Tag: covid

KVGB conducts vaccination camp for bankers

Banking & Finance

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A Covid vaccination camp for bankers was conducted at the head office of Karnataka Vikas Grameen Bank (KVGB) in Dharwad on Wednesday.

Also read: KVG Bank launches loan scheme for medical sector

Inaugurating the camp, P Gopi Krishna, Chairman of KVGB, said the bank employees and officers have done commendable job during the period arising out of Covid by extending uninterrupted service to the customers in general and villagers in particular. “The vaccine would boost their self-confidence and immunity,” he said.

More than 200 bank employees aged between 18 and 45 were vaccinated on Wednesday. The camp was organised in association with the Dharwad district administration and the Dharwad district district health office.

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We are looking at a revival through retail focus, says Shivan JK, MD, Dhanlaxmi Bank

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Thrissur-based Dhanlaxmi Bank has chalked out strategies for growth by expanding its retail book. Shivan JK, Managing Director and CEO, is optimistic of achieving a good growth rate in the current fiscal. He says that the bank would continue to focus on CASA and retail advances including gold loans. The business volumes grew 6.39 per cent to ₹18,834 crore for the last fiscal. Edited excerpts:

What are your growth plans in the current financial year?

We will continue our focus on expanding our retail book through gold loan and other retail products. We have launched limited period MSME campaign. Our gold loan book is showing steady growth and with the launch of special 1/3-month product this book is gaining traction.

Also read: Dhanlaxmi Bank posts ₹5.28 crore net profit in Q4

We are looking at an overall 12-15 percent growth with thrust on retail/ agri including microfinance and select MSME and corporate growth. Our liability franchise is robust, and we estimate steady growth in CASA and retail term deposits.

What is the position of NPAs of the bank? How has it progressed last year?

The GNPA position as on March 31, 2021, was 9.23 per cent. We are maintaining a provision coverage of 74.20 per cent.

The position has deteriorated from the previous year due to a low advance base and recognition of NPAs, which were under moratorium following the Supreme Court order on March 23. If we include the ‘proforma’ NPAs, we were at 10.82 per cent as at the end of Q3.

Most of these are small ticket NPAs with good security coverage. Due to lockdown, our recovery efforts are constrained. We are hopeful of bringing this level below 9 per cent by end of this quarter. And there are no major fresh slippages expected.

What is the impact of Covid on the bank’s business? What plans are in place?

The growth has been muted whereas asset deterioration has steadily increased. The moratorium and its sudden lifting added to the woes.

We have instructed our operating offices to maintain all Covid protocols and safety precautions. We are tying up with two private hospitals to ensure that all staff take at least the first dose of vaccine.

When do you see the economy recovering? Also do you see interest rates going up soon?

Our hope is that things return to almost normal from the second quarter of this fnancial year and then the economy will bounce back with a growth in GDP of 8-9 per cent for the FY as per revised predictions. As for your question regarding the interest rates going up, we have reached the bottom. But with the liquidity overhang and the time lag in corporate demand picking up, the rates would be stable in the short term but will firm up by Q3.

Also read:Banks decide to extend unsecured personal loans for Covid treatment

How about NRI investments in your business? And are there any plans for merger with bigger banks?

We are not a big player in the NRI segment compared to other peer banks. In this current financial year, it will be one of our focus areas. And, no, we don’t have any plans for merger with other bigger banks.

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SBI’s Ecowrap revises FY22 GDP projection to 7.9% from 10.4%

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State Bank of India’s economic research department has revised it real GDP projection for FY22 to 7.9 per cent from 10.4 per cent earlier, with its analysis showing a disproportionately larger impact of the second wave of Covid-19 pandemic on the economy.

The Department, in its report “Ecowrap”, imparted an upward bias to this number with the fervent hope of 1 crore vaccinations per day beginning mid-July as per government projections.

“However, our analysis shows a disproportionately larger impact on economy this time and given that rural is not as resilient as urban, the pick up in pent-up demand is unlikely to make a large difference in FY22 GDP estimates, and hence it could only be a modest pick up,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.

For the current financial year, GDP outlook will be impacted by the trajectory of international commodity prices which have risen sharply during the year, as per Ecowrap.

Consumption impact

Further, the pass-through impact of higher commodity prices will be visible in domestic prices thus impacting consumption during the year.

Also read: Moody’s pegs India GDP growth at 9.3% in FY22

The report observed that the overall consumption trajectory will depend on the recovery in services “Trade, hotels, transport, communication & services related to broadcasting” which supports roughly 25 crore households. Corporate, in the listed space, reported better growth numbers across parameters in Q4 (January-March) FY21, but this trend may soon reverse.

