Tag: sbi

SBI Q2 earnings: State Bank of India’s profit soars 67% as provisions slide

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Slippages in Q2FY22 stood at Rs 4,176 crore, as against Rs 15,666 crore in the June quarter and the slippage ratio was 0.66% for the quarter.

State Bank of India’s (SBI) standalone net profit rose 67% year-on-year (y-o-y) to Rs 7,627 crore in Q2FY22 driven by an improvement in asset quality and a sharp drop in provisions. Dinesh Khara, chairman of SBI, said that after the Covid second wave receded, the asset quality outcomes in the September quarter turned out to be quite encouraging.

“The first quarter saw an elevated level of fresh slippages as collections were severely impacted due to restrictions on mobility and concerns around health and safety of our staff as well as customers. However, our ground level forces have rallied back in the second quarter,” Khara said.

Slippages in Q2FY22 stood at Rs 4,176 crore, as against Rs 15,666 crore in the June quarter and the slippage ratio was 0.66% for the quarter. Provisions dropped 98% y-o-y to Rs 189 crore and the credit cost stood at 0.43%. The gross non-performing asset (NPA) ratio fell 42 basis points (bps) sequentially to 4.9% and the net NPA ratio was down 25 bps at 1.52%. SBI’s total restructured book for resolution of Covid-related stress stood at Rs 30,312 crore, accounting for 1.2% of its loan book.

Khara said that loans which in Q1 had turned delinquent in the home loan and Xpress credit personal loan segments saw a pullback in Q2. In the small and medium enterprises (SME) segment, the bank was able to pull back or restructure loans as per the revised guidelines. “With the economic activity coming back, cash flows are restored and we are in a position to see better behaviour as far as borrowers are concerned. No major concerns are there related to asset quality because the underwriting has improved significantly and the collection machinery on the ground has become activated very well,” he added.

SBI’s net interest income (NII), or the difference between interest earned and expended, rose 10.7% y-o-y to Rs 31,184 crore. The net interest margin (NIM) rose 17 bps sequentially to 3.09%.

The bank’s gross advances grew 6.17% y-o-y to Rs 25.31 lakh crore as on September 30, 2021. Retail loans grew 15.2% y-o-y, while the corporate loan book shrank 4%. Khara said that working capital limits for large corporates are unutilised to the extent of 50%. However, SBI has a pipeline of Rs 1.15 lakh crore and it expects that term loans to the tune of Rs 2.25 lakh crore will be availed by companies. Sanctions worth Rs 4.6 lakh crore are still waiting to be availed, he said.

“As far as our overall advances growth is concerned, it stands at over 6% and we would like to see it growing up to 10%. Much of it could be a function of the real economy,” Khara said, adding that retail loans will continue to grow at a faster pace, going by the early signs seen in October. “This month we have seen decent demand from corporates too, and if that continues, we should be in a position to see decent numbers. The unutilised loan limits might decline from the current 50% to 30-35%,” he said.

Deposits grew 9.8% y-o-y to Rs 38.1 lakh crore as on September 30, with the current account savings account (CASA) ratio up 85 bps y-o-y at 46.24%.

SBI’s shares ended 1.14% higher than their previous close on the BSE at Rs 527.65 on Wednesday.

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SBI net profit up 67% in Q2, chairman says asset quality significantly improved, BFSI News, ET BFSI

Banking & Finance

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The State Bank of India, India’s largest lender, today reported a standalone net profit of Rs 7,626 crore, up 67% on year, the highest ever for the bank.

A year ago, the bank reported a net profit of Rs 4,574 crore. On a sequential basis, the profit rose 17% from Rs 6,504 crore in the June quarter.

The bank’s asset quality has significantly improved, chairman Dinesh Khara said at the earnings announcement.

Gross non performing assets came in at 4.90% in the September quarter, lower than 5.32% in the June quarter and 5.28% in the year ago quarter.

Meanwhile, the net NPA ratio stood at 1.52% for the quarter.

The net interest income (NII) – the difference between interest earned and expended – rose 10.6% to Rs 31,184 crore in Jul-Sep.

The non interest income fell 3.7% to Rs 8,207 crore compared with Rs 8,527 crore a year ago.

Khara highlighted that the capacity utilisation of manufacturing is still very low. Advances rose by just 6.17% over last year, driven by personal retail advances, up 15.17% on year, and foreign office advances, up 16.18% on year.

Domestic advances grew 4.61%, with home loans, which constitute 24% of domestic advances, rising 10.74% on year.

