The critical task facing Indian banking is to quickly improve the risk-assessment capability of the state-owned banks, which account for three-quarters of all banking; and if that fails, then to privatise them.
Bandhan Bank to fund SMEs, create jobs, says FM
Analysts say strengthening bank's capital will boost earnings, bank needs chief with long stint to run show
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.
According to experts, 'Lakshmi' and the logo 'Godesses Lakshmi' have a lot of value in India and are the biggest driver for the Bank. Retaining the Lakshmi name and logo will help DBS.
Axis Bank's loan portfolio quality deteriorated, with gross NPAs rising to 5.22% of gross advances.
Although such alerts are not compulsory for the banks, this may become the norm now if payments are missed even for a day.
Gross NPAs of public and private sector banks stood at Rs 2.41 lakh crore and 26,571 crore respectively.
The order, a "negative" overall, will be a short term positive for corporate focused state-run and private lenders because of the possibility of delaying incremental stressed asset recognition.
Reserve Bank of India Governor Raghuram Rajan had said recently that there was "no need" to set up a separate bad bank to deal with stressed assets of public sector lenders.
Indradhanush-II is likely to chart out the process for resolution of non-performing assets.
Bank credit is likely to grow at a four-year high of 11-12 per cent in fiscal 2023, on the back of better economic growth and budgetary support from the government, according to a report. In the fiscal ended March 2022, bank advances have likely grown at 9-10 per cent. "Healthy economic growth and budgetary support from the government should lift bank credit growth by 200-300 basis points to 11-12 per cent this fiscal," Crisil Ratings said in the report. The higher credit growth expectation is also supported by the improved resilience of the banking system, it added.
Total income of the bank during January-March 2018 stood at Rs 14,559.85 crore, slightly up from Rs 14,181.31 crore earned in the same period of 2016-17.
While the total disbursement of housing loans by PSBs as well as HFCs witnessed a deceleration in 2016-17, there was significant growth for the lower slabs
Like everything else, the structure of banks may change, and banks may depend more on digital technologies and artificial intelligence for dealing with both their customers and employees.
The net NPA ratio declined to 3.7 per cent in September 2019 from just below 4 per cent in March 2019, reflecting increased provisioning.
Banks recovered Rs 18,933 crore (Rs 189.33 billion) worth of bad loans during the April-December period.
ICICI Bank was the top gainer in the Sensex pack, rising over 3 per cent, followed by ITC, SBI, HCL Tech, Axis Bank, Bajaj Finserv and Tech Mahindra. NSE Nifty advanced 32 points to 15,856.05.
The Reserve Bank Officers Cooperative Credit Society, which caters to the credit needs of RBI officers posted all over India, has a fixed deposit of Rs 105 crore in the bank on which the RBI has placed various curbs for six months following revelations of irregularities.
The Indian financial system's asset quality improved despite the pandemic, but it could be due to special dispensations by the regulator, and banks would likely see increased stress on their books once the schemes expire. According to the annual trend and progress report of the Reserve Bank of India (RBI) released on Tuesday, the data available for this financial year so far indicate that banks' bad debts have moderated while provision coverage ratios (PCRs), capital buffers as well as profitability indicators have improved relative to pre-pandemic levels.
A roadmap for the consolidation of public sector banks will be outlined during the year.
Unlike the earlier experience post the global financial crisis, where nearly 90 per cent of the restructuring happened in the corporate loans, the non-corporate segment, which includes small businesses, agricultural loans and retail lending, will account for a higher share this time.
Maharashtra and West Bengal lead the way in bank fraud.
The choice clearly is between prompt corrective action and slow but sure destruction, says Tamal Bandyopadhyay.
Moderate credit growth at around 22 per cent and relatively higher deposit growth has placed the liquidity situation of banks in more comfortable zone.
The central agency is probing Kapoor's role in connection with the disbursal of a loan to a corporate entity and the subsequent alleged kickbacks that were reportedly received in his wife's accounts.
A paper authored by Rajan said, state-linked banks can be a first step in altering the ownership structure of some PSBs, where the government brings down its stakes to below 50 per cent, creating distance from operations of banks, and improving governance along the way.
The Rs 60,000 crore (Rs 600 billion) farm loan relief package announced by finance minister P Chidambaram in the budget might have become an issue of debate but write-offs are not new to the banking system. During the last five years, banks have written-off loans farm, retail and corporate -- amounting to over Rs 60,000 crore to clean up their balance sheet.
In a written reply in the Rajya Sabha Minister of State for Finance Namo Narain Meena pointed out that this amounted to 3.48 per cent of the total advances given by the state-owned banks.
Bankers have decided to fight back against 'arbitrary arrests' and 'harassment' by probe agencies.
The NCLAT said the RBI cannot restrict it from prohibiting banks from 'asset classfication' and observed that any change in this order would upset the entire resolution process of the IL&FS
Public banks face slowdown heat.
'The CM kept his cool, but his adviser was liberal with filthy language.' Tamal Bandyopadhyay recreates the diary of a general manager in a public sector bank, providing a glimpse of how they balance their work and life.
Banking on better credit growth prospects alone may not be the right strategy as far as investing in bank stocks are concerned.
Gross bad loans of banks may rise from 6.9 per cent in September 2021 to 8.1-9.5 per cent by September 2022 if the Omicron variant strikes the economy hard, as per the financial stability report of the Reserve Bank released on Wednesday. The report also said that the rising stress level in the retail loan portfolio of banks -- the mainstay of bank credit for many years now -- was led by home loans, which grew in double-digits so far this fiscal. While asset quality improved, with gross non-performing assets (GNPA) and net NPA (NNPA) ratios declining to 6.9 and 2.3 per cent, respectively, in September 2021, the slippage ratio inched up during the same period as private sector banks showed a higher rate of deterioration in asset quality, as per the report.
The buyout will cost LIC about Rs 100 billion, based on the Rs 248 billion market capitalisation of IDBI Bank as on Friday, and assuming it acquires a 40 per cent equity stake from the government.
Sharma to step down as Axis Bank chief on December 31.
The banking sector's credibility is on thin ice. Unless the government takes strict steps, things could get worse.
The government is set to earn an equity dividend of nearly Rs 13,800 crore from the listed public-sector banks (PSBs), all 12 of them, for FY23, up 50 per cent from Rs 9,210 crore in FY22. This will be the highest ever dividend for the government from PSBs. The 12 PSBs in our sample are paying an equity dividend of nearly Rs 21,000 crore for FY23, up 53 per cent from Rs 13,710 crore for FY22.
'The entire system acted as cheerleaders to Vijay Mallya. The RBI failed, the banks failed, the auditors of the banks and Mallya failed.'
