Tag: Govt

Govt to soon clear list of independent directors for various banks, BFSI News, ET BFSI

Banking & Finance

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The government is expected soon to clear a list of independent directors to be appointed on various public sector banks and financial institutions to meet regulatory norms of corporate governance. There have been vacancies at the independent director level across the public sector space, leading to regulatory non-compliance, sources said.

A list of eligible persons to be appointed as independent directors has gone to the Prime Minister’s Office and it will take a final call soon, the sources said.

Appointments Committee of the Cabinet headed by Prime Minister Narendra Modi makes all high-level appointments, including that of independent directors.

As per the Companies Act 2013, every listed public company shall have at least one-third of the total number of directors as independent directors.

Since many listed public sector banks (PSBs) and some financial institutions (FIs) are short of the mandated number of directors, it is in violation of the Companies Act as well as listing norms of market regulator Securities and Exchange Board of India, the sources said.

For example, some of the banks like Indian Overseas Bank, Indian Bank and UCO Bank are not compliant with independent director norms.

Except for State Bank of India (SBI) and Bank of Baroda, the position of chairman in most of the state-owned banks is vacant. The posts of workman director and officer director, representing the employees and officers of the banks, respectively, have been vacant for the past 7 years.

There are 12 public sector banks, four public sector general insurance companies, and one life insurance firm. Besides, there are some specialised insurance players like Agriculture Insurance Company of India Ltd.

In addition, there are state-owned financial institutions like IFCI, IIFCL, ECGC Ltd and EXIM Bank.

The Boards of Directors of nationalised banks are guided by the provisions of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and Nationalised Banks (Management and Miscellaneous Provisions ) Scheme, 1970. PTI DP ANZ BAL BAL



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Govt extends tenure of Bank of India executive director PR Rajagopal by two years

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State-run Bank of India on Monday said the government has extended the term of its executive director PR Rajagopal by two years.

The central government vide notification dated August 26, 2021 extended the term of office of PR Rajagopal, Executive Director of the bank for a period of two years, beyond his currently notified term or until further orders, whichever is earlier, the bank said in a regulatory filing.

His current term was to expire on February 28, 2022.

The government last week extended the term of executive directors of various public sector banks. It also extended the terms of MD & CEOs of Punjab National Bank and Bank of Maharashtra.

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Govt extends tenure of 4 public sector banks’ top officials, BFSI News, ET BFSI

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Four state-owned banks on Friday said the government has extended tenures of their top officials, including managing director and chief executive officers (MD and CEOs) of Punjab National Bank and Bank of Maharashtra.

Besides, the government has extended the tenures of executive directors of Punjab National Bank (PNB), Union Bank of India and Central Bank of India.

The government sent notifications to these banks on Thursday, informing them about the extensions given to the top-level officials.

“The Department of Financial Services, Ministry of Finance, vide its notification dated August 26, 2021, has extended the term of office of S S Mallikarjuna Rao, managing director and chief executive officer of the bank (PNB), for a period beyond September 18, 2021,” PNB said in a regulatory filing.

Rao’s current tenure was to come to an end on September 18, 2021, and the extension has been given till the date of his superannuation (January 31, 2022) or until further orders, whichever is earlier, PNB said.

The government has also extended the tenure of Bank of Maharashtra MD and CEO A S Rajeev for two years, the Pune-based lender said in a filing.

Rajeev’s current tenure was coming to an end on December 1, 2021.

In addition to this, two executive directors of PNB, two in Union Bank of India (UBI) and one in Central Bank of India have been given extension beyond their current tenures.

Sanjay Kumar and Vijay Dube, executive directors of PNB, have been given extensions till August 23, 2023 and November 30, 2022, respectively.

The terms of UBI’s executive directors — Manas Ranjan Biswal and Gopal Singh Gusain — have been extended.

Biswal’s term has been extended beyond his currently notified term, which expires on February 28, 2022, till the date of his superannuation (April 30, 2022) or until further orders, whichever is earlier, Union Bank of India said.

Similarly, Gusain’s term has been extended till the date of his superannuation, (January 31, 2022) or until further orders, whichever is earlier. His term was coming to an end on September 19.

