Tag: Covid-19

Will try to keep soft interest rate regime as long as possible: SBI chief

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State Bank of India will try to keep the interest rates benign as long as possible with a view to supporting the economic growth, its chairman Dinesh Kumar Khara has said.

On the impact of the second wave of Covid-19 on non-performing assets of the bank, the SBI chief said that as the lockdown was not pan-India, one will have to wait and watch to assess its impact on the banking sector.

Impact of local restrictions

Observing that multiple variables including inflation have a bearing on the interest rates, he said, “our effort is to support the growth initiatives. To really ensure that happens, we will try to keep the soft interest rate regime for as long as possible.” In an interview to PTI, Khara said it is too early to give any colour to likely scenario of NPAs because of local restrictions.

Also read: SBI’s Business Activity Index dips to a new low

The impact of lockdown differ from State to State as it is not uniform, he said, adding, “so, probably we can wait and watch for some more time before making any comment on impact on economy and NPA situation.” Speaking about various initiatives of the country’s largest lender, Khara said, SBI has decided to set up makeshift hospitals with ICU facilities for Covid-19 patients in some of the worst affected States.

Fighting the pandemic

The bank has already earmarked ₹30 crore and is engaging with non-governmental organisations (NGOs) and hospital management for setting up medical facilities on an emergency basis for the treatment of Covid-19 patients.

He said the bank intends to put in place 1,000 beds with 50 ICU facilities in the States that are the worst affected.

SBI is also collaborating with hospitals and NGOs to provide oxygen concentrators for patients.

“We have put in place an action plan. We have earmarked ₹70 crore-plus out of which we are giving ₹21 crore to 17 circles for Covid-19 related initiatives,” he said.

For the safety of employees and their families, he said, the bank has tied up with hospitals across the country to facilitate treatment of those who have fallen sick on a priority basis.

Also read: Banks roll out special schemes to protect, treat employees amidst Covid surge

About 70,000 employees out of 2.5 lakh strong staff strength have already got vaccinated. The bank has decided to bear the cost of vaccination for its employees and their dependent family members.

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Reflecting the wide spread of Covid, insurers report a surge in claims from rural regions, too

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Health insurers are reporting a flood of Covid-related claims from across the country, including rural regions, reflecting the spread of the pandemic.

Rapid rise

Till last month, Covid claims had been mainly from urban areas of Delhi, Maharashtra, Uttar Pradhesh, Chhattisgarh, and Bihar as also some from Tamil Nadu and Karnataka.

“However, we now see a surge in claims from rural areas, too, in line with the rapid surge of the Covid-19 pandemic across regions,” Sanjay Datta, Chief-Underwriting, Claims and Reinsurance, ICICI Lombard GIC, told BusinessLine.

Health insurers have been seeing a jump in the cashless treatment claims relating to Covid-19 cases, Datta said. The government and the Insurance Regulatory and Development Authority of India recently told all hospitals not to deny cashless treatment for those eligible under their insurance plan. “Going by the current trend of rising cases, we need to wait and see how the claims scenario will be during this fiscal,” Datta said.

“We have paid Covid-19 claims to 14,500 customers. In 2020, it was around 10,000 in eight months, whereas in 2021, we have witnessed 4,500 claims in just three months,” said Bhabatosh Mishra, Director Underwriting, Products and Claims, Max Bupa.

The average claim size is at about ₹1.4 lakh but there are instances of claims going as high as ₹30 lakh depending on the insurance policy. The industry estimates the total Covid-19 claims payout from the start of the pandemic at ₹15,000 crore.

Demand for cover up

The demand for health insurance, in general, and Covid-cover, in particular, has been going up again. “The second wave of Covid is spreading at a faster rate, which has led to a significant increase in the demand for health insurance policies,” said the top executive of a private health insurer.

According to Datta, many of those who had taken Covid-specific standard cover under ‘Corona Kavach’ have been renewing it, even as fresh demand from new customers is emerging. The Insurance Regulatory and Development Authority of India recently extended the deadline for sale/renewal of standard Covid-specific policies by six more months in view of the resurgence of the pandemic.

