Microfinance portfolio of SFBs saw a muted growth of about 3% last year
Transiting from "survival mode", which took most of the management time in FY21, the bank has been able to take a long-term view in terms of growth and preparing technology in the past 12 months.
The Finance Ministry is considering a proposal to set up a National Asset Management Company that may act as a nodal agency for taking over bad loans of banks and help revive sick units.
On standalone basis, SBI's profit declined by 37.9 per cent to Rs 1,581.55 crore, from Rs 2,538.32 crore on account of rise in bad loans.
Interest rates on all loans linked to MCLR stand reduced by 5 bps with effect from May 10, 2019: SBI
The second quarter results of banks show that net profits for the industry increased 57 per cent annually. The private sector banks recorded a 64 per cent rise in profits, whereas the net profits of public sector banks jumped 50 per cent in this period. A significant portion of this increase can be attributed to the rise in credit costs and a decline in non-performing assets (NPAs).
Share prices of Dewan Housing, Indiabulls Housing, and PNB Housing have declined 30-80% in the past one year
The country's largest lender SBI on Thursday reported a 4.20 per cent decline in consolidated December quarter net at Rs 6,257.55 crore, largely because of a higher base in the year-ago period where it had benefitted from a Rs 4,500 crore one-off income. On a standalone basis, the city-headquartered lender's net profit came in at Rs 5,196.22 crore as against Rs 5,583.36 crore in the year-ago period and Rs 4,574.16 crore in the preceding September quarter. SBI chairman Dinesh Kumar Khara told reporters that the year-ago period had seen the resolution of the Essar Steel loans, resulting in an over Rs 4,000 crore interest income and Rs 500 crore other income benefit.
Thanks to the recapitalisation by the government and measures taken by the central bank, collapse of any large housing finance company won't pose as big a risk as it had six months ago.
Gross NPAs of public and private sector banks stood at Rs 2.41 lakh crore and 26,571 crore respectively.
Cases across the country against defaulters who owe over Rs 1 crore each, reveal CIBIL data.
According to the RBI's Financial Stability Report, the industry's gross bad-loan is at a 14-year high. As RBI's March 2017 deadline for banks to clean up soured credit looms closer, Shailajanand Mishra takes stock of just how bad the situation is.
'The snakes and ladders game will continue till the consolidation process is complete simply because we don't know how bad the scene is, with some of the banks being merged,' says Tamal Bandyopadhyay.
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.
Relations with the government, the bank's majority owner, are a tricky issue for all SBI chiefs, and, like all his predecessors, Khara will be closely watched for his equations with the finance ministry representative on the SBI board.
'Without bold action to deal with our banking crisis, count on the economy's doldrums to continue for much longer than most of us anticipate,' says Rahul Jacob.
Housing Development Finance Corp (HDFC) chairman Deepak Parekh on Tuesday said that while the country's macroeconomic fundamentals remain strong and the recovery is in progress, the unpredictability of coronavirus will remain a key challenge. Owing to the second wave, the Indian economy is likely to mirror a similar trend seen in FY21, where the first half of the financial year is weaker and the second half is significantly stronger, he said. "I remain confident that India's macroeconomic fundamentals are strong. Recovery is underway," Parekh said while addressing the 44th annual general meeting of HDFC Ltd. He said, the country's forex reserves and foreign direct investment inflows have scaled record highs, the capital markets are also buoyant and agriculture growth is expected to remain strong with food grain production estimated at over 305 million tonnes.
Public sector banks (PSBs) have written off a massive Rs 8 trillion of loans in the seven years of the Narendra Modi government in office. This is more than twice the capital infused by the Bharatiya Janata Party-led government during the period. Between 2014-15 and 2020-21 (FY21), the Centre had infused Rs 3.37 trillion into PSBs. At Rs 1.06 trillion, FY19 saw the highest capital infusion.
>It's not easy to predict the market. But there are at least two positive factors to back the PSU banks, explains Tamal Bandyopadhyay.
As industrialist Vijay Mallya fights his wilful defaulter tag, former CAG Vinod Rai has said Kingfisher Airlines' loan default is just a "trickle" and the overall problem of huge bad loans at public sector banks can be blamed on 'cronies' using connections to borrow money.
Investors in LIC's insurance and other schemes are receiving a lower rate of return because LIC is subsidising incompetence at best and malfeasance at worst in institutions such as IDBI Bank and IL&FS, says Jaimini Bhagwati.
Given the uncertain macroeconomic conditions, most brokerages have turned slightly cautious on the pace of growth in State Bank of India's (SBI's) earnings going ahead. While they don't see any significant risk arising for now, its sheer balance sheet size and systematic importance has nudged them to cut earnings estimates for fiscal year 2023-24 (FY24) and 2024-25 (FY25) up to 5 per cent. India's largest state-owned bank, on Thursday, reported standalone net profit of Rs 16,694.51 crore for Q4FY23.
Is the SBI chairman leaving the bank in a stronger and better position than what it was? Abhijit Lele finds out.
It is difficult to say if the banking sector will see the worst behind it by March 2020, warns Tamal Bandyopadhyay.
FinMin plans tougher targets for bad loans, Casa and others in performance-linked pay for senior management.
Banks, through the Indian Banks' Association, have urged RBI and credit information companies to maintain a database of wilful defaulters.
RBI's draft guidelines on computation of base rate, if implemented in its current form, will significantly impact the profitability of banks.
As the fight for deposits intensifies, the cost of money will rise and the margin will be under further pressure, points out Tamal Bandyopadhyay.
The central bank dashed hopes of any steep interest rate reduction.
Lenders can now initiate recovery proceedings since the SC has lifted the standstill on asset classification, which protected stressed accounts from slipping into NPAs.
It has Rs 20,500 crore of standard stressed pool outstanding as of June 2018. Thus, the entire stressed book (net NPAs and standard stressed pool) is nearly two times its net worth.
The central bank will come out with fresh set of guidelines for companies applying for on-tap bank licence
According to the global financial services major, following two years of sub 5 per cent growth, India's GDP is expected to be around 5.6 per cent in 2014-15 and around 6.5 per cent in 2015-16.
In a message to public sector banks (PSBs) that only performers will survive, the government, in an unprecedented move, has decided to allocate capital to only nine PSBs.
NPA problem to continue for next 2-3 quarters: banks to FinMin
The country's gross domestic product (GDP) growth is likely to be 8.8 to 9 per cent in the current financial year, driven by agriculture and industry sectors, Care Ratings said in a report. The country's economy had contracted by 7.3 per cent in fiscal 2020-21. The agency said the outlook for the Indian economy on almost all counts in FY22 would look seemingly better than FY21 on account of the negative base effect.
The event will also hurt PNB's asset quality in the March 2018 quarter. While the finer details of the fraud have not been provided, making it difficult to gauge the exact impact, analysts say it will dent the bank's financials.
One thing is for sure: It smacks of the regulator's lack of confidence in the bank's board, points out Tamal Bandyopadhyay.
Ironically, bad loans and non-performing assets are on the rise in public sector banks in India, say sector watchers.
Every defaulter is not a wilful defaulter who has the capability of paying back and is yet not servicing the bank loan, observes Tamal Bandyopadhyay.
