Cabinet committee OKs seven appointments of executive directors at six PSBs, BFSI News, ET BFSI

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The Appointments Committee of the Cabinet (ACC) today approved seven appointments of executive directors at six public sector banks, the government said in a release accessed by ETBFSI. All appointments are likely to come into affect from the date of assumption of office.

The appointments will be effective provided that the officials are eligible for extension of the term of office, after a review of their performance by two years, or until further orders, whichever is earlier.

Rajneesh Karnatak has been appointed as the executive director of Union Bank of India for a period of three years. Karnatak is currently the chief general manager of Punjab National Bank.

Roy Joydeep Dutta has been appointed as the executive director of Bank of Baroda for three years, and is currently the chief general manager of the bank.

Nidhu Saxena has been appointed as the executive director of Union Bank of India for three years. Currently, Saxena is the general manager of UCO Bank. Saxena’s appointment can also come into force after February 1, 2022, or until further orders, whichever is earlier.

Kalyan Kumar has been appointed as the executive director of Punjab National Bank for three years. Kumar is currently the chief general manager of Union Bank of India.

Ashwani Kumar, currently the chief general manager of Punjab National Bank, has been appointed as the executive director of Indian Bank for three years.

Yadav Ramjass, currently the chief general manager of Bank of Baroda, has been appointed as the executive director of Punjab & Sind Bank. Ramjass’ appointment will be effective up to his date of attaining superannuation – April 30, 2024 – or until further orders, whichever is earlier.

Asheesh Pandey, currently the chief general manager of Union Bank of India, has been appointed as the executive director of Bank of Maharashtra for a period of three years, with effect from the date of assumption of office on or after December 31, or until further orders.



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Union Bank MD, BFSI News, ET BFSI

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With digitization gaining pace, close to 50 per cent of retail and MSME loans offered by banks will shift to digital lending platforms over the next two to three years, Union Bank of India‘s Managing Director and CEO Rajkiran Rai G said on Thursday. Rai said digital lending is changing the banking landscape in a big way because of the availability of data and many ecosystem partners collaborating with banks.

“I feel that at least 50 per cent of the loans under retail and MSME segments will move to the digital lending platforms, right from sourcing to documentation level, in two to three years,” Rai said while speaking at Sibas 2021, an annual banking and finance conference.

He said the digital lending space is gaining traction and banks need to develop products that can deliver services online to customers.

Rai said he sees a big revolution in MSME lending going forward.

“The working capital lending to MSME will move from open credit like working capitals and cash credits, to very-targeted lending such as very specific invoice discounting and supply bill discounting,” he said.

Speaking about the entry of fintech in the banking space, he said initially it was thought that fintech will compete with banks, but now the relationship between the two has become more symbiotic.

“Now, fintechs are helping us (banks). They are no longer competitors to us. The digital lending space will be nothing but fintech tie-ups,” he said.

There are many products where fintechs are already working with banks, he added.

Rai believes banks need to continuously invest in technology and upgrade themselves.

He said the management bandwidth in the public sector space, at least on thinking about innovations and digitization, is quite less.

“We have the traditional people who are good in handling technology and managing the core banking system, but they are not in the space of innovation and developing new products,” Rai said.

He said public sector banks need to get new talent from the system who are adept in technology and can bring in innovations. PTI HV MR



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Staff asked to follow ‘Navratri’ dress code or pay fine!, BFSI News, ET BFSI

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Mumbai, In a bizarre development, public sector lender, Union Bank of India had mandated a section of its staffers compulsorily adhere to a special ‘Navratri‘ dress code or be ready to cough out fines.

The detailed order came vide a colourful circular issued on October 1 by the Digitisation Department, at the Central Office in Mumbai, signed by General Manager, A. R. Raghavendra.

Following an uproar on social media, the UBI management has reportedly yanked off the circular, it emerged late on Sunday night.

In the multi-coloured order, Raghavendra had asked all staff and on-site vendor partners to follow a daily colour dress code for the festival – from October 7, yellow, green, grey, orange, white, red, royal blue, pink, and purple for the last day – October 15.

To ensure compliance, he warned of a Rs 200 fine each for not adhering to the colour code plus a daily group photos of all staffers!

