Tag: sbi

SBI employees donate ₹62 crore to PM CARES Fund

Banking & Finance

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About 2.50 lakh employees of State Bank of India (SBI) have collectively donated ₹62.62 Crore to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM CARES) Fund on the occasion of 66th Foundation Day of their Bank.

Last year, the employees of India’s largest bank made a total donation of ₹107.95 crore to the PM CARES Fund by letting go of one day’s salary and a day’s leave encashment.

Also read: Huge slowdown in credit offtake a cause of concern for banking industry: SBI DMD

Dinesh Kumar Khara, Chairman, SBI, said, “It is a matter of pride for State Bank of India that our employees have continued to offer banking services to our customers throughout the pandemic, putting service before self, in the true sense of the term.

“In addition, they have voluntarily come forward to contribute to the PM CARES Fund at a time when the government is strengthening the healthcare system to tackle the pandemic.”

The PM CARES Fund was set up by the government with the primary objective of dealing with any kind of emergency or distress situation as posed by the Covid-19 pandemic, and to provide relief to the affected people.

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HDFC Bank, BFSI News, ET BFSI

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The RBI‘s ban on selling new credit cards has impacted market share on an incremental basis, HDFC Bank said on Wednesday, promising to get back to the market “with a bang” once the “temporal” embargo is lifted and recoup the losses. The bank’s head of consumer finance, digital banking and information technology, Parag Rao, said that it has used the last six months to “introspect, re-engineer and innovate” about the cards business, where it has 15.5 million customers.

The bank has lost its market share by a couple of percentage points because of the ban, but the actions taken internally have ensured that it continues to hold on to market share by spends, he said.

In December, the RBI acted against repeated technological outages at HDFC Bank over two years by slapping unprecedented penalties, which included a ban on any new credit card issuance and also prohibition on launching new digital initiatives.

“We have got very aggressive plans to get back in the market with a big bang… You will rapidly see HDFC Bank not just regaining market share but also significantly increasing our spend market share,” Rao said.

Without sharing any details over when he expects the ban to be lifted, Rao said within 3-4 months of the ban getting lifted, one should expect a correction in the incremental market share back to the pre-ban levels, launch of new products and features and also partnerships which have been forged during this period.

“We were very clear that this is at best a temporal situation. During the six months when we were not issuing new credit cards, we increased our merchant acceptance base, our liability franchise increased and today we are sitting on a large base of already analytically data mined customers who have already kept ready and pre-approved,” he said.

The “large sales force” has been trained, re-skilled and primed for the aggressive play ahead and backend processes for them have also been made more streamlined, Rao said.

He admitted that rivals have seized up on the opportunity once HDFC Bank stopped issuing the cards, amidst reports on how ICICI Bank and SBI, among others have grown. It can be noted that HDFC Bank’s credit card customers decreased by 4.67 lakh between December and April, when they stood at 14.9 million, while SBI has gained over 6 lakh new cards and ICICI gained 10 lakh.

The bank has been in constant discussion with RBI ever since the ban was imposed and has upgraded its systems as per the indications from the regulator, Rao said, adding that it has now presented a plan which focuses on the immediate, short term, mid-term and long term plan to the central bank.

“We are awaiting the comments from the RBI. We are hopeful that RBI will be satisfied with the plan which we had submitted,” he said.

Rao said the bank’s investments in technology were already at par with global standards, but the recent regulatory action will see higher spends on technology over the next two or three years.

Reiterating its focus outlined earlier, he said outages do happen and they happen with rivals as well, but the important aspect will be how it manages its way out of a crisis.

The bank’s shares were trading 0.17 per cent down at Rs 1,499 apiece on the BSE at 1344 hrs, as against gains of 0.28 per cent on the benchmark. AA MKJ



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How corporates gorged on RBI’s easy money, shunned banks?, BFSI News, ET BFSI

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Corporates took the advantage of liquidity offered by Reserve Bank‘s special liquidity windows to raise funds from the bond market, reducing their dependence on bank loans during the quarter

While the corporate bond market is still dominated by financial companies, non-financial companies have increased borrowing in the last one year.

