The sub-prime mess has presented the foreign units of domestic banks with lucrative investment opportunities. Global banks, struck by a severe liquidity crunch and risk aversion, are selling a lot of their investments in debt of Indian companies at a discount.
The money mule scam has reached Indian shores. Banks have noticed instances of fraudsters based overseas, posing as global payment companies, luring gullible people into joining them as "money transfer agents" and using their bank accounts to route ill-gotten money.
The adverse impact of the rupee appreciation has gone beyond exports. The currency's climb is now affecting government infrastructure projects funded by multilateral lending agency such as the Asian Development Bank (ADB).
Till March 2007, the bank had invested a total of Rs 1,973 crore (Rs 19.73 billion) in shares of companies. In the nine months since then, it has added Rs 3,000 crore (Rs 3 billion) to its investment kitty, making investments of over Rs 100 crore (Rs 1 billion) in a clutch of blue-chip companies including GMR Infrastructure, Godrej Industries, Maruti Suzuki, Cairn India and DLF, besides closest rival ICICI Bank.
The focus on instances of excesses by banks in their attempts to recover money has had the unintended effect of encouraging some borrowers to dare banks to take steps to recover loans.
Banks plan to charge a levy on unutilised portion of credit.
Banks are sensing warning signals of potential loan defaults from gems and jewellery exporters as the appreciating rupee continues to dent their profits. Loan accounts of a few diamond and jewellery exporters are already showing signs of stress, with banks receiving delayed payments.
Faced with abundant liquidity and flat credit off-take, banks are reversing interest rate hikes charged to large companies.In the first three months of this fiscal, most blue chips could access loans at a maximum of one to two percentage points below the PLR. Today, short-term loans (that is, for less than one year) for such companies are available between 7.5 and 9 per cent.
The interest rates on deposits continue to be high despite ample liquidity due to monetary policy uncertainty and expectations that liquidity would tighten later this year. Banks are still offering peak interest rates of 9 to 9.5 per cent on deposits
The loan portfolio of banks has grown by Rs 54,908 crore (Rs 549.08 billion) till September 14, representing only 3.6 per cent growth. During the same period last year, banks had lent Rs 147,657 crore (Rs 1,476.57 billion), a rise of 10.5 per cent.
Banks are facing increasing delinquencies by overleveraged mid-sized companies, now caught in hardships due to changes in their operating environment.
In their first step towards introducing a pension scheme based on defined contribution, public sector banks have in-principle decided to introduce such a scheme for new recruits in the officer cadre.
Manish Khera, chief executive officer, Fino, tells Shriya Bubna that the smart card technology platform of Fino can help banks cut operational costs by one-third and MFIs, but connectivity remains an issue.
Public sector banks have asked the Centre to intervene as talks with bank unions for allowing half of their employees a second chance to opt for pension instead of provident fund have reached a deadlock.
Central bank fears corporate credit is finding its way to the bourses.
Public sector banks, in a frenzy to cash in on the retail credit boom during the three years beginning 2003-04
Three to six month loan rate cut by up to 100 bps.
State Bank of India's investment kitty now includes Rs 300 crore (Rs 3 billion) worth of shares of its competitor and the second largest lender, ICICI Bank.
For a larger pie in business opportunities thrown up by the rising cross-border acquisitions by Indian companies, the country's largest bank, State Bank of India, is looking to acquire a small investment banking firm in Europe.
Foreign banks say they have been caught in a "conflict" situation with respect to the manner in which the Reserve Bank of India (RBI) conducts inspections at their branches.
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