Tag: regional rural banks

Banks write off Rs 46,382 crore NPA in H1, BFSI News, ET BFSI

Banking & Finance

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Banks have written off bad loans amounting to Rs 46,382 crore during the first six months of 2021-22, the finance ministry informed the Lok Sabha on Monday. As per the RBI guidelines and policy approved by bank boards, non-performing loans, including, inter-alia, those in respect of which full provisioning has been made on completion of four years, are removed from the balance sheet of the bank concerned by way of the write-off.

In a written reply, Minister of State for Finance Bhagwat Karad said banks evaluate/consider the impact of write-offs as part of their regular exercise to clean up their balance-sheet, avail of tax benefit and optimise capital, in accordance with the RBI guidelines and policy approved by their boards.

“As per RBI data on global operations, scheduled commercial banks have written-off loans of Rs 46,382 crore during the first six months of the current financial year 2021-22,” he said.

The borrowers of written-off loans continue to be liable for repayment and the process of recovery of dues from the borrower in written-off loan accounts continues.

In another reply, Karad said the total loans outstanding of Regional Rural Banks (RRBs) stood at Rs 3,34,171 crore at end-March 2021, up from Rs 2,98,214 crore at end-March 2020.

He said RRBs have been playing an important role in purveying agricultural credit, particularly to small and marginal farmers and weaker sections of society.



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Wipro bags tech transformation engagement from Kerala State Co-op Bank, BFSI News, ET BFSI

Banking & Finance

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New Delhi, Oct 27 (PTI) IT firm Wipro on Wednesday said it has secured a multi-year contract from Kerala State Co-operative Bank (also known as Kerala Bank). Kerala Bank currently runs 15 different core banking environments with five core banking solutions.

“As part of this multi-million-dollar strategic engagement, Wipro will implement a consolidated, common core banking system for the bank, provide over 20 allied solutions, aimed at streamlining technology adoption and enabling a superior customer experience,” a statement said.

Wipro will also set up a Data Centre, Disaster Recovery Centre, Near DR (Disaster Recovery) and command centre, implement the latest Reserve Bank of India cybersecurity frameworks, and provide facility management services for five years, it added.

“We see IT modernisation as the key driver for achieving business transformation and growth. An integrated IT landscape comprising of best-in-class Core Banking and allied solutions will not only enable seamless information flow but will also help achieve high performance and scalability in our operations,” Rajesh AR, GM (IT and Digital Banking) at Kerala Bank, said.

Wipro is currently engaged with over 100 DCCBs across 12 states in India. Wipro has consolidated its position across all Banking segments in India, including Schedule Commercial Banks, Regional Rural Banks, Co-operative Banks and the latest Small Finance and Payment Banks.

“Wipro has been engaged with Kerala Bank and is providing core banking services to multiple District Co-operative Central Banks (DCCB) for many years. This extensive experience uniquely positions us to deliver this complex programme, which redefines customer experience while ensuring security for clients of Kerala Bank,” Wipro Head – BFSI India (SRE) Sanjay Jaireth said.

In a separate statement, Wipro said it is partnering with Micro Focus to launch the Legacy Migration and Modernisation Lab, collaborating with Amazon Web Services (AWS).

This lab, hosted at Wipro’s AWS Launchpad in Parramatta, Australia, will allow companies in Australia and New Zealand to experience a hands-on demonstration of tools and accelerators that can help optimise mainframe application capabilities for the cloud, it added.

The lab combines the strengths and technical expertise of Wipro, Micro Focus, and AWS to help customers become agile, reduce operational costs and mitigate application-modernisation risks to enable a cloud-ready IT ecosystem, the statement said.

These advanced capabilities will also help companies innovate faster and drive better business results, it added.

In addition, the lab will serve as a training ground for testing mainframe app-modernisation scenarios, allowing businesses to conduct training, and demonstrate proof of concepts in real-time. PTI SR BAL BAL



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Mudra loan disbursals rise in H1 on economic revival, BFSI News, ET BFSI

Personal Finance

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As the economy revives, Mudra loans, or small-ticket loans up to Rs 10 lakh for entrepreneurs and small businesses, have made a comeback.