The corporates tapped the long-term repo operations (LTRO) funds, and targeted LTRO offered by the RBi last year, raising funds for up to three years. Firms raised funds aggressively during the third and fourth quarters of the last year for deleveraging high-cost debt.

The fundraise

Corporates raised Rs 2.1 lakh crore in December ended quarter and Rs 3.1 lakh crore in the fourth quarter from the corporate bond markets. In contrast, the corresponding year-ago figures were Rs 1.5 lakh crore and Rs 1.9 lakh crore, respectively.

Bonds were mostly raised by top-rated companies at 150-200 basis points below bank loans. Most of the debt was raised by government companies as they have top-rated status.

For AAA-rated corporate bonds, the yield was 6.85 per cent in May 2020, which fell to 5.38 per cent in April 2021 and to 5.16 per cent in May 2021.

Debt reduction

The corporate world focused on deleveraging high-cost loans through fundraising via bond issuances despite interest rates at an all-time low. This has led to muted credit growth for banks.

According to data analysis by the SBI research wing, the top 15 sectors with more than 1,000 listed entities reported over Rs 1.7 lakh crore of debt reduction in 2000-21.

Refineries, steel, fertilizers, mining & mineral products, and textile alone reduced debt by more than Rs 1.5 lakh crore during FY21.

Fertilizers, mining and minerals, FMCG, cement products, consumer durables, and capital goods were among the sectors where loan reduction of 20 per cent or more was reported during FY21.

According to data from the Reserve Bank of India, loan growth fell to a 59-year low of 5.6% on year as of March 31. Credit was logging a 6.4% in the previous fiscal.

Low interest rates

As interest rates drop to an all-time low, corporates reduced their loan liabilities to facilitate a lower finance cost, which resulted in the primary issuance of bonds increasing by nine per cent.

The spread of AAA bonds for a 10-year tenor declined from 124 bps in April 2020 to 70 bps in April 2021.

Similarly, the spread for 5 year and 3-year bonds declined from 89 bps and 147 bps in April 2020 to 9 bps and 30 bps in April 2021 respectively.

This trend is continuing in FY22 also.

These companies not only reduced their loan liabilities at lower finance cost but also increased their cash and bank balance by around 35% in March, as compared to March 2020, suggesting a conservative approach to conserve cash during uncertain times.

Corporate willingness for new investments also remains tepid as the economy is still recovering from the second wave.



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No more than 4 free withdrawals a month at SBI

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State Bank of India has decided to allow to its basic savings bank deposit (BSBD) account holders to withdraw cash beyond four free transactions a month for a fee, and offer free non-financial and transfer transactions, among others.

The aforementioned “additional value-added services” will be introduced for BSBD account holders with effect from July 1.

Currently, BSBD customers are allowed four free withdrawals, including ATM withdrawals, in a month free of charges. No further withdrawals are allowed beyond these four transactions.

With effect from July 1, India’s largest bank will allow withdrawals beyond the four free transactions by charging ₹15 plus GST per cash withdrawal transaction at branch channel/ATM or at other bank’s ATM.

Cheque book

The bank will offer first 10 cheque leaves free in a financial year to all BSBD customers.

Thereafter, a BSBD customer will be charged ₹40 + GST for a 10 leaf cheque book; ₹75 + GST for a 25 leaf cheque book; and ₹50 + GST for emergency cheque book for 10 leaves or part thereof.

However, senior citizen customers are exempted from the aforementioned conditions.

Currently, one cheque book of 25 leaves is issued free to senior citizens and differently abled persons per year. For other BSBD account holders, no cheque book is issued

As per the bank’s website, BSBD accounts are primarily meant for poorer sections of society to encourage them to start saving without any burden of charges or fees. There is minimum balance requirement. Also, there is no cap on the deposit amount.

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SBI to issue electoral bonds at 29 branches from July 1-10

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The Centre on Tuesday announced that electoral bonds will be issued by the State Bank of India’s 29 authorised branches across the country from July 1-10.

