offer, the bank will waive all service charges/processing fees and documentation charges on its retail products like home loans, vehicle loans, myProperty loans, personal loans, pension loans and gold loans, PNB said.

Besides, PNB is offering personal loans starting from 8.95 per cent, which is one of the lowest in the industry, it added.

It also announced offering home loan top-up at an attractive rate of interest. PNB said customers can avail these offers till December 31, 2021.

The Delhi-headquartered lender said it is confident of seeing an encouraging revival in overall consumer spending, which will help boost its credit portfolio.



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Depositors of stressed 23 cooperative banks including PMC to get up to Rs 5 lakh back, BFSI News, ET BFSI

Banking & Finance

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Depositors of stressed banks like Punjab & Maharashtra Cooperative (PMC) Bank are now set to get up to Rs 5 lakh back from November 30 as the government has notified the amendment to the DICGC Act.

Parliament earlier this month passed the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021 ensuring that account holders get up to Rs 5 lakh within 90 days of the RBI imposing moratorium on the banks.
The amount of Rs 5 lakh would be provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
The government has notified September 1, 2021 as the date on which the provisions of the Act shall come into force, according to a gazette notification dated August 27, 2021.

“In exercise of the powers conferred by sub-section (2) of section 1 of the Deposit Insurance and Credit Guarantee Corporation (Amendment) Act, 2021 (30 of 2021), the Central Government hereby appoints the 1st day of September, 2021, as the date on which the provisions of the said Act shall come into force,” it said.

Effective date

Consequently, 90 days from the effective date is November 30, 2021 for depositors to get their funds back.

The first 45 days are meant for the bank, which has come under stress, to collect all the details of the accounts where the claims will have to be made. This will then be forwarded to the insurance company, which in real-time will check it all up, and nearer the 90th day, depositors will get the money, Finance Minister Nirmala Sitharaman had said.
The benefit will also accrue to the depositors of 23 cooperative banks which are in financial stress and on which the Reserve Bank of India (RBI) has imposed certain restrictions.

DICGC, a wholly-owned subsidiary of the RBI, provides insurance cover on bank deposits. At present, it takes 8-10 years for the depositors of a stressed bank to get their insured money and other claims.

Cooperative bank failures

Though the RBI and the Centre keep monitoring the health of all banks, there have been numerous recent cases of lenders, especially cooperative banks, being unable to fulfil their obligations towards the depositors due to the imposition of a moratorium by the RBI.

Last year, the government increased the insurance cover on deposits by five times to Rs 5 lakh. The enhanced deposit insurance cover of Rs 5 lakh came into effect from February 4, 2020. Every bank used to pay 10 paise as an insurance premium per Rs 100 of deposit.



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