The Department of Financial Services, through a notification on August 26, has also extended the term of office of Ashok Srivastava, executive director of Central Bank of India, the lender said in a separate filing.

His term has been extended beyond January 22, 2022, till the date of his superannuation (November 30, 2022) or until further orders, whichever is earlier, Central Bank of India said.



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Govt extends tenures of UBI, Central Bank of India’s executive directors, BFSI News, ET BFSI

Banking & Finance

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Public sector lenders Union Bank of India (UBI) and Central Bank of India on Friday said the government has extended tenures of their executive directors.

The terms of UBI’s executive directors — Manas Ranjan Biswal and Gopal Singh Gusain — have been extended vide a notification dated August 26, the lender said in a regulatory filing.

Biswal’s term has been extended beyond his currently notified term, which expires on February 28, 2022, till the date of his superannuation (April 30, 2022) or until further orders, whichever is earlier, Union Bank of India said.

Similarly, Gusain’s term has been extended till the date of his superannuation, (January 31, 2022) or until further orders, whichever is earlier. His term was coming to an end on September 19.

The Department of Financial Services, through a notification on August 26, has also extended the term of office of Ashok Srivastava, executive director of Central Bank of India, the lender said in a separate filing.

His term has been extended beyond January 22, 2022, till the date of his superannuation (November 30, 2022) or until further orders, whichever is earlier, Central Bank of India added.



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FinMin moves file for extension of 3 MDs, 10 EDs of govt-owned banks, BFSI News, ET BFSI

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New Delhi, Jul 25 () The finance ministry has moved a file for extension of tenure of three public sector banks’ managing directors, including Punjab National Bank (PNB), according to sources. Besides, the sources said the ministry has also recommended the Department of Personnel and Training (DoPT) for extension of 10 executive directors (EDs) of various public sector banks.

The three-year term of S S Mallikarjuna Rao, MD and CEO of PNB, is coming to an end on September 18 but the finance ministry has recommended for extension for four months till January 31, 2022, when Rao attains his superannuation age of 60 years.

Atul Kumar Goel’s term as MD and CEO of UCO Bank has been recommended for a two-year extension beyond November 1 this year. A S Rajeev, MD and CEO of Bank of Maharashtra, has been suggested for an extension of two years beyond December 1.

The finance ministry has simultaneously forwarded the name of S L Jain for the appointment of MD and CEO of Indian Bank. The BBB, the headhunter for state-owned banks and financial institutions, had recommended the name of Jain in May after the interview.

With regard to EDs, the ministry has recommended names of 10 for extension of their term till their superannuation age or two years, whichever is earlier.

The MD and CEO of a public sector undertaking is given a maximum tenure of five years as a government guidelines.

According to sources, the ministry sought extension of the executives from the Appointments Committee of Cabinet (ACC). The proposal has been sent to the Dof Personnel and Training for the same after consultation with BBB. The final call for extension will be taken by the ACC.

Interestingly, the Banks Board Bureau (BBB) has also invited applications for appointment of new MDs of PNB.

For PNB, the BBB on June 16, had sought public application for the MD and CEO post. The eligibility criteria as announced in public notice is that the applicant should be in the age group of 45 to 57 years in mainstream banking, of which, at least one year has to be at the board level.

The compensation offered is in line with the MD and CEO of a large public sector bank, it said. DP ANZ HRS hrs



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Govt seeks Parliament nod for Rs 1.87 lakh crore supplementary demands for this fiscal, BFSI News, ET BFSI

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The government sought approval for additional expenditure of Rs 1.87 lakh crore from Lok Sabha, as part of the first batch of supplementary demand for grants for FY22.

Finance minister Nirmala Sitharaman laid a statement of the demands in the lower House, which amounted to a net additional cash outgo of Rs 23,675 crore, on Tuesday.

The remaining Rs 1.63 lakh crore came from savings of the various ministries and departments and through enhanced receipts and recoveries, the statement said.

The single largest demand came from the finance ministry for Rs 1.59 lakh crore as transfer to states in the form of back-to-back loans as goods and services tax (GST) compensation shortfall.

The GST compensation shortfall would not affect the central government’s fiscal deficit, making the net outgo quite modest, said Aditi Nayar, chief economist at ICRA.

