Tag: sbi

Number of unique wilful defaulters rose by 286 in pandemic, BFSI News, ET BFSI

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The number of wilful defaulters has increased from 2,208 to 2,494 at the end of March 31, 2021, Finance Minister Nirmala Sitharaman informed Parliament on Tuesday.

As per RBI data on global operations, during the last three financial years, public sector banks (PSBs) have effected recovery of Rs 3,12,987 crore in non-performing assets (NPAs) and written-off loans.

“RBI has further apprised that the total number of unique wilful defaulters reported by PSBs was 2,017 as on March 31, 2019, 2,208 as on March 31, 2020 and 2,494 as on March 31, 2021,” she said.

Bank NPAs

Sitharaman said that the RBI has apprised that as per data reported by banks to the Central Repository of Information on Large Credits (CRILC), the total funded amount outstanding of borrowers whose sector code is private and whose loans are classified as NPAs in the PSBs as on March 31, 2019, March 31, 2020, and March 31, 2021, is Rs 5,73,202 crore, Rs 4,92,632 crore and Rs 4,02,015 crore respectively.

Banks are required to take steps to initiate the legal process, wherever warranted, against the borrowers or guarantors for recovery dues, she said. They may also initiate criminal proceedings against wilful defaulters, wherever necessary, she added. In reply to another question, the Finance Minister said public sector banks have done a write-off of Rs 1,31,894 crore during 2020-21 as compared to Rs 1,75,876 crore in the previous year. As a result of the government’s strategy of recognition, resolution, recapitalisation and reforms have led to decline in gross NPAs as a percentage of total advances to 9.11 per cent as of March 31, 2021, from 11.97 per cent on March 31, 2015.

Top 100 wilful defaulters

The total size of the top 100 wilful defaults rose 5.34% in FY20 from Rs 80,344 crore as of March 2019.
Mehul Choksi-owned Gitanjali Gems topped the wilful defaulters’ list with Rs 5,693 crore dues, followed by Jhunjhunwala brothers’ REI Agro with Rs 4,403 crore and Jatin Mehta’s Winsome Diamonds & Jewellery with Rs 3,375 crore.

The top 10 wilful defaulters include another jewellery maker Forever Precious Jewellery, and Vijay Mallya’s Kingfisher Airlines Punjab National Bank had the highest exposure to Gitanjali Gems with Rs 4,644 crore of non-performing assets (NPA) as of March 2020. PNB also had Rs 1,447 crore exposure to Gili India and Rs 1,109 crore to Nakshatra Brands.

Write-offs

State Bank of India had Rs 1,875 crore dues from top 10 wilful defaulter ABG Shipyard with the bank writing o the entire amount. Uco Bank had Rs 1,970 crore exposure to REI Agro with half of it being written off.

Write-offs are accounting entries for shifting NPAs from the active balance sheet to off-balance sheet accounts. These are backed by 100% provision and therefore any recovery from these accounts adds to net profit.
RBI collects credit data from banks monthly, with data on defaults being collected on a weekly basis. The regulator has mandated banks to provide fully against NPAs older than four years and allowed to write these old NPAs.

The reduction in NPAs during FY20 was largely driven by write-os, RBI had said in its report on Trend & Progress of Banking in India. Banks’ total gross NPA reduced to 8.2% at the end of March 2020 from 9.1% a year earlier.



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SBI opens new branch in Delhi

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State Bank of India (SBI) on Saturday opened a new branch at the President’s Estate in New Delhi.

The branch, which was inaugurated by President Ram Nath Kovind, will provide all types of banking services to the residents of President’s Estate, India’s largest bank said in a statement.

The branch will offer safe deposit lockers and is also equipped with ATM, cash deposit machine and self-service passbook printer, it added.

Dinesh Khara, Chairman, SBI, said, “The branch will offer a convenient and seamless banking experience to all the customers. This branch at President’s Estate is a jewel in the crown for SBI.”

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SBI opens branch in President’s Estate, BFSI News, ET BFSI

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New Delhi, Jul 24: The country’s largest lender State Bank of India (SBI) on Saturday opened a branch at President’s Estate. The branch was inaugurated by President Ram Nath Kovind along with First Lady Savita Kovind, in the presence of Finance Minister Nirmala Sitharaman, SBI said in a statement.

The branch will provide all types of banking services including safe deposit lockers to the residents of President’s Estate, it said.

Secretary to the President K D Tripathi, SBI Chairman Dinesh Khara and other senior officials of the bank were also present at the inauguration ceremony, it said.

