Tag: sbi

Anecdotal, though-provoking memoir on India’s banking system, BFSI News, ET BFSI

Banking & Finance

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New Delhi, This is a highly anticipated account of some of the critical periods in the history of Indias financial sector by one of the countrys most talented and established banking professionals in the country, Rajnish Kumar, former Chairman of State Bank of India (SBI), Indias largest commercial bank.

“The Custodian of Trust” (Penguin) is the story of Rajnish Kumar’s incredible journey as a banker. Debuting as a writer with his memoir, Kumar shares his stories – from being a probationary officer in SBI to becoming its chairman in 2017 – capturing the many changes he witnessed in India’s banking sector during his career. Recounting his experiences about the aftermath of demonetization; challenges in YES Bank; the crisis in Jet Airways and NPAs, this book is anecdotal, engaging and thought- provoking, and will attract a wide spectrum of readers.

“I am pretty excited to share my journey of 40 years with State Bank of India and offer glimpses of my personal life,” Rajnish Kumar said.

“SBI is considered a proxy to the Indian Economy. In that sense, the book is also an account of the tremendous progress made by the country as well as the banking and financial system in the last four decades. The removal of poverty has been the biggest challenge and banks have played a critical role in the fight against poverty. There are many untold and unknown stories in the book, which I am sure readers will find interesting and inspirational,” he added.

Even before its official launch, “The Custodian of Trust” has received generous praise and endorsements from the stalwarts of India Inc. and the banking industry. Ratan Tata, Chairman Emeritus, Tata Sons, remarked that “this book is not just about the banking system of our country, but a chronicle of contemporary economic history”. Uday Kotak, CEO, Kotak Mahindra Bank, said about the book: “It has the potential to be a Bollywood blockbuster.”

Premanka Goswami, Executive Editor at Penguin Random House India, said: “Rajnish Kumar assumed the responsibility to lead the country’s biggest commercial bank at a critical time when India’s financial sector was going through a turmoil. ‘The Custodian of Trust’ opens a window to these times. We, at Penguin House Random House India, are excited to publish Kumar’s memoir.”

Rajnish Kumar joined SBI as a probationary officer in 1980. He served the bank in various capacities across the country and overseas. Prior to his appointment as Chairman, he was Managing Director (National Banking Group) at the bank overseeing the Retail business and Digital Banking. He was Chairman of the Indian Banks Association and served on the boards of many other companies while serving SBI.

Currently, he is a director on the boards of HSBC Asia Pacific, L&T Infotech Ltd and Lighthouse Communities Foundation. He is also an exclusive advisor to Kotak Investment Advisors Ltd and senior advisor to Baring Private Equity Asia Pvt Ltd.

–IANS

vm/ksk/



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Get details here, BFSI News, ET BFSI

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If you are a State Bank of India (SBI) customer then you should know that few of its digital channels will be unavailable on October 9 and 10 (i.e., Saturday and Sunday). According to the bank’s official Twitter account, SBI customers will not be able to use services such as Internet Banking , YONO ,YONO Lite ,UPI for a 120 minutes both on Saturday and Sunday due to scheduled maintenance activities.

“We request our esteemed customers to bear with us as we strive to provide a better banking experience. We will be undertaking maintenance activities from 00:20 hrs to 02.20 on 9th Oct 2021(120 minutes) and from 23:20 hrs on 10th Oct 2021 to 1.20 hrs on 11th Oct(120 minutes). During this period, Internet Banking / YONO / YONO Lite / UPI will be unavailable. We regret the inconvenience caused and request you to bear with us,” stated SBI via a tweet.

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RBI governor, BFSI News, ET BFSI

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Amid rising concerns over mispricing of credit risk by banks due to abundant liquidity, the Reserve Bank of India today said it was for the banks to do their own risk assessment and price their loans accordingly.

‘Banks should do own risk assessment and based on it should price their loans, action lines in the domain on banks,” said RBI governor Shaktikanta Das.