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SBI cuts minimum interest rate on home loans up to ₹30 lakh to 6.70 per cent

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State Bank of India (SBI) has cut the minimum interest rate at which its home loans up to ₹30 lakh will start from 6.95 per cent to 6.70 per cent.

The new interest rate is effective from May 1, 2021.

The home loan rate cut comes exactly a month after the bank hiked the minimum interest rate on home loans by 25 basis points (bps) from 6.70 per cent to 6.95 per cent.

For home loans above ₹30 lakh and up to ₹75 lakh, the interest rate will start at 6.95 per cent. For big-ticket home loans above ₹75 lakh, the interest rate will be 7.05 per cent, India’s largest bank said in a statement.

SBI said women borrowers will get a special concession of 5 basis points (bps). Further, a 5 bps concession is being offered as a digital incentive to customers applying for home loans via YONO digital banking platform. One basis point is equal to one-hundredth of a percentage point.

CS Setty, MD (Retail & Digital Banking) said, “The affordability for the consumer increases immensely with the present home loan interest rate offerings, which reduce the EMI (equated monthly installment) amounts substantially. I am sure these measures will give a fillip to the real estate industry too.”

SBI had hiked the minimum interest rate on home loans by 25 basis points (bps) from 6.70 per cent to 6.95 per cent with effect from April 1, 2021.

After SBI upped the minimum interest rate at which it will offer home loans last month, Kotak Mahindra Bank, in a statement issued on April 12, 2021, said it will continue its special interest rate on home loans of 6.65 per cent per annum.

“In the interest of consumers and on the back of strong demand trends, Kotak continues to offer possibly the lowest home loan interest rate in the market,” it said the statement, adding that the rate is applicable across all loan amounts.

“Both fresh home loan applicants and balance transfer cases are eligible for interest rates beginning at 6.65 per cent per annum. Interest rates are linked to borrowers’ credit score and the Loan to Value ratio,” Kotak Mahindra Bank further said.

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RBI Governor meets MD, CEOs of small finance banks, BFSI News, ET BFSI

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The Reserve Bank of India on Friday held a meeting with heads of small finance banks on credit flows to different segments of the borrowers and get a sense of emerging stress on banks’ balance sheet in view of the current economic situation.

The video conference meeting, chaired by RBI Governor Shaktikanta Das, was also attended by Deputy Governors M. K. Jain, M.D. Patra, M. Rajeswar Rao and a few other senior RBI officials.

In his opening remarks, the Governor recognised the important role of the SFBs in delivering credit and other financial services to individuals and small businesses. He also emphasised the supervisory expectations in terms of maintaining their business resilience and managing risks prudently.

Das advised the banks to pay focussed attention on improving customer grievance redress process while also strengthening IT systems in the interest of the banks and their customers.

A lot of discussions hovered around assessing liquidity scenario for banks and making an assessment of bad assets emerging from current economic situation.

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Banks roll out special schemes to protect, treat employees amidst Covid surge

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With bank employees continuing to service customers at branches amidst surging Covid-19 cases, banks have initiated special measures to ensure their safety and provide medical help.

With daily Covid -19 caseload at over three lakh, lenders have rolled out more measures this time around, than last year beyond, rostering of employees and limiting banking hours to 10 am to 2 pm.

“We are using a lot of analytics to identify containment areas, high risk areas and are using Artificial Intelligence and Machine Learning for rostering of employees. We are shifting transactions digitally. We have to understand that the number one priority is to keep everybody safe,” said Anup Bagchi, Executive Director, ICICI Bank.

HDFC Bank has converted three of its training centres based out of Bhubaneswar, Pune, and Gurugram into isolation facilities for Covid positive employees.

“These facilities have been equipped with first line assistance and will have round the clock nurses and visiting doctors. Immediate medical help from a nearby hospital will be made available if required,” it said in a recent statement.

Last week, Axis Bank released a detailed four-page document ‘With You’ that lists helpline numbers, resources, and confidential counselling services for employees and their dependents.