Total deposits grew nearly 10% on year, current account deposits grew 19.2% and saving bank deposits grew 10.55%.



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Profit may double, NIM likely in 3-3.1% range, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: State Bank of India (SBI) may report up to 100 per cent surge in net profit for September quarter on a marginal rise in net interest income (NII). Net interest margin (NIM) is seen healthy at 3-3.1 per cent. Analysts said healthy NIM, recovery from DHFL and lower loan loss provision should lead to strong profitability, which may partly be offset by the hit on NPS/pension for retired personnel.

Slippages should remain moderate, with limited NPAs in retail, said Emkay Global, which said the stress in SME could be taken out via restructuring.

This brokerage is expecting the bank to report 58.5 per cent YoY rise in net profit at Rs 7,249.80 crore compared with Rs 4,574.20 crore in the same quarter last year. It sees NII rising 2.4 per cent to Rs 28,856.30 crore from Rs 28,181.50 crore YoY. NIM is seen at 3 per cent compared with 2.9 per cent in June quarter and 3.1 per cent in the year-ago quarter.

Nirmal Bang Institutional Equities is pegging profit at Rs 7,646.60 crore, up 67.2 per cent YoY. NII is seen growing 3.8 per cent YoY to Rs 29,263.30 crore. Pre-provision profit is seen at Rs 18,792.30 crore, up 14.2 per cent.

The bank is seen reporting a loan growth of 8.1 per cent YoY to Rs 24,80,546.20 crore and deposit growth of 8.6 per cent at Rs 37,69,359.80 crore. Credit cost is seen at 1.4 per cent.

“SBI should continue to report better NII growth of 3.5 per cent YoY, loan growth of 8 per cent on lower interest reversals. We build higher slippages from Agri and SME segments, while we build in recovery from DHFL,” Prabhudas Lilladher said.

This brokerage is expecting a 102 per cent surge in profit at Rs 9,263 crore. It sees NIM at 3.05 per cent while gross NPA is seen at 5.83 per cent.



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Bankers shocked over ‘high-handed’ move, BFSI News, ET BFSI

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Former State Bank of India (SBI) chairman Pratip Chaudhuri was arrested by the Rajasthan police on Monday on complaints from a loan defaulter sending shock waves in the banking industry that was just limping back to normalcy after years of fear of being implicated criminally on trumped up charges.

There was reportedly no notice or formal summons in a decade-old soured-loan case which has shaken the banking sector, stoking concerns the incident could delay decision making in multi-billion-dollar recovery initiatives of several lenders.

Former SBI chairman Rajnish Kumar termed his predecessor’s arrest as extremely unfortunate and a case of high handedness. “Prima facie, it seems to be a case of misrepresentation of facts and singling out of an individual, who held a high position, to seek publicity,” Kumar told ET. “In the process, the dignity of an individual has not been given any consideration. It needs to be looked into whether due process of law has been followed.”

Account Acquired by an NBFC in 2017
Chaudhuri was arrested from his Delhi residence by the Rajasthan police and taken to Jaisalmer on Monday. His subsequent bail application was rejected by the local magistrate. The case refers to the ‘Garh Rajwada’ hotel project in Jaisalmer, financed by SBI in 2007.

  • Chaudhuri was arrested from his Delhi residence by Rajasthan police, taken to Jaisalmer on Monday
  • Local magistrate rejected his bail plea
  • Case refers to a Jaisalmer hotel project, financed by SBI in 2007 Account became an NPA in 2010
  • Chaudhuri retired in 2013 NPA was sold to an ARC in 2014
  • Bank not summoned or asked for its views in case

Since the project was not completed for three years and a key promoter passed away in April 2010, the account slipped into the non-performing asset (NPA) category in June 2010.

As the country’s biggest mass lender didn’t succeed in reviving the project, SBI sold the loans to the Alchemist Asset Reconstruction Co (ARC) in March 2014.

To be sure, it is unclear whether Chadhuri was arrested because of his role as SBI chairman or because he was later chairman of Alchemist ARC, which bought the assets from the bank. Police authorities in Rajasthan couldn’t immediately be reached for their comments.

Ironically, bankers said Chaudhuri retired from the bank six months before the sale of loans, in September 2013.

In a statement, SBI said the sale to Alchemist ARC was done through a laid-down process. Further, the account was taken to the bankruptcy court and was acquired by an NBFC in December 2017.

