Tag: sbi

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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SBI, HDFC Bank don’t want sensitive data made public, BFSI News, ET BFSI

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NEW DELHI: The two largest banks in the country — State Bank of India and HDFC Bank — moved the Supreme Court on Friday and sought a stay on the Reserve Bank of India’s directive to banks to provide financially sensitive data under the RTI Act, saying they feared that it could be detrimental to their business operations and compromise confidentiality of customer information

Though the direction was sought against RBI, it was aimed at the SC’s order that allowed divulging of such data.

Court earlier restrained RBI from disclosure under RTI Act

The SBI, through advocate Sanjay Kapur, said, “In view of the judgment in Jayantilal N Mistry case, the RBI is seeking disclosure of confidential and sensitive information of the applicant bank, including information of its employees and its customers, purportedly under the Right to Information Act, 2005, which are otherwise exempt under the provisions of Section 8 of said Act.”

Appearing for the SBI and HDFC, solicitor general Tushar Mehta and senior advocate Mukul Rohatgi told a bench of Justices L N Rao and Aniruddha Bose that divulging sensitive information like inspection reports/risk assessment reports/annual financial inspection reports of banks would render them vulnerable in the competitive banking sector to rivals, who could exploit the RTI Act to know the trade secrets and internal strengths of successful banks.

The court had earlier restrained the RBI from disclosing such reports under the RTI Act.

However, that interim order got washed away because of the SC’s April 28 order refusing the review the Jayantilal N Mistry judgment.



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Banks eye family trusts of defaulting tycoons to recover loans, BFSI News, ET BFSI

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Armed with the Supreme Court go-ahead to seize assets of personal guarantors, banks are looking to recover money parked in family trusts.

Many of the family trusts created by businesspeople are meant primarily to protect their assets from potential claims related to their companies, such as in bankruptcies. Neither lenders nor agencies such as the Enforcement Directorate or income tax department have been able to penetrate these asset protection trusts.

The SC verdict

The Supreme Court had upheld the validity of the Centre’s notification allowing banks to proceed against personal guarantors for recovery of loans given to a company under the Insolvency and Bankruptcy Code (IBC).

A bench comprising justices L Nageswara Rao and S Ravindra Bhat held that approval of resolution plan under the IBC does not discharge personal guarantors of their liability towards the banks.

“In the judgment, we have upheld the notification,” Justice Bhat said while reading out the conclusion of the judgement which decided as many as 75 petitions pertaining to the validity of the notification.

Petitioners had challenged the November 15, 2019 notification issued under the IBC and other provisions in as far as they relate to personal guarantors to corporate debtors.

Upholding the validity of the notification, the top court ruled that initiation of an insolvency resolution plan for a company does not absolve corporate guarantees given by individuals from paying up the dues to financial institutions.

The IBC law

Under the IBC law, banks can go after the family trusts formed by promoters or those who have given personal guarantees, provided there is a fraud or siphoning of money involved as per provisions of the IBC.

Promoters of several Indian companies had earlier accused their professional managers of fraud and diverting company funds. But they would not get any respite from the IBC as lenders will now invoke their personal guarantees.

SBI action

SBI was one of the respondents to the 74 petitions and challenges by promoters on invocation of personal guarantees. It has been in the forefront of invoking guarantees of promoters of defaulting companies. It had invoked Rs 1200 crore of guarantees given by Ambani for defaulting companies Reliance Communications and Reliance Infratel.

In January ET had reported SBI had also approached the Mumbai bench of the NCLT to initiate guarantees by the Videocon Indsutries’ Dhoot brothers totalling Rs 11,500 crore.

It had also taken Bhushan Power & Steel promoter Sanjay Singal to court to recover Rs 12,276 crore dues to the bank for which he was a guarantor. All these promoters had challenged these actions in court.



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Amit Saxena, SBI, BFSI News, ET BFSI

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Q. How is SBI using digital transformation as a means to address many challenges that is emanating during the pandemic. If you could share some light on digital architecture and things you are doing from last one year?

