Tag: economy

Bank of Maharashtra’s Q4 net soars

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Bank of Maharashtra’s (BoM) net profit soared 187 per cent year-on-year (yoy) in fourth quarter to ₹165 crore on the back of a large recovery in a technically written-off account and a robust growth in net interest income.

The Pune-headquartered public sector bank reported a net profit of ₹58 crore in the year ago quarter. The higher net profit in the reporting quarter comes despite a 92 per cent rise in loan loss provisions.

Interest income

Net interest income was up 35 per cent yoy to ₹ 1,383 crore (₹ 1,023 crore). Non-interest income, comprising fee-based income, trading income and other income, skyrocketed 215 per cent to ₹1,235 crore (₹392 crore).

MD & CEO, AS Rajeev, said recovery of ₹508 crore from the Bhushan Power (technically written-off) account bumped up the other income. Loan loss provisions, including Covid-19 related, increased to ₹1,376 crore (₹717 crore). Provision coverage ratio improved to 90 per cent as at March-end 2021 against 84 per cent as at March-end 2020.

As of March-end 2021, the total deposits rose 16 per cent yoy to ₹1,74,006 crore and total advances were up 13 per cent yoy to ₹1,07,654 crore.

Within deposits, the proportion of low-cost current account, savings account (CASA) deposits rose to 54 per cent from 50 per cent a year ago.

Within total advances, retail advances were up 26 per cent; mico, small and medium enterprises advances (35 per cent); and agriculture (13 per cent). However, corporate & other advance de-grew about 2 per cent.

Rajeev expects 14-15 per cent growth in deposits and 15-16 per cent growth in advances in FY22. Further, the proportion of CASA deposits could go up to 55 per cent and the loan mix between retail:wholesale could change to 65:35 from the current 63:37.

Net interest margin improved to 3.11 per cent in the reporting quarter against 2.41 per cent in the year ago quarter.

Gross non-performing asset (NPA) position improved to 7.23 per cent of gross advances against 12.81 per cent in the year ago quarter. Net NPAs declined to 2.48 per cent of net advances against 4.77 per cent

Meanwhile, the Bank said it is planning to raise up to ₹5,000 crore via equity and bonds.

Last year, out of the enabling provision for raising up to ₹3,000 crore, BoM could raise only ₹505 crore via Tier-II bonds. The market then was not conducive for tapping Tier-I (equity) issuance, the Bank’s chief said.

Rajeev said, in FY22, BoM could raise the resources via follow-on public offer, rights issue, qualified institutions placement issue, preferential issue and via Basel III compliant bonds.

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Despite pandemic, TMB registers impressive performance in FY21

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Tamilnad Mercantile Bank (TMB) has reported an impressive performance on many parameters in FY21 that include strong growth in net profit, good asset quality and higher business.

The Tuticorin-based bank’s net profit grew 48 per cent at ₹603 crore in 2020-21 as compared to ₹408 crore in 2019-20.

“While higher net interest income and other income, and lower provisions are major factors for profit growth, this performance is truly on account of the efforts of branches. Our strength lies in relationship banking and today if at all we are cut above the rest, it is because of field level staff and their connect with the customers,” said KV Rama Moorthy, Managing Director & CEO, TMB told Businessline.

Operating profit

The operating profit of the company grew 21 per cent at ₹1,202 crore in FY21 when compared with ₹995 crore in previous fiscal, on the back of 17 per cent growth in net interest income that stood at ₹1,538 crore as against ₹1,320 crore. The interest expenditure decreased to ₹2,072 crore from ₹2,147 crore.

TMB had a gross NPA of ₹1,085 crore as of March 31, 2021, up from ₹1,021 crore a year ago. Its gross NPA as a percentage of total advances reduced to 3.44 per cent in FY21 from 3.62 per cent in FY20. Net NPA was marginally up to 1.98 per cent from 1.80 per cent. NPA and restructured advances of the bank is only 3.93 per cent.

The bank has made additional Standard Asset Provision of ₹50 crore for the pandemic. Total advances grew 12 per cent to ₹31,541 crore from ₹28,236 crore. Total deposits stood at ₹40,970 crore from ₹36,825 crore. The company achieved its total business target of ₹72,500 crore at ₹72,511 crore, up 11 per cent from ₹65,061 crore in FY20.

Credit to MSME sector grew 18 per cent to ₹12,036 crore (₹10,170 crore in FY20).

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EPF gets 4.11 crore new subscribers between 2017-21

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More than 4.11 crore new subscribers joined the Employees Provident Fund (EPF) scheme during the last three and a half years, while about 4.87 crore got enrolled in the Employees State Insurance (ESI) scheme, according to the National Statistical Office (NSO).