On October 14, there will be a ‘Chaat Party’ and staffers have been advised not to carry their lunch boxes, besides indoor games for staff and executives, post-lunch from 3 p.m. onwards.

“We request you all to make yourself available and not to keep any meeting,” Raghavendra said, signing off with a ‘request’ to all to follow the day-wise colour code scheme and make the celebration a grand success.

The All India Union Bank Employees Federation (AIUBEF) has not taken kindly to the diktat and shot off a letter to the UBI Managing Director and CEO Rajkiran Rai G., demanding stringent action against the GM.

Eminent litterateur and Madurai CPI-M MP, S. Venkatesan, has dashed off a letter to the UBI, terming Raghavendra’s circular as “highly atrocious”.

“It would damage not only image of the state-run bank and also is an infringement of human rights and secular values of this great country,” Venkatesan said, demanding withdrawal of the circular and action against the erring official.

Taking umbrage, AIUBEF General Secretary Jagannath Chakraborty has said that issuing official instructions for celebrating a religious festival in office, fixing a dress code, and imposition of penalty are not routine matters and would have required the permission from the top management.

“This has never happened in the 100 years’ history of the Bank. He should immediately withdraw the circular,” the AIUBEF leader said.

“We believe he did not obtain the permission… However, whether he was granted permission or not, we hereby lodge a strong protest against such wishful & dictatorial action of Raghavendra,” Chakraborty said.

He pointed out that a religious festival like Navratri should be observed and celebrated privately and “not officially in a PSB that maintains a high esteem towards the secular fabric of our society”.

“Celebration of any festival is a voluntary phenomenon that has no room for any instruction/coercion far to speak of imposition of penalty. The GM should know that for exercising a power, one should possess the power first,” added Chakraborty.

The AIUBEF asked the MD under what rule the GM derived the power to impose penalties for not adhering to the nine-colour dress code, even on holidays!

“We demand for fixing of accountability upon him and also for appropriate action for using Bank’s logo, platform, etc. to accomplish his personal desire by abusing official power,” said Chakraborty.

Bankers said they do not recall “such a thing ever” as dress codes, photo-sessions, parties and indoor games in the office, in the entire banking industry and said the UBI must immediately act against the officer concerned to convey the correct message to the national banks fraternity.

(Quaid Najmi can be contacted at q.najmi@ians.in)



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NARCL expects up to 32%, or Rs 64,000 crore, recovery from the first bad loan tranche, BFSI News, ET BFSI

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The National Asset Reconstruction Company (NARCL), or bad bank, hopes to between Rs 50,000 crore and Rs 64,000 crore through the resolution of bad loans amounting to Rs 2 lakh crore, according to a report.

The lowest recovery is seen at 25 per cent or Rs 50,000 crore while the highest recovery rate is pegged at 32 per cent, or Rs 64,000 crore. The most likely recovery has been pegged at 28 per cent or Rs 56,000 crore.

The NARCL will buy the assets around Rs 36,000 crore or, about 18 per cent of the book value of Rs 2 lakh crore assets. About 15 per cent of Rs 36,000 crore would be paid by NARCL to banks in cash and the remaining 85 per via security receipts guaranteed by the Centre.

Close to liquidation

Though banks have made 100% provision for these assets, even Rajkiran Rai, Chairman of Indian Banks Association, and MD & CEO of Union Bank of India does not expect more than 20-25 per cent recovery from these legacy accounts, he told a television channel.

The State Bank of India has identified NPAs with Rs 17,000-18,000 crore outstanding to be transferred to the NARCL while Punjab National Bank has identified Rs 8,000 crore worth of NPAs, Union Bank of India Rs 7,800 crore of NPAs to be transferred to the National ARC. The Bank of India has identified about Rs 5,500 crores of assets for transfer while Indian Bank about Rs 1,900 crore.