Amit Saxena: The last one year has been quite challenging. We thought this year we will be able to do things differently than last year. Given the pandemic situation we are into, having said that it has not stopped SBI moving from one stage of transformation to another transformation. We have done a lot of transformation with respect to digital banking platform YONO itself. We have introduced Video KYC, we are trying to launch end to end loan processing through a digital platform where we should be able to give it to all our customers so that they do not have to visit our branches.

We are going to start it with smaller amounts of loans, but we are planning to expand to all loans. We already have most of the loans. Like for example I you have a loan from another bank. What we call as the existing to the bank customer you can transfer that loan YONO platform. That is very good journey, it is still not end to end, very good journey it’s still not end to end but it would help you because we will generate there is some of the loan processing thing which still needs to be done through the system itself right so would we would generate you a sequence number and using that sequence number you cans peak to somebody will call you, you do not need to go anywhere and then you have to upload some of your documents and then it will be done because that’s the integration with the CRM system. Having said that that is only one part of the journey where we are trying to give customer convenience itself but at the same time what we are looking at we are looking at how our architecture is a revamp itself, so we have worked on most of our bigger systems architecture.

We are really looking at doing some of the architecture transformation now. Architecture transformation is not something which is easily said than done itself so you would see that a lot of things which we are trying to do so, one thing which we are very focused about which is the standardization and rationalization. So, what happens into our system, IT system just for the sake of our viewers that you would see that lot of there are lot of different system which are trying to integrate with each other and usually large banks like us we have to get some of those things into a manner that most of the system should be able to interact through a single interface and we should avoid a multiple interface system itself. So that kind of standardization we have done last year wherein now most of the system are interacting through an enterprise service bus and they are interacting in a manner in a seamless manner. So that helps bank with respect to that now the number of KPIs which we are having that is reduced.

The number of security related things gets centralized and most of the system is now able to know that which APIs they should be using. That is a kind of architectural event we have done. But that is the first step because once we are trying to do an architecture event, the second thing comes in how you are going to handle the scalability and just to let you know the last year the volumes have increased almost double itself. What you are having right that’s not going to stop they are going to double by this year also so what we have to see is that how we are going to scale our system. So, we have an approach with respect to when we are building such system and because we run some of the largest transaction processing system in the country itself. We do a scalability with the free hand than of waiting upon so, we are planning now the scalability by Q4 of this year then of trying to do so.



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PSBs are on an upswing, but have they really buried the past?, BFSI News, ET BFSI

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The stock market has turned bullish on public sector banks amid growing expectations that their asset quality woes have hit the trough.

The State Bank of India results announcing a reduction in bad loan pile has fuelled the euphoria. But experts say public sector banks are still wobbly despite the outlook as Covid stress has brought renewed challenges for them.

What’s up?

Traders have mounted derivative bets on state-owned banks encouraged by the recent run-up in share prices. The outstanding positions in futures contracts of public sector lenders such as SBI,

Punjab National Bank and Bank of Baroda have shot up, especially after strong March quarter results from SBI last week.

The open interest in Bank of Baroda futures by number of shares is at a lifetime high and in SBI it is at the highest since September 2020. SBI shares touched a lifetime high of Rs 427.70 on February 18 this year are near that mark.

Nifty PSU Bank index gained 2% to close at 2,398.15 on Monday, with Punjab National Bank, Central Bank and Union Bank and SBI gaining 2-5%.

In the ongoing May series, SBI’s shares are up 14.6% while Bank of Baroda’s shares have risen nearly 22%. Punjab National Bank’s shares are up 13.5% during the same period.

The red flags

While the banks have cleaned up their books, mostly on the basis of write-offs, and posting robust numbers they may be staring at a renewed stress.

Banks are facing greater stress in smaller towns, more so the public sector banks as they have a bigger presence there.

The special mention accounts of public sector lenders are increasing, showing a rise in new stress as Covid buffets smaller businesses.

