Break the chain: IBA asks banks to restrict services in view of surge in Covid-19 cases

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The Indian Banks’ Association has asked banks to follow the Covid-19 pandemic related standard operating procedures (SOPs) it issued last year, whereby they will provide only essential customer services, business hours will be shortened, and employees will be called on rotational basis to break the transmission of the coronavirus in the second wave.

Under the SOPs, banks will continue to provide four essential services — cash deposits and withdrawals, clearing of cheques, remittance and government businesses.

The State Level Bankers’ Committee (SLBC) of each State/ Union Territory will review the situation in its area and decide on additional services that can be provided.

The Association said working hours (business hours) could be restricted from 10 AM to 2 PM. Door-step banking activities should be encouraged.

The SOPs recommended that employees may be called on rotational basis or be allowed to work from home as the case may be depending on the nature of job, staff position and size of the establishment.

Ideally, 50 per cent of the employees may be called for “in person” duty on rotation basis.

The SOPs require strict adherence to social distancing, management of customers, health and sanitation, wearing masks and gloves, in the bank premises.

IBA advised banks to explore arrangements with hospitals to provide all emergency medical facilities required for the staff in the event of Covid infection and also for staff requiring intensive medical attention.

Banks may also arrange for emergency medical help kits at the district/city level to ensure immediate support for staff members.

Unlike last year, the states are now issuing guidelines for breaking the chain of the Covid-19 pandemic. According to the Association, depending on the gravity of the local situation, banks may have to follow different Covid protocols in different states/districts.

 

IBA said its list is only indicative and banks are encouraged to adopt additional measures for the safety and security of the employees.

The Association had issued the first SOP on March 18, 2020 to enable banks to draw up business continuity plans. Subsequently, it also issued an appeal to all bank customers to avail of limited services at bank branches so that physical visits to banks were avoided as far as possible.

IBA issued the second SOP on April 28, 2020, guiding banks to resume full-fledged services and at the same time to ensure safety of the staff and customers.

 

The United Forum of Bank Unions (UFBU) had appealed to IBA to issue appropriate instructions to bank managements to restrict banking services to essential activities in view of the second wave of the pandemic.

In a letter to the Association’s Chairman, Rajkiran Rai G, UFBU said the pandemic situation has turned into a matter of grave concern.

“Bank branches, with continued footfalls and across-the-counter connect with customers, are potential hubs of infection,” Sanjeev K Bandlish, Convenor, UFBU, said

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Housing demand structural, here to stay: Deepak Parekh

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Housing Development Finance Corporation (HDFC) Ltd Chairman Deepak Parekh on Thursday said the demand for housing is not pent-up demand but is structural demand and is here to stay.

“In my 44 years of working in the housing sector, I have to say that the strong demand that one has seen for housing in the recent period has certainly surprised on the upside,” he said at the One World One Realty Global Proptech Summit 2021.

The growth in home loans has been aided by low interest rates, softer or stable property prices and continued fiscal benefits on home loans, he further said.

“Technology has enabled developers to virtually showcase their properties and home loan providers, too, have leveraged their digital platforms to continue to serve new and existing customers,” he said.

HDFC enters into co-lending partnership with Indiabulls Housing Finance

According to Parekh, demand for housing is a combination of first time homebuyers, customers moving up the property ladder by shifting to larger homes; acquiring a second home in another location; and the current work from home situation in which proximity to the workplace is perhaps less compelling.

He also noted that the government’s ‘Housing for All’ programme has given a boost to the sector.

Under the Prime Minister’s Awas Yojana, as at March 31, 2021, an estimated 1.13 crore homes have been sanctioned, Parekh said. “This has been a game-changer for the housing sector as the ultimate objective is building a more inclusive and property owning democracy,” he said.

HDFC Bank Q4FY21: What is spooking HDFC Bank’s stock

Meanwhile, noting that infrastructure creation is one way to ensure a sustained recovery, without spiralling inflation, Parekh said that construction and real estate development is going to play a key role in all major global economies.

“And now more than ever before, the role of technology and innovation becomes extremely important,”he said, while pointing out that the construction industry is one of the least digitalised sectors in the world.

Stressing the need for digital infrastructure for the real estate sector, he said prop tech companies can play a big role in accelerating the government’s smart city mission as well as help local level bodies and municipalities in terms of facilitating online approvals of building permits.

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Despite healthy Q4 result, HDFC Bank believes tough times have begun for FY22, BFSI News, ET BFSI

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Amid the second COVID-19 wave, India’s largest private sector lender HDFC Bank reported on Saturday, an 18.2% y-o-y rise in net profit to Rs 8,186.51 crore for the quarter ended March. The Bank had posted a net profit of Rs 6,927.69 crore in the year-ago period. The Bank’s Net Interest Income also witnessed a 12.6% y-o-y rise to Rs 17,120 crore in the quarter under review, as compared to Rs 15,204 crore in the year-ago period.