The Electoral Bonds would be valid for fifteen calendar days from the date of issue and no payment shall be made to any payee Political Party if the Electoral Bond is deposited after expiry of the validity period, an official release said. The Electoral Bond deposited by an eligible Political Party in its account shall be credited on the same day, the release added.

The Electoral Bonds can be encashed by an eligible Political Party only through a Bank account with the Authorized Bank.

A person being an individual can buy Electoral Bonds, either singly or jointly with other individuals. Only the Political Parties registered under Section 29A of the Representation of the People Act, 1951 and which secured not less than one per cent of the votes polled in the last General Election to the House of the People or the Legislative Assembly of the State, would be eligible to receive the Electoral Bonds, the release added.

Electoral Bonds may be purchased by a person who is a citizen of India or those incorporated or established in India.

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SBI official, BFSI News, ET BFSI

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Banks need to operate on lower net interest margins for the good of the economy, an official of State Bank of India said on Monday. Speaking at a webinar organised by MCCI, Deputy Managing Director V S Radhakrishnan said lenders must develop the capability to function with NIMs less than the existing 3 -3.5 per cent range.

“Working on lower NIMs is good for the economy, though high margins are definitely good for the banking system,” he said.

Radhakrishnan, however, said the right eco-system has to be put in place for banks to operate on lower NIMs. “High credit cost is one of the reasons for higher margins,” he said.

He also said lenders need to forge alliances with NBFCs and fintech companies to reach out to unbanked areas.

Radhakrishnan said low credit growth among large corporations is a cause for concern, as most companies are deleveraging balance sheets by accessing equity markets and selling non-core assets.

Asset quality is another worry for the banking sector as the real economy has been hit by the COVID-19 pandemic, he said.

“Rural demand has been affected due to the second wave and consumer sentiment is weak. Many people have lost jobs, too,” the SBI official said.

Radhakrishnan said he hopes that the RBI will continue to maintain its accommodative stance despite the threat of inflation.

“The central and state governments need to boost demand,” he said.

The infrastructure sector can be a big game changer for the economy, and foreign investors should be wooed to invest in this space, Radhakrishnan added. DC RBT RBT



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SBI YONO crossed 70.5 million downloads and a registered user base of 37.09 million, BFSI News, ET BFSI

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Country’s largest lender, State Bank of India‘s flagship digital offering YONO (You Only Need One) has crossed 70.5 million downloads, with a registered user base of 37.09 million and averages daily logins of around 10 million.

The bank laid out the details in its annual report and said it has been operating its analytical potential through AI/ML to increment efficiency, procuring new business and for risk management.
Post retail it added the service for its corporate customers too with five applications viz Corporate Internet Banking, Cash Management Product, Supply Chain Financing Unit, e-Trade and e-Forex. Currently, SBI is functioning to avail an entire digital trade finance solution to business clients on YONO platform.

The bank said, a digital journey has also been initiated for Forex rate booking and document upload facility to enhance customer convenience, which will help the bank increase income from Forex business.

The bank had also launched YONO offering in the UK, Mauritius, Maldives, Bangladesh, Sri Lanka and Canada. As of March 31, 2021, over 40,000 overseas customers have been onboarded on the YONO platform. SBI anticipation to inaugurate YONO in the countries such as Singapore, Bahrain, South Africa, and the USA by the end of FY2022.

The bank said it will continue accelerate its digital agenda as the scope and reach of YONO will be expanded further.



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SBI Chairman, BFSI News, ET BFSI

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MUMBAI: Although the second wave of the Covid-19 pandemic again brought businesses and economic activities to a standstill, Chairman of the State Bank of India (SBI), Dinesh Kumar Khara has expressed hope that the country’s economy would recover in the ongoing financial year.

The Chairman noted that the global economy contracted by 3.3 per cent in 2020 with the pandemic causing significant loss of lives and livelihood.

The GDP in India contracted by 7.3 per cent in FY2021 and the country experienced a second wave of infections with cases rising rapidly since March 2021, he said while addressing the 66th Annual General Meeting of the bank.