SBI’s SMA accounts where repayments are overdue more than a month totalled Rs 11,500 crore, while Bank of Baroda and Punjab National Bank had also reported build-up of these accounts for the December quarter during in QIP documents.

Credit growth has been falling for the last few years and totalled 5.58% for FY21 as against 6.02% for FY20. This credit growth is mostly cornered by the private banks, with PSBs seeing a sharper fall in credit growth

While PSU banks have reduced their bad loan pile mostly through write-offs, the recovery from such accounts is abysmal at less than 30%. In FY20, about 25% bad loans were written off. SBI wrote off Rs 32,000 crore in FY21, which is 23% of its total bad loans.

Comparison with private lenders

PSU bank shares have mostly been underperformers vis-à-vis their private-sector peers in the past decade because of high nonperforming loans (NPLs) and loss of market share. The superior performance by private sector banks pushed their valuations to record levels.

The Nifty PSU Bank index is down 11.6% in the past three years, while the Nifty Private Bank Index is up 23%. The Nifty index is up 43.1% in the same period.

PSU banks including Bank of India, Punjab National Bank, Bank of Baroda and UCO Bank among others are trading at a Price to Book (P/B) of around 0.55-0.7 times. SBI is trading at P/B ratio of 1.6 times.

In comparison, private lender HDFC Bank is trading at 4.1 times and Kotak Mahindra Bank at 5.5 times.



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Covid-19: SBI temporarily raises ceiling for cash withdrawal by customers at ‘non-home’ branches

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State Bank of India (SBI) has temporarily upped the ceiling for non-home cash withdrawal for self and also enabled non-home cash withdrawal by third-parties at its branches so that customers don’t have to travel far to meet their urgent cash requirements amid the raging Covid-19 pandemic.

India’s largest bank has doubled cash withdrawal for self (using cheque) to Rs 1 lakh per day.

Cash withdrawal for self (using withdrawal form) accompanied by Savings Bank Passbook has been upped five times to Rs 25,000 per day.

Cash withdrawal by a third party, which was not allowed earlier, has been pegged at Rs 50,000 per day (using cheque only).

Home branch is a branch where the customer’s account is maintained. Branches other than their home branch are called non-home branches.

The above mentioned revision in ceilings for non-home transactions for ‘Personal’ segment customers is available up to September-end 2021. The move could prompt other banks to follow suit, to help customers transact at the nearest branch in case of an emergency.

SBI has disallowed cash payment to third parties via withdrawal forms. Branches would verify Know-Your-Customer (KYC) document(s) of the third party and preserve them along with the instruments.

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Stellar show: SBI net jumps 80% on strong interest income, lower provisions

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Commenting on the ongoing second wave, SBI chairman Dinesh Khara said there would be some impact, as the banking sector tends to move in tandem with the macro environment.

State Bank of India (SBI) on Friday reported an 80% year-on-year (y-o-y) increase in its net profit to Rs 6,451 crore for the March quarter (Q4FY21) on the back of a healthy growth in interest income, improved asset quality and lower provisioning. The lender’s net interest income (NII) grew 19% y-o-y to Rs 27,067 crore. On the back of this, SBI’s operating profit increased 7% y-o-y and 14% sequentially to Rs 19,700 crore.

Commenting on the ongoing second wave, SBI chairman Dinesh Khara said there would be some impact, as the banking sector tends to move in tandem with the macro environment.

The bottom line also got support from lower provisioning for stressed assets. Total provisions declined 11% y-o-y to Rs 13,249 crore during the March quarter. During FY21, total provisions declined 5% to Rs 51,144 crore, compared to Rs 53,645 crore during FY20.The net profit for FY21 increased 41% y-o-y to Rs 20,410 crore.

The bank saw fresh slippages of 21,934 crore during the quarter under review. “Overall, slippage and restructuring applications for FY21 stood at Rs 46,416 crore, well below guidance of the bank,” Khara said. The lender had earlier said slippage and restructuring would remain under Rs 60,000 crore for the whole financial year (FY21). Total recovery and upgradations during Q4 remained at Rs 27,930 crore. The provision coverage ratio (PCR) improved 413 bps y-o-y to 87.75%, compared to 83.62% during Q4FY20.

