Despite high exposure of public sector banks to power, iron and steel sectors, analysts remain in a wait-and-watch mode.
'Public sector banks are like an extended arm of the government.' 'They rush to rescue certain sectors or they rush to invest in certain sectors to prop up the economy which the private banks don't.'
Bank credit offtake is expected to pick up following normalisation of economic activities aided by the government thrust on public expenditure in current fiscal year, a report said. According to the Care Edge report, the gross non-performing assets (GNPA) ratio hit a six-year low of 5.9 per cent in FY22 but remained above the pre-asset quality review of 2015-16. However, it said, India's NPA ratio is one of the highest among the comparable countries despite gradual decline.
All these companies were provided loans by PNB as part of consortium lending.
Recent rates cuts by most banks may not have a significant impact on margins, say analysts.
US-based Oaktree on Monday pipped Piramal Enterprises and Adani Group to emerge as the highest bidder for DHFL after fresh bids were invited under the insolvency process, according to sources. The committee of creditors had fixed December 14 as the last for submission of revised bids. According to the sources, Oaktree raised the bid to Rs 36,646 crore, including Rs 1,000 crore for insurance and Rs 3,000 crore of interest earned, while Piramal Enterprises offered Rs 35,550 crore, including Rs 300 for insurance and Rs 3,000 of interest earned.
According to recent finance ministry data that captures the performance of public sector banks, instances of home loan defaults contributing to gross non-performing assets was the highest in the category of loans up to Rs 200,000.
As many as 433 borrowers have taken loans of over Rs 1,000 crore.
Finance Minister Nirmala Sitharaman is scheduled to meet heads of public sector banks (PSBs) next week to review performance of the lenders and progress made by them to support the economy battered by the COVID-19 pandemic. Banks would be urged to sanction loans for productive sectors to accelerate revival of the economy, sources said. According to sources, the two-day meeting would commence on November 17 and undertake a comprehensive review of various segments, progress in government schemes including Aatmanirbhar Bharat Abhiyan.
CEA offers three compelling arguments in his case for privatisation of government-owned banks.
The bank's branch expansion and recruitment have been curtailed.
Total income of the bank improved to Rs 13,852.1 crore (Rs 138.52 billion).
In the atmosphere created by the reaction to the PNB fraud and RBI's resolution framework, "don't lend, don't resolve" is bound to become the bankers' new mantra, says T T Ram Mohan.
The banks total income for the September quarter this fiscal was Rs 17,324.3 crore.
Insolvency professionals feel the bankruptcy code will deter defaulters, but NPAs will not cease unless banks are sensitised on credit appraisal and experts are hired by banks to inspect what is happening with their loans.
In the same quarter a year before, most of them had reported a dismal performance.
Total income rose to Rs 19,322.63 crore during the quarter under review, was up 17.08 as against Rs 16,502.97 crore.
Factors like dedicated recovery teams, centralised follow-up on bad loan accounts and resolutions via NCLT are driving the trend
'The Insolvency and Bankruptcy Code is neither beneficial to banks nor helpful for the borrower.' 'Genuine people who are caught in economic stagnation will lose everything and thousands will lose jobs.'
Banks do extensive investigation before declaring an account fraud; they owe it to us as they deal with our money. Why would they try to fix an innocent borrower? asks Tamal Bandyopadhyay.
'For years, the RBI has been warning banks on probable frauds in bank guarantees and advised them to exercise due care.' 'PSB staffers feel their jobs are secured, hence there is no need to be vigilant and exercise financial prudence.'
The haircut for major banks stands at 52 per cent, if the dues of Jaypee Infrastructure, Lanco Infrastructure and Era Infrastructure are kept out of the calculation.
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.
In absolute terms, the outstanding book value of NPAs of LIC in the debt portfolio across life, pension and unit-linked funds is to the tune of Rs 32,685.39 crore at the end of December 2019.
'RBI was focusing on public sector banks perhaps thinking that private sector banks are managed efficiently while PSU banks are not.' 'Now, RBI has to focus on private sector banks too.'
New Development Bank plans to issue $300-500 mn worth masala bonds in rupee: K V Kamath.
Though the economy has steadily gained momentum and remained resilient since the second quarter of the current fiscal, the Omicron variant of coronavirus remains the major challenge along with rising inflation pressures, says the Reserve Bank in its second financial stability report. In the foreword to the report released on Wednesday, RBI Governor Shaktikanta Das notes that after the destructive second wave in April-May 2021, the growth outlook has progressively improved, though there are headwinds from global developments and more recently from the Omicron virus. A stronger and sustainable recovery hinges on the revival of private investment and shoring up private consumption, which unfortunately still remain below their pre-pandemic levels, he notes.
The RBI has this year cut interest rates by 110 basis points in four instalments but banks have passed only a part of it to borrowers. Before the last reduction earlier this month of 35 basis points, the bank on an average had passed only 29 basis points out of 75 basis points cut affected during 2019.
Cases across the country against defaulters who owe over Rs 1 crore each, reveal CIBIL data.
'In plain simple English, these practices amount to a looting of our country's future by some in the business community, in cahoots with some lenders,' says RBI Governor Dr Urjit R Patel.
'What do the moves towards protectionism suggest?' 'That we do not have Aatmavishwas.' 'If you have self-confidence, confidence in your ability to compete with the best in the world, why do you need protectionism?'
Data used for the graph and cited elsewhere in the column were obtained from various publications of the RBI.
The cumulative loss of 20 state-run lenders stood at Rs 14,000 crore during Q4
Finance minister Nirmala Sitharaman on Wednesday exuded confidence that inflation would further decline and the government is on track to meet its budgetary target for deficit and said that there is no fear of stagflation in India. Replying to the debate on first batch of Supplementary Demands for Grants 2022-23 in Lok Sabha, the finance minister said inflation has come down and it is now in the tolerable band of the RBI. Inflation has been declining since April 2022 and it is declining further, she said.
Public sector banks have lost nearly Rs 2.85 lakh crore on account of loan dues of 13 corporates even as the banks are used to bail out ailing financial institutions such as Yes Bank and IL&FS, United Forum of Bank Unions alleged on Monday. In a press release, UFBU's convener B Rambabu said the organisation calls for a two-day all India bank strike on December 16 and 17 protesting against Banking Laws (Amendment) Bill 2021 and opposing the Centre's alleged move to privatise PSBs. According to the statistics given by the UFBU, the 13 corporates' outstanding dues were at Rs 486,800 crore and it was resolved at Rs 161,820 crore resulting in a loss of Rs 284,980 crore.
In the first two quarters of 2012-13, banks referred a record number of 74 CDR cases, involving a total debt amount of Rs 40,000 crore.
Reserve Bank deputy governor Anand Sinha on Wednesday said though bad loans are rising in the system, the central bank does not see it a systemic risk as yet.
'What is critical today in India is confidence of depositors.' 'If you have these kinds of problems spreading like this, the confidence level of a lot of people in the system gets shaken.'
The RBI was not party to the decision to demonetize 500 and 1,000-rupee notes, which was taken at the highest level of India's political leadership.
