Reflecting strong momentum in business, commercial banks, including one public sector lender, reported a year-on-year (YoY) growth in advances. This was higher than or around the banking sector trend in the first quarter ended June 2023. Bank of Maharashtra said its loans expanded by 25 per cent YoY to Rs 1.75 trillion. This pace was much higher than the banking system's 15.4 per cent growth till June 16, 2023, according to Reserve Bank of India (RBI) data.
The pace of lending to the infrastructure sector, including power and roads, fell sharply to 1.8 per cent year-on-year (YoY) in May, 2023 compared to 9.8 per cent in May, 2022. Within the segment, the growth in loans to the power sector was at 0.3 per cent YoY in May 2023, down from 9.3 per cent in May 2022. The RBI data showed that outstanding credit to power sector stood at Rs 6.17 trillion in May.
Bank of Baroda (BoB) has made prudential provision of Rs 500 crore for exposure to Go First, which has sought bankruptcy protection after the National Company Law Tribunal (NCLT) admitted its plea for voluntary insolvency. Sanjiv Chadha, managing director and chief executive officer of BoB, said the bank identifies issues in advance and makes provisions if required. The Mumbai-based public sector lender has an exposure of Rs 1,300 crore to the troubled airline.
Go First chief executive officer Kaushik Khona and tribunal-appointed interim resolution professional Abhilash Lal on Thursday reached out to the airline's staff, seeking their support for revival. While Khona said the company had taken all steps for the airline's revival, Lal put forward the view it would have to raise funds. Employee engagement took place a day after the National Company Law Tribunal (NCLT) admitted the airline's insolvency plea on Wednesday and ordered a moratorium on recoveries.
Private sector banks reported a robust profile with healthy growth in net interest income (NII), credit offtake and reduction in provision burden for the fourth quarter ended March 2023 (Q4 of FY23). However, as a pack, their net profit declined by 9.7 per cent year-on-year (YoY) at Rs 25,317 crore in Q4. This is because Axis Bank posted losses due to its one-time hefty charge for the acquisition of Citibank India's consumer business.
SBI has suggested that banks be exempted from handing over the complete forensic audit report to the borrower as it would hamper future investigation and forewarn the borrower by way of disclosure of confidential information.
Benefitting from the economic rebound, banks are expected to report a healthy bottom-line and asset quality profile in the quarter ended March 2023 (Q4FY23). The net profit of listed commercial banks is projected to grow by an average 43.6 per cent year-on-year (YoY) in Q4FY23 amid better net interest margins (NIMs) and declining credit costs. This is based on a combined assessment of analyst estimates for 17 banks on Bloomberg database.
The share of low-cost money in total deposits continued to take a knock at the close of FY23 as banks engaged in intense competition by offering higher interest rates on term money to garner funds amid tight liquidity conditions. The share of current accounts and saving accounts (CASA) in total deposits declined by 2-4 per cent by end of March 2023 from March 2022 figure, according to BSE filings by private banks. The ease of movement of funds on digital platforms and the deployment of money by businesses from current accounts also played a role in dwindling the share of CASA money.
The Supreme Court's decision to allow borrowers a chance to be heard before their accounts are flagged as fraudulent by lenders is expected to result in several cases being reopened where the borrower is aggrieved because of such classification, bankers said. Still, the reopening of cases would not be automatic. A borrower who is aggrieved by the 'fraud' classification will have to approach the bank and consequently, the bank will take the necessary steps so that the apex court's order is followed in letter and spirit, they said.
Lenders and shareholders of Reliance Industries Ltd (RIL) will meet on May 2 to demerge the firm's financial services business. This is expected to create a big player in segments including the NBFC (non-banking financial company) space with net worth of Rs 25,851 crore as of March 2022. According to the plan, RIL shareholders will get a share in the demerged entity for each one held in the company.
Highly-rated finance firms and housing finance companies are expected to benefit from the absence of Housing Development Finance Corp (HDFC) from the bond market once it merges with the HDFC Bank in early FY24. Post merger, the bond market is expected to become less crowded, which will ease fund raising conditions for other players in the field. It may perhaps also compress the spread for debt instruments floated by housing finance companies (HFCs) over 10-year government bonds, subject to demand and supply conditions.
Public-sector banks (PSBs) in Q3FY23 wrote off bad loans worth Rs 29,000 crore, up from Rs 23,000 crore in the same quarter a year ago, as part of a clean-up exercise. According to estimates by rating agency CARE Ratings, the write-offs by PSBs in April-December 2022, at Rs 81,000 crore, were lower than the Rs 90,000 crore in April-December 2021. Sanjay Agarwal, senior director, CARE Ratings, said a lot of it was driven by regulations, and assets that had 100 per cent provision coverage were written off.
The Securities and Exchange Board of India (Sebi), the market regulator, has said, in a submission to the Supreme Court, that it is "enquiring" into the allegations made by American short-seller Hindenburg Research against the Adani Group of companies and its impact on the markets. In the same matter, the central government has agreed to form an expert committee to strengthen the regulatory regime in order to ensure that market investors are protected. The Supreme Court had last week suggested an expert committee to look into the allegations and had asked the Centre for its response.
The Reserve Bank of India on Monday gave banks time till end of December 2023 to complete renewal of agreements for the existing safe deposit lockers of customers. Banks were earlier required to complete the process by January 01, 2023. The central bank has asked them to complete work in phases with intermediate milestones of 50 per cent by June 30, and 75 per cent by September 30.
UCO Bank mulls AT1 offering to raise Rs 1,000 cr.
The first quarter of calendar 2023 will see new faces heading four large public-sector banks -- Canara Bank, Bank of Baroda, Indian Overseas Bank, and Bank of India.
Exuding confidence in sustaining the tempo of credit growth, public sector bankers said on Wednesday that consolidation in the public sector bank (PSB) space has given them a robust base to scale. The privatisation of PSBs can be done through divestment of government stake to a wider base of investors without haste. There is nothing to worry about at this point (high credit offtake) as underwriting standards and risk management are much better.
Breaking the streak of continuous fall in outstanding amounts, non-resident Indian (NRI) deposits rose for the first time in the financial year to $134.54 billion in October 2022. The figure was $133.67 billion in September. Reserve Bank of India (RBI) data showed that NRI deposits were in shrinking mode for the first six months of FY23. They fell to $133.67 billion in September from $139 billion in March.
The Delhi high court on Friday awarded Rs 20 lakh to Microsoft in damages in a 12-year-old copyright infringement suit. Microsoft said that a Mumbai-based firm was illegally using its software programs in which its copyrighted products, including Microsoft Windows, Microsoft Office and Windows Server were being reproduced and used for commercial purposes at the firm's offices. The court had on May 24, 2010, passed an injunction restraining the Mumbai firm from infringing the plaintiffs' software programs.
The Reserve Bank of India (RBI) has put in place a framework to allow overseas subsidiaries and branches of Indian banks and financial institutions to undertake activities not specifically permitted in the Indian domestic market. The framework also specifies the applicability of these instructions to International Financial Services Centres in India, including Gujarat International Finance Tec-City (GIFT City). While these activities may not need prior approval, they are subject to compliance with all applicable laws/regulations and conditions stipulated by the RBI and those prescribed by the host regulator.
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