The NSO said in a release of data of formal employment sectors from 2017 to 2021 that more than 24 lakh people opted for the New Pension Scheme (NPS) of the government in the same period.

In February 2021, around 11.58 lakh new members joined the Employees’ State Insurance Corporation (ESIC). In January this year, about 11.78 lakh joined the scheme from Government and organised sectors of employment. Soon after the first lockdown, in June last year, the ESIC saw about 8.87 lakh new enrollments. It was 4.89 lakh in May and 2.63 lakh in April in the same year during the lockdown period.

But in July, the enrolments came down to 7.63 lakh and later increased to 9.5 lakh in August. 11.58 lakh workers enrolled in September and 12.11 lakh in October 2020.

In the EPFO, 12.37 lakh workers registered in February and 11.95 lakh in January of this year. Between September 2017 to February 2021, the EPFO saw around 4.11 crore new subscribers. In the NPS, 58,250 joined in February 2021. The scheme has 64,40,628 subscribers as of now.

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ICRA: Uncertainties with rising Covid cases could compound NBFCs woes

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The resurgence of the Covid-19 pandemic is likely to impact the performance of assets under management of retail NBFCs in 2021-22, rating agency ICRA said on Wednesday.

“Domestic Retail-NBFC AUM are facing asset quality headwinds which will moderate growth in 2020-21 and is also likely to affect their performance in 2021-22, following resurgence of the Covid-19 pandemic,” it said in a statement.

Higher loan losses seen

Asset quality pressures would play out fully in this fiscal as the level of economic activities are yet to substantially pick up over the pre-Covid levels, with risks further compounded by recent rise in infection rate, it further said.

While NBFCs can proceed with the overdue recoveries post lifting of the Supreme Court order on the NPA classification in March 2021, ICRA notes that performance of most of the key target asset and borrower segments continues to be sub-optimal, which would impact realisations leading to higher loan losses.

“Entities have augmented their provisions steadily since the fourth quarter of 2019-20 and are currently carrying provisions of more than 50 per cent of the pre-Covid levels, the same is expected to be maintained at least for a few more quarters in view of the current uncertainties,” it said.

AM Karthik, Vice President, Sector-Head Financial Sector Ratings, ICRA, said, “Restructuring expectation averages around 2.6 per cent (ICRA sample of large NBFCs) presently and we expect reported Gross Stage 3 to increase steadily by about 50-100 basis points (over December 2020 levels) by March 2022, as a base case; and could inch-up further if the impact of the pandemic continues for longer period leading to lockdowns or other tighter restrictions.”

Revival in growth

ICRA expects the Retail-NBFC AUM, which is estimated to be about ₹10-lakh crore as of December 2020, to have grown by three to five per cent in 2020-21 as pent-up demand, post the lockdown, led to some revival in segments such as namely gold, microfinance, two-wheelers, and tractors.

In 2021-22, growth is expected to revive to about eight per cent to 10 per cent driven by improvement in demand from all key target segments compared to last fiscal.

Growth, however, would be contingent upon access to adequate funding lines, it further said, adding that the capital structure is expected to remain adequate.

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Rupee plunges to 9-month low of 75.05 against the dollar

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The rupee depreciated further on Monday to cross 75 against the dollar mark, spooked by the likely adverse impact of the second wave of Covid-19 pandemic on economic recovery and unfavourable effects of surplus liquidity in the financial system.

The currency unit opened at 74.97 to the dollar, about 24 paise weaker against the previous close. The rupee crossed the 75 mark for the first time in about nine months, depreciating to a low of 75.145. Intra-day, it also tested a high of 74.78. It closed weaker at 75.055 to the dollar, down about 33 paise over the previous close of 74.73.

CARE Ratings, in a report, observed that the Reserve Bank of India’s policy of providing even more liquidity to the system through the Government Securities Acquisition Plan, though positive for the bond market (where yields have softened by 5-8 basis poinys), is not so for the currency.

“There is now excess liquidity of ₹7-lakh crore in the reverse repo basket and there will be an infusion of ₹25,000 crore on the 15th of this month. So much liquidity in the system is not good news for the rupee…,” CARE said.

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Enable Covid-19 vaccination on “priority basis” for banking sector staff: Finmin

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The Department of Financial Services (DFS) in the Finance Ministry has urged the Union Home and Health Ministries to enable Covid-19 vaccination on priority basis to bank, NPCI employees – who are on the “frontline and dealing with customers and critical infrastructure for seamless banking and payment system”.

