Mining conglomerate Vedanta Limited has received approvals from the majority of its creditors for a proposed demerger of businesses, marking an important step in the company's plan to split into six independent listed companies. "I am happy to let all of you know that we have received the 52 per cent plus the additional percentage, which is required for us to reach 75 per cent. "We have crossed that threshold as well. Most of the lenders have approved it," a senior Vedanta executive said in a recent bondholder conference call.
The finance ministry is in favour of extending the August deadline for public sector banks (PSBs) as well as insurance companies to increase their minimum public shareholding (MPS) to the mandated 25 per cent, said a senior government official. "The election results will determine the course of action. "Most likely, those who did not receive an extension to meet the minimum shareholding norm will be granted one," the senior government official said.
As banks' chase for customers to collect cheap deposits is not fructifying, they are forced to offer inflation-beating real interest rates on fixed deposits now, and state-run banks led by Punjab & Sind Bank tops the chart offering 8-8.50 per cent per annum deposit rate. Banks are forced to offer inflation-beating deposit rates for a tenor ranging from 200 to 800 days as credit growth has been far outpacing deposit mobilization throughout this fiscal, leading to a funding crunch.
'The universe of PSU stocks is huge and diverse.' 'Investors should bet on specific sectors and stocks from the basket as most of them may continue to consolidate after years of outperformance.'
Public sector banks' cumulative profit crossed the Rs 1 lakh crore-mark in the financial year ended March 2023, with market leader State Bank of India (SBI) accounting for nearly half of the total earnings. From posting a total net loss of Rs 85,390 crore in 2017-18, the Public Sector Banks (PSBs) have come a long way as their profit touched Rs 1,04,649 crore in 2022-23, according to an analysis of their financial results. These 12 PSBs witnessed 57 per cent increase in total profit compared to Rs 66,539.98 crore earned in 2021-22.
Bank of India, Canara Bank, Dena Bank, Corporation Bank and Andhra Bank are among the lenders that received capital infusion from the government.
Finance secretary Rajiv Kumar was positive in formation of a committee consisting all concerned to address the issues arising out of the proposed merger of 10 banks including preserving the identity of all the banks.
The drop in net interest margin will separate the men from the boys, explains Tamal Bandyopadhyay.
Banks are also weighing the option of hiring experts for help in specialised areas.
The rally in PSBs, analysts feel, was more a knee-jerk reaction to the development, and the actual benefits will start to accrue once the addition takes place in 2024. "The actual benefit for banks from the inclusion in JP Morgan's EM Index will accrue from June 2024 onwards. "Until then, the larger fundamentals of the market will dictate the moves. "Once the initial euphoria subsides, bond markets will look to global cues which may trigger fresh selling," said Siddharth Khemka, head of retail research, Motilal Oswal Financial Services.
It won't be easy for the banking sector to better its performance every quarter, predicts Tamal Bandyopadhyay.
Moody's Investors Service on Thursday downgraded subordinated debt ratings of 11 Indian banks, including SBI, ICICI Bank and HDFC Bank.
Not all public sector banks are back in the black, but their collective net profit for the year is Rs 32,346 crore against a Rs 9,013 crore loss in the previous year, points out Tamal Bandyopadhyay.
The mergers will not involve any cash but only share swaps
Amendments would be required in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 for privatisation, sources said.
The finance ministry on Wednesday allowed all private sector banks to participate in government-related business, like collection of taxes. pension payments and small savings schemes. At the moment, only few large private sector are allowed to conduct government-related business.
The country's largest lender State Bank of India will get the largest sum of Rs 8,800 crore as government's capital infusion.
Some of the public banks showed improvement; much more still needs to be done
The Reserve Bank has asked the public to pay their income tax dues well in advance so as to avoid standing in long queues and stated that 29 agency banks are also authorised to accept such payments.
Norms governing investments by provident funds bar these from depositing funds in a commercial bank in case the NPAs of that bank exceed two per cent of net advances.
Banks have as much as Rs 3,652 crore (Rs 36.52 billion) of unclaimed deposits lying with them, with the State Bank of India (SBI) alone accounting for about 15 per cent of the amount, the government informed Parliament on Friday.
Analysts say there is still no visibility of earnings improvement.
This is part of the first batch of Supplementary Demands for Grants for 2020-21 moved by Finance Minister Nirmala Sitharaman in the Lok Sabha.
Rajan said the RBI is working on upgrading the capabilities of its inspectors to undertake bank system audits as well as to detect vulnerabilities in them
Business is down to such an extent that last year these firms could not even meet RBI's capital norm of Rs 50 million for partnerships and Rs 100 million for public and private firms in this line of business.
Adani group is on track to surpass a combined Ebitda (earnings before interest, taxes, depreciation, and amortisation) of Rs 1 trillion in the ongoing financial year (FY25) as it prepares for a $2 billion (over Rs 16,700 crore) share sale by its flagship entity Adani Enterprises next month, according to a source close to the matter.
That's the only way to convince those who have money to return to the bank fold, ditching other asset classes, says Tamal Bandyopadhyay.
Future Enterprises Ltd (FEL) on Tuesday said it has defaulted on payment of Rs 19.16 crore to Punjab National Bank, Canara Bank and Union Bank of India under the one-time restructuring plan. This is the second default by FEL this month. The due date for payment of Rs 19.16 crore was March 28, FEL said in a regulatory filing.
The first such interaction would be in Mumbai on Monday.
The move to make the appointment process more robust comes after last month's arrest of S K Jain, chairman and managing director of Syndicate Bank last month, over graft charges.
With the rise in interest rates, bond yields have been on the rise; this will dent banks' treasury profits. Also, many retail borrowers may find it difficult to service their loans when the loan rates rise, points out Tamal Bandyopadhyay.
Lenders can now initiate recovery proceedings since the SC has lifted the standstill on asset classification, which protected stressed accounts from slipping into NPAs.
A section of analysts feel now may not be a bad time to buy select PSBs.
On BSE, 1,469 shares fell and 1,200 shares rose. A total of 190 shares were unchanged.
According to the complaint filed by SBI, the account had become non-performing asset on January 27, 2016.
At least 13 candidates are in the race for the position of managing director and chief executive officer (MD & CEO) of Punjab National Bank (PNB), the second-largest public sector bank (PSB), according to multiple sources familiar with the matter. "Among the candidates, some are executive directors (EDs) and managing directors in major PSBs. "Financial Services Institutions Bureau (FSIB) will conduct the interviews next month," said a source.
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With new private banks in the play, the going could become more difficult for the old-school state-run banks, already losing business and market position, forcing them to think hard towards consolidating and forming larger entities to garner big-ticket deals.
Moody's Investors Service on Wednesday raised the rating outlook for 18 Indian corporates and banks, including Reliance Industries, Infosys, SBI and Axis Bank, to 'stable' from 'negative'. This follows the upgrade by the US-based rating agency in India's sovereign rating outlook to 'stable' from 'negative' on Tuesday. The agency had affirmed the sovereign rating at 'Baa3'.
Union Bank of India, Canara Bank, Andhra Bank, Saraswat Co-operative Bank and YES Bank have come together to allow inter-bank fund transfers through debit cards.
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