This branch at President’s Estate is a jewel in the crown for SBI and will offer a convenient and seamless banking experience to all the customers, said Khara.

SBI has the largest network of more than 22,000 branches and 60,000 ATMs serving around 45 crore customers through its 2.5 lakh employees. DP MR



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Videocon resolution may be back to square one after NCLAT stay, BFSI News, ET BFSI

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After NCLAT stayed the order of the NCLT of Mumbai Bench, the process of Videocon Industries’s liquidation case may start all over again. Legal experts also believe that SBI-led creditors may not do anything but the bid winner Anil Agarwal’s Twin Star may appeal in Supreme Court against the NCLAT order.

“As of now, NCLAT has stayed the order. The creditors (appellant) were possibly challenging the entire bidding approved by NCLT on the grounds that some procedures might not have been followed, opinions not being considered. Now there are high chances that the entire process can restart,” said Vikas Tomar, Partner, Indian Law Partners.

There are 35 financial creditors of Videocon, of which 19 major creditors, including SBI, Union Bank, IDBI, Central Bank, BOB and ICICI Bank approved the resolution, which includes the 95.85% haircut. But three minority shareholders, Bank of Maharashtra, SIDBI and IFCI rejected the resolution on the ground of low resolution and filed an appeal in NCLAT.

Large versus Minority Creditors versus Bidder

The plea of minority shareholders is heard and the whole case will move in a direction to get more benefits for the financial creditors.

“Banks are normally prepared to take a 60-70 per cent haircut on payments if an insolvency process is initiated. The bid was also rejected on the grounds that they should be compensated upfront and in cash rather than through NCDs. Accepting this bid will just increase the banks’ losses, and now their only option is to call for bids from interested parties,” said Sonam Chandwani. Managing Partners, KS Legal and Associates.

The main ground of the minority shareholders was the low resolution amount.

“The large financial creditors like SBI and others may prefer to keep quiet and wait for the court to do its process. But there are high chances that Anil Agarwal’s Twin Star Technologies may appeal in Supreme Court against NCLAT order,” said a legal expert who did not want to be identified.

There were 11 bidders for Videocon but only three had bid for the whole Videocon’s group assets. The majority of them had bid for only a particular division of the company. Hence on one side, there is a big hope that minority shareholders will recover more, but on the other side there the whole process may take a long time.

The Videocon resolution case has been one of the most dramatic in the IBC process. Starting from Chanda Kochchar, former MD and CEO, ICICI Bank losing her job and facing trials with investigative agencies for irregularities in the giving loans to the group, to the fresh challenge to the resolution process, it has been a bumpy road.



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IBA to soon move application to RBI for setting up Rs 6,000-cr bad bank, BFSI News, ET BFSI

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Having secured licence from the Registrar of Companies, the Indian Banks’ Association (IBA) will soon move an application to the Reserve Bank of India (RBI) to set up a Rs 6,000-crore National Asset Reconstruction Company Ltd (NARCL) or bad bank, according to sources.

With registration of the company, the process for putting an initial capital of Rs 100 crore is on as per the guidelines, the sources said adding that the next step will be audit and then move application to the RBI seeking licence for the asset reconstruction company.

The RBI in 2017 raised capital requirement to Rs 100 crore from the earlier level of Rs 2 crore keeping in mind higher amount of cash required to buy bad loans.

Legal consultant AZB & Partners has been engaged for seeking various regulatory approvals and fulfilling other legal formalities.

The initial capital would come from eight banks who have committed, and the NARCL would expand the capital base to Rs 6,000 crore subsequently after the RBI’s nod, the sources said.

Other equity partners would join after the RBI’s licence and even the board would be expanded, the sources added.

IBA, entrusted with the task of setting up a bad bank, has put a preliminary board for NARCL in place. The company has hired P M Nair, a stressed assets expert from State Bank of India (SBI), as the managing director. The other directors on the board are IBA Chief Executive Sunil Mehta, SBI Deputy Managing Director S S Nair and Canara Bank‘s Chief General Manager Ajit Krishnan Nair.

Finance Minister Nirmala Sitharaman in Budget 2021-22 announced that the high level of provisioning by public sector banks of their stressed assets calls for measures to clean up the bank books.

“Asset Reconstruction Company Limited and Asset Management Company would be set up to consolidate and take over the existing stressed debt,” she had said in the Budget Speech. It will manage and dispose the assets to alternative investment funds and other potential investors for eventual value realisation, she had said.

Last year, IBA made a proposal for the creation of a bad bank for swift resolution of non-performing assets. The government accepted the proposal and decided to go for an asset reconstruction company and asset management company model in this regard.