This will go a long way in assuring them about the safety of themselves and their families and will boost their morale in continuing to provide their best services to their customers, the DFS said in a communication to the Home and Health Secretaries.

‘Priority groups’

Making a case for inclusion of banking sector staff in the “priority groups” for vaccination, the DFS has highlighted that the Parliamentary Standing Committee on Home Affairs on Management of Covid-19 pandemic had in their 229th report appreciated the efforts taken by the banking sector for providing uninterrupted banking facilities during the Covid-19 outbreak and the consequent lockdown.

The Committee had, therefore, placed on record the good work done by them and recognised them as Covid-19 warriors, the DFS has said. DFS has also now pointed out that many bank officials in their efforts to provide continuous service had lost their lives.

Reliance on digital banking services

Similarity, as people’s reliance on digital modes of payment increased, it was critical to ensure that electronic and digital payments channels were available seamlessly round the clock for a safe and secure customer experience. Here the NPCI staff played a critical role, the DFS has said.

DFS has said that bank employees had played a critical role over the past one year in ensuring that bank branches remain open and functional, and providing the complete suite of banking services to their customers.

This was despite issues on mobility of bank staff to their place of work and issues in adhering to social distancing norms and other precautions. “The effort of bank staff was even more important in view of the disbursal and withdrawal of benefits transferred by the government to beneficiaries under Pradhan Mantri Garib Kalyan Yojana,” the DFS has said.

India has so far covered over 9 crore citizens in its vaccination drive and has supplied over 64 million doses to over 84 countries, including 10 million doses as grant. Already Indian Banks Association, HDFC Bank and NPCI had written to the DFS seeking inclusion of bank employees in the priority list for vaccination.

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NABARD Tamil Nadu region aims ₹40,000 crore loan disbursals in FY22

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Our Bureau

The National Bank for Agriculture and Rural Development (NABARD) Tamil Nadu region is planning to make ₹40,000 crore of loan disbursal in FY22, according to a senior official of the development bank.

During FY21, loans disbursed by Tamil Nadu Regional Office of the NABARD reached an all-time high of ₹27,104 crore, nearly doubling from ₹14,458 crore disbursed the previous year.

“In FY21, our loan disbursal grew by 87per cent to ₹27,104 crore. If the same level of growth sustains and co-operation from all stakeholders continues, we are confident of disbursing loans worth ₹40,000 crore in FY22,” S Selvaraj, Chief General Manager, NABARD, Tamil Nadu Region said here on Thursday.

He was addressing a press conference in the city to highlight the milestone achieved by NABARD Tamil Nadu region.

Also read: Nabard staff strike on March 30, seek pension updation

Selvaraj said that the growth in loan disbursement of NABARD Tamil Nadu region is higher than the national growth rate and also assumes significance as it came during the pandemic-hit year.

“This growth (in disbursements) is really remarkable since office functioning were severely impacted during the first five months due to Covid-19,” Selvaraj said, adding, “The support from Tamil Nadu government and government institutions and from stakeholders such as commercial banks, co-operative banks, NBFC-MFIs, selfless work and dedication by NABARD officials and transparent and simplified procedures at NABARD are the major reasons that enabled this robust growth.”

At pan-India level, Loans and advances of NABARD grew by 25 per cent to to ₹6.03-lakh crore in FY21 as against ₹4.81-lakh crore in the previous year.

Of the total disbursement in Tamil Nadu during FY21, refinancing of loans to eligible financial institutions increased by 89 per cent to ₹23,062 crore while support for rural infrastructure stood at ₹4,042 crore. The development bank also extended a grant assistance of ₹31 crore to various innovative projects to Agri and allied sectors.

Also read: CAG seeks details of performance audit of public sector banks recapitalisation

Of the total refinancing, Cooperative banks accounted for a major share at ₹8,761 crore (38 per cent) followed by Commercial Banks (₹6,602 crore), Regional Rural Banks (RRBs) – ₹4,840 crore and NBFC / NBFC-MFIs at ₹2,858 crore.

The ratio between loan refinancing and rural infrastructure support stood 85-15 per cent in FY21. Selvaraj said in FY22, the share of rural infrastructure may go up to 25 per cent as per the demand.

To aid the economic revival, the Reserve Bank of India (RBI) on Monday extended a fresh support of ₹50,000 crore to the All-India Financial Institutions for new lending in FY22. Out of which, NABARD will be provided a special liquidity facility (SLF) of ₹25,000 crore for one year to support agriculture and allied activities, the rural non-farm sector and non-banking financial companies-microfinance institutions.

