The government on Thursday said it will encourage mergers of public sector banks to create strong entities, which can compete with other world-class banks.
Mangalore-based Corporation Bank is considering merger of its housing finance arm Corporation Bank Homes with itself.
It is to keep labour unions away and make the employees feel important.
The meeting comes a day after Finance Minister P Chidambaram met heads of PSU banks and got an assurance from Indian Banks Association that banks would consider interest rate cut and come up with some decisions on the price at which credit will be delivered to different sectors. Following the meeting many public sector banks announced their decision to cut lending rates by up to 75 basis points.
Credit-to-deposit (CD) ratio of major public sector and private sector banks during the October-December quarter of FY24 inched up as compared to the previous quarter though government-owned lenders reported a lower rate than their private peers. CD ratio is the ratio of the funds that banks lend as compared to the funds raised in the form of deposits. The CD ratio of top public sector banks (PSBs) - State Bank of India, Punjab National Bank, Bank of Baroda and Canara Bank - was lower than their private counterparts.
The government on Monday said that its mantra for banking reforms would be 'consolidation, competition and convergence' to enable PSU banks to become more stronger, bigger and globally competitive.
Indian stock markets are expected to be driven mostly by global factors this week amid a lack of local triggers and earnings season largely coming to an end, say analysts. Crude oil prices, rupee movement and US Federal Reserve meeting minutes to be released this week will also influence the market sentiment. "With the earnings season behind us, global cues would largely dictate the trend in the coming week," Ajit Mishra, SVP - technical research, Religare Broking Ltd, said.
A number of non-banking financial companies (NBFCs) have tapped into the debt capital market ahead of the festival season to meet increasing credit demand as bank funding slows. On Tuesday, Aptus Value Housing Finance secured Rs 300 crore at an interest rate of 8.75 per cent through bonds maturing in five years. ICICI Home Finance Company turned to the market to raise Rs 275 crore at 7.94 per cent, alongside another Rs 300 crore at 7.95 per cent, through bonds maturing in five and three years, respectively.
Enthused by government's commitment to act proactively and ensure more liquidity to promote economic growth, ICICI Bank managing director K V Kamath on Monday promised to review interest rate in the next few days.
Despite multiple headwinds at the start of 2023, the Indian markets delivered a strong performance, posting 19-20 per cent growth for the year. Even as new records were set, investor sentiment remains strong going into 2024, given the lower inflation, expectations of steady to lower interest rates, higher economic growth, and strong inflows. However, the overriding concern for most brokerages is valuations.
Two public sector banks, Union Bank of India and United Bank of India (UBI), on Monday cut lending rates by 25-50 basis points (bps) ahead of Finance Minister P Chidambaram's meeting with PSU bank chiefs.
ONGC has written to the government numerous times saying the state-run banks on getting assured business act in cartel, offering interest rates lower than even that on retail deposits.
A tribunal on Monday halted a $75-million settlement due to be paid by Diageo Plc to Mallya.
Indian Bank plans an initial public offer in July 2004 to raise capital for funding its expansions, its chairman Ranjana Kumar said on Tuesday.
Banks are likely to cut rates even further, say finance minister Arun Jaitley.
HDFC was the top gainer in the Sensex pack, spurting over 2 per cent, followed by Bajaj Finserv, M&M, NTPC, Bharti Airtel, UltraTech Cement and ONGC. NSE Nifty rose 98.35 points to 14,823.15.
Banking sector veteran N C Vaghul says that the finance minister's step is neither positive nor regressive. He feels that banks and the finance ministry need to find a middle path. \n
Equity benchmark Sensex slumped 400 points on Wednesday tracking losses in index majors HDFC twins, Kotak Bank and TCS amid a weak trend in global markets.
The other prominent gainers were Tech Mahindra, HCL Technologies, Wipro, State Bank of India and Larsen & Toubro. Bajaj Finserv, Power Grid, UltraTech Cement and HDFC Bank were among the laggards.
Cash-strapped Kingfisher Airlines owed over Rs 5,600 crore (Rs 56 billion) to public sector banks as on February this year.
Following the footsteps of its peers, the Kolkata-based UCO Bank has priced its Rs 240 crore initial public offer at an attractive Rs 12 a share to woo retail investors.
Banks are in need of government support to manage the stressed assets
The Finance Ministry has invited private sector bankers.
Punjab National Bank is believed to have clinched the deal for taking over the ailing Industrial Finance Corporation of India.
Finance Minister P Chidambaram asked banks on Monday to even out their loan portfolios to ensure adequate credit to productive sectors, while prescribing deposit mobilisation to head-off liquidity crunch. \n\n
Taking advantage of the robust financial health of public-sector banks, the government has asked them to pay interim dividends, as part of efforts to contain fiscal deficit within 5.6 per cent of the GDP.
Bajaj Finance was the top laggard in the Sensex pack, skidding over 2 per cent, followed by Kotak Bank, Nestle India, HDFC, M&M and ICICI Bank. ONGC was the top gainer, rallying around 8 per cent. NTPC, Asian Paints, Tech Mahindra, PowerGrid and IndusInd Bank were among the other winners.
The government on Wednesday pulled up some of the PSU banks for not meeting the agriculture loan targets, but praised for a hefty 37 per cent rise in the operating profits aggregating at over Rs 21,000 crore (Rs 210 billion).
Bank of Baroda Q4 results: Key brokerages have raised their target prices on Bank of Baroda after the state-owned lender posted better-than-expected March quarter (Q4FY23) results. Analysts now see up to 29 per cent upside in the stock from a one-year perspective as they believe BoB is well-placed among the large public banks with nearly all key business metrics moving closer to the top-tier banks. Valuations, too, remain attractive despite steady strong quarterly performances.
Public sector banks together may take a hit of about Rs 2,200 crore (Rs 22 billion) annually if Indian Banking Association succumbs to trade unions' pressure and agrees to hike salaries of staff by 11 per cent this fiscal.
Credit rating agency ICRA has said that mergers are one of the best options for growth of Indian banks but warned that it may not solve some "basic problems" of Indian banks plagued by inferior asset quality, poor management and lack of autonomy.\n\n\n\n
Sensex, Nifty end the day in red on unfavourable cues from global markets.
Bharti Airtel was the top gainer in the Sensex pack, rising around 4 per cent, followed by Tech Mahindra, HDFC, Kotak Bank, M&M and HCL Tech. NSE Nifty advanced 21.85 points to 16,280.10.
IDBI ranked as the 2nd most trust PSU bank.
A local official confirmed the incidents but said the causes of these suicides were yet to be ascertained.
Top gainers in the Sensex pack included Tata Steel, Kotak Bank, NTPC, HDFC twins, PowerGrid and ONGC, rising up to 4.60 per cent.
With short-term rates firming up due to tight liquidity conditions, Indian corporates are opting to borrow long term to take advantage of the attractive rates by locking them in these uncertain times. The banking system has a liquidity deficit of over Rs 2 trillion. According to market participants, engineering conglomerate Larsen & Toubro (L&T) raised Rs 1,500 crore through 10-year bonds in December 2024.
Though most experts remain bullish on the banking space, they suggest investors buy only those banks whose NPAs are at a manageable level of 3% to 4% and there is credit growth or earnings visibility.
On the Sensex chart, IndusInd Bank, SBI, Dr Reddy's, NTPC, ICICI Bank, HCL Tech and Bajaj FinServ emerged as major laggards.
Among Sensex components, shares of Reliance Industries, India's largest company by market value, stole the show by surging 1.61 per cent to their highest in over three months.
