Tag: canara bank

RBI committee to evaluate on-tap applications for universal and small finance banks licenses, BFSI News, ET BFSI

Banking & Finance

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The Reserve Bank of India has taken a step ahead ever since the guidelines on on-tap licensing were announced in early 2016.

The RBI has step up a standing external advisor committee (SEAC) under former deputy governor Shymala Gopinath to evaluate new banking licenses under on-tap application for universal and small finance banks.

The application will be scrutinised by a standing committee and NBFCs floated by corporates could be given licenses.
Apart from Gopinath as chairperson of the committee, the RBI has inducted four members Revathy Iyer who’s central board director of RBI, NPCI’s chairman B Mahapatra, Canara Bank’s former chairman T N Manoharan and SBI’s former MD & PFRDA’s former Chairman Hemant Contractor.

Recently the RBI”s internal working grou had floated a paper on the issue of new licenses to corporate groups wherein NBFCs owned by corporate groups should be allowed to set-up banks, where many in the industry saw it as opening the doors for corporates to get into the banking sector.

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Bank branches closed for next 4 days; SBI, other PSU banks may get hit as unions strike on March 15-16

Personal Finance

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About 10 lakh bank employees and officers of the banks will participate in this two-day strike

Bank branches may remain closed for the next four days, including a two-day weekend holiday, and a two-day planned strike beginning Monday. The United Forum of Bank Unions (UFBU), an umbrella body of nine unions, will go on a two-day strike on March 15 and 16, 2021, to protest against the proposed privatisation of two state-owned banks. Starting tomorrow, banks are scheduled to be closed on March 13, 2021 (second Saturday) and March 14, 2021 (Sunday). Due to this, bank services are likely to be impacted for the next four days. However, ATM, mobile and internet banking will remain functional. Customers are advised to plan bank-related work accordingly today, in order to avoid any last-minute trouble.

Finance Minister Nirmala Sitharaman in her Union Budget 2021 speech announced the privatisation of two public sector banks (PSBs) as part of a disinvestment plan to generate Rs 1.75 lakh crore. In 2019, the government has already privatised IDBI Bank by selling its majority stake to LIC. Moreover, so far in the last four years, the government has merged 14 public sector banks. Conciliation meetings – before the Additional Chief Labour Commissioner on March 4, 9 and 10 – did not yield any positive result, PTI quoted All India Bank Employees Association (AIBEA) general secretary C H Venkatachalam as saying.

10 lakh employees to participate in strike

About 10 lakh bank employees and officers of the banks will participate in this two-day strike. Along with AIBEA the bank unions of All India Bank Officers’ Confederation (AIBOC), National Confederation of Bank Employees (NCBE), All India Bank Officers Association (AIBOA) and Bank Employees Confederation of India (BEFI), National Bank Employees Federation (INBEF), Indian National Bank Officers Congress (INBOC), National Organisation of Bank Workers (NOBW) and National Organisation of Bank Officers (NOBO), among others have given a call for a strike.

Work in SBI may be impacted

State Bank of India (SBI) has made all arrangements to ensure normal functioning in its branches and offices. However, in a BSE filing, SBI has informed that work in the bank may be impacted by the strike. “We have been advised by the lndian Banks Association (lBA) that United Forum of Bank Unions (UFBU) which comprises 9 major Unions….has given a call for all-lndia strike by Bank Employees on 15th & 16th March 2021,” it said in an exchange filing.

Canara Bank: Bank branches functioning may be hit

Earlier this month, Canara Bank also said that it has been informed by the Indian Banks’ Association (IBA) that the United Forum of Bank Unions (UFBU) has given a call for strike in the banking industry on 15 March and 16 March for the issues relating to industry level and not for any bank-level issues. It assured that the Bank has taken necessary steps for the smooth functioning of Bank’s branches/offices on the days of proposed strike. “However, in the event of strike materializing, the functioning of the branches/offices may be impacted,” it added.