“Our current focus is on employee health and safety. At the start of the crisis last year, we had taken a call that we would transition to a hybrid work model. In regions we are calibrating presence in response to regulatory guidance and implementing rostering where WFH is not feasible,” said Rajkamal Vempati – EVP and Head, Human Resources, Axis Bank.

Bankers point out that while banking is an essential service, bank employees are not treated as frontline workers.

“It is an extremely unfortunate situation. Had bankers been able to get vaccinated, many of the deaths would have been prevented,” Soumya Datta, General Secretary, All India Bank Officers’ Confederation.

Industry estimates peg that there have been about 1,000 Covid-19 related deaths and lakhs bank employees being infected.

“We are an essential services… we are all exposed (to customers). We don’t have the luxury. But we are not allowed vaccinations, not allowed to board trains, not allowed to board buses. So, what kind of essential services we are? More push should be there,” Bagchi had told reporters in a media call on April 29.

The Indian Banks’ Association has advised banks to curtail working hours and also said that they should only carry out essential services at branches including cash deposits and withdrawals, clearing of cheques, remittances and government transactions.

But Datta said many states are yet to allow this move. He also pointed out that about 30 per cent bank branches in the country are single officer branches. In such branches, it is difficult to do rostering as there is no back up officer available.

Earlier this month, the Finance Ministry had written to the Ministries of Home Affair and Health and Family Welfare for vaccination against Covid-19 of employees of all banks and the National Payments Corporation of India, irrespective of their age, on an urgent basis.

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India to begin phase 3 vaccine strategy from May 1

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India will commence its more liberalised phase-3 vaccination programme from May 1, making those above 18 years of age eligible for the anti-Covid shots.

The registration for phase 3-vaccination will commence on CoWIN, the digital platform that is tracking each and every vaccination carried out in the country.

These are the steps that need to be followed for getting registered for the vaccination: The beneficiary will have to visit the website www.cowin.gov.in and register his or her name by entering the name and mobile number. Once the mobile number is given, an OTP will be sent to the number, which required to be provided for completing the registration. Subsequently, the beneficiary must fill in the details of any of the eight different photo ID proofs mandated by the government. They include Aadhaar card, driving licence, PAN card, passport, voter card, and pension book, among others. Once these details are provided, the beneficiary will be able to schedule the vaccination at a place and time of convenience.

Currently there are two vaccines that are being given to beneficiaries – Covaxin and Covishield – and both require two doses for completing the vaccination course. While two doses of Covaxin are given 4 to 6 weeks apart, the gap between two Covishield doses could be 4 to 8 weeks. Many beneficiaries receiving the shot may develop mild symptoms such as fever, body pain and tiredness.

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FIDC seeks relief measures in wake of second Covid wave

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Concerned about the impact of the second wave of Covid-19 infections, Finance Industry Development Council has sought relief measures including restructuring for retail and individual borrowers of non banking financial companies (NBFCs).

In a representation to Reserve Bank of India Governor Shaktikanta Das, FIDC has asked that borrower accounts, irrespective of whether or not they had been restructured earlier and if they are standard accounts as on March 31, 2021, may be allowed restructuring without any downgrade in asset classification, subject however to the lending NBFCs undertaking fresh credit assessment of the borrowing entity.

“We wish to bring to your kind notice that the second wave of Covid- 19 has already started impacting the industry, more so the above self- employed segment of customers having little or nothing to fall back upon,” FIDC said in the letter.

NBFCs under pressure

It also pointed out that with many states like Maharashtra, Chhattisgarh, Madhya Pradesh, Karnataka, Rajasthan, Tamil Nadu and NCR already under lockdown or lockdown-like strict conditions, which has resulted in closure of NBFC branches. It is becoming increasingly difficult to reach customers for collections as their business has come to standstill and their livelihoods are under threat, it further said.

“It will not be long before the NBFC industry starts reeling under pressure of increased NPAs and at the same time, handling demand of moratorium and/or restructuring from its existing and deserving customers,” FIDC said.

Loan restructuring

It has also asked the RBI to allow standstill on buckets for restructured accounts for the first quarter of the current fiscal.

FIDC has also sought restructuring of loans taken by small NBFCs (having asset size of less than ₹500 crore) from banks and FIs and to avoid ALM mismatch arising out of restructuring of their customers’ accounts.

