central government
08:25
Delhi Dharna on 21st March 2018 -UFBU
Delhi Dharna on 21st March 2018 -UFBU
United Forum Of Bank Unions held an urgent meeting on 23 rd Feburart 2018 in Chennai.
Showing posts with label capital. Show all posts
Showing posts with label capital. Show all posts
Tuesday, 6 March 2018
Saturday, 11 June 2016
public sector banks
19:40
Public Sector Banks:11 PSU banks will need Rs 1,20,000 crore capital
Public Sector Banks:11 PSU banks will need Rs 1,20,000 crore capital
The government has announced Rs 70,000 crore capital infusion for 22 PSU banks by March 2019.
Global rating agency Moody’s has said the asset quality of public sector banks will remain under pressure over the next 12 months and increased provisioning would constrain profitability and limit internal capital generation. As a result, 11 PSU banks will need Rs 1,20,000 crore capital — Rs 50,000 crore more than the amount the government has planned to inject into them to bolster their balance sheets.
The 11 lenders which will include State Bank of India, Bank of Baroda and Bank of India will need the capital through 2020, it said. The government has announced Rs 70,000 crore capital infusion for 22 PSU banks by March 2019. Of this, 25,000 crore has already been injected and the government plans to infuse as much during the current fiscal.
After analysing the earnings of these banks for the financial year ended March 2016, Moody’s said the increased provisioning would constrain profitability and limit internal capital generation. The asset quality review mandated by the Reserve Bank of India (RBI) in the second half of 2015-16, in an effort to clean up the banks’ balance sheets, has adversely affected their profitability.
The review has resulted in higher non-performing loan (NPL) ratios and increased loan loss provisioning expenses. Eight of the 11 public sector banks (PSBs), rated by Moody’s, posted a net loss for the full fiscal. The remaining three reported a significant decline in profits. “We expect the capitalisation profile of the PSBs to further deteriorate, unless the government provides additional capital support,” the ratings agency said.
Gross NPAs of lenders have surged by a whopping Rs 2,41,000 crore in just six months — December and March quarters of fiscal 2015-16 — mostly due to the aggressive provisioning undertaken by PSU banks at the behest of the RBI. As a result, gross NPAs have gone up from Rs 349,113 crore in September 2015 when the RBI ordered the asset review to Rs 590,772 crore by March 2016. “In view of their results for the fiscal year ended March 2016, Moody’s analysis suggests capital requirements of about Rs 1.2 lakh crore for its 11 rated public sector banks, far higher than the remaining Rs 45,000 crore included in the government’s budget for capital distribution to the banks until 2020,” Moody’s said.
According to it, these banks’ asset quality will remain under pressure over the next 12 months, as they continue to recognise NPLs from some of the larger leveraged corporate groups, particularly in the steel and power sectors. “As a result, elevated provisioning expenses will continue to constrain profitability and limit internal capital generation,” Moody’s said.
Source:The New Indian Express
Monday, 21 March 2016
Higher flow of savings into the capital markets via mutual funds and Others-India Banking Experts
Higher flow of savings into the capital markets via mutual funds and Others-India Banking Experts
CHENNAI: With their huge bad loans and provisioning for the same affecting their profitability, India's banks may not reduce their lending rates in the near future following the slashing of interest rates on the small savings schemes, say experts.
They also predict that there will be a higher flow of savings into the capital markets via mutual funds and others.
The BJP-led central government, much to the chagrin of the common man, cut the interest rates on various small savings schemes and public provident fund (PPF), citing banks' grievance that they were not able to reduce their lending rates as interest on deposits were on the high side.
The interest rate was cut from 8.7 percent to 8.1 percent on PPF, from 8.5 percent to 8.1 percent on National Savings Certificate, from 8.7 percent to 7.8 percent for Kisan Vikas Patra and from 8.4 percent to 7.4 percent on five-year recurring deposit. Even the girl child scheme Sukanya Samridhhi Account (SSA) was not spared, with a cut from 9.2 percent to 8.6 percent.
Similarly, rate cut has been announced on various term deposits. The banks had been saying that they are forced to pay higher interest rate on their deposits as they have to compete with the small savings schemes enjoying tax benefits.
"This decision was expected as the government had indicated a move in this direction earlier. We hope that with this review of the small savings interest rates, banks would considerably hasten a re-look at their own lending rates and bring these down for both consumers and investors," business chamber FICCI's secretary general A. Didar Singh said in a statement.
"Banks have been pointing out the interest rates on small savings instruments as one of the factors that have deterred them from reducing their interest rates. With the government now having made this move, banks must take an immediate cue and support the incipient economic recovery," he added.
The slashing of interest rates on PPF and other small savings schemes may not result in banks cutting down their lending rates immediately given their own problems.
"In the near future the banks may not reduce their lending rates but will use this - interest cut on small savings schemes - to mobilise more deposits. If they have to kick start the economic growth, they have to mobilise deposits for lending," Saswata Guha, director, Financial Institutions at global credit rating agency Fitch Ratings, told IANS.
He also agreed that the banks have to contend with their huge bad loans and hence lending rate cuts may not happen soon.
"They don't have the wherewithal to reduce their lending rates now," Guha said.
"The rate cut on small savings schemes is not all that bad and savers will now put some part of their money in the capital markets, mutual funds and others that give higher returns," Bhuvana Shreeram of Mumbai-based Financial Freedom Golden Practices told IANS.
"PPF rates have been as high as 12 percent for the first 15 years and have come down to average around 8.5 percent in the last 15 years. But look at the timing of this fall. In 2001, double digit PPF rates became history. And what happened to India's GDP and more importantly per capita income of Indians is important to note," Shreeram said.
According to her, when GDP and per capita income goes up, people have more money to spend, and the government will increase its spending thereby creating more jobs and more capital investments will come into the country which again means more jobs.
"Historically, through the good and bad times of the last 35 years, capital markets have given 17 percent average annual returns which is 2.5 times risk free rate," Shreeram said.
Source:ET
Tuesday, 15 March 2016
Paytm
07:59
Paytm borrows Rs 300cr from ICICI Bank
Paytm borrows Rs 300cr from ICICI Bank
Online payments and commerce platform Paytm has taken a loan of close to Rs 300 crore from ICICI Bank in two tranches, a move that analysts say reflects the slowdown in venture capital (VC) investing.
Just last week, India's largest online marketplace Flipkart disclosed that it had secured a credit line of Rs 450 crore from HDFC Bank by pledging fixed deposits. In the last few months of 2015 too, Flipkart had pledged assets to access credit facilities worth Rs 1,400 crore from Kotak Mahindra Bank and Deutsche Bank.
When contacted, Paytm founder Vijay Shekhar Sharma told TOI, "This is a treasury management move for working capital. While adequate funds are there, it is advised by our finance teams to get these credit lines for working capital on the back of security such as FDs (fixed deposits), mutual funds, etc, in order to conserve cash."'
An email sent to ICICI Bank, the country's largest private sector lender, did not elicit a response till the time