“I don’t think SBI has flagged this issue as a complaint, SBI has flagged it as a concern, which is for the banks to take note of, whatever be the liquidity situation,” he said.

Mispricing of loans

A few weeks ago, SBI, the country’s largest lender, has said that mispricing of risks is a cause of concern given the fact that there is ample liquidity in the system.

Since deposits are flowing into the system and credit offtake is yet to take place, bankers may be tempted to make investments in alternative avenues like T-Bills, SBI chairman Dinesh Kr Khara said.

“The depth of this alternative investment market is shallow. There is a chance of mispricing of risks. But I feel there will be no compromise on underwriting standards as the banking system has learned the hard way due to huge NPAs,” he said.

Striking a balance

The SBI chairman said there is a need to strike a balance and unless there is improvement in growth, it will be big challenge.

Regarding offtake of credit, the banker said some industrial sectors are showing improvement but it is not universal across sectors.

“I hope the Production Linked Incentive scheme will help a lot in offtake of liquidity, particularly in the MSME sector. Now some private sector investments are likely to take place besides PSUs. The road sector is looking promising,” he stated.

Khara said given the present macroeconomic conditions it is unlikely that the central bank will alter interest rates in the coming Monetary Policy Committee meeting.



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Khara, BFSI News, ET BFSI

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-By Nidhi Chugh & Ishwari Chavan

Dinesh Khara

State Bank of India will soon roll out its Environmental, Social, and Governance structure, with an aim to increase its exposure to climate-change-mitigation companies, such as renewable energy, by extending credit relaxations, said Chairman Dinesh Khara.

For loans exceeding Rs 50 crore, borrowers are assigned scores on the basis of their performance on various ESG parameters, Khara said at the ESG India Leadership Awards 2021 on Thursday.

“The bank acknowledges the increasing risk of climate change that is embedded in its credit portfolio, and is in the process of devising a framework for climate risk management. We are also in the process of identifying and managing risk arising out of ESG practices, to increase our exposure to climate-change-mitigation companies, which includes relaxation in extending credit facilities to borrowers in the renewable energy sector,” Khara said.

Unless banks are able to provide adequate credit to green projects and measure risk in their portfolio, the bank’s depositors and shareholders will continue to carry ESG risk that can erode returns, Khara said.

According to experts, ESG investors are likely to face risks of small cap and single stock investments, and interest rate and inflation.

Khara spoke of the bank’s plan to embrace ESG investments.
Khara spoke of the bank’s plan to embrace ESG investments.

SBI aims to be carbon neutral by 2030, and in line with this target the bank has taken a number of initiatives to reduce its carbon impact, including installation of solar power plants, tree plantation, organic farming and banning the use of single use plastic, Khara said.

The bank has taken a two-fold approach to reach its 2030 goal – managing the impact of its own operations and directing its funding to climate-change-mitigation sectors, he added.

On India’s approach towards sustainable growth, Khara said the banking sector should accelerate green lending and report their ESG portfolio performance. India should define its green finance by combining international practices, developing its set of principles, and obtaining stakeholders’ views.

“To support acceleration in green financing, a number of structural changes will be needed in the traditional lending approach, including evaluation and certification of the green credentials of each project, understanding of the corporate roadmap to achieve net zero, and how projects will contribute to the achievement of net zero emissions,” he said.

Meanwhile, at the award function, Infosys emerged as a ESG leader across industries, while Axis Bank led the pack in transparency and disclosures, said ESGRisk.ai, the organiser, in a note.



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What is co-lending, and how will work?, BFSI News, ET BFSI

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-By Ishwari Chavan

Under RBI’s model, banks can co-lend with all registered NBFCs, including housing finance companies.


The co-lending model has been around in the BFSI sector for some time now, but after the Reserve Bank of India issued guidelines in November 2020, co-lending has become a response to ease the liquidity crisis in non-bank lenders. The method aims to enhance credit flow to productive sectors, and banks and non-banking financial companies (NBFCs) have been increasingly exploring co-lending opportunities.