The report observed that after registering nominal loss of ₹13.4-lakh crore in H1 (April-September) FY21, the gain in H2/October 2020 – March 2021 (of ₹7.3-lakh crore) resulted in overall annual loss of ₹6.1-lakh crore. Real loss on the other hand stood at ₹10.6-lakh crore in FY21.

“This is a peculiar characteristic that is being exhibited in FY21 data. Normally, the annual increase in nominal GDP is more than the annual increase in real GDP, which is quite obvious given the fact that inflation is always in positive territory in India. However, in FY21 the contraction in real GDP was more than the contraction in nominal GDP,” Ghosh said.

Third wave

Meanwhile, the report assessed that the average duration of third wave for top countries is 98 days and that of second wave is 108 days, with third wave peak as a multiple of second at 1.8 and second wave as a multiple of first at 5.2 (for India it was at 4.2).

Also read: Manufacturing PMI slides to 50.8, job shedding accelerates

International experience thus suggests that the intensity of third wave is as severe as the second wave, according to Ecowrap. However it is also observed that in third wave, if we are better prepared, the decline in serious case rate will lead to less number of deaths.

The department’s analysis shows that if serious cases decline from 20 per cent to 5 per cent (due to better health infrastructure and rigorous vaccination) in the third wave, then the number of deaths in the third wave could significantly reduce to 40,000 as compared to current deaths of more that 1.7 lakh.

“So vaccination should be the key priority, especially for the children who could be the next vulnerable group. With around 15-17 crore children in the 12-18 age bracket, India should go for an advanced procurement strategy like that adopted by developed nations to inoculate this age-group,” emphasised Ghosh.

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IBA CEO, BFSI News, ET BFSI

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As the government enhanced the scope of the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), banks on Sunday said they have sanctioned Rs 2.54 lakh crore and have room to disburse another Rs 45,000 crore under the plan.

To support the businesses affected by the second wave of COVID-19, the Finance Ministry on Sunday enhanced the scope of ECLGS, including providing concessional loans to hospitals/nursing homes for setting up on-site oxygen generation plants.

The validity of the scheme is extended by a further three months to September 30 or till guarantees for an amount of Rs 3 lakh crore are issued, the ministry said in a statement.

“Of the total kitty (for ECLGS) available, Rs 2.54 lakh crore of loans have already been covered and there is a window available for roughly Rs 45,000 crore. Of the Rs 2.54 lakh crore, Rs 2.40 lakh crore has already been disbursed,” Indian Banks’ Association Chief Executive Officer (CEO) Sunil Mehta told reporters after the ministry’s announcement.

The ministry said, under the ECLGS 4.0, a 100 per cent guarantee cover to loans up to Rs 2 crore will be provided to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants.

The interest rate on these loans has been capped at 7.5 per cent.

“Borrowers who are eligible for restructuring as per the RBI guidelines of May 5, 2021, and had availed loans under ECLGS 1.0 of overall tenure of four years comprising of repayment of interest only during the first 12 months with repayment of principal and interest in 36 months thereafter will now be able to avail a tenure of five years for their ECLGS loan i.e. repayment of interest only for the first 24 months with repayment of principal and interest in 36 months thereafter,” the ministry said.

Also, the new scheme has made a provision of additional ECLGS assistance of up to 10 per cent of the outstanding as of February 29, 2020, to borrowers covered under ECLGS 1.0, in tandem with restructuring as per the RBI guidelines of May 5, 2021.

The government has also removed the current ceiling of Rs 500 crore of loan outstanding for eligibility under ECLGS 3.0, subject to maximum additional ECLGS assistance to each borrower being limited to 40 per cent or Rs 200 crore, whichever is lower.

Loans to the civil aviation sector were also made eligible under ECLGS 3.0, the ministry said.

“We all are aware of the scenario which emerged post resurgence of COVID 2.0. It has actually led to a lot of disruption of economic activity.

“The most vulnerable among them, MSMEs, are in need of support, which has been extended in various forms, more so in the May 5 circular of Reserve Bank of India. Now, the government today announced the modification to the ECGL scheme,” State Bank of India Chairman Dinesh Khara said.

On ECLGS 4.0, Khara said his bank will be in a position to build a book size of about Rs 2,000 crore.

He said for the resolution framework 2.0, announced by the RBI on May 5, all public sector banks have come out with a formulated templated approach for restructuring of loans to individuals, small businesses, MSMEs up to Rs 25 crore.