According to the latest data, Rs 1,17,332 crore has been disbursed as on October 15 in the current fiscal, as against Rs 85,000 crore, showing the trend of normalisation of the economy.

Total disbursals in 2020-21 had declined to Rs 3.11 lakh crore against Rs 3.29 lakh crore in the previous year.

While public sector banks are actively lending to small businesses, many private sector banks are cautious on the segment and lending, just to meet the priority sector norms.

Rise in NPAs

However, non-performing assets among such loans have also increased. In Maharashtra, public sector banks’ Mudra loan NPAs have risen to 32 per cent at June-end 2021, from 26 per cent a year ago.

SBI’s NPA on Mudra loans in the state is at 59 per cent as on June-end 2021, followed by Punjab National Bank at 44 per cent, Indian Bank at 33 per cent and Bank of Maharashtra at 31 per cent at June-end 2021.

In Jharkhand, Canara Bank’s Mudra NPAs are as high as 114.35 per cent and bad loans were Rs 183.63 crore, against the outstanding amount of loans at Rs 160.58 crore.

Among private sector banks, HDFC Bank’s Mudra loan NPAs in Jharkhand were at 26.21 per cent, followed by IDFC First Bank at 24.93 per cent.

Loan losses

Public sector banks have seen a sharp surge in the amount of Mudra loans turning into NPAs over the last three years. NPAs in Mudra loans had jumped to Rs 18,835 crore in 2019-20, from Rs 11,483 crore in 2018-19 and Rs 7,277 in 2017-18, according to finance ministry data.

Mudra loan disbursements by state-owned banks rose to Rs 3.82 lakh crore in 2019-20, from Rs 3.05 lakh crore in 2018-19 and Rs 2.12 lakh crore in 2017-18.

Banks and financial institutions have sanctioned Rs 14.96 lakh crore to over 28.68 crore beneficiaries in the last six years. The average ticket size of the loans is about Rs 52,000, it said.

Under Pradhan Mantri MUDRA Yojana, collateral-free loans of up to Rs 10 lakh are extended by Member Lending Institutions (MLIs) viz Scheduled Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Non-Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs) etc.



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RRB employees to observe one-day strike on September 27 against govt’s divestment plan, BFSI News, ET BFSI

Banking & Finance

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The regional rural bank (RRB) employees are going to observe a one-day strike on September 27 opposing the government’s plan to divest its 50% share in each of the rural banks in favour of their respective sponsor banks.

The employee unions are instead demanding formation of a national rural regional bank and delinking of it with any sponsor bank. The union flag bearers are of the view that there has always been conflicts of interest between mainstream commercial banks and the RRBs they sponsor.

India has 43 RRBs with a network of around 22,000 branches mostly in the hinterlands to ensure banking facilities for farmers and artisans. These banks collectively employ one lakh people.

The central government holds 50% in each of the RRBs while their respective sponsor banks hold 35%. The balance 15% in RRBs is held by the respective state governments according to their areas of operation. For example, West Bengal has three RRBs within its boundary and the state holds 15% in each of these banks.

The All India Regional Rural Bank Employees Association, a coordinating body of National Federation of RRB Officers & National Federation of RRB Employees, said that relinquishing central government share would eventually lead to privatisation and that’s why they are opposing it.

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Merge RRBs with sponsor banks, AIBEA urges Finance Minister, BFSI News, ET BFSI

Banking & Finance

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Chennai, The merger of Regional Rural Banks (RRB) with their sponsor banks would avoid business cannibalization and reduction in administrative overheads, the All India Bank Employees’ Association (AIBEA) said on Monday.

In a letter to Union Finance Minister Nirmala Sitharaman, AIBEA General Secretary C.H. Venkatachalam said instead of further reforms in the RRB sector, it would be better to merge them with their sponsor banks as this will add to the rural network of the latter and at the same time, eliminate the weaknesses that they suffer presently.