The asset quality improved during the March quarter. The gross non-performing asset (GNPA) ratio improved 22 basis points to 4.98%, compared to reported pro forma gross NPAs of 5.44% in the previous quarter. Similarly, net NPAs ratio improved 31 bps to 1.5% from 1.81% in the December quarter. Lenders had reported NPAs on a pro forma basis during the December quarter due to a standstill order from the apex court on declaring NPAs.

“A definitive assessment of the impact of Covid-19 is dependent upon circumstances as they evolve in the subsequent period,” Khara said. However, he said the bank might register a credit growth of around 10% in FY22 as the bank’s credit growth is normally 1% above India’s GDP.

Khara also said SBI is reaching out to customers to see if they need fresh restructuring scheme announced by the RBI. Earlier this month, the regulator had announced a fresh loan restructuring window for individual and small businesses hit hard by fresh Covid-19 wave.

The lender’s fee income increased 7.4% y-o-y to Rs 8,455 crore, compared to Rs 7,873 crore in Q4FY20. Similarly, forex income grew 16% y-o-y to Rs 803 crore. Overall, other income grew 21% y-o-y to Rs 16,225 crore.

Advances grew 5% y-o-y and 3.4% q-o-q to Rs 25.39 lakh crore. Retail lending portfolio increased 16% y-o-y to Rs 8.7 lakh crore. However, corporate advances declined 3% y-o-y to Rs 8.18 lakh crore. Deposits grew 13.5% y-o-y and 4% q-o-q to Rs 36.81 lakh crore. Current account savings account (CASA) grew 17% y-o-y and 7% q-o-q to Rs 16.46 lakh crore.

The net interest margins (NIM) improved 16 basis point (bps) y-o-y to 2.9%, but declined 22 bps sequentially. The capital adequacy ratio (CAR) remained at 14.5% with CET1 ratio of 10.02% at the end of March 2021.

The bank declared a dividend of Rs 4 per equity share for FY21. The date of payment of dividend is June 18, 2021.

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SBI’s asset quality improves, but Covid may intensify pain in agri, corporate and SME portfolios

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The stock of SBI rallied more than 4 per cent on Friday, following stellar numbers posted by the PSU bank in the March 2021 quarter. The bank’s net profit for the quarter jumped 80 per cent (yoy), led largely by growth in other income and lower credit costs.

Investors also loaded on the stock following the bettering trends in the bank’s asset quality.

Lower than proforma

For the first nine months of FY21, the six-month moratorium on loan repayments, and the ensuing asset classification standstill kept bad loans at bay. This resulted in a chunk of slippages being recognised by the bank in the March quarter (₹21,934 crore) – more than double the slippages recognised in the corresponding quarter last year. However, this still constitutes just about 0.9 per cent of the bank’s gross advances. Besides, the bank’s prudent provisioning in the last quarters helped keep the credit costs in check — it ended FY21 with a credit cost of just 1.12 per cent.

SBI’s gross non-performing assets (GNPA) were at 4.98 per cent. The GNPAs were lower in the quarter compared to both the year ago period (6.15 per cent) and the proforma numbers reported in December 2020 quarter (5.44 per cent).

The slippages during the quarter largely stemmed from the corporate (constituting 30 per cent of the total slippages) and SME (22 per cent) loans. The agri loan portfolio, which has been under stress for the last two years, contributed to another 33 per cent of the slippages.

Further, requests for restructuring amounted to ₹17,852 crore (0.7 per cent of the gross advances). About 77 per cent of the restructuring requests too flowed from the corporate and SME book combined.

Worst may not be over

Despite bulky slippages been recognised in the March quarter, the worst is not yet over for SBI, on the asset quality front. This is because just when the economy was recovering from the after effects of the lockdown in the last year, the pandemic’s second wave came as a bummer. With looming uncertainty, the management refused to give out any guidance at the moment. However, it indicated that the collection efficiencies in April 2021 (calculated on a 7 to 89 days past due) were 20 basis points lower than in March 2021. This may worsen in the coming months, following the on-going partial lockdowns in many parts of the country.