HDFC Bank on Saturday also said that it has set aside ₹500 crore as provisions to cover the Supreme Court-directed compound interest refund to all borrowers during the March-August period.

Srinivasan Vaidyanathan, CFO of the bank, said that while the Indian Banks’ Association (IBA) is still working out the methodology of computing the refund, It is estimated that the waiver bill would be in the range of ₹7,000-7,500 crore. To be sure, the government has borne the waiver cost of ₹6,500 crore for borrowers of up to ₹2 crore in certain sectors announced last October.

In a regulatory Filing the private lender further added that the impact of COVID-19, including changes in customer behaviour and pandemic fears, as well as restrictions on business and individual activities, has led to significant volatility in global and Indian financial markets and a significant decrease in local economic activities.

The slowdown during the year has led to a decrease in loan originations, the sale of third party products, the use of credit and debit cards by customers and the efficiency in collection efforts.

“The extent to which the COVID-19 pandemic, including the current “second wave” that has significantly increased the number of cases in India, will continue to impact the Bank’s results will depend on ongoing as well as future developments, which are highly uncertain, including, any new information concerning the severity of the COVID-19 pandemic and any action to contain its spread or mitigate its impact whether government-mandated or elected by us.” HDFC Bank said in a statement, addressing the recent surge in covid cases in the country.

Lockdowns not only disrupt loan growth but also impact loan repayment collections. Banks are expected to give the true picture of their asset quality in the March quarter after the Supreme Court refused to extend the standstill on reporting of bad loans till August 31.

Early signs of asset quality impact are already visible for HDFC Bank. For the March quarter though, the lender reported gross bad loan ratio of 1.32%, which captures the true picture of asset quality given that judicial standstill on bad loan recognition has been lifted. Investors will now keenly monitor any changes in the lender’s asset quality and its commentary in the wake of the second wave of Covid-19 infections.

Despite healthy Q4 result, HDFC Bank believes tough times have begun for FY22Another major aspect that investors will keenly watch is the impact of the Reserve Bank of India’s order on issuances of new credit cards on the lender’s credit card business. The Reserve Bank of India (RBI) had asked the lender to halt all new issuances of credit cards and digital services offerings till the time it sorts out its technological issues.



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HDFC Bank Q4 net profit jumps 18% on-yr; board decides against declaring dividend in Mar 2021 amid COVID surge

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HDFC Bank reported an 18.2 per cent on-year jump in standalone net profit to Rs 8,186.51 crore for the January-March quarter of FY21. The company had posted a profit of Rs 6,927.6 crore in the corresponding quarter of the previous year. Amid the second COVID-19 wave, the company informed that its board has considered it prudent to currently not propose a dividend for the financial year ended March 31, 2021. India’s largest private sector lender’s Net Interest Income (NII), the difference between interest earned through lending and interest paid to depositors, witnessed a 12.6 per cent on-year rise to Rs 17,120 crore in the quarter under review, as compared to Rs 15,204 crore in the same period last year. The Bank’s net revenues (net interest income plus other income) rose to Rs 24,713 crore in the fourth quarter of FY21 from Rs 21,236 crore in the previous year.

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Unfazed by Covid-19, fund raising for public issues jumped by 115% in FY21

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Pandemic does not seem to have affected fund mobilisation through capital market as Financial Year 2020-21 (FY 21) saw resources raising through public issue more than doubled. Mutual fund and corporate bond market also registered good growth; a Finance Ministry statement released on Wednesday.

“Despite the uncertainty prevailing in FY 2020-21 owing to Covid-19 pandemic, fund raising in FY 2020-21 was better than that in FY 2019-20 for both Public Issues and Rights Issues,” the statement said.

According to data compiled by the Ministry, fund raising through public issue jumped 115 per cent during FY 21 while growth was 15 per cent for rights issues. Similarly, number of unique investors across different kind of mutual fund grew by 10 per cent, while number of issues in Corporate Bond Market increased by 10 per cent in FY 2020-21.

Mutual funds

Assets under management (AUM) of Mutual Fund Industry increased by 41 per cent to ₹31.43-lakh crore as on March 31 of FY 21 from ₹22.26-lakh crore as on March 31, FY 20. During this period, the number of unique investors across Mutual Fund schemes also increased by 10 per cent to 2.28 crore from 2.08

With increasing expansion of the MF industry in smaller cities, the AUM from below top 30 cities increased by 54 per cent to over ₹5.35 lakh crore from ₹3.48 lakh crore. Investors in Mutual Fund industry may choose to invest in any of the 1,735 mutual fund schemes across categories as per their investment objective as on March 31, 2021.