What is RBI‘s Co-Lending Model, and how will it work?

RBI’s CLM is one wherein two lender firms, in this case a bank and an NBFC, come together to disburse loans. Under RBI’s model, banks can co-lend with all registered NBFCs, including housing finance companies.

As per the guidelines, NBFCs and HFCs facilitate the origination and collection of housing loans while banks leverage their balance sheet strength to house the majority of the loan. This means that 80% of the loan will reflect in the bank’s balance sheet, while 20% in that of NBFCs or HFCs.

In simple terms, banks will lend to NBFCs, and NBFCs will pass it on to the priority sectors, since they have a greater reach.

NBFCs will be the single point of interface for the customers and enter into a loan agreement with the borrowers. The agreement should contain the features of the arrangement and the roles and responsibilities of NBFCs and banks.

The ultimate borrower would be charged an all-inclusive interest rate.

Considering the lower cost of funds from banks and greater reach of NBFCs, the primary focus is to improve credit flow to the unserved and underserved sectors of the economy, also known as priority sectors, and make funds available to the ultimate beneficiary at an affordable cost.

The agreement should contain the features of the arrangement and the roles and responsibilities of NBFCs and banks.
The agreement should contain the features of the arrangement and the roles and responsibilities of NBFCs and banks.

RBI has prescribed that a portion of bank lending should be used for developmental activities, for the priority sector, which includes agriculture, MSMEs, housing, and so on.

According to norms, both public and private sector banks have to lend 40% of their net bank credit (NBC) to the priority sector and foreign banks have to lend 32% of their NBC.

How is co-lending beneficial for lenders and borrowers?

The partnership allows banks to lend more funds to sectors and regions they do not have reach in. With the greater reach of NBFCs, the model allows banks to meet their total priority sector lending (PSL), while NBFCs get bigger and top rated borrowers on its books.

It also allows NBFCs to source clients, perform credit appraisals and disburse a small part of the loan amount, and enables banks to expand their lending business.

The end borrower gets accessibility to loans at very affordable and competitive rates, and is in turn included in the country’s financial ecosystem.

Recent co-lending agreements

> Last week, U GRO Capital signed a co-lending agreement with IDBI Bank to provide formal credit to underserved MSMEs.

> Last month, Bank of India entered into a co-lending arrangement with MAS Financial Services for MSME loans, IIFL Home Finance signed an agreement with Punjab National Bank, and SBI signed an agreement with Paisalo Digital.

> In July, YES Bank and Indiabulls Housing Finance Ltd entered into a strategic co-lending agreement to offer home loans.



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Moody’s raises rating outlook to stable for 18 corporates, banks, BFSI News, ET BFSI

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Moody’s Investors Service on Wednesday raised the rating outlook for 18 Indian corporates and banks, including Reliance Industries, Infosys, SBI and Axis Bank, to ‘stable’ from ‘negative’. This follows the upgrade by the US-based rating agency in India’s sovereign rating outlook to ‘stable’ from ‘negative’ on Tuesday. The agency had affirmed the sovereign rating at ‘Baa3’.

The nine companies whose rating outlook has been revised upwards are RIL, TCS, Infosys, ONGC, Petronet LNG Ltd, UltraTech Cement, Oil India, Indian Oil Corporation and Hindustan Petroleum Corporation Ltd (HPCL).

The agency also affirmed the rating on privatisation-bound Bharat Petroleum Corporation (BPCL), but maintained the ‘negative’ outlook.

The nine banks whose outlook has been revised to ‘stable’ are SBI, Axis Bank, Bank of Baroda, Canara Bank, Axis Bank, HDFC Bank, ICICI Bank, PNB, Union Bank and EXIM Bank.

“Stabilization in asset quality and improved capital are the main drivers of this rating action,” Moody’s said.