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Canara Bank-led consortium gets Rs 800-cr settlement offer from road asset promoter

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The process involves a call for other bids as public sector banks want to avoid being accused of malfeasance in taking substantial haircuts and handing back a company to its promoters.

A consortium of lenders led by Canara Bank has received a one-time settlement (OTS) offer of Rs 800 crore for bad loans worth Rs 1,428 crore from road asset developer HKR Roadways. SBI Capital Markets has sought matching or higher bids for settlement of the company’s outstanding loans.

In stressed assets where there are few other options before lenders, they have been taking the OTS route to exit the account. The process involves a call for other bids as public sector banks want to avoid being accused of malfeasance in taking substantial haircuts and handing back a company to its promoters.

HKR Roadways is owned by Gayatri Highways and Megha Engineering Infrastructure, who hold 37% each. DLF & Associates holds the remaining 26% stake, according to a bid document. As on November 1, 2019, HKR Roadways owed Canara Bank Rs 279 crore, Punjab National Bank Rs 281 crore, Union Bank of India Rs 323 crore, Indian Overseas Bank Rs 192 crore, IIFCL Rs 169 crore, Indian Bank Rs 94 crore and Bank of Baroda Rs 90 crore.

HKR Roadways is a special purpose vehicle incorporated on August 9, 2010 for design, construction, finance, operation and maintenance of four-laning of 206.858 km of the existing Hyderabad-Karimnagar-Ramagundam road (SH-1) in Telangana under design, build, finance, operate and transfer (toll) basis.

The company envisaged the project cost at Rs 2,209 crore, which was funded with a debt of Rs 1,525 crore, equity of Rs 230 crore and grant of Rs 454 crore. The original commencement of operations (COD) date of the project was August 12, 2013. However, due to delay in obtaining right of way approvals from railway authorities for over bridges and under bridges, the company approached the lenders to extend the COD. Based on the requests,the lenders accepted the revision in COD to March 31, 2015.

The project commenced toll collection from June 1, 2014. Subsequently, the company completed an additional stretch of 4.856 km, taking the total completed stretch length to 195.05 km. Post the toll revision in June 2016, the company has been collecting user fee for the stretch of 195.05 km. “There has been a significant underperformance in traffic and revenue vis-à-vis initial estimates from the first year of operations across various vehicle categories. The account has become NPA with all lenders,” the bid document said.

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Canara Bank retains MCLR rates

Banking & Finance

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Canara Bank has retained its marginal cost of funds based lending rate (MCLR) on loans/advances across all tenors with effect from March 7.

Accordingly, the tenor linked MCLRs of the bank is as under: Overnight MCLR – interest rate 6.70 per cent, one-month MCLR – interest rate 6.70 per cent, three-month MCLR – interest rate 6.95 per cent, six-month MCLR – interest rate 7.30 per cent and one-year MCLR – interest rate 7.35 per cent. Repo Linked Lending Rate (RLLR) continues to be at 6.90 per cent.

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Canara Bank’s Executive Director Matam Venkata Rao appointed as MD & CEO of Central Bank, BFSI News, ET BFSI

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New Delhi: Public-sector lender Canara Bank on Monday said its Executive Director Matam Venkata Rao has been appointed as the new MD & CEO of Central Bank of India. The central government through a gazette notification on February 26, 2021 has appointed Matam Venkata Rao, Executive Director, Canara Bank, as Managing Director and Chief Executive Officer in Central Bank of India for a period of three years, Canara Bank said in a regulatory filing.

Rao’s appointment in the Central Bank of India will be effective from the date of assumption of office on or after March 1, 2021, or until further orders, whichever is earlier, said the lender.

“He ceases to be the Executive Director of Canara Bank with effect from March 1, 2021,” Canara Bank said.

In May last year, the Banks Board Bureau had recommended Rao to be the new MD & CEO of Central Bank of India.

Rao’s appointment is in lieu of M D Pallav Mohapatra, who retired as the MD & CEO of Central Bank of India on February 28, 2021.