Corporate bond market

Similarly, around 2003 issues of Corporate Bonds for an amount of over ₹7.82-lakh crore happened in FY 21, surpassing the amount raised (around ₹6.90-lakh crore). While the number of issues increased by 10 per cent during FY 21, the amount raised increased by 13.5 per cent as compared to the previous financial year.

Resource Mobilisation through Public and Rights Issues

(Amount is in Rs. Crore)

Particulars

2019-20

2020-21

 

No.

Amount

No.

Amount

1)Public Issues,

62

21,382.35

56

46,029.71

of which

 

 

 

 

Initial Public Offer (IPO)

60

21,345.11

55

31,029.71

Follow-on Public Offer (FPO)

2

37.24

1

15,000.00

2)Rights Issues

17

55,669.79

21

64,058.61

Total (1+2)

79

77,052.14

77

1,10,088.32

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NHB launches ₹10,000-crore Special Refinance Facility-SRF 2021

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National Housing Bank (NHB) has rolled out a ₹10,000-crore ‘Special Refinance Facility-2021’ (SRF-2021) to provide short term refinance support to housing finance companies (HFCs) and other eligible Primary Lending Institutions (PLIs).

This facility is expected to meet the short-term liquidity requirements of the PLIs and will also support them for onward lending to individuals to maintain steady growth in the housing finance sector, according to NHB.

This NHB initiative comes on the heels of the Reserve Bank of India (RBI) extending fresh support ( in the recent monetary policy review) under another Special Liquidity Facility-2 (SLF-2) of ₹ 10,000 crore to the NHB for one year to support the housing sector.

RBI to provide ₹50,000-cr refinance to all-India financial institutions

Post Covid -19, the housing finance sector has revived and showed steady improvement in sanctions and disbursements since the second quarter of FY2020- 21.

It may be recalled that last year during May-August 2020, NHB had provided refinance support of ₹ 14,000 crore under the Special Refinance Facility (SRF) and Additional Special Refinance Facility (ASRF).

This short-term liquidity support for a year was part of Special Liquidity Facility (SLF) granted by the RBI at repo rate to NHB under Aatma Nirbhar Bharat Abhiyaan announced by the Finance Minister.

Return of DFIs

During the period April 1, 2020 to March 31, 2021, NHB had extended an amount of ₹ 42,823.93 crore as refinance to PLIs which includes HFCs, Scheduled Commercial Banks including Regional Rural Banks (RRBs), Small Finance Banks (SFBs), under its various refinance Schemes including SRF and ASRF extended by the RBI.

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Rupee slips below 75/$ level in early trade ahead of key macroeconomic data release

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The rupee opened on a weak note and fell below the 75 per US dollar level in early trade on Monday amid lacklustre opening in domestic equities ahead of the release of key macro-economic data.

Moreover, rising crude oil prices, foreign fund outflows, spiking Covid-19 cases and heavy selling in domestic equities weighed on the domestic currency.

At the interbank foreign exchange market, the rupee opened at 74.97, then lost further ground and fell to 75.14 against the US dollar, showing a decline of 41 paise over its previous closing.

The Indian rupee, on Friday, had closed at 74.73 against the US dollar.

The rupee started on a weak note against the US dollar weighed by the inflationary pressures on the economy ahead of the data release tonight, Reliance Securities said.

Meanwhile, India hit a new coronavirus infection record with 1,68,912 new cases, the highest single-day rise so far, taking the total tally of cases to 1,35,27,717, according to official data.

Meanwhile, Brent crude futures, the global oil benchmark, rose 0.05 per cent to $62.98 per barrel.

Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out ₹653.51 crore on Friday, as per provisional data.

Domestic bourses opened on a weak note on Monday with benchmark indices Sensex trading 1,357.46 points down at 48,233.86 and Nifty down 402.35 points at 14,432.50.

Meanwhile, US consumer price data will be released on Tuesday, while investors will also await Fed Chair Jerome Powell’s speech on Wednesday at the Economic Club of Washington, the note said.

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The outlook is optimistic and we look forward to grow: Kotak Life MD and CEO

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Optimistic about the prospects of the life insurance industry, G Murlidhar, Managing Director and CEO, Kotak Mahindra Life Insurance says expectations of improved economic growth, more awareness about insurance and digitisation will give a boost to demand.

In an interview with BusinessLine, he also expressed hope that the impact of the second wave of the Covid-19 will be limited as insurers have learnt to work through the pandemic. Edited Excerpts:

How do you expect the company to do this year?

How the company will do depends on the economy and the industry. My view is that India still remains largely under insured and under penetrated market. A lot of opportunity exists.

I think we’ll bounce back and we will have 10 per cent to 12 per cent growth this fiscal. GDP will grow so we expect domestic savings will grow. Also with increasing customer awareness, people are willing to buy insurance products, and I think the digital inclusive technology is really helping. I don’t see any problem for the industry. The outlook is is optimistic and we look forward to grow.