The assets

Banks have identified Rs 82,496 crores worth of bad loans that could be transferred to the NARCL, which names like Videocon’s VOVL (Rs 22,532 crores total exposure), Reliance Naval and Engineering Ltd (Rs 8,934 crore), Amtek Auto (Rs 9,014 crore), Jaypee Infratech (Rs 7,950 crore, Castex Technologies (Rs 6,337 crore), GTL Ltd (Rs 4,866 crore), Visa Steel (Rs 3,394 crore), Wind World India Ltd (Rs 3,161 crore), Lavasa Corporation (Rs 1,424 crore), Consolidated Construction Consortium Ltd (Rs 1,353 crores), among others.

Several assets such as Videocon have seen realisable value close to liquidation value in NCLT proceedings. Many big-ticket resolutions at IBC have seen haircuts over 90%. With most of the NPAs proposed to be transferred to the bad bank being old legacy NPAs, there has been an erosion in value, making them more likely to head to liquidation.

Lavasa Corporation has got bids worth Rs 700 crore for loan claims of over Rs 8,000 crore at NCLT.



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Union Bank of India bags pension disbursal mandate from NDMC, BFSI News, ET BFSI

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New Delhi, Union Bank of India on Tuesday said it has bagged pension disbursement mandate from North Delhi Municipal Corporation. Union Bank of India has entered into an agreement with North Delhi Municipal Corporation (NDMC) for pension disbursal of their retired employees, the lender said in a release.

A memorandum of understanding was signed at the Civic Centre, the headquarters of NDMC.

The agreement will come into effect immediately.

“Union Bank of India is committed to ensure timely, accurate and reliable disbursement of monthly pension to the pensioners of North Delhi Municipal Corporation (NDMC), along with serving the pensioners in a better manner.

“Our collaboration is a step forward in our relationship with NDMC and going to benefit Union Bank of India, NDMC and people at large,” R K Jaglan, GM, Government Business said.

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Bank lending hit as corporates head to bond St, fintech firms poach retail borrowers, BFSI News, ET BFSI

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Overall bank lending could drop during this fiscal as corporate loan demand slumps and other sources of borrowings emerge.

Bank credit flow during April to August has shrunk over the same period a year ago, according to data from the Reserve Bank of India. This is despite the private-sector lenders such as HDFC Bank and ICICI Bank reporting double-digit growth in lending in the first quarter.

The overall fund flow into the economy grew by 10% in FY21 despite the pandemic. However, the incremental bank lending shrank 1.6% in FY21, while non-bank sources grew 30%.

Corporates reluctant

Banks are hoping for a lending spurt with the revival of capital expenditure, but it remains doubtful due to uncertainty over Covid.

Also, corporates are looking at cheaper avenues for funds. They raised Rs 1.8 lakh crore from the bond market this fiscal so far. Foreign direct investment and ECB have been also been strong, which has been bad news for banks. The buoyant equities market has seen corporates raising over Rs 1 lakh crore from the avenue during this fiscal till August.

In July

The total outstanding loans to large industries by the banking sector has shrunk for the 11th straight month in July 2021 as companies continue to deleverage and shift to cheaper options such as bonds. Most of the bank credit is driven by the retail and agri segments as sanctioned limits of corporates remain unutilised to the extent of 25%. The credit to large industries shrank 2.9% in July.

The credit growth in the last two months is being led by is led by MSMEs, agriculture and retail as corporate lending stays tepid.

PSU banks hit

The deleveraging has led to a drop in corporate loan demand for banks, especially PSU ones.

The domestic corporate loans by the State Bank of India fell 2.23 per cent to Rs 7,90,494 crore in the quarter ended June 30, 2021, compared to Rs 8,09,322 crore in the same quarter last year. In the first quarter of FY21, SBI reported 3.41 per cent growth in corporate advances.

Union Bank of India‘s share of industry exposure in domestic advances dropped to 38.12 per cent at Rs 2,40,237 crore from 39.4 per cent at Rs 2,47,986 crore in the same quarter a year ago. Corporate loans dropped 3% at Indian Bank during the last quarter. At PNB, corporate loans fell 0.57 per cent at Rs 3,264,66 crore in June quarter 2021 compared to Rs 3,28,350 crore a year ago.

Retail front

Banks, which have been relying on the retail sector, are facing competition. Non-banking financial companies that were reeling after the collapse of IL&FS have bounced back and emerged out of the pandemic relatively less hurt. Banks are facing competition from fintech firms, which have made borrowing a seamlessly easy experience.

with the advent of account aggregators, transaction details of borrowers can be open to lender, which may lead to poaching of customers.