Also, the rating outlook has been revised to ‘stable’ from ‘negative’ on 10 Indian infrastructure issuers, including NTPC, NHAI, PGCIL, Gail, Adani Transmission and Adani Ports and Special Economic Zone Limited (APSEZ). PTI JD ABM ABM



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SBI extends partnership with TCS for another 5 years

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Tata Consultancy Services (TCS) on Wednesday announced that its long-standing client State Bank of India (SBI) has extended its partnership for another five years.

SBI has been using TCS BaNCS for over two decades now. As a part of the new contract, TCS will continue to maintain and enhance SBI’s application estate around core banking, trade finance, financial reporting, and financial inclusion with new features and functionality. This will support the bank’s ability to launch newer offerings and respond to business and regulatory changes.

Digital solutions for Gen Next banking

In addition, TCS will continue to leverage its contextual knowledge of SBI’s business and technology landscape to help the bank with large transformation programmes to help its customers make their day-to-day banking easy and secure. In the most recent such engagement, TCS is helping build Bharat Craft — an omnichannel, online B2B e-commerce platform which would serve as a marketplace for MSMEs, jointly driven by SBI and the Government of India.

As fintechs turn up the heat, banks must up their tech game

Prior to that, TCS collaborated with SBI to execute the simultaneous merger of five associate banks and Bharatiya Mahila Bank. The colossal undertaking involved integrating over 200 business processes, over 43 IT applications, 17,500 products, and over 50 billion database records, impacting over 50,000 tellers across 7,000 branches. Immaculate planning and execution ensured accomplishment of all goals, without any interruption to services, in just six weeks, TCS said.

‘Valuable partner’

Ravindra Pandey, DMD & CIO, SBI, said, “Technology and innovation have been at the core of SBI’s growth and transformation journey over the last two decades. TCS has been a valuable partner since the beginning and has supported us in building and running a high-performing, resilient and scalable core banking platform that is foundational to all our digital initiatives. We are pleased to extend our relationship with TCS as we continue to work together to launch new initiatives for enhanced customer experience.”

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ICICI Bank 2nd in card spends, ahead of SBI, BFSI News, ET BFSI

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ICICI Bank has overtaken SBI in credit card spends in August taking the number two spot after HDFC Bank. According to RBI data, ICICI Bank had a market share of 19.6% in August 2020 up from 15.8% in August 2020. SBI Card’s market share in spends, slipped to 18.7% in August 2021 from 20% in the previous year.

In absolute terms, total spending through credit cards in August 2021 was Rs 77,733 crore, up 54% from Rs 50,319 crore in August 2020. The overall number of cards in force has increased from 5.8 crore to 6.4 crore in the same period.

“Looking at total spends, since November 2020, ICICI has gained around 510 basis points market share, while HDFC Bank and SBI cards have lost around 285bps and 90bps market share, respectively. ICICI Bank’s total spends for July 2021 was equal to that of SBI cards despite ICICI Bank’s market share (based on outstanding cards) being lower than that of SBI Cards. We believe, ICICI’s co-branded card with Amazon (1.6 millon as of March 2021), which forms more than 50% of incremental card additions, has helped it to scale up its credit card business in a significant way,” said Suresh Ganapathy, an analyst with Macquarie research.

To boost credit card spending, HDFC Bank on Tuesday launched its Festive Treats 3.0 campaign, which will provide offers on cards, loans and EMIs. The bank has partnered with over 10,000 merchants across 100 locations as it expects customers to return to offline shopping following a dip in Covid cases and increased pace of vaccinations. “This year we have come out with more offline offers including hyperlocal merchants. We will use our ATM platform to inform customers about the offers around their location,” said Parag Rao, group head (payments, consumer finance, digital banking and IT).

HDFC Bank continues to be the market leader with 26.5% of total credit card spending in India. However, the bank’s share has fallen from August 2021, when it accounted for 28.7% of the total spend. Sequentially, HDFC Bank had seen a dip in credit cards in force as the RBI ban was still in force for most of the month. Since the ban was lifted the bank had added four lakh credit cards to its base of 1.47 crore cards as of August 2021.

