Sandeep Sood has moved on from L&T Financial Services and joined HDFC Bank as Senior Vice President- Technology Risk. He will be based out of Mumbai.
HDFC Bank is one of India’s largest banks providing a wide range of financial products and services to over 43 million customers.
In the new role, Sood will be overseeing the bank’s various upcoming and ongoing digital transformation initiatives.
In his previous stint with L&T Finacial Services, Sood was Head-IT Infrastructure & Services. He was associated with the company for more than 4 years.
Sood has more than 26 years of professional experience and has worked with companies like NPCI, Reliance Jio Infocomm, HCL Comnet and Tatanet Services.
Throughout his career, Sood has been involved in various projects including Service Delivery, IT Management, Management, Outsourcing, Project Management, Business Process, Solution Architecture.
He completed his graduation in Telecommunications & Network from BITS Pilani. Sood also holds a certificate in Managing IT Projects from IIM-A.
Dhanlaxmi Bank on Thursday said its Part-Time Chairman G Subramonia Iyer has resigned, on personal grounds. “G Subramonia Iyer, part-time chairman and independent director of the bank, has submitted his resignation from the board of directors of the bank vide his letter dated December 2, 2021,” the bank said in a regulatory filing.
His resignation is to be effective from December 31, 2021, it added.
“G Subramonia Iyer has informed that he was tendering his resignation owing to certain urgent and emergent domestic and personal reasons and there were no other material reasons for his resignation,” it added.
Shares of Dhanlaxmi Bank on Thursday closed at Rs 14.14 apiece on the BSE, down by 0.42 per cent from the previous close.
Banks deposits contracted by over a lakh crore in the post Diwali fortnight as investors applied in huge amounts for the big ticket IPOs lined up during the fortnight ended November 19
Aggregate deposits in the banking system dipped Rs 2.67 lakh crore during the fortnight ended November 19 to Rs 157.8 lakh crore, latest RBI data indicates. Both demand and term deposits contracted sharply during the fortnight by Rs 1.52 lakh crore and Rs 2.67 crore respectively.
Analysts attribute this largely to investors using the money parked in banks to apply for many big ticket IPOs during the fortnight. These included PayTM, Sapphire Foods and paisabazar.com among others. “The sharp contraction in deposits during the fortnight is probably driven by withdrawal for IPOs ” said an economist with a foreign bank. “There was a big jump in deposits in the previous fortnight.”
But on a long-term basis deposits continue to post a strong growth despite banks lowering interest rates earned on them. Weighted average term deposit rates have fallen by over 50 basis points-bps over the last one year. Yet, the year-on-year deposit growth is 9.8 per cent as of November 19, as bank deposits continue to be a risk free avenue of investment for savers. It is reckoned that bank deposits account for nearly half of household financial savings in India as they have been typically risk averse. But this mind-set is slowly changing, experts say.
As for credit, there was a modest pick-up of Rs 1,158 core during the fortnight. But on a long-term basis, banks are seeing a pick-up in loan demand as economic activity picks up following easing of lockdown induced restrictions. On a year-on-year basis, credit growth worked out to 6.9 per cent as of November 19, compared to less than 6 per cent a few years ago.
As per the latest data on sectoral deployment of bank credit, loans to large corporates rose 0.5 per cent (on a year-on-year basis) to Rs 22.7 lakh crore in October compared to a contraction of 1.8 per cent a year ago. All major segments except services including agriculture, industry and retail posted higher growth rates over previous year.
The bank credit is ticking up for industry and allied sectors in line with the economic revival, but certain segments continue to stay in doldrums.
Credit to commercial real estate and education loans shrunk by 0.5% and 8.7% on year, respectively, in October.
According to RBI data on sectoral credit deployment, loans to the industry sector increased 4.1% on year to Rs 28,54,571 crore as on October 22. On the other hand, loans to commercial real estate fell 0.5% on year to Rs 2,53,582 crore while education loans credit deployment by banks by 8.7% to Rs 47,260 crore.