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CBI books firm, CMD for Rs 1.5K cr bank fraud, BFSI News, ET BFSI

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Shimla: The Central Bureau of Investigation (CBI) has registered a case against a Delhi-based private company, which has its industrial unit in Himachal Pradesh, and others including its promoter & CMD; director/guarantor & two corporate guarantors; unknown public servant(s)/unknown others, for allegedly conspiring with each other to defraud banks, while causing a loss of around Rs 1,528.05 crore to the consortium of 16 banks led by Bank of India.

The consortium banks were – Bank of India, Union Bank of India, Andhra Bank, Punjab & Sind Bank, Indian Overseas Bank, State Bank of Hyderabad, Central Bank of India, Corporation Bank, HDFC Bank Limited, Oriental Bank of Commerce, Saraswat Co-operative Bank, State Bank of Patiala, UCO Bank, Allahabad Bank, Standard Chartered Bank & DBS.

The case has been registered against Indian Technomach Company Limited, its promoter & CMD Rakesh Kumar Sharma, director/guarantor Vinay Kumar Sharma, Gurupath Merchandise Limited (corporate guarantor), Kolkata, and Thunder Traders Limited (Corporate Guarantor), Kolkata, and unknown public servants/others.

CBI officials said searches were conducted on Wednesday at various premises, including at Kangra and Paonta Sahib in Sirmaur district, Himachal Pradesh.

It was alleged that the private company, engaged in manufacturing of ferrous and non-ferrous metal, obtained credit facilities/loans from the consortium of 16 nationalised/private banks from 2008 to 2013 with Bank of India as lead bank.

The accused had allegedly conspired with an intention to defraud the banks through said acts and diverted funds from the loan account, thus causing a loss of Rs 1528.05 crore to the said consortium of the banks.

The account was classified as NPA in the books of accounts of Bank of India with effect from March 31, 2014 due to overdue status of the account in line with IRAC guidelines. The account was red-flagged by Bank of India, as advised by RBI in May 2015 and was declared a fraud in February 2016.



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Here are top banks offering most affordable home loan rates, BFSI News, ET BFSI

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Home loans help people become property owners, and have ownership over secured assets. That is why it is so important for us to know where we can avail the loan from.

Tenure for home loans usually range from 15 years to 30 years, and is one of the most affordable loans available.

The cost effectiveness of a home loan depends on the bank you choose. Following are some top banks offering affordable home loans.

Bank Salaried Borrower Self Employed Borrower Women Others Effective Rate of Interest

(RBI Repo Rate : 4%)

Kotak Mahindra Bank 6.50%-7.1%
ICICI Bank 6.75%-7.4% 6.90%-7.5% 6.75%-7.55%
Bank of Baroda 6.75%-9.0% 7.00%-9.0% 6.75%-9.00%
Union Bank of India 6.80%-7.3% 6.85%-7.3% 6.80-7.30% 6.80-7.30% 6.80%-7.35%
State Bank of India 6.80%-7.1% +15 bps -5 bps 6.80%- 7.15%
Axis Bank 6.90%-8.4% 7.00%-8.5% 6.90%-8.55%
Canara Bank 6.90%-8.85% 6.95%-8.90% 6.90%-8.90%

(Source:
Official Websites- Kotak Mahindra Bank, ICICI Bank, Union Bank of India, State Bank of India, Axis Bank, Canara Bank
BankBazaar.com- Bank of Baroda )

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Loans to large industries shrink for 11th month as corporates avoid banks, BFSI News, ET BFSI

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The total outstanding loans to large industries by the banking sector has shrunk for the 11th straight month in July 2021 as companies continue to deleverage and shift to cheaper options such as bonds.

Most of the bank credit is driven by the retail and agri segments as sanctioned limits of corporates remain unutilised to the extent of 25%.

The credit to large industries shrank 2.9% in July.

The credit growth in the last two months is being led by is led by MSMEs, agriculture and retail as corporate lending stays tepid.

Lending to MSMEs, agriculture and retail picked up sharply in July this year over previous year’s levels, data on sectoral deployment of bank credit released by the Reserve Bank of India showed.