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NPA risks easing for largest PSU banks but shortage of funds could hit credit growth

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State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank, and Union Bank of India, have all reported an improvement in their asset quality in the first nine months of the current fiscal year.

Risk of a sharp deterioration in the asset quality of five of the largest PSU banks now seems to be abating with the economic recovery picking up pace, said Moody’s Investors Service in a recent note. However, despite this, the rating agency cautioned that such public sector lenders are likely to remain starved of sufficient capital to absorb unexpected shocks and support credit growth. Banks were expected to see a sharp rise in NPAs last year when the pandemic slowed the Indian economy down but despite the economic slump, the asset quality of banks has seen mild improvement.

Risks reducing for banks

State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank, and Union Bank of India, have all reported an improvement in their asset quality in the first nine months of the current fiscal year. “The gross NPL ratios of the five banks declined by an average of around 100 basis point as of the end of 2020 from a year earlier,” Moody’s said. The estimates even account for loans that have not yet been declared NPAs owing to the Supreme Court order. Lenders are also drawing comfort from the provisions made by them against the expected jump in NPAs.

During the pandemic, various measures were undertaken to support borrowers. This, according to Moody’s has largely helped limited impact of the pandemic on the banks’ asset quality. These measures included loan repayment moratorium, loan restructuring, monetary easing, liquidity infusion, Capital infusion into public sector banks, lowering LCR, among others. “As of the end of December 2020, the five banks restructured 0.7%-2.6% of gross loans, less than our expectations, as the impact of the pandemic on borrowers was not as severe as we had anticipated,” the report said.

Dearth of capital to result in uneven recovery

Despite the green shoots, capital shortage remains a risk. “The banks will continue to face shortages of capital to both absorb any unexpected stress and support credit growth, with high credit costs continuing to suppress profitability,” they added. This shortage in the capital could result in an uneven recovery for the Indian economy with various vulnerable industries facing a setback. The banks’ asset quality can also deteriorate more than anticipated, with exposures to the MSMEs, in particular, posing risks, Moody’s said.

The government planned to infuse Rs 20,000 crore into public sector banks this fiscal year and another Rs 20,000 in the next financial year. While the capital infusions will help the banks meet Basel capital requirements, it will not boost credit growth, according to the report. This would result in some banks turning to the market. Canara Bank and PNB have already raised some capital from equity markets.

On the other hand, in an earlier note, Moody’s said that private sector banks have raised sufficient capital buffers to tide through any hiccups going forward. Asset quality of private lenders remains supported by the same measures that have aided their public sector peers.

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Canara Bank Q3 profit dips 9% YoY to Rs 696cr as provisions rise 61%

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Canara Bank’s shares on the BSE closed at Rs 131.15 on Wednesday, down 1.83% from their previous close.

Public sector lender Canara Bank on Wednesday reported a 9% year-on-year (y-o-y) decline in net profit to Rs 696 crore in the December quarter of FY21, with a 61% rise in provisions to Rs 4,686 crore taking a toll on the bottom line. The bank reported a total income of Rs 21,479 crore, up 5.71% YoY.

Net interest income (NII) – the difference between interest earned and that expended – stood at Rs 6,081 crore, up 14.6% YoY. Provisions for the quarter stood at Rs 4,686 crore. Its operating profit rose 46.65% YoY to Rs 5,382 crore. The net interest margin (NIM), a key measure of profitability, fell two basis points (bps) sequentially to 2.8%.Gross non-performing assets (NPAs), as a percentage of total advances, fell 77 bps on a sequential basis to 7.46% and the net NPA ratio declined 78 bps to 2.64%. Slippages during the quarter were to the tune of Rs 395 crore, down from Rs 7,916 crore a year ago, given the impact of the Supreme Court’s stay on recognising bad loans after August 31.