“The idea behind this is that those who are involved in the implementation of the resolution framework, they should not have any hardship in terms of any implementation,” Khara added.

When asked about the size of the restructuring pool banks are expecting this time, IBA Chairman and Union Bank of India‘s Managing Director and Chief Executive Officer Rajkiran Rai G said it was too early to put a number for potential recasts, as banks are only sending messages to eligible borrowers.

“Last time also we saw that the number of customers opting for this (restructuring) was not that high. So, we need to get some feedback and it is difficult to crystallise a number at this point in time,” Rai said.

Khara said during the previous restructuring scheme, SBI had about 8.5 lakh SME customers who were eligible for restructuring but only 60,000 borrowers availed it.



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Uday Kotak, BFSI News, ET BFSI

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NEW DELHI: The decision to relax partial lockdowns and restrictions imposed by various state governments to contain second wave of Covid-19 pandemic should be based on the advice of experts as the July-September period is going to be crucial for the nation, said CII President Uday Kotak.

As vaccination drive picks up in July-September and positive cases come down on account of current restrictions and partial lockdowns imposed by various state governments, the main challenge would be to take a decision on opening up the economy, he said.

“After vaccination picks up, what do we do? Do we open up or be cautious? So, that will be the trade-off which will be crucial between July and September in the race between vaccination going up, current positivity rate remaining low.

“But, the worry that if you open up too soon, we will get COVID 3.0 quickly and that is the trade-off for which we need to take a calibrated call, not today but in the second half of June,” Kotak told PTI.

The decision to open up should be taken on the advice of experts based on scientific evidence, he said adding that the July-September period needs to be handled with care.

“Let us get scientists and experts to do their analysis and then take the call based on expert advice. One of the challenges, I feel, we in India face is that many people take decisions without depending enough on expertise.

“I would rather depend on expertise and based on that, take the right decisions,” he said.

As per estimates, he said, by August, India should be produce about 15 crore vaccines per month, and there is a decent hope that post-September and October, India would be vaccinating a lot of people.

“What is really the issue is this 3-4 months hiatus which we have now is the challenge that we need to handle with care because post-COVID 2.0, most states have effectively curtailed economic activities,” he added.



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Karnataka Bank Q4 net up 14.83 per cent

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Karnataka Bank Ltd registered a net profit of ₹31.36 crore during the fourth quarter of 2020-21 as against a net profit of ₹27.31 crore in the corresponding period of the previous fiscal, recording a growth of 14.83 per cent.

The board of directors of the bank, which met on Wednesday, approved the audited annual financial results for the period ended March 31 and also recommended a dividend of 18 per cent to be approved in the ensuing 97th annual general meeting.

The bank registered a net profit of ₹482.57 crore for 2020-21 as against ₹431.78 crore in 2019-20, recording a growth of 11.76 per cent.

Terming the annual result as the best result during tough conditions triggered by the pandemic, Mahabaleshwara MS, Managing Director and Chief Executive Officer of the bank, said this clearly demonstrates the resilience of the bank.

The all-time high annual net profit, the highest ever CRAR of 14.85 per cent, very satisfactory PCR of 70.05 per cent, a new high of 31.49 per cent in CASA, over 90 per cent digital transactions, moderation in NPAs, etc., all indicate that economic prescription of the bank for Covid era – ‘Conserve, Consolidate and Emerge Strong’ – has provided the much-required immunity, he said.

Also read: Karnataka Bank gets additional director

The retail and mid-corporate advance, which has been the focus areas of the bank as part of its credit realignment initiative, has registered a growth of 6.34 per cent. The overall credit portfolio has seen negative growth as there was a degrowth of 53.44 per cent under the large corporate sector.

He said the ratio of retail, mid-corporate, large corporate has improved to 52.98 per cent, 33.79 per cent, 13.23 per cent as against 45.49 per cent, 28.71 per cent, 25.80 per cent as of March 2020.

“Even though we have been successful in overcoming the adverse impact of the pandemic under wave 1.0, we will continue to be ‘cautious and conservative’ in handling wave 2.0 as well, by keeping intact all our efficiency maximisation efforts,” he said.

‘Economic vaccines’

Various ‘economic vaccines’ such as restructuring, guaranteed emergency credit line, etc., being rolled out by the RBI and the Government would definitely help the needy borrowers and the banking industry alike to effectively overcome the challenges in a resilient way, he said.

Stating that the non-performing assets (NPA) have also moderated, he said the gross NPAs of the bank stood at ₹2,588.41 crore constituting 4.91 per cent as of March 31, 2021 as against ₹2,799.93 crore constituting 4.82 per cent as on March 31, 2020.