Meanwhile, state-owned Canara Bank has expressed its intent to be the lead sponsor of NARCL with a 12 per cent stake.

The proposed NARCL would be 51 per cent owned by PSBs and the remaining by private sector lenders.

NARCL will take over identified bad loans of lenders. The lead bank with an offer in hand of NARCL will go for a ‘Swiss Challenge‘, wherein other asset reconstruction players will be invited to better the offer made by a chosen bidder for finding higher valuation of a non-performing asset on sale.

The company has picked up those assets that are 100 per cent provided for by the lenders. Banks have identified around 22 bad loans worth Rs 89,000 crore to be transferred to NARCL in the initial phase.



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Chairman, BFSI News, ET BFSI

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The country’s largest lender State Bank of India is working towards launching the next version of its digital lending platform – Yono (You Only Need One App), chairman Dinesh Khara said. Speaking at a banking event organised by industry body IMC, Khara said when the bank initially started Yono, it was thought of as a distribution platform for the retail segment products.

“During the course of the journey, SBI could realise Yono’s potential for international operations, particularly where we have the retail operations. We could visualise its relevance for Yono business also, and now we have started leveraging it for our agriculture segment,” he said.

“Now what we are thinking of is as to how to integrate all these fragmented pieces of Yono and think in terms of something like Yono 2, which is the next version of it. It is something which we are working on and will come out with it and products soon,” Khara said.

As of March 31, 2021, Yono has over 7.96 crore downloads and about 3.71 crore registrations, according to the bank’s annual report for 2020-2021.

The bank has onboarded 40,000 overseas customers on the Yono platform as of end-March 2021, it said. The lender is on course to launch Yono in Singapore, Bahrain, South Africa, and the USA by the end of the financial year 2021-22.

Khara further said that SBI looks at technology from the point of view of having oversight on its operations.

The bank has started leveraging analytics for profiling the customers and to reach out to customers. It is also leveraging analytics for management and mitigation of risks.

Speaking at the event, Yes Bank‘s Managing Director and Chief Executive Officer Prashant Kumar said this is a time where banks need alliances and relationships with technology. It is a time to ride on the core competence of partners to create solutions and collaborations, he said.



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How RBI’s current a/c norms have put smaller banks at a disadvantage, BFSI News, ET BFSI

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The Reserve Bank of India‘s (RBI) insistence on companies opening current accounts with banks is among the factors that have helped large lenders such as HDFC Bank, ICICI Bank and SBI raise their shares of the competitive corporate banking market in 2020, according to a report.

Apart from the RBI rules, the government’s mega merger to reduce the number of state-owned banks has also helped in the trend, rating agency Crisil said on Wednesday in the report.

In mid-2020, the RBI had come up with the circular that specified which bank can open a current account for a borrower, in order to check any misuse through multiple current accounts.

A fourth of the large and medium corporates said they were banking with at least one among ICICI Bank, Axis Bank and HDFC Bank as against 17 per cent in 2016, it said adding that the private sector banks have grown at over 25 per cent per year.

In most of the four-year period, SBI defended its market-leading penetration levels but in 2020, the lender expanded its footprint. Now, nearly a third of corporates do business with the largest lender and 30 per cent name it as their cash management provider.

The RBI circular

In its August 6, 2020, circular, the regulator had mandated that no bank shall open current accounts for customers who have availed credit facilities in the form of CC/OD from the banking system, and all transactions shall be routed through the CC/OD account. The RBI moved was targeted to ensure greater discipline and transparency in the way large borrowers move funds.

It had said that in case where a bank’s exposure to a borrower was less than 10% of the banking system’s exposure to that borrower, debits to the CC/OD account can only be for credit to the CC/OD account of that borrower with a bank that has 10% or more of the exposure of the banking system to that borrower.

“Several trends have contributed to the pick-up in market penetration among the leading banks, including the ‘mega merger’ of the country’s public sector banks and the Reserve Bank of India’s ‘circular on current accounts’, which essentially rules that banks can only open current accounts for companies to whom they are also major credit providers, the report said.

Consolidation

It said the pressures exerted by the pandemic will accelerate the consolidation of the Indian corporate banking industry, as the market’s biggest banks prove themselves best-positioned to help large- and middle-market companies overcome crisis disruptions.

“When the pandemic sent the country into lockdown last year, companies needed immediate assistance from banks, at first to ensure financial stability, and then to keep businesses running,” says Gaurav Arora, head of Asia at Coalition Greenwich, part of Crisil, said.