Experts say banks have sharply reduced exposure to unsecured credit and are focusing on secured home loans and working capital needs of high rated corporate borrowers. While they are focusing on growing the mortgage book, banks have reduced exposure to commercial real estate, given the uncertain times.
Nearly 9.55% of education loans extended by PSU banks were labelled as non-performing assets (NPAs) as on December 31, 2020, with loans for engineering and nursing courses topping the chart.
Job and income loss and drop-out rates during the pandemic were key factors behind the surge in education loan NPAs.
Rising unemployment rate is posing major challenges to the banking system as the repayment ability of the borrowers are getting impacted accordingly.
About Rs 8,587 crore loans over 366,260 accounts have turned bad as of December 2020.
As on December 31, 2020, there are 24.84 lakh education loan accounts with an outstanding of Rs 89,883.57 crore across the country. Out of these, about 9.55% or 3.66 lakh accounts with an outstanding of Rs 8,587.10 crore have turned NPAs, the parliament was informed.
The highest defaults were in loans extended for engineering courses as Rs 4,041.68 crore spread over 176,256 accounts as on December 31, 2020.
COVID-led spike
Interestingly, the NPA rate has dropped to 7.61% in FY20 end from 8.11% in FY18. It stood at 8.29% in FY19. The category has witnessed higher NPAs than other categories of retail loans including housing, vehicle, that saw bad loans in the range of 1.52% and 6.91% in FY20 While NPAs in the housing, vehicle and other retail sector loans have remained below 2%, consumer durables NPAs have trebled to 6.91% as on March 2020 from 1.99% in March 2018.
Reserve Bank of India
Rising graph
Led by a rise in lending to micro and small, and medium industries, bank loans to the industry sector grew a 4.1% on year in October, sharply higher than 2.5% a month ago and contraction of 0.7% a year ago, according to the RBI data.
Loans to large corporates rose 0.5% (on a year-on-year basis) to Rs 22.7 lakh crore in October compared to a contraction of 1.8 % a year ago.
All major segments, except services including agriculture, industry and retail posted higher growth rates over the previous year. Overall bank credit rose 6.9% in October compared to 5.2% a year ago according to the latest data on sectoral deployment of bank credit released by the Reserve Bank of India.
Government schemes like emergency credit guarantee schemes targeted at such borrowers also seemed to have played a part in the pick-up in lending to these corporate borrowers during the festival season.
The 10.7% growth in gross capital formation in Q2’21-22 is driven primarily by public capital expenditure although there are also signs of a pickup in private capex in the current fiscal.
The Reserve Bank of India (RBI) had issued guidelines on co-lending scheme for banks and NBFCs for priority-sector lending, to improve credit flow towards underserved sectors of economy, the bank said in a release, adding that the model aims to give the borrower the best interest rate and better reach.
State Bank of India (SBI) on Thursday signed an agreement with Adani Capital, the non-banking finance company (NBFC) arm of the Adani Group, for co-lending to farmers for purchase of tractors and farm implement.
“This partnership shall help SBI to expand customer base as well as connect with the underserved farming segment of the country and further contribute towards the growth of India’s farm economy. We will continue to work with more NBFCs in order to reach out to maximum customers in far flung areas and provide last mile banking services,” said SBI chairman Dinesh Khara.
The Reserve Bank of India (RBI) had issued guidelines on co-lending scheme for banks and NBFCs for priority-sector lending, to improve credit flow towards underserved sectors of economy, the bank said in a release, adding that the model aims to give the borrower the best interest rate and better reach.
Registered in 2017, Adani Capital is a non-deposit taking systemically important NBFC with total assets under management (AUM) of Rs 1,292 crore as on March 31. The NBFC had 28,000 customers spread across 63 branches in 6 states including Maharashtra, Gujarat, Rajasthan, Karnataka, Tamil Nadu and Uttar Pradesh.