The biggest loser in terms of share of spending is Citibank, which led the ranking in terms of card spend for many years. The multinational, which had a 7.8% share of spends in 2020 now accounts for 4.9% of spending. IDFC First Bank, a relatively late entrant, has managed to make a dent by increasing its share of card spend to over 1%. American Express is the only multinational bank to grow its share of spending from a year-ago period. However, the US issuer also faces an embargo on issuing new cards until it complies with data localization norms, which is likely to hit growth.



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SBI and Indian Navy launch NAV-eCash Card, BFSI News, ET BFSI

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The Indian Navy and State Bank of India (SBI) has launched SBI’s NAV-eCash Card onboard India’s largest Naval Aircraft Carrier INS Vikramaditya.

The launch of SBI’s NAV-eCash Card is in view SBI’s efforts towards the GOI’s vision of Digital India and a conscious shift towards less-cash economy. The unique infrastructure at naval ships inhibits traditional payment solutions particularly when the ship is in high seas where there is no connectivity. NAV-eCash Card with its dual-chip technology will facilitate both online as well as offline transactions.

The Card will obviate the difficulties faced by personnel onboard in handling physical cash during deployment of the ship at high seas. The card takes care of the requirements of Navy to provide a seamless onboard experience. The NAV- eCash Card will change the payment ecosystem while the ship is sailing with no dependency on cash for utilization of any of the services onboard.

Shri CS Setty, MD (Retail & Digital Banking), SBI, emphasized upon the Bank’s commitment towards defence forces and the long relationship with the armed forces of India. He also expressed the feeling of pride on being associated with defence forces. The concept will be replicated at other naval ships and various defence establishments for creating a secured, convenient and sustainable payment ecosystem.

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Soma Sankara Prasad likely to be next UCO Bank MD, BFSI News, ET BFSI

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The government is considering appointing Soma Sankara Prasad, the deputy managing director of State Bank of India, as managing director of Kolkata-based UCO Bank. The Banks Board Bureau (BBB) has suggested the name of UCO Bank Managing Director Atul Kumar Goel for heading Punjab National Bank as MD. The managing director position of PNB will fall vacant after the superannuation of S S Mallikarjuna Rao in January.

According to sources, since Prasad was in the reserve list when the interview for appointment for managing director of Indian Bank took place earlier this year, he has been recommended to head UCO Bank subject to various clearances including vigilance.

The final view in this regard would be taken by the Appointments Committee of the Cabinet (ACC) headed by the Prime Minister, sources said.

The BBB, the headhunter for state-owned banks and financial institutions, in May had conducted interviews for the position of MD of Indian Bank. Post interview, Shanti Lal Jain was recommended for the post while Prasad was the candidate on the reserve list.

Last month, the Reserve Bank removed UCO Bank from its Prompt Corrective Action (PCA) Framework following improvement in various parameters and a written commitment that the state-owned lender will comply with the minimum capital norms.

The lender also apprised the RBI of the structural and systemic improvements that it has put in place, which would help the bank in continuing to meet the financial commitments. The public sector bank plunged under PCA in May 2017.

PCA is triggered when banks breach certain regulatory requirements such as return on asset, minimum capital and quantum of the non-performing asset.

The restrictions disable banks in several ways to lend freely and force them to operate under a restrictive environment that turns out to be a hurdle to growth.

UCO Bank had posted over a four-fold jump in its net profit to Rs 101.81 crore for the first quarter of the fiscal ended June 30, as bad loans fell significantly.

The lender trimmed its gross non-performing assets (NPAs or bad loans) significantly to 9.37 per cent of the gross advances as of June 30, 2021, as against 14.38 per cent at June-end 2020.

The net NPAs were down at 3.85 per cent (Rs 4,387.25 crore) from 4.95 per cent (Rs 5,138.18 crore). PTI DP ANZ MR



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