Besides, the bank has also increased its exposure in the risky corporate and SME segments. While much of the growth in gross advances (up 4.8 per cent to ₹25.4 lakh crore) came from the retail personal advances, the bank has also been growing its exposure towards corporates and SMEs, albeit at a moderate pace.

Over the last couple of years, the bank has been redirecting its focus on retail personal loans — with 16.5 per cent (yoy) growth during the quarter, retail personal loans now constitute about 39.9 per cent of the gross advances of the bank, compared to 36 per cent in FY20.

While the share of corporate loans has come down to 37.5 per cent (from 40.9 per cent in the year ago period), the bank’s corporate exposure has grown by 6.5 per cent yoy, including the corporate bonds and commercial papers worth ₹51,811 crore issued during the quarter. Besides, much of the loan growth in corporate segment came from the roads and ports (up 47.6 per cent yoy) and aviation (up 76.6 per cent yoy) industries. However, this might not be very alarming since most of these loans were towards Government agencies and PSUs in this space. Besides, these industries still constitute only about 3.8 and 0.5 per cent of the domestic advances of the bank.

About 25 per cent of the bank’s corporate loan book comprises of companies rated BBB or below — up from 23 per cent in March 2020.

The SME and agri loan portfolios also saw a moderate growth of 4.24 and 3.92 per cent, respectively, in the March quarter.

Any significant rise in slippages or restructuring from current levels can lead to rise in provisioning eating into earnings of the bank. However, existing provision cover (PCR of 77 per cent plus special Covid related provisions) and healthy capital ratio (13.74 per cent) can provide a buffer to absorb losses going ahead.

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SBI Q4 net profit up 80%

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State Bank of India’s standalone net profit jumped 80 per cent year-on-year (yoy) to ₹6,451 crore in the fourth quarter ended March 31, 2021, against ₹3,581 crore in the same period in the previous year.

The Board of India’s largest Bank declared a dividend of ₹4 per equity share (400 per cent) for the financial year ended 31st March,2021.

Net interest income increased 19 per cent y-o-y to ₹27,067 crore (₹22,767 crore in the year ago quarter). Other income was up 22 per cent y-o-y at ₹16,225 crore (₹13,346 crore in the year ago quarter).

Also read: Indian shares gain as financials rebound, SBI results awaited

Loan loss provisions burden came down 17 per cent y-o-y to ₹9,914 crore (₹11,894 crore).

Gross non-performing assets came down to 4.98 per cent of gross assets against 6.15 per cent. Net non-performing assets position improved to 1.50 per cent of net assets against 2.23 per cent.

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SBI reports net profit of 80% yoy as provisions drop, BFSI News, ET BFSI

Banking & Finance

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State Bank of India has reported an 80 per cent year-on-year rise in net profit to Rs 6,450.75 crore for the March ending quarter.

The bank’s provisions and contingencies fell to Rs 11,051 crore fro the final quarter of the last financial year as against Rs 13,495.1 crore it reported in Q4FY20.

The bank also declared a dividend of Rs 4 per share for the financial year ending March. The bank also saw it’s net interest income soar with a healthy growth of 19 per cent to Rs 27, 067 crore.

Asset quality improvement was also seen as GNPAs stood at 4.98% from 5.44 per cent in December’20 ending quarter. The bank’s net NPA ratio improved to 1.5 per cent in the March quarter as compared to 1.81 per cent in three months to December 31.

The bank’s provision coverage ratio has improved to 87.75% up 413 bps year-on-year and the slippages ratio for FY21 has declined to 1.18% from 2.16% as at the end of FY20.

The credit cost at the end of FY21 has declined by 75 bps year-on-year to 1.12% and the cost-to-income ratio has marginally increased from 52.46% in FY20 to 53.60% in FY21.

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