It has also asked the RBI for liquidity support to small NBFCs for on lending to micro, small and medium enterprises.

“We urge the RBI to increase the overall support outlay to AIFIs from ₹50,000 crore to at least ₹75,000 crore,” FIDC said, adding that benefit of PSL classification for lending by banks to

NBFCs for on-lending may please be regularised as part of the overall PSL policy.

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SBI to recruit 6,344 junior associates

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Here’s some good news for job-seekers in the current pandemic-ravaged times. State Bank of India (SBI) has just announced vacancies for recruiting 6,344 Junior Associates (Customer Support & Sales).

This recruitment drive comes in the backdrop of the possibility of companies slowing hiring due to the adverse impact of Covid-19 on their operations as well as demand for goods & services. So, there is likely to be fierce competition for the vacancies.

Though under the essential academic qualifications, India’s largest bank has prescribed “graduation in any discipline from a recognised University or any equivalent qualification recognised as such by Central Government”, it is likely that many with professional qualifications, including engineering, law, management, among others, will have a shot at the exam.

This time around the number of vacancies, including regular, backlog and special recruitment drive, advertised are about 35 per cent less vis-a-vis last year.

The age criteria for the general candidates to take the exam is “not below 20 years and not above 28 years” as on April 1, 2021. For the other categories, there is relaxation in the upper age limit.

The starting Basic Pay for Junior Associate is now higher at ₹19,900 against ₹13,075 earlier.

This hike in Basic Pay follows the signing of the industry-wide 11th Bipartite Wage settlement in November 2020, whereby bank employees — officers, staff and sub-staff — got a 15 per cent hike in the payslip component.

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As per SBI’s recrutiment advertisement, the total starting emoluments of a Clerical Cadre employee payable in a metro like Mumbai will be around ₹29,000 per month (₹26,000 earlier).

This is inclusive of Dearness Allowance, other allowances at the current rate and two additional increments for newly recruited graduate junior associates. Allowances may vary depending upon the place of posting.

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According to the bank, the new recruits will be on probation for a minimum period of 6 months. They will be required to complete e-lessons during the probation, for getting confirmed in the bank, failing which their probation will be extended till completion of the same.

Further, before the probation period comes to an end, their performance will be evaluated and the probation period of those employees whose performance fails to meet the bank’s expectation, may be extended.

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SBI research dept cuts FY22 real GDP forecast to 10.4% from 11%

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State Bank of India’ Economic Research Department has revised its real GDP growth forecast downwards to 10.4 per cent from 11 per cent in FY22 in view of the Covid-19 pandemic related partial/ local/ weekend lockdown in almost all the states.

The ERD estimated the total monetary impact (total loss) of the current lockdown in various States at Rs 1.5 lakh crores. Of this, Maharashtra, Madhya Pradesh and Rajasthan account for 80 per cent.

“Maharashtra has put up a stringent lockdown. Being the economically biggest and most industrialised state in India, this lockdown will have a huge impact on growth.

“Currently, we estimate loss of around Rs 82,000 crore for Maharashtra (which accounts for 54 per cent of the total loss) which will definitely increase if restrictions are further tightened,” Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, said.

 

Migration of labour

The ERD’s presentation titled ‘Thwarting the Second Wave: Rapid Vaccination should be the primary tool and not Lockdown,’ said migration of labour is continuing unabated.

According to data provided by Western Railways (Headquarters: Mumbai; for the period of April 1-12), almost 4.32 lakh people have returned to states such as Uttar Pradesh (UP), West Bengal (WB), Bihar, Assam and Odisha from Maharashtra.

“Of the 4.32 lakh, around 3.23 lakh reverse migrated to UP and Bihar alone. From Central Railways our estimate indicates that around 4.7 lakh reverse migrated to northern and eastern states from Maharashtra,” the presentation said.

 

SBI’s Business Activity Index is now at a five-month low (at 86.3 in the week ended April 19, 2021). All the indicators have shown a dip with maximum decline in Apple mobility, weekly food arrival at Mandis and RTO revenue collection, according to SBI’s ERD.