“RBI has announced a SLF window to address liquidity problems faced by banks due to the pandemic. Last year, we released ₹1,500 crore to banks in Tamil Nadu under this facility. This year also we expect to extend around ₹2,000 crore to Cooperative Banks and RRBs to meet liquidity challenges, if any,” Selvaraj said.

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Will enhance aggregate limit of WMA for States, UTs: RBI

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The Reserve Bank of India (RBI) has decided to enhance the aggregate limit of ways and means advance (WMA) limit for all States and Union Territories to ₹47,010 crore, which is an increase of 46 per cent from the current limit of ₹32,225 crore.

Also read: RBI proposes mandatory interoperability of full KYC prepaid instruments

The central bank also decided to continue with the enhanced interim WMA limit of ₹51,560 crore granted by RBI due to the pandemic for a further period of six months (September 30, 2021).

Under WMA, States and UTs get short-term credit up to three months from the RBI to bridge temporary mismatches in cash flows.

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Commercial credit growth rebounds to pre-Covid level: Report

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The growth in commercial credit enquiries were at nearly pre – Covid levels by December last year, aided by the government’s Emergency Credit Line Guarantee Scheme.

“Commercial credit enquiries surged 58 per cent year-on-year in June 2020 and stabilised toward the end of the year, up around 13 per cent year on year as of December 2020, which is similar to pre-Covid-19 growth levels,” said the latest TransUnion CIBIL-SIDBI MSME Pulse Report.

The total on-balance-sheet commercial lending exposure in India stood at ₹71.25 lakh crore in September 2020, registering a growth of 2.1 per cent year on year, it further said.

Significantly, for the micro, small and medium enterprises (MSMEs), credit exposure grew 5.7 per cent on an annual basis in September last year, amounting to ₹19.09 lakh.

“This credit growth is observed across all the sub-segments of MSME lending,” it said adding that MSME loan originations show a v-shaped recovery with the existing to bank segment being the primary beneficiary.

Also read; Banks under Directions: Govt, RBI working on allowing depositors withdraw up to ₹5 lakh

Rajesh Kumar, Managing Director and CEO, TransUnion CIBIL said the resurgence in MSME credit growth, which is back at pre-pandemic levels, is a very promising indicator of economic recovery in our markets.

“Public sector banks are the leading drivers of this resurgence as they have astutely wielded data analytics and credit information solutions to swiftly comply with the ECLGS guidelines and dexterously implement lending to MSMEs,” he further said.

PSBs registered a 30 per cent year growth in loan originations in September 2020, which was nearly double their pre-Covid level of 16 per cent in February 2020.

For private banks, the YoY originations growth stood at 16 per cent in September last year.

The report however, said that recent enquiry trends for December 2020 and January 2021 show a reversal of this trend. Private banks have resumed MSME lending and are closing the gap rapidly, it said.

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RBI board reviews current economic situation

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The Central Board of Directors of the Reserve Bank of India reviewed the current economic situation, global and domestic challenges, among others, at its meeting on Tuesday .

Nirmala Sitharaman, Union Minister of Finance & Corporate Affairs, in her address to the directors, outlined the thinking behind the Budget and the priorities of the government.

In his statement on February 5, the RBI Governor Shaktikanta Das observed that the Budget has provided a strong impetus for revival of sectors such as health and well-being, infrastructure, innovation and research, among others.

Investment climate

This will have a cascading multiplier effect, going forward, particularly in improving the investment climate and reinvigorating domestic demand, income and employment, he added.

“The investment-oriented stimulus under AatmaNirbhar 2.0 and 3.0 (given during the peak of the pandemic) has started working its way through, and is improving the spending momentum along with the quality of public investment.

“Both will facilitate regaining India’s growth potential over the medium-term. The projected increase in capital expenditure augurs well for capacity creation and crowding in private investment, thereby improving the prospects for growth and building credibility around the quality of expenditure,” Das said.

The RBI has projected India’s real GDP growth at 10.5 per cent in 2021-22 – in the range of 26.2 to 8.3 per cent in H1 (April-September 2021) – and 6.0 per cent in Q3 (October-December 2021).

Per the statement, the projection for Consumer Price Index (CPI) based (retail) inflation has been revised to 5.2 per cent in Q4 (January-March) 2020-21 (earlier projection: 5.8 per cent), 5.2 per cent to 5.0 per cent in H1 2021-22 (5.2 per cent to 4.6 per cent) and 4.3 per cent in Q3: 2021-22, with risks broadly balanced.

The board meeting, held under the Chairmanship of Shaktikanta Das, Governor, through video conferencing, also reviewed the various areas of operations of the Reserve Bank, including ways for strengthening Grievance Redress Mechanism in banks.

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