‘No Legal Basis’

The arrest, without any due notice or summons neither to the bank nor Chaudhuri, has not gone down well with current and former SBI executives. Former SBI deputy managing director Sunil Srivastava took to Twitter to express his displeasure. “Frankly, without notice and without summons, how can police from another state arrest someone in Delhi? Where is the due process of law? Absolutely pathetic. Is the system being gamed again by defaulters despite all efforts by Modi govt; time for overhaul of judicial processes to improve transparency and introduce accountability,” Srivastava wrote on the social media platform.

Interestingly, Alchemist ARC promoter Alok Dhir was not arrested and his mobile phone was switched off when ET tried to reach him. “Whatever it is, it does not have a logical or legal basis,” the chief of a large public sector bank said, on the condition of anonymity. “There have been numerous court orders, including from the Supreme Court, that directors are not liable for the faults or crimes of a company management. Some lower level judicial and police officers who have no clue of how banking works take these high-handed decisions to please higher-ups. This must stop.”

‘SBI not Party to Case’

SBI said despite the case involving its loan account, it was neither summoned nor asked for its side of the story.

“It transpires now that the borrower had initially filed an FIR with the state police against the sale of the asset to the ARC. Aggrieved against the negative closure report filed by police authorities, the borrower had filed a ‘protest petition’ before the CJM court,” SBI said in a statement. “Incidentally, SBI was not made a party to this case. All the directors of that ARC, including Mr Chaudhuri who joined their board in Oct 2014, have been named in the said case. Incidentally, Mr Chaudhuri retired from the bank’s service in Sep 2013.”

The bank said it has now accessed copies of the proceedings that show the court was not briefed correctly on the sequence of events.

Bank Offers Cooperation
“In as much as SBI was not a party to this case, there was no occasion for the views of SBI being heard as part of these proceedings,” the bank said. “SBI would like to reiterate that all due processes were followed while making the said sale to ARC. The bank has already offered its cooperation to the law enforcement and judicial authorities and will provide further information, if any, that may be called for from their side.”

Bankers said lessons have not been learnt despite recent judicial and police overreaches. They were referring to the dramatic June 2018 arrest of the Bank of Maharashtra CEO Ravindra Prabhakar Marathe, and executive director Rajendra Kumar Gupta. The police subsequently filed a closure report due to lack of evidence and Marathe and Gupta were reinstated.

“The point is that the police were not punished. There is no punishment for wrongful cases and judgements that can destroy careers. Law enforcement agencies are not acting with responsibility and this will have economic repercussions,” said the bank CEO cited above.



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SBI launches pre-approved two-wheeler loan scheme ‘SBI Easy Ride’

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State Bank of India (SBI) has launched a pre-approved two-wheeler loan scheme ‘SBI Easy Ride’ through its digital banking platform YONO.

Eligible SBI customers can avail of two-wheeler loans, up to 85 per cent of on-road price subject to eligibility, through the YONO app without visiting the bank branch.

Customers can apply for the Easy Ride loan for an amount up to ₹3 lakh at an interest rate of 10.5 per cent per annum onwards for a maximum tenure of four years, the Bank said in a statement. The minimum loan amount has been fixed at ₹20,000.

Also read: SBI launches video call life certificate submission facility for pensioners

The Bank emphasised that the EMI is as low as ₹2,560 per lakh. The loan availed will be disbursed directly into the dealer’s account.

SBI Chairman Dinesh Kumar Khara said this digital loan offering will position the Bank at the initial stage of a customer’s life cycle by offering a two-wheeler loan and thereafter upgrade the relationship along with their growth.

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Deutsche Bank ready to be NPS custodian for just Rs 100 per year, BFSI News, ET BFSI

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In an ultra-aggressive bid, Deutsche Bank is willing to accept a fee of just ₹100 a year for being the custodian of India’s pension fund which has total assets under custody of more than ₹6 lakh crore across various schemes.

The existing custodian, Stock Holding Corporation of India, a large depository participant owned by public financial institutions, charges close to ₹19 crore for the job.

Other institutions in the race for the custody mandate of the National Pension Scheme (NPS) include Citi, SBI-SG Global Securities Services (a joint venture between SBI and Societe Generale Securities Services), and ICICI. The fees quoted by these organisations are more than ₹1crore.

NPS, launched by the central government and involving multiple asset managers handling one of the largest fund pools in the country, is regulated by the Pension Fund Regulatory and Development Authority.

“It’s a prestigious mandate. So, Deutsche has probably taken a call to make money from a transitory float it could enjoy as a custodian,” said an official of a bank that has not put in a bid.

