Corporation Bank is the biggest beneficiary of this round of capital infusion with Rs 9,086 crore of funding, followed by Allahabad Bank with Rs 6,896 crore.
'He's at best a holding-CEO. Not one who will re-imagine the bank,' a senior banker and former colleague tells Raghu Mohan about HDFC Bank CEO & MD Sashidhar Jagdishan.
Is the worst over for Indian banks? The past two years saw them ride on treasury trades as deposits soared and credit growth dipped sharply. Gross and net non-performing assets (NPAs) moved south, and the provision coverage ratio (PCR), capital buffers, and profitability indicators are back at pre-pandemic levels. So, what's the plot ahead?
The Reserve Bank on Wednesday said the amalgamation of Lakshmi Vilas Bank with DBS Bank India will come into force from November 27 and the moratorium imposed on the crisis-ridden lender will be removed on that day. The RBI issued the statement within hours of the Cabinet clearing the Scheme of Amalgamation of Lakshmi Vilas Bank Limited (LVB) with DBS Bank India Limited (DBIL).
The government has proposed "drastic changes" in the rules framed to retune the composition of three committees of the RBI: Board for Financial Supervision, the Board for Payment and Settlement Systems and the Committee of the Central Board.
Cox & Kings had a total debt of Rs 3,238 crore at end of FY19 and this included both short-term and long-term loans.
Patel, who headed the RBI from September 2016 till his sudden resignation in December 2018, says in his book thta the government seemed to lose enthusiasm for the new bankruptcy law in the middle of the year he left the central bank. Though Patel does not name anybody in the book, the mid-2018 period he refers to is the time when Piyush Goyal held temporary charge of the finance ministry between May and August.
At present, bank depositors get an insurance cover of Rs 1 lakh on their amount by the Deposit Insurance and credit Guarantee Corporation.
The PCA plan covers various suggestions or measures to recover non-performing assets (NPAs), reduce costs, boost capital, downsize risk-weighted assets, and improve profitability, among others. The LVB management is in the process of implementing all of these, said sources.
Highly-placed sources in the government say that none of the senior ministers had any inkling of Patel's resignation
The coming years could be exciting for Bandhan Bank, IDBI Bank, IDFC First Bank, Federal Bank, and CSB Bank.
The meeting came amid a face-off between the central bank and the finance ministry over issues ranging from appropriate size of reserves that RBI must maintain to ease of lending norms to step up growth in an election year.
Economic Affairs Secretary Subhash Garg is the finance ministry's primary liaison with the RBI.
For state-run lenders, the average NPAs shot up to 14.5 per cent, with IDBI Bank, UCO Bank and Indian Overseas Bank having their NPAs at above 25 per cent.
The general nervousness because of the IL&FS default will prevail in the system for now.
'I am sure Dr Patra will get the fullest cooperation from the finance minister who needs workhorses, not prima donnas constantly looking to improve their CVs,' says T C A Srinivasa-Raghavan.
It has been a year since the Reserve Bank of India (RBI) initiated prompt corrective action (PCA), an exercise that puts weak banks under central bank scrutiny, against the 94-year-old Lakshmi Vilas Bank (LVB). But recently, this low-profile Chennai-headquartered bank found itself attracting some unwonted publicity when 60 per cent of its shareholders voted against a proposal to re-appoint seven directors, including one of the promoters, K R Pradeep (who holds around 2 per cent), and the company's managing director & chief executive officer S Sundar.
'There is merit in keeping the central bank's balance sheet strong if the government's fiscal balance sheet is weak.'
CII suggested the policy measures required to ease the tight liquidity situation by cutting CRR by at least 50 basis points.
Given the pressure from India Inc and the banking fraternity, it is surmised that the portfolio rejig will take place before April.
RBI says haste in easing norms for banks harmful to economy.
Its obsession for growth, chasing corporate clients and giving up its original mandate of meeting the needs of local trade and businesses. A quarter of its loan book has gone bad. That's an error of business strategy, points out Tamal Bandyopadhyay.
The meeting is expected to chart a road map for cleaning up their balance sheets and boost credit flows, reports Somesh Jha.
If the new governor can think out of the box even as he signals that he can bat for the RBI cadre and respect its institutional memory, that will go a long way in getting out of the current impasse.
RBI may be inclined to impose severe restrictions on lending in the coming quarters.
The government wants the RBI to part with most of its profit as dividend.
The problem for the NBFC sector is the funding inertia by banks and not lack of funds.
The main difference of opinion between RBI and FinMin is over the transfer of the RBI's 'excess' capital reserves. The Jalan panel seeks to convince finance secretary Subhash Garg to soften his dissent note language. The move is aimed at maintaining the now-cordial relations between the RBI and the finance ministry.
Under the watchful eyes of five wise men, who know the industry well, banks will not find it easy to hoodwink the system, says Tamal Bandyopadhyay.
The Centre's proposal to call for governance reform in the RBI could, however, take a back seat, a source privy to the development said.
Progress on the steps taken by Governor Shaktikanta Das' predecessor Urjit Patel to restore financial system integrity will be a key thing to assess any damage to the institution, Subramanian said.
The main reason was that CPI inflation would likely remain below 4 per cent till July.
Owing to Finance Minister Nirmala Sitharaman being new to her role, a number of crucial announcements in the Budget bore Garg's imprint, especially the decision to borrow in overseas markets, reduce the fiscal deficit as a percentage of gross domestic product, and resort to off-Budget borrowing to meet that target, says Arup Roychoudury.
Amid slowdown blues, the government has unveiled a raft of measures over the past few months aimed at improving liquidity in the system, moderating interest rates as well as credit growth apart from addressing stress in the NBFC sector.
Who is to take their place? Will a new generation of entrepreneurs start up with better business sense, or at least better luck? But the so-called unicorns are mostly copy-cat entrepreneurs whose cash flow is funded by overseas (including Chinese) money, notes T N Ninan.
'No commercial bank will be allowed to fail. There is nothing to worry about.'
Let all the stakeholders, especially the government, remember that if the Make in India lion needs to roar and rise again, it won't happen unless India Inc rises too, points out Shekaar Subramanian.
The Reserve Bank of india is likely to tell state-run United Bank of India (UBI), which has seen erosion of capital due to bad loans and higher provisioning to implement prompt corrective action.
'This is the first time we will see how SIP investors react to market correction.'
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