This was the second consecutive November when the NBFC has crossed the Rs 1,000-crore disbursement mark.
Shriram City Union Finance, the Chennai-based leading two-wheeler NBFC and part of Shriram Group, has disbursed the highest ever loans amounting to Rs 1,022 crore to 1.6 lakh two-wheelers in November 2021.
This was the second consecutive November when the NBFC has crossed the Rs 1,000-crore disbursement mark. The attractive financing offers during the festive season have stood out as one of the key drivers, with an additional push by the increase in people movement and recovery in rural demand leading to elevated disbursements. With the increasing demand for electric vehicles (EVs), the NBFC foresees a rise in the average loan ticket size which will help in touching new milestones, according to a company release.
Shriram City primarily caters to salaried and non-salaried buyers inclined towards the entry-segment two-wheelers having the highest demand across categories. The growing demand and intuitive use of AI-powered lending interfaces have triggered mass adoption by consumers and channels, thereby creating a network effect in further adding volumes. Followed by their milestone of financing over 1 crore two-wheelers, Shriram City Union is now the largest two-wheeler financer in India, offering app-based lending, paperless receipting, and contactless loans, it added.
Sources in the bank said that Iyer resigned due to health reasons.
Dhanlaxmi Bank said in a regulatory filing on Thursday that part-time chairman and independent director of the bank G Subramonia Iyer has submitted his resignation from the board of directors of the bank, owing to certain urgent and emergent personal reasons.
The Kerala-based bank has been in the news recently for all the wrong reasons, including an RBI advisory to ensure transparency in the nomination process of directors and follow best corporate governance practices. Sources in the bank said that Iyer resigned due to health reasons.
The lender currently has just five directors against the maximum strength of 11. It also has two RBI nominees on board as additional directors. It does not have a chartered accountant on board as director after the tenure of the former chartered accountant-director ended on September 30,2020. Some shareholders,including former directors, have also approached the court after the bank board rejected their candidature, moved under Section 160 of the Companies Act. The bank reported a 74% year-on-year decline in its second quarter net profits to `3.66 crore, with bad loans increasing.
The Reserve Bank has today (December 02, 2021) filed an application for initiation of CIRP against Reliance Capital Ltd., under Section 227 read with clause (zk) of sub-section (2) of Section 239 of the Insolvency and Bankruptcy Code (IBC), 2016 read with Rules 5 and 6 of the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudication Authority) Rules, 2019 (“FSP Insolvency Rules”) at the Mumbai Bench of the Hon’ble National Company Law Tribunal.
As per Rule 5 (b) (i) of the FSP Insolvency Rules, an interim moratorium shall commence on and from the date of filing of the application till its admission or rejection. The explanation to Rule 5 (b) provides that “interim moratorium” shall have the effect of the provisions of sub-sections (1), (2) and (3) of Section 14. Sub-sections (1), (2) and (3) of Section 14 of the IBC have been reproduced below:
“(1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:
(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority;
(b) transferring, encumbering, alienating or disposing off by the corporate debtor any of its assets or any legal right or beneficial interest therein;
(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(54 of 2002);
(d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.
(2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period.
(3) The provisions of sub-section (1) shall not apply to –
(a) such transaction as may be notified by the Central Government in consultation with any financial regulator;
(b) a surety in a contract of guarantee to a corporate debtor.”
SCHEDULED COMMERCIAL BANKS (Including RRBs and SFBs)
ALL SCHEDULED BANKS
20-NOV-2020
05-NOV-2021 *
19-NOV-2021 *
20-NOV-2020
05-NOV-2021 *
19-NOV-2021 *
I
LIABILITIES TO THE BKG.SYSTEM (A)
a) Demand & Time deposits from bks.