A Deutsche India spokesman said the bank would not comment on a client mandate.

“Beyond fees, there could be other ways to earn. Discount brokers charge little or nothing from stock traders. But, with so much liquidity available, earnings from float have come down with the fall in overnight rates. It may further shrink with T+1 (settlement in stock exchanges),” said an official of a financial intermediary.

A custodian has the opportunity to enjoy a day’s float by parking some money with the Reserve Bank of India under the reverse repo facility or in the inter-bank market.

Funds into NPS move from the employer (when salaries are paid) to the collection banks following which the money is transferred to custodians when an asset manager decides to invest in bonds and equities. Since investments happen within a day or two, custodians have a limited float.

The Deutsche bid has to pass the test laid down by the finance ministry.

According to the government’s ‘Manual for Procurement of Consultancy & Other Services’, “An abnormally Low bid is one in which the bid price, in combination with other elements of the bid, appears so low that it raises material concerns as to the capability of the bidder to perform the contract at the offered price. Procuring entity may in such cases seek written clarifications from the bidder, including detailed price analyses of its bid price in relation to scope, schedule, allocation of risks and responsibilities and any other requirements of the bid document. If, after evaluating the price analyses, (the) procuring entity determines that the bidder has substantially failed to demonstrate its capability to deliver the contract at the offered price, the procuring entity may reject the Bid/Proposal.”

Recently, a similar bid from another MNC bank for the custody mandate of postal life insurance was rejected on this ground.

While custody is a stable and sought after business, a few institutions have recently changed tack in choosing custodians. Life Insurance Corporation of India (LIC) recently shut the doors to foreign banks in selecting the custodian for its ₹10 lakh crore holding of stocks and corporate bonds. MNC banks lost out as LIC’s condition was that if the bidder was a foreign company or MNC, any of its securities had to be listed in India.



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Ex-SBI chairman Chaudhury’s bail plea rejected in loan scam case, BFSI News, ET BFSI

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The Chief Judicial Magistrate of Jaisalmer Court on Monday rejected the bail application of former SBI chairman Pratip Chaudhury, arrested in the Jaisalmer hotel loan fraud case, and sent him to judicial custody till November 15.

The former SBI chairman will now have to spend his Diwali behind bars, said sources.

He will be in judicial custody for 15 days till November 15, they added.

Pratip Chaudhury was arrested from Delhi on Sunday and brought to Jaisalmer on Monday.

After that he was produced in the court of Chief Judicial Magistrate, his lawyer moved the bail application, but CJM Hanuman Sahai Jat after hearing rejected the bail application of Pratip Chaudhury and ordered to send him to judicial custody till November 15, following which he was was taken to jail.

The case relates to a hotel group in Jaisalmer which took a loan of Rs 24 crore from SBI in 2008. When the hotel group did not pay full instalments of the loan, the bank allegedly went against the RBI rules and declared it NPA after confiscating the property. It is alleged that later the property was also sold in a wrong manner. At present, the value of this property is being said to be around Rs 200 crore.

The SBI in a statement said that all the facts of the case were not presented before the court properly and SBI was not made a party to the case.

“‘Garh Rajwada’ was a hotel project in Jaisalmer, financed by the Bank in 2007. The project remained incomplete for over 3 years and the key promoter passed away in April 2010. The account slipped into NPA in June 2010. Various steps taken by the Bank for completion of the project as well as recovery of dues didn’t yield desired results. Hence as part of Bank’s recovery efforts, the dues were assigned to an ARC for recovery in March 2014. This sale to ARC by the Bank was done through a laid down process as per the policy of the Bank. “We further understand that the borrower was subjected to IBC process by the said ARC and the asset has been acquired by an NBFC in December 2017, again through due process under the orders of NCLT, Delhi,” the statement said.

“As recovery efforts failed, approvals for sale to ARC were taken in Jan 2014, the assignment to ARC was completed in March 2014. It transpires now that the borrower had initially filed an FIR with the State Police against the sale of asset to ARC. Aggrieved against the negative closure report filed by Police authorities, the borrower had filed a ‘Protest petition’ before the Hon’ble CJM Court. Incidentally SBI was not made a party to this case. All the directors of that ARC including Chaudhuri, who joined their Board in October 2014, have been named in the said case. Incidentally, Chaudhuri retired from Bank’s service in September 2013.