Further, the additional outgo of Rs 90,000 crore for the free foodgrain provision in May-November was being absorbed by the cushion created in this year’s budget on account of the prepayment of the Food Corporation of India’s loans in FY21, according to Nayar.

“With healthy revenues amid only a modest increase in the expenditure outlay, the cash flow position of the government of India does appear to be quite comfortable, which allowed the release of the Rs. 75,000 crore of GST compensation loans from the Central Government’s own borrowings raised so far,” she said.

The department of health and family welfare which sought Rs 10,727 crore Covid-19 emergency response and health system preparedness.

The finance ministry also raised a demand for Rs 1,750 crore as compound interest support to lending institutions in relation to the loan moratorium.

The list of demands also included Rs 1,872 crore sought for loans and advances to Air India by the civil aviation ministry.



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CPI writes to finance minister opposing govt proposal to privatise nationalised banks, BFSI News, ET BFSI

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New Delhi, Jul 17 () CPI general secretary D Raja wrote to Finance Minister Nirmala Sitharaman on Saturday, hitting out against the government proposal to privatise nationalised banks. In his letter, Raja said the finance minister had mentioned in her budget speech that the government has proposed to privatise two nationalised banks.

“Since privatisation of any bank is not in the interest of our economy and people, we have expressed our strong opposition to the same, both inside Parliament and outside. Our opposition to such privatisation of banks is on account of the fact that our banks today represent huge public savings of the common masses and these precious savings are safe only if the banks are in government control,” he said.

The Left leader pointed out that a large-scale failure of many private banks was the reason behind the move to nationalise banks in the first place, adding that the government is thinking about privatisation of banks at a time when many private companies have turned out to be major loan defaulters.

“It would be imprudent to hand over the banks to private hands, whose efficiency is also not guaranteed going by the recent experiences of some of the private banks. Nationalised banks have been greatly helping and supplementing the government’s efforts to boost the economy and hence, need to be further strengthened with adequate measures from the government,” he said.

Raja said media reports have quoted a Niti Aayog recommendation proposing the names of the Central Bank of India and the Indian Overseas Bank for privatisation.

“Even though these are news items not authenticated by any official agency of the government, nonetheless, the same is creating a lot of anxiety and anguish amongst the employees and officers of these two banks.

“I have learned that even some deposits are being withdrawn by customers. Hence, it will be desirable for the government to make a statement clarifying the position,” he added.

“In case the government has any such proposal to privatise any bank, our party is opposed to it. Such a decision must be reviewed and rescinded,” the Communist Party of India (CPI) said. ASG RC



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Govt extends deadline for transaction, legal advisors to bid for managing IDBI Bank sale till Jul 22, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: The government has extended the deadline for transaction and legal advisors to bid for managing the IDBI Bank strategic sale by 9 days till July 22.

The Department of Investment and Public Asset Management (DIPAM) had on June 22 invited bids from merchant bankers and law firms for managing and giving legal advice for the sale process. The last date to put in bids was July 13.

“… The competent authority has decided to extend the bid submission date of the… tender by nine days. The last date of bid submission will now be July 22, 2021,” the DIPAM said in a notice.

DIPAM, which manages government’s equity, had also clarified to the merchant bankers that LIC’s holding in IDBI Bank would be sold along with government’s stake, but the exact quantum of stake dilution would be decided later.

The central government and LIC together own more than 94 per cent equity of IDBI Bank.

LIC, currently having management control, has a 49.24 per cent stake, while the government holds 45.48 per cent in the bank. Non-promoter shareholding stands at 5.29 per cent.

The cabinet in May had approved the strategic sale of the entire stake of government and Life Insurance Corporation (LIC) in IDBI Bank.

In response to queries received from potential transaction advisors in IDBI Bank, DIPAM has clarified that since LIC’s stake would be sold along with that of the government’s, a single transaction advisor would manage the entire share sale process.

“The mandate received from CCEA is to offload up to 100 per cent stake of GoI and LIC along with transfer of management control. However, the exact quantum is yet to be worked out. It will be determined, as we go through the transaction and ascertain investors’ interest and market appetite.

“It is clarified that LIC’s stake will be sold along with GoI’s shareholding in this transaction. So there is only one transaction advisor,” it said.