The net NPAs also moderated to ₹1,642.10 crore constituting 3.18 per cent from ₹1,755.01 crore as on March 31, 2020 constituting 3.08 per cent. Even though both the gross NPAs and net NPAs amounts have come down, the marginal increase in percentage term is mainly on account of denominator effect, he said.

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India plans stimulus package for sectors worst affected by second wave, BFSI News, ET BFSI

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India is preparing a stimulus package for sectors worst affected by a deadly coronavirus wave, aiming to support an economy struggling with a slew of localized lockdowns, people familiar with the matter said.

The finance ministry is working on proposals to bolster the tourism, aviation and hospitality industries, along with small and medium-sized companies, the people said, asking not to be identified as the deliberations are private. The discussions are at an early stage and no timeline for an announcement has been decided, they said. A finance ministry spokesman declined to comment.

The latest wave of Covid-19 infections has made India the global hotspot for the pandemic and has decimated travel since the second wave picked up in March even though Prime Minister Narendra Modi has refused to implement a strict nationwide lockdown like last year’s. With high daily cases, many local governments — including Maharashtra and Tamil Nadu, India’s most industrialized states — have imposed curbs against the spread of the virus.

That’s prompted many economists to cut their forecasts for the financial year that began April 1, as rising unemployment and dwindling savings among consumers dim the chances for double-digit growth. While the International Monetary Fund expects India’s economy to expand 12.5% this year to March — and will be revisiting the forecast in July — the country’s central bank projects 10.5% growth.

Flagging growth prospects put the onus on policy makers to support activity, especially once the virus caseload eases. Finance Minister Nirmala Sitharaman, who said last month she’s monitoring the economy in a “very detailed fashion,” has held discussions with economists in recent days about a stimulus package, the people said.

In April, the finance ministry eased rules for capital expenditure by government departments to try to boost spending in the economy.

Pressure also is building on the central bank — which serves as the banking sector regulator — to ease loan repayment rules, especially for sectors badly hit by this virus wave.

–With assistance from Anirban Nag.



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SBI Card puts in place mechanism for COVID stress relief, BFSI News, ET BFSI

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SBI Cards and Payment Services (SBI Card) on Monday said it has framed a COVID-19 related stress resolution mechanism in accordance with the RBI’s recently announced relief measures. Pursuant to RBI’s circular dated May 5, 2021, the company has framed the resolution framework 2.0 for COVID-19 related stress of individuals and small businesses, based on the tenets as enumerated in the central bank guidelines, SBI Card said in a regulatory filing.

“The policy covers norms on offering relief to stressed cardholders by means of resolution plans and the related provisioning and asset classification norms,” it said.

Earlier this month, the Reserve Bank came out with the Resolution Framework 2.0 under which individuals and small businesses having exposure up to Rs 25 crore can opt for loan restructuring if they had not availed its earlier scheme.

The RBI on May 5 said it decided to extend such a facility for restructuring of existing loans without a downgrade in asset classification in view of the uncertainties created by the resurgence of the pandemic in India.

The pure-play credit card company, promoted by the country’s largest lender SBI, recorded a flat growth in its total income at Rs 9,714 crore for the fiscal ended March 2021.

Net profit fell by 21 per cent year-on-year at Rs 985 crore.



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HDFC Bank sees stress emanating from loans restructured during Covid 1.0, BFSI News, ET BFSI

Banking & Finance

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HDFC Bank has warned of a rise in loan delinquencies as business and collection efficiencies have been hit by the Covid wave.

The second wave has accentuated problems for the people hit by the first wave and there will be stress emanating from borrowers who took the moratorium or restructuring, its chief executive Sashidhar Jagdishan said in an investor call.

“For the first time in as many years, we don’t have visibility on what is going to happen and, hence, near-term expectations are tepid,”Jagdishan said.

“There will be incremental slippages if this continues for a while longer.”The pace of vaccination is crucial for both clarity and visibility on likely delinquencies. he said.

He stressed that vaccinating more citizens, within the shortest period of time, was the only way of returning to normalcy.

“Unfortunately, the availability of vaccines is still a blind spot. A lot of people are struggling to get vaccinated, but as soon as this is smoothened, positivity should return to the future outlook,” he said. The bank has also asked its collection agents and door-to-door staff to function digitally.

Collections hit

“The impact of Covid 2.0 is much more than what we saw in the first wave, and the health of our staff is paramount,” he said. “So long as they are able to engage with customers digitally and secure business digitally, including collections, we will be alright.