“It appears from the copies of the proceedings now accessed by us that the Hon’ble Court does not appear to have been briefed correctly on the sequence of events. In as much as SBI was not a party to this case, there was no occasion for the views of SBI being heard as part of this proceedings. SBI would like to reiterate that all due process were followed while making the said sale to ARC. The Bank has already offered its cooperation to the Law Enforcement and Judicial authorities and will provide further information, if any that may be called for from their side,” the SBI statement added further.



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Banks with 95% cards implement RBI order on recurring payments, BFSI News, ET BFSI

Banking & Finance

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A month after the RBI’s fresh rules on mandates for recurring card payments kicked in, banks accounting for over 95% of credit cards in the market are compliant with the new system. Over 20 lakh e-mandates have been registered by cardholders with a host of merchants.

According to payment industry sources, the banks whose credit cards are eligible for new standing payment mandate include SBI, Axis Bank, HDFC Bank, Yes Bank, American Express, Bank of India, Bank of Baroda, ICICI Bank, HSBC, RBL Bank, IndusInd Bank and Kotak Mahindra Bank. Several banks have enabled the mandate for both debit cards as well as credit cards.

Automatic recurring payments also require the merchant to be on-boarded to the new e-mandate framework. The compliant businesses include most of the OTT (over-the-top) streaming platforms, private life & general insurance companies, global IT giants like Google, Facebook, Microsoft and McAfee, as well as some edtech companies.

Interestingly, Indian cardholders who have registered with overseas service providers, having payment gateways abroad, are not subject to the new rules. This is because the RBI has no jurisdiction to impose second-factor authentication in those markets. It is up to the customer to disable international transactions on their cards.

What has facilitated the fast on-boarding of merchants is IT solutions like SI Hub developed by BillDesk and Mandate HQ developed by Razorpay. However, some domestic banks like Canara Bank & Punjab National Bank and Standard Chartered Bank were until last week in the process of making the necessary system changes.

According to the sources, card-based recurring transactions are 2.5% in terms of the number of transactions and 1.5% in terms of the value of the total card payments done in the country. On average, approximately 75% of domestic recurring transactions are of values of up to Rs 5,000. The corresponding figure for cross-border recurring transactions is approximately 85%.



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SBI launches video call life certificate submission facility for pensioners

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State Bank of India (SBI) has launched a Video Life Certificate (VLC) facility for pensioners.

With this facility, pensioners can schedule a video call with SBI staff at their convenience and complete the process of life certificate submission without having to visit the bank branch, India’s largest bank said in a statement.

Pensioners have to log on to www.pensionseva.sbi, click on ‘Video LC’ and enter their SBI pension account number. They will have to submit the OTP received on their registered mobile numbers.

After reading the terms and conditions, pensioners can click on ‘Start Journey’.

“Pensioners will have to keep their original PAN card in place, click on ‘I am ready’ and grant permission to start the video call,” the Bank said.

Dinesh Khara, Chairman, SBI said, “We believe this facility will digitally empower pensioners and enable them to submit their life certificates without any hassle of visiting the branch amid Covid-19. ”

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Former SBI boss Chaudhary arrested for selling hotel at cheap price after declaring as NPA, BFSI News, ET BFSI

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Former SBI chairman Pratip Chaudhary has been arrested by the Jaisalmer Police from Delhi on the basis of arrest orders issued by the Chief Judicial Magistrate Court in the case of selling a hotel property at a cheap price after declaring it NPA.

Pratip Chaudhary was arrested on Sunday and will be brought to Jaisalmer on Monday. According to information received from the police, Pratip Chaudhary was arrested from his residence in Delhi in a case related to a hotel group in Jaisalmer. It is alleged that the property worth about Rs 200 crore was sold for Rs 25 crore by declaring it Non Performing Asset (NPA).

This property, in fact, was seized in lieu of the loan. According to the police, the hotel group had taken a loan of Rs 24 crore from SBI in 2008 for the construction purpose. At that time, another hotel of the group was running smoothly. After that, when the group could not repay the loan amount, the bank seized both the hotels of the group after considering it as a non-performing asset. At that time, the chairman of the bank was Pratip Chaudhary.

The bank then sold both the hotels to a company for Rs 25 crore at a much lower price than the market rate. On this, the hotel group went to court.

Meanwhile, the buyer company took over it in 2016 and when this property was valued in 2017, its market value was found to be Rs 160 crore. At the same time, after retirement, Pratip Chaudhary joined the same company as a director to which this hotel was sold. At present, the value of these hotels is being estimated at Rs 200 crore.

In this case, the CJM Court of Jaisalmer ordered the arrest of Pratip Chaudhary.



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