Referring to the April-May 2020 period witnessing huge monthly incremental increase in deposits (particularly time deposits) as people had fewer options to spend due to the nationwide lockdown, Ghosh observed that this time also large traction in time deposits can be expected as most of the states have imposed a partial lockdown.

 

All Scheduled Commercial Banks’ credit growth declined to a 59-year-low of 5.6 per cent in 2020-21, compared to 6.1 per cent growth in 2019-20, the presentation said. On the other hand, deposits have increased to 11.4 per cent in FY21, compared to 7.9 per cent growth in FY20.

Peak time

The ERD’s model suggests that the estimated peak time is 96 days from February 15, indicating the peak happening in the third week of May.

“It may be noted that we are incrementally adding around 15,000 cases over the peak of the previous day as of today, though such numbers are difficult to predict.

“Uttar Pradesh and Maharashtra achieved a peak before the national peak in the first wave. Now new cases in Maharashtra seem to be stabilising but the share of cases in total of various other states (Chhattisgarh, Madhya Pradesh, Gujarat) has increased in the current second wave and these are showing an increase in daily new cases,” Ghosh said.

So, if other states also implement strict actions and control the spread, then the national peak may come within the weeks after the Maharashtra peak, he added.

Vaccine update

The presentation said: “Spanish Flu in 1918 shows more deaths in later waves, thus vaccination is a must to avoid larger fatalities later.

“Injection to infection ratio shows that India made rapid improvement this year, but it is still below Israel, Chile and UK…Only 2.6 per cent of the population in the world is fully vaccinated, and in India only 1.2 per cent of population is fully vaccinated till now.”

The experience of other countries shows infections stabilise after 15 per cent of the population receives a second dose, it added.

Now that States are free to buy vaccines from manufacturers from May 1, ERD’s estimate for 13 States shows that the cost of vaccines at almost 15-20 per cent of States’ health expenditure budget (assuming half of the population in these states will get vaccinated by the Central Government), still it will be only 0.1 per cent of GDP.

This is significantly lower than the economic loss in GDP due to lockdown, which is already at 0.7 per cent of GDP, it added.

Vaccine Hesitancy Index

The ERD observed that the state-wise performance in case of vaccination is quite uneven.

“Our ‘Vaccine Hesitancy Index’ calculated as doses administered per 100 available shows that all N-E states and in states like Goa, Jharkhand, Assam, Delhi, Uttarakhand, Chhattisgarh there is a vaccine hesitancy,” Ghosh said.

Give ambulance status to oxygen tankers

The ERD said all states should allow ambulance status to oxygen tankers so that they move faster, which will certainly help and reduce the transit time.

“Government of India should analyse the oxygen data on a daily basis and direct supply. This is purely a supply chain optimisation problem,” Ghosh said.

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FM speaks to IRDAI Chairman on Covid insurance claims

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Finance Minister Nirmala Sitharaman has said that she had a talk with the Insurance Reguator on the issue of cashless treatment at networked and temporary hospitals for treatment of Covid patients.

In a tweet, the Finance Minister, mentioned “Reports are being received of some hospitals denying cashless insurance. Spoken to Chairman, IRDAI SC Khuntia to act immediately. In March 20 #Covid included as a part of comprehensive health insurance. Cashless available at networked or even temporary hospitals.”

In another tweet, the FM wrote, “As on 20/4/21, over 9 lakh #Covid related claims have been settled by insurance companies for ₹8642 Cr. Even tele-consultations can be covered. IRDAI shall direct companies to prioritise authorisations and settlements of #Covid cases.”

IRDAI issues clarification on cashless claims in Covid-19 cases

Taking a serious note of reports on denial of cashless treatment for eligible Covid-19 patients, the insurance regulator said cashless treatment facility cannot be denied. Business Line had reported this earlier.

“It is clarified that the policyholders are entitled to cashless facility at all such network providers (hospitals) with whom the insurance company/TPA (third party administrator) has entered into an agreement in accordance to the norms of service level agreement (SLA),” the Insurance Regulatory and Development Authority of India (IRDAI) said in a circular.

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