Because we have also directed our collection agents not to step out, among the stressed borrowers we expect to see a higher amount of delinquency but these accounts should get resolved in the coming quarters.”

“As things stood in March, we would have had a very buoyant FY22, but as things stand now, our performance is on a best-effort basis,” he said. “But the platform is so good that we will be in a position to bounce back when things return to normalcy.”

Tech issues

Jagdishan also said the bank management was hard at work to solve the tech issues plaguing the lender in recent years. The bank faced three major digital outages in the last three years, prompting the central bank to direct curbs, including a standstill on launching new digital initiatives and onboarding credit card customers.

“A fair amount of work has happened though we still need some time before we can control the issues on resilience,” Jagdishan said. “We have done a fair amount of work on our IT systems, security, infrastructure, and our recovery timeline is something we are working on.

The strictures imposed by the RBI have given us a window to work faster. We are impacted, it is a blot on the bank that we are unable to source cards but I take this positively and build our technology that is better than that of anyone else in the system.”

HDFC Bank first saw a spurt in cheque bounce cases in April, coinciding with the second lethal Covid wave in the country.

Check bounce rates for HDFC Bank were improving up to March 2021. However, bounce rates increased in April, returning to January 2021 levels. Maharashtra, Madhya Pradesh, Punjab, and Telangana were seeing higher check bounce rates.



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BFSI firms put employee health as top priority as Covid rages, BFSI News, ET BFSI

Personal Finance

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The second wave of Covid-19 pandemic, which put a severe strain on the healthcare infrastructure across India, has made BFSI firms put their employee’s health and safety on top priority.

From helping employees source beds in hospitals, oxygen facilities, critical medicines to financial assistance, BFSI firms will continue to keep their employees’ well-being even as business takes a little hit.

Max Life Insurance

Speaking at the 2nd ETBFSI Virtual Summit, Prashant Tripathy, MD & CEO, Max Life Insurance said, “Things have gotten really difficult in the last few weeks and we have had to change our course on the health, safety and well-being of our employees. We have been helping our employees in whatever way we can to tide through these difficult times.”

The private insurer has set up a platform – Call Health – which provides round-the-clock service like telephonic assessment of Covid-19 symptoms and consultations with empanelled doctors. It has also set up a dedicated helpdesk to provide reliable information about network hospitals and Covid testing labs.

Equitas Small Finance Bank

P N Vasudevan, MD & CEO, Equitas Small Finance Bank, says, “We have to go beyond the new normal as the reality has hit us hard. The first wave was unique, new for all of us and we weren’t familiar with lockdowns and everyone was taken aback. But thankfully, last year the impact of the virus wasn’t that strong as compared to the current time.”

He adds, “We’ve already lost about eight employees and it’s not possible to digest and there’s no way we can ask anyone to go out and do the job.”

He explains that businesses have to work on a different level substantially as compared to last year. The bank is internally preparing for a 3-4 year horizon and long-term timeframe as situations keep evolving.

Vasudevan adds, “Health and well-being of our staff is of paramount importance and we have set up a war-room to ensure we can do our best to support our staff.”

Muthoot Finance

Kochi-headquartered Muthoot Finance echoes the thought that the safety of employee and staff is of paramount importance.

George Alexander Muthoot, MD, Muthoot Finance says, “We’ve more than 5,000 branches across the country, some locked down, some not in lockdown. We can’t force staff to come to the branch but in the head office most of the work has gone in digital processes.”

Muthoot Finance is paying two years’ salary to the dependents of employees who have succumbed to Covid-19. In Kerala, it has tied up with two hospitals to ensure if any of their employees seek any medical assistance the same can be availed.

Muthoot adds, “Encouraging staff to go ahead for vaccination and it is the thing which will keep us going ahead and tackle the pandemic. Business will eventually come back to normal but employees’ safety and well-being are of utmost importance for now.”

Fino Payments Bank

Fino Payments Bank, dependent on its vast rural network, is also finding it hard to tackle the ongoing situation. Rishi Gupta, MD & CEO, Fino Payments Bank, says, “Everything has taken a backseat, what is not normal is that employees are getting impacted due to Covid. Our operations are spread across rural areas, we can’t tell our partners and employees to go out and get the business done in times like these.”

He believes that these will have a long-term impact on how businesses are being done and will change dramatically as situations evolve.

Gupta adds, “For now the priority is to ensure employee safety and wellness with a high level of communication throughout the time. Trying to move as much as we can towards digital operations and processes along with empathy & assistance towards employees and their families.”



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