The bank’s management said once the stay was lifted, there could be slippages worth around Rs 10,000 crore on a loan book of about Rs 6.74 lakh crore. The gross NPA ratio will increase by around 150 bps and net NPA ratio may increase by 130 bps. “So the impact will not be huge because even after adding this as on date, we can maintain a net NPA ratio of less than 4% and a gross NPA ratio of less than 9% with a provision coverage ratio of about 80%. So, for Canara Bank, as far as the slippages are concerned, which are going to be in future, are very well under control,” said MD & CEO LV Prabhakar.

He added that the ratio of accounts which availed of the one-time restructuring scheme stood at 20 (retail): 80 (corporates) in value terms. In the retail book, the gross NPA ratio is well below 2% and in housing loans, it was under 1%. In personal loans and vehicle loans, too, bad loans were under 2%. Gross advances of the bank stood at Rs 6.67 lakh crore as on December 31, 2020, with 5.8% y-o-y growth. Total deposits of the bank stood at Rs 9.73 lakh crore as on the same date, up 7.8% y-o-y. The domestic current account savings account (CASA) share improved to 33.41% from 31.8% a year ago.

Canara Bank’s shares on the BSE closed at Rs 131.15 on Wednesday, down 1.83% from their previous close.

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Reports consolidated net profit of Rs 739 crore, BFSI News, ET BFSI

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NEW DELHI: State-owned Canara Bank on Wednesday reported consolidated net profit of Rs 739.20 crore in the third quarter ended December of the current fiscal. It had earned a net profit of Rs 406.43 crore during the same period a year ago.

However, the profit of Q3FY21 is not comparable year-on-year as the latest figures are of the amalgamated entity after the merger of Syndicate Bank into Canara Bank.

The amalgamation came into effect from April 1, 2020.

The bank’s total income (consolidated) during October-December period of 2020-21 rose to Rs 24,490.63 crore from Rs 15,531.80 crore, Canara Bank said in a regulatory filing.

“Figures of December 31, 2019, and March 31, 2020, are related to standalone Canara Bank financials to pre-amalgamated period, hence, not comparable with post amalgamation financials of September 30, 2020 and December 31, 2020,” the bank said.

On asset front, the gross non-performing assets (NPAs) of the bank fell to 7.48 per cent of the gross advances as of December 31, 2020, as against 8.40 per cent by end of December 2019.

In value terms, the gross NPAs or bad loans were of the order of Rs 49,988.56 crore as against Rs 36,860.49 crore.

Net NPAs were 2.65 per cent (Rs 16,796.15 crore), down from 5.05 per cent (Rs 21,377.86 crore).

Provisioning for bad loans and contingencies stood at Rs 4,327.34 crore for the quarter under review, higher than Rs 1,815.32 crore parked aside for year ago quarter. Of this, the provision for bad loans was of Rs 2,658.48 crore as against Rs 1,205.85 crore a year earlier, the bank said.

On standalone basis, the net profit in Q3FY21 stood at Rs 696.06 crore as against Rs 329.62 crore. Total income was at Rs 21,479.86 crore, against Rs 14,001.63 crore on standalone basis.

Shares of Canara Bank traded at Rs 133.30 a piece on BSE in afternoon trade, down 0.22 per cent from their previous close.



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Canara Bank Q3 profits up 88 per cent at Rs 750 cr

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Canara Bank has posted an 88.54 per cent increase in profits for the third-quarter (Q3) of 2020-21 on a consolidated basis at Rs 749.73 crore as against Rs 397.65 crore posted in the same period last year.

In Q3, the bank’s total income grew by 57.68 per cent to Rs 24,490.63 crore as against Rs 15,531.80 crore recorded last year. EPS for the quarter stood at Rs 5.01 as against Rs 5.09 posted last year.

Segment revenues: treasury operations Rs 6,309.09 (last year Rs 3,290.33 crore), retail banking operations Rs 8,486.75 crore (Rs 5,468.90 crore), wholesale banking operations Rs 6,691.49 crore (Rs 5,196.02 crore) and life insurance operations Rs 3,003.30 crore (Rs 1,477.84 crore).

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