“Monitoring would be much more effective since they would become part of the bank and come under the direct control of the management of the sponsor banks. This would also obviate a lot of administrative overheads and expenses,” he said.

While the objectives of RRB are laudable, their very nature of the business makes them fragile and vulnerable, he noted.

“More often than not, these RRBs even face competition from their own sponsor banks too. In this background, there have been many efforts to restructure the RRBs to make them strong and vibrant but the results have not been that encouraging because of the intrinsic reasons and they are bound to be so,” Venkatachalam said.



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PSBs may face more stress at govt focuses on Mudra loans, BFSI News, ET BFSI

Banking & Finance

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The government is banking on small borrowers to help lift credit demand and has asked banks to lenders to focus on Mudra loans.

It expects small borrowers to help pick up credit demand once the lockdowns in states are eased.

The government has asked banks to prioritise this segment and ensure timely sanctions and disbursals. Lenders have also been asked to regularly monitor asset quality for small-ticket loans including PMMY loans.

Loans disbursed by banks and microfinance institutions for non-corporate small borrowers and for income-generating activities in the non-farm segment are termed as Mudra loans under the Pradhan Mantri Mudra Yojana (PMMY), which was launched in 2015,

In fiscal 2021, banks had sanctioned loans worth Rs 2.79 lakh crore under the PMMY. Of these, loans of Rs 2.64 lakh crore were disbursed.

Interest subvention

The government is also considering extending the interest subvention of 2% on prompt repayment of Shishu loans sanctioned under the Pradhan Mantri Mudra Yojana (PMMY).

Under the PMMY, loans up to Rs 50,000 are termed Shishu loans. The subvention scheme is being implemented through the Small Industries Development Bank of India.

Last year in June, the government announced the interest subvention under the Atmanirbhar Bharat Abhiyan. It had noted that the move will help support small businesses to continue functioning during these times of crisis and have a positive impact on the economy and support its revival.

Loan losses

However, public sector banks (PSBs) have seen a sharp surge in the amount of Mudra loans turning into non-performing assets (NPAs) over the last three years. NPAs in Mudra loans had jumped to Rs 18,835 crore in 2019-20, from Rs 11,483 crore in 2018-19 and Rs 7,277 in 2017-18, according to the Finance Ministry data.

Mudra loan disbursements by state-owned banks rose to Rs 3.82 lakh crore in 2019-20, from Rs 3.05 lakh crore in 2018-19 and Rs 2.12 lakh crore in 2017-18. The Mudra loan NPAs as a percentage of total loans rose to 4.92 per cent in 2019-20 from 3.42 per cent in 2017-18.

Banks and financial institutions have sanctioned Rs 14.96 lakh crore to over 28.68 crore beneficiaries in the last six years. The average ticket size of the loans is about Rs 52,000, it said.

Under PMMY collateral-free loans of up to ₹10 Lakh are extended by Member Lending Institutions (MLIs) viz Scheduled Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Non-Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs) etc.

The loans are given for income generating activities in manufacturing, trading and services sectors and for activities allied to agriculture.



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SBI chairman calls for deployment of technology in RRBs

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The Regional Rural Banks (RRBs) should adopt modern technology, Dinesh Kumar Khara, Chairman, State Bank India (SBI) said.

He was speaking after formally launching Digital Insta Savings Account (DISA) Mobile App of Andhra Pradesh Grameena Vikas Bank (APGVB) and Telangana Grameena Bank (TGB).

The video-Know Your Customer (KYC) facility will also be shortly launched in RRBs, he said.

“APGVB & TGB are amongst the most progressive RRBs in the country and better than small finance banks with a brand, reach, network and fair understanding of risks we are working in,’’ he said.

While explaining the features of (DISA) K Praveen Kumar, Chairman, APGVB and V Arvind, Chairman, TGB, said instant account could be opened within 10 minutes with facilities such as zero balance, immediate activation of mobile banking and Rupay Debit card, according to a release.

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