Tag: rajkiran rai

Union Bank home loans at lowest ever 6.4% rate, BFSI News, ET BFSI

Banking & Finance

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Union Bank of India on Tuesday announced a reduction in its home loan interest rates, which will now start from 6.4% – the lowest rate in the industry. The reduced rate will be effective from October 27. The new rates will apply to customers applying for fresh loans or those who wish to transfer their existing loans including balance transfers. This is the lowest home loan rate offered by a mainstream bank ever.

“We are offering 6.4% for the best category of customers with credit scores of over 800. The low-cost deposits are providing us a cushion enabling us to cut rates even further,” said Rajkiran Rai, MD & CEO, Union Bank of India. He added that the bank was working with thin margins as defaults among top-rated customers is unlikely and also the RBI assigns a lower risk-weightage to home loans, which enables banks to lend more with less capital.

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NARCL expects up to 32%, or Rs 64,000 crore, recovery from the first bad loan tranche, BFSI News, ET BFSI

Banking & Finance

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The National Asset Reconstruction Company (NARCL), or bad bank, hopes to between Rs 50,000 crore and Rs 64,000 crore through the resolution of bad loans amounting to Rs 2 lakh crore, according to a report.

The lowest recovery is seen at 25 per cent or Rs 50,000 crore while the highest recovery rate is pegged at 32 per cent, or Rs 64,000 crore. The most likely recovery has been pegged at 28 per cent or Rs 56,000 crore.

The NARCL will buy the assets around Rs 36,000 crore or, about 18 per cent of the book value of Rs 2 lakh crore assets. About 15 per cent of Rs 36,000 crore would be paid by NARCL to banks in cash and the remaining 85 per via security receipts guaranteed by the Centre.

Close to liquidation

Though banks have made 100% provision for these assets, even Rajkiran Rai, Chairman of Indian Banks Association, and MD & CEO of Union Bank of India does not expect more than 20-25 per cent recovery from these legacy accounts, he told a television channel.

The State Bank of India has identified NPAs with Rs 17,000-18,000 crore outstanding to be transferred to the NARCL while Punjab National Bank has identified Rs 8,000 crore worth of NPAs, Union Bank of India Rs 7,800 crore of NPAs to be transferred to the National ARC. The Bank of India has identified about Rs 5,500 crores of assets for transfer while Indian Bank about Rs 1,900 crore.

The assets

Banks have identified Rs 82,496 crores worth of bad loans that could be transferred to the NARCL, which names like Videocon’s VOVL (Rs 22,532 crores total exposure), Reliance Naval and Engineering Ltd (Rs 8,934 crore), Amtek Auto (Rs 9,014 crore), Jaypee Infratech (Rs 7,950 crore, Castex Technologies (Rs 6,337 crore), GTL Ltd (Rs 4,866 crore), Visa Steel (Rs 3,394 crore), Wind World India Ltd (Rs 3,161 crore), Lavasa Corporation (Rs 1,424 crore), Consolidated Construction Consortium Ltd (Rs 1,353 crores), among others.

Several assets such as Videocon have seen realisable value close to liquidation value in NCLT proceedings. Many big-ticket resolutions at IBC have seen haircuts over 90%. With most of the NPAs proposed to be transferred to the bad bank being old legacy NPAs, there has been an erosion in value, making them more likely to head to liquidation.

Lavasa Corporation has got bids worth Rs 700 crore for loan claims of over Rs 8,000 crore at NCLT.



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SBI Chairman Dinesh Khara explains rolling out RBI’s 5-May SME loan relief measures; ECLGS extended

Banking & Finance

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State Bank of India’s (SBI) Chairman Dinesh Khara talked about loans for SMEs, Covid-19 resurgence, and RBI’s relief measures of 5 May 2021 in a press conference on May 30, 2021.

SBI Press Conference HIGHLIGHTS: State Bank of India’s (SBI) Chairman Dinesh Khara talked about loans for SMEs, Covid-19 resurgence, and RBI’s relief measures of 5 May 2021 in a press conference on May 30, 2021. Chairman Khara explained how RBI’s SME loan relief measures, which were announced on May 5, 2021, will be rolled out. He informed that PSBs have formulated templated approach for restructuring loans to individuals, small businesses and MSMEs up to Rs 25 crore. In order to approach bank for resolution, customers can file an application on the portal at the bank website, they can make manual submission of applications at the branch. Khara also informed that government will provide 100 per cent guarantee cover to loans up to Rs 2 crore to hospitals/nursing homes etc for setting up on-site oxygen generation plants, interest rate capped at 7.5%. The validity of ECLGS has also been extended to September 30, 2021, or till guarantees for an amount of Rs 3 lakh crore is issued. The disbursement under the scheme has been permitted up to December 31, 2021.

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