Credit to agriculture and allied activities expanded 12.4% in July 2021 as compared with 5.4% in last July.

Deleveraging on

Corporates that are flush with cash on account of booking bumper profits are looking to deleverage their bank loans and prepaying them.

HDFC Bank received Rs 30,000 crore in prepayments through the Jue quarter, mainly from companies in the commodities and infrastructure sectors.

In the April-June quarter, AAA or AA-rated companies sought to deleverage as they recorded solid cash balances. Cash flows were robust at commodity companies because of record iron ore or aluminium prices, boosting net profits. Infrastructure companies, too, reported fatter bottom lines due to the government’s extensive highway-building programme.

With demand collapsing during pandemic and uncertainty rising, companies had put a pause on expansion and have focused on becoming debt-free.

PSU loan books shrink

The deleveraging has led to a drop in corporate loan demand for banks, especially PSU ones.

The domestic corporate loans by the State Bank of India fell 2.23 per cent to Rs 7,90,494 crore in the quarter ended June 30, 2021, compared to Rs 8,09,322 crore in the same quarter last year. In the first quarter of FY21, SBI reported 3.41 per cent growth in corporate advances.

Union Bank of India‘s share of industry exposure in domestic advances dropped to 38.12 per cent at Rs 2,40,237 crore from 39.4 per cent at Rs 2,47,986 crore in the same quarter a year ago. Corporate loans dropped 3% at Indian Bank during the last quarter. At PNB, corporate loans fell 0.57 per cent at Rs 3,264,66 crore in June quarter 2021 compared to Rs 3,28,350 crore a year ago.

Up to May, the gross loans to large industries declined by 1.7 per cent year­-on­year, according to RBI data.

However, HDFC Bank expanded its corporate loans by over 10% in the April-June quarter to about Rs 3.15 lakh crore.

Shift to bonds

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.

Corporates raised Rs 2.1 lakh crore in the December 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.



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Indian banks facilitate cryptocurrency transactions amid a fresh boom, BFSI News, ET BFSI

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As Indians flock to the cryptocurrency market with renewed enthusiasm, banks are joining the party.

They are again allowing the purchase of Bitcoin and other cryptocurrencies through their channels, easing curbs that they had imposed on such services.

Lenders including HDFC Bank, ICICI Bank and Axis Bank are allowing transactions in virtual currencies through the UPI platform.

Crypto exchange WazirX has listed the net banking facilities of Punjab National Bank, Union Bank of India, IDBI, IDFC First Bank, Federal Bank and Deutsche Bank to make payments for crypto purchases.

According to crypto exchanges, more banks are now warming up to them and several channels are available for customers to buy crypto assets.

The change in stance happened after the Reserve Bank of India told banks that they no longer can use the regulator’s 2018 circular prohibiting dealings in virtual currencies, as the direction has been struck down by the Supreme Court, said people in the know.

Banks have also reopened accounts with crypto exchanges after conducting due diligence, in absence of any specific regulation. This comes at a time when Indians are flocking back to cryptocurrencies.

Reluctant banks

As early as June banks were sending official notices to many customers warning them of curbs, including permanent closure of accounts.

Lenders were asking customers to clarify the nature of transactions and warning credit card users that transactions of virtual currency will lead to suspension/cancellation of card.

While trading in cryptocurrency is not illegal as per existing Indian laws, individual institutions can enforce their terms based on their risk assessment.

A grey area

Despite the boom, cryptocurrencies are in a grey area in India, with the Reserve Bank hostile towards it and the government unsure about its prospects.

There is no legislation or regulatory code yet to govern the crypto ecosystem, leading to confusion among customers, businesses and financial institutions providing banking services.

In 2018, the Reserve Bank of India barred financial institutions from supporting crypto transactions, which the Supreme Court overturned in 2020. The government has circulated a draft bill outlawing all cryptocurrency activities, which has been under discussion since 2019.

Last month, the RBI asked banks not to cite its 2018 circular and clarified that banks can do their own KYC for crypto clients. With this, banks are now reassessing the situation, but several banks currently lack the technical expertise to make a supervisory assessment on these transactions.



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