He, however, said that policy measures and the coordinated efforts of the Reserve Bank of India (RBI) and the Centre were directed towards enabling growth on a more durable basis during these difficult times.

“Notwithstanding the second wave of Covid-19, Indian economy, through its resilience, is poised for a recovery in FY2022,” the SBI chief told the shareholders of the bank.

Speaking on the performance of the bank in FY21, he said that although the last fiscal was an exceptionally challenging year for the entire world, the state-run bank was able to function against all odds with minimal disruption for the customers.

“The business continuity plans that were chalked out have worked well for the Bank and this is reflected in various parameters of the Bank’s performance in FY 2021.”

Notably the bank has achieved high level of digitization with share of Alternate Channels in total transactions increasing to 93 per cent in FY2021, thereby converting a challenging situation into an opportunity, the Chairman said.

He said that in the current financial year, SBI will continue to accelerate its digital agenda, adding that the scope and reach of YONO will be expanded further.

“With the rollout of pre-package insolvency for resolution, resumption of courts and formation of National Asset Reconstruction Company, efforts will be in full force to keep the momentum in stressed asset recovery in the current financial year.”

The bank is comfortably placed in terms of growth capital. Opportunities for lending in promising sectors will be explored to diversify the portfolio and contain risk.

“In conclusion, the bank adjusted to the challenges posed by the Covid-19 pandemic and is better positioned to tackle any subsequent wave. I am cautiously optimistic that the performance trajectory of FY2021 will continue in FY2022 as well.”



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In Covid year, banking sector sees record profit of Rs 1 lakh crore, BFSI News, ET BFSI

Banking & Finance

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Mumbai: The banking sector has recorded its highest ever profits of Rs 1,02,252 crore in FY21, a year when the economy was battered by the pandemic. This is a significant turnaround compared to a net loss of nearly Rs 5,000 crore for the industry in FY19.

Two banks — HDFC Bank and SBI — contributed half of the industry’s profits. Of the total profits, HDFC Bank at Rs 31,116 crore accounted for 30%, an 18% increase over the previous year. The country’s largest lender SBI accounted for another 20% at Rs 20,410 crore. The third-highest was ICICI Bank, which earned Rs 16,192 crore, more than double what it earned in the previous year. Private banks also gained market share as public sector banks (PSBs) went slow in lending.

The biggest turnaround was among PSBs which reported a collective net profit for the first time in five years. Only two of the 12 PSU banks — Punjab & Sind Bank and Central Bank of India — reported a net loss for the year. In the private sector, Yes Bank remained in the red with a net loss of Rs 3,462 crore as it continued to make provisions. However, for banks in the red, the losses were lesser than what they reported in the previous year.

The single biggest reason for PSBs to post such a Rs 57,832-crore turnaround was the end of their legacy bad loan problem. This burden reached a peak after the RBI forced banks to classify 12 large defaulting accounts, followed by another 40 accounts, as non-performing assets and initiate bankruptcy proceedings. Given the size of these exposures, the move resulted in loans worth Rs 4 lakh crore turning bad. By March 2020, banks had completed making provisions for most of these loans. Additional provisions were offset by large recoveries from earlier written-off accounts, and banks stopped bleeding.

According to rating agency ICRA, the profits for the current year were the windfall gains on bond portfolios of public banks account, which contributed two-thirds of their profits before tax in FY21. The rating agency added that barring SBI, profit from the sale of bonds exceeded the pre-tax profits of all other public banks. The profit from bond sales was higher than the Rs 20,000-crore capital infused by the government in FY21.

The value of government bonds rises when interest rates fall. The RBI’s aggressive move to keep rates low has reduced interest income but provided huge gains in treasury income. The year 2020-21 was also a year of consolidation for the 10 public sector banks that merged into four. Last year, the merging entities recorded huge losses in the fourth quarter before the merger, which contributed to the Rs 26,015-crore loss among PSU banks in FY20. This year, the acquiring banks made profits with Indian Bank topping the list at Rs 3,004 crore followed by Union Bank at Rs 2,905 crore.



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