The quantum of stake dilution would be declared before RFP (Request for Proposal) stage of the transaction, it added.

Finance Minister Nirmala Sitharaman in her Budget for 2021-22 had said the process of privatisation of IDBI Bank would be completed in the current fiscal. The government aims to mop up Rs 1.75 lakh crore in the current fiscal from minority stake sale and privatisation.

Of the Rs 1.75 lakh crore, Rs 1 lakh crore is to come from selling government stake in public sector banks and financial institutions. Rs 75,000 crore would come as CPSE disinvestment receipts.



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Govt to borrow 47% less in Q2

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The Government will be borrowing about 47 per cent less at ₹2.21 lakh crore in the second quarter of FY22 against ₹4.68 lakh crore in the first quarter via weekly Treasury Bill auctions.

The central bank, in a statement, said: “After reviewing the cash position of the Central Government, Government of India, in consultation with the Reserve Bank of India, has decided to notify the amounts for the issuance of Treasury Bills for the quarter ending September 2021.”

As per the calendar, the Government will be borrowing about 53 per cent of the total amount via 91-days T-Bill auctions; 24 per cent via 182-days T-Bills and 23 per cent via 364-days T-Bills.

Market experts say since more than 50 per cent of the total Government borrowing in Q2 is via 91-days T-Bills, RBI probably wants the yields at the short-end to go up.

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Govt kicks of IDBI Bank stake sale, but doesn’t disclose quantum, BFSI News, ET BFSI

Banking & Finance

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The government has invited bids from transaction advisors and legal firms for assisting in the strategic sale of IDBI Bank.

The Cabinet had in May given in-principle approval for IDBI Bank’s strategic disinvestment along with transfer of management control.

The central government and LIC together own more than 94 per cent equity of IDBI Bank. LIC, currently having management control, has 49.24 per cent stake, while the government holds 45.48 per cent. Non-promoter shareholding stands at 5.29 per cent.

The last date for submission of bids by both transaction advisor and legal advisors is July 13, the Department of Investment and Public Asset Management (DIPAM) said.

Transaction advisor

The transaction advisor would be required to advise and assist the government on modalities of disinvestment and the timing; recommend the need for other intermediaries required for the process of sale/disinvestment and also help in identification and selection of the same with proper Terms of Reference.

The transaction advisor will also assist in the preparation of all documents like Preliminary Information Memorandum (PIM), organise roadshows to generate interest among the prospective buyers and suggest measures to fetch the optimum value.

The advisor would also be supporting IDBI Bank in setting up an e-data room and assisting in the smooth conduct of the due diligence process.

The extent of shareholding to be divested by the central government and LIC shall be decided at the time of structuring of transaction in consultation with the RBI, the government had earlier said.

Insurance giant LIC had acquired a controlling stake in IDBI Bank in January 2019.

Finance Minister Nirmala Sitharaman in her Budget for 2021-22 had said the process of privatisation of IDBI Bank would be completed in the current fiscal.

The government aims to mop up Rs 1.75 lakh crore in the current fiscal from minority stake sale and privatisation.

Of the Rs 1.75 lakh crore, Rs 1 lakh crore is to come from selling government stake in public sector banks and financial institutions, and Rs 75,000 crore through CPSE disinvestment receipts.

Under PCA

Under the PCA imposed by RBI in 2017, the bank’s balance-sheet shrank as it could not extend loans to corporates and was not allowed to open branches.

It used the four years of PCA to restructure its business, cut exposure to large loans and bulk deposits and create verticals for various lending businesses to speed up turnaround time.

The bank has worked for the last four years on various parameters, done recoveries and raised its provision coverage ratio to 97%.

The lender was looking at Rs 4,000 crore of recoveries in this fiscal.

Retail loans

The share of corporate loans, which was about 67% four years back when it went under PCR, has shrunk to 40% now with 60% loans being retail. The bank is now targeting 55% loan book as retail and rest corporate. It wants to maintain low costs retail deposits at 48% of total deposits.

As a result, the institution has transformed from a project financier to a retail lender.

The company is looking to target the mid-corporate segment and will now avoid overexposure to certain industries and grow the business in a calibrated manner.

It sees over 12% growth in retail loans and an 8-10% rise in corporate loans.



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