Are you worried about the second wave of Covid?

As an insurer, no, not really. Yes, this second wave of Covid is a problem and there will be some impact on business and mortality. But I think it will be limited for some time, and it will be overcome. The way we do business has also changed quite a bit. Even during the first wave, business went on, we were still continuing to sell and we still continue to so we did even today. The insurance industry on the whole hasn’t fallen behind substantially. We have learnt to work through this.

What is the strategy of the company going ahead?

We are a very balanced company– we have equal sale of group and equal sale of individual products. And on the individual side, we have agencies selling 50 per cent and the rest 50 per cent by non agency that is banca and others. So we are pretty balanced in what we sell and that will continue. There’s a huge thrust towards digitisation, which will continue not only in fulfilment but also in selling. In the last one year we have put together huge number of tools for digitisation. We will also work on direct B2C.

Is persistency still an issue for the industry?

There was a temporary blip in the month in the initial part after the pandemic because there was also extension of the deadlines. But otherwise the industry has slowly caught up. It was bound to happen. We as a company really focus on persistency.

Do you expect the demand for protection products to continue?

Protection saw a big spurt immediately after the pandemic broke out. I think it is now settling but it is still higher. Our protection business too has grown substantially and we want to see protection as a big share and we will like to grow it.

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With work flexibility, Singapore’s DBS Group to cut office space

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DBS Group Holdings Ltd. is poised to trim office space in Singapore, the latest bank to pare its footprint in the city-state during the coronavirus pandemic.

According to people with knowledge of the matter, Southeast Asia’s largest bank plans to surrender about two and half floors, or 75,000 square feet, in Tower 3 of the Marina Bay Financial Centre. The lender occupies more than a dozen floors in the building, located in the central business district near the iconic Marina Bay Sands hotel and casino.

DBS is set to give up the floors in December, the people said, asking not to be identified because the plans are private. A representative for the company declined to comment.

 

The move comes on top of the lender’s plans to cut space in the pricey Hong Kong market. Banks worldwide are rethinking their use of offices after the health crisis showed that they can still operate effectively with many employees at home. HSBC Holdings Plc is allowing more than 1,200 staff at its U.K. call centres to permanently work remotely.

In Singapore, DBS follows the footsteps of Citigroup Inc. and Mizuho Financial Group Inc. Citigroup is giving up three floors as it aims to better optimize its real estate, while Mizuho is cutting space equivalent to less than one floor on the back of work from home success.

Anchor Tenant

DBS is the anchor tenant at MBFC Tower 3, part of a three-tower complex managed by Raffles Quay Asset Management. Other tenants include Rio Tinto Plc. It’s the headquarters for DBS, which also has space in Changi Business Park.

Singapore’s largest bank has been promoting work flexibility while also espousing the benefits of office life. In November, it said employees would be allowed to work remotely as much as 40% of the time. Chief Executive Officer Piyush Gupta said last month that staff sometimes need to be in the office to “build the soul of the company.”

The downsizing by financial firms may not necessarily be a huge setback for the Singapore office market, given that tech behemoths are expanding their presence in the Southeast Asian hub. Amazon.com Inc. is taking up the three floors Citigroup is relinquishing, while ByteDance Ltd. agreed to lease three floors in a building in the financial district.

Singapore’s office market has shown recent signs of a recovery. The vacancy rate eased to 3.3% last quarter from 3.9% in the last three months of 2020, according to preliminary estimates by CBRE Research. The rebound was led by Grade A office buildings, with rents for those properties remaining stable in the quarter.

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Finance Ministry calls for vaccination of all bank and NPCI employees on priority

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The Finance Ministry has called for urgent Covid-19 vaccination for employees of all banks and the National Payments Corporation of India, irrespective of their age.

In a letter, the Department of Financial Services in the Finance Ministry has asked the Ministry of Home Affairs and the Ministry of Health and Family Welfare, to consider Covid vaccination on a priority basis for bank and NPCI employees, pointing out that “they are on the frontline and deal with customers and critical infrastructure for seamless banking and payment system”.

Bank employees have worked through the Covid-19 pandemic and lockdown. Bank unions have been requesting that bank staff be treated as frontline workers and are vaccinated as early as possible.

The letter comes amidst the second wave of the pandemic and concerns over mutant strains.

Data with the Indian Banks’ Association reveals that there have been 600 deaths due to Covid-19 in the banking industry as of December 31, 2020. The sector has about 13.5 lakh workers.

“Bank employees have played a critical role over the past year in ensuring that bank branches remain open and functional, and are providing the complete suite of banking services to their customers,” the DFS noted in its letter.

NPCI staff, too, have played a critical role, it said.

The DFS has also received representations from the IBA, HDFC Bank and NPCI on the issue.

At present, the Covid-19 vaccination is available for those above 45 years of age.

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