The 2021 ‘Coalition Greenwich’ research study mentioned State Bank of India, along with leading private sector banks Axis Bank and HDFC Bank, and foreign banks Citi and HSBC, as companies’ top sources of support during the crisis.

The report said that even before the start of the global pandemic, India’s corporate banking market was on a consolidation path, driven by decisive steps by regulators to solidify the country’s banking sector, and the rapid evolution and growth of the leading private banks.



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Lenders set up bad bank for loans in default, BFSI News, ET BFSI

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Mumbai: Public sector lenders led by Canara Bank have officially formed the bad bank — the National Asset Reconstruction Company (NARC). Their next step now is to obtain approval from the Reserve Bank of India (RBI) to function as an ARC.

In May, banks decided to appoint Padmakumar M Nair, chief general manager in charge of stressed assets in SBI, as the MD of the NARC. According to RBI norms, an ARC should have minimum net owned funds of not less than 15% of the total financial assets that it plans to acquire on an aggregate basis or Rs 100 crore.

According to industry sources, lenders have identified 22 asset loan accounts worth Rs 82,496 crore. Assuming a book value of half the loan amount, the ARC would have to pay out around Rs 6,000 crore to purchase the assets. This is because the RBI norms require that 15% of the value of the asset has to be paid in cash, while the rest can be paid for by issuing security receipts (SRs). These SRs entitle the holder to a share of the recovery effected by the ARC.

To make the SRs more attractive to buyers, the government will guarantee recovery of up to Rs 31,000 crore. Lenders said that the objective of the guarantee was to provide comfort to investors and the average recovery is usually higher than the guaranteed amount provided. The notification in respect of the guarantee is likely after NARC obtains a registration from the RBI.

The loans that have been approved for transfer to the ARC include Videocon Oil Ventures (Rs 22,532 crore), Amtek Auto (Rs 9,014 crore), Reliance Naval (Rs 8,934 crore), Jaypee Infratech (Rs 7,950 crore), and Castex Technologies (Rs 6,337 crore).



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Amit Jhingran assumes charge as new CGM of SBI, Hyderabad circle

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Amit Jhingran has assumed charge as Chief General Manager, State Bank of India (SBI), Hyderabad Circle, on Monday.

“Jhingran joined SBI as a probationary officer in 1991 in Lucknow Circle and has rich experience in all facets of commercial banking such as retail credit, deposit mobilization, international banking operations and branch management,” SBI said in a release.

Prior to being posted as Chief General Manager, Hyderabad Circle, Jhingran was the Chief Executive Officer, SBI Chicago, USA.

Jhingran took charge from Shri O.P.Mishra, who has been elevated as Deputy Managing Director of the Bank and posted at Corporate Centre, Mumbai as DMD (HR) & Circle Development Officer (CDO).

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SBI to auction two NPA accounts to recover dues of over Rs 313 cr, BFSI News, ET BFSI

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NEW DELHI: SBI will auction two non-performing accounts (NPAs) next month to recover dues of over Rs 313 crore, according to a notice by the lender.

The two accounts to be put up for e-auction on August 6 are Bhadreshwar Vidyut Pvt Ltd (BVPL) with a loan outstanding of Rs 262.73 crore and GOL Offshore Ltd with Rs 50.75 crore dues.

“In terms of the bank’s policy on sale on financial assets, in line with the regulatory guidelines, we place these accounts for sale to ARCs/banks/NBFCs/FIs, on the terms and conditions indicated there against,” SBI said in the notice.

The reserve price for the auction of Bhadreshwar Vidyut is set at Rs 100.12 crore and for GOL Offshore at Rs 51 crore.

SBI has asked the interested parties to do the due diligence of these assets with immediate effect, after submitting expressions of interest and executing non-disclosure agreement with the bank.

“We reserve the right not to go ahead with the proposed sale at any stage, without assigning any reason. The decision of the bank in this regard shall be final and binding,” SBI said.

BVPL was set up in 2007 as a special purpose vehicle promoted by OPG group, having substantial experience in power and steel sectors. In April 2019, ICRA moved the long term rating on bank facilities to the tune of Rs 2,062.40 crore to the company to ‘Issuer Not Cooperating’ category.

ICRA said it had been trying to seek information from the company to monitor its performance, but despite repeated requests, the management of the company remained non-cooperative. It had also advised lenders and investors of the company to exercise appropriate caution while using the rating action as it might not adequately reflect the credit risk profile of the company.

The Mumbai based GOL Offshore is engaged in the business of providing services to oil and gas extraction, excluding surveying.



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