201373.99
205959.09
183142.15
206260.16
210181.03
187335.20 **
b) Borrowings from banks
40318.07
53796.57
38185.4
40331.35
53801.57
38188.72
c) Other demand & time liabilities
16484.33
20995.72
21222.31
16703.22
21317.45
21567.42
II
LIABILITIES TO OTHERS (A)
a) Deposits (other than from banks)
14370434.56
16046752.32
15779059.46
14784077.19
16474336.33
16206713.37
i) Demand
1511515.97
1973120.55
1820881.25
1547335.41
2014888.32
1861754.47
ii) Time
12858918.58
14073631.87
13958178.24
13236741.78
14459448.1
14344958.95
b) Borrowings @
264021.31
257577.06
260318.65
268261.22
262103.55
264684.48
c) Other demand & time liabilities
636575.92
635520.71
615238.46
647938.9
646787.83
625918.77
III
BORROWINGS FROM R.B.I. (B)
114711
96985.79
101927.79
114711
96985.79
101927.79
Against usance bills and / or prom. Notes
IV
CASH
86616.11
98099.29
98432.07
88950.69
100399.34
100928.11
V
BALANCES WITH R.B.I. (B)
471487.88
670135.27
683603.8
484054.08
687427.36
700942.61
VI
ASSETS WITH BANKING SYSTEM
a) Balances with other banks
i) In current accounts
11425.48
40214.11
18593.87
13662.03
42766.03
20874.99
ii) In other accounts
134448.38
143374.44
140314.79
165339.52
176623.9
173337.33
b) Money at call & short notice
9244.66
15679.24
9571.89
29750.64
31515.16
27226.31
c) Advances to banks (i.e. due from bks.)
20825.1
24166.87
23186.64
21266.43
24546.16
23573.45 £
d) Other assets
30611.18
26798.95
28163.32
35170.59
29647.88
31048.94
VII
INVESTMENTS (At book value)
4425325.04
4686515.14
4584495.17
4556773.78
4829999.06
4728592.62
a) Central & State Govt. securities+
4423853.43
4685223.99
4582872.94
4548898.99
4822718.13
4720625.82
b) Other approved securities
1471.6
1291.16
1622.24
7874.79
7280.94
7966.82
VIII
BANK CREDIT (Excluding Inter Bank Advance)
10434880.34
11161089.43
11162246.68
10769722.2
11513622.12
11508587.94
a) Loans, cash credits & Overdrafts $
10269074.72
10944303.23
10950760.37
10601991.68
11294835.06
11295116.49
b) Inland Bills purchased
23917.08
32801.09
32289.66
24203.5
32838.51
32304.02
c) Inland Bills discounted
97069.17
131827
127341.62
97997.91
133115.27
128598.07
d) Foreign Bills purchased
16331.43
19349.01
18623.8
16556.25
19559.11
18861.52
e) Foreign Bills discounted
28487.93
32809.06
33231.27
28972.86
33274.14
33707.88
NOTE
*
Provisional figures incorporated in respect of such banks as have not been able to submit final figures.
(A)
Demand and Time Liabilities do not include borrowings of any Scheduled State Co-operative Bank from State Government and any reserve fund deposits maintained with such banks by any co-operative society within the areas of operation of such banks.
**
This excludes deposits of Co-operative Banks with Scheduled State Co-operative Banks. These are included under item II (a).
@
Other than from Reserve Bank, National Bank for Agriculture and Rural Development and Export Import Bank of India.
(B)
The figures relating to Scheduled Commercial Banks’ Borrowings in India from Reserve Bank and balances with Reserve Bank are those shown in the statement of affairs of the Reserve Bank. Borrowings against usance bills and/ or promissory notes are under Section 17(4)(c) of the Reserve Bank of India Act, 1934. Following a change in the accounting practise for LAF transactions with effect from July 11, 2014, as per the recommendations of Malegam Committee formed to review the Format of Balance Sheet and the Profit and Loss Account of the Bank, the transactions in case of Repo/ Term Repo/MSF are reflected under “Borrowings from RBI”.
£
This excludes advances granted by Scheduled State Co-operative Banks to Co-operative banks. These are included under item VIII (a).
+
Includes Treasury Bills, Treasury Deposits, Treasury Savings Certificates and postal obligations.
$
Includes advances granted by Scheduled Commercial Banks and State Co-operative Banks to Public Food Procurement Agencies (viz. Food Corporation of India, State Government and their agencies under the Food consortium).
Food Credit Outstanding as on
(₹ in Crore)
Date
20-Nov-20
05-Nov-21
19-Nov-21
Scheduled Commercial Banks
88956.29
76866.29
82415.32
State Co-operative Banks
30402.08
35817.22
35817.22
The expression ‘ Banking System ‘ or ‘ Banks ‘ means the banks and any other financial institution referred to in sub-clauses (i) to (vi) of clause (d) of the explanation below Section 42(1) of the Reserve Bank of India Act, 1934.
No. of Scheduled Commercial Banks as on Current Fortnight:135
The share price of lenders (banks) saw a decline in November, while non-lenders (insurance and capital markets) saw only a minor decline, Kotak Institutional Equities said in its report. Kotak further said that payment activity saw marginal month-on-month (m-o-m) decline after the festive (Diwali) season and the loan growth too continued to be sluggish with no sharp recovery in any specific segment barring SME despite a low interest rate environment.
Kotak believes that with the asset quality issues gradually receding, they see spreads decline but loan demand issues remain.
“November was a sluggish month for the BFSI sector as the Bank Nifty registered a decline of 9 per cent. Non-frontline private banks saw the sharpest decline of 14 per cent, while non-lenders (capital market players and insurance companies) resisted the downward momentum. Frontline private banks also saw a drawdown, with HDFC Bank performing relatively better. NBFCs outperformed the bank index. On a 12-month horizon, PSU banks have outperformed the Bank Nifty quite meaningfully. The emergence of a new Covid strain has put pressure on the market, but we wait to see if the spread could result in another set of mobility restrictions in India,” Kotak Institutional Equities said in its report.
Highlights from the report
Payments data continues to be strong, albeit with marginal m-o-m decline
Daily payments data for November from RBI indicates that strong trends in payments continued across payment systems, with marginal mom decline on the back of the festive season in October. In particular, a representative subset of card spends data indicates that spends in November were robust, although marginally lower mom. UPI transactions also saw a similar trend. Bank credit growth stood at ~7% levels with negligible growth from the corporate segment and a marginally better performance on the retail side. Loan growth has been sluggish, but seems to have bottomed out and we expect to see some strengthening in the trend.
NIM expansion unlikely
As per the latest data from RBI, deposit rates were flat m-o-m at around 5.1%. Both private and PSU banks have reduced their TD rates by around50 bps over the past 12 months. Wholesale deposit cost (as measured by CD rates) has seen a much sharper decline. It has been broadly stable in FY2022. The gap between repo and 1-year TD rate for SBI stands at 100 bps after declining from peak levels of around 130 bps. The premium of SBI TD rates over G-Sec yields has narrowed from its peak level.
Lending rates on fresh loans were flat m-o-m for banks overall, but declined nearly 30 bps m-o-m for private banks and increased 30 bps m-o-m for PSU banks. These rates have been volatile in recent months. The gap between fresh lending rates of private and PSU banks has declined to around 120 bps, which is in line with the average over the past 12 months. The gap between outstanding and fresh lending rates has been in the range of 110-140 bps since the onset of Covid. Steep decline in bond market rates till July 2020 had led to a narrowing of the spread between bank funding and bond rates, but bond yields seem to be trending upwards now. The lenders have been slow in passing the lower cost of funds. In recent months, the spreads are beginning to peak out and decline marginally suggesting that expansion of NIM on corporate books is a low probability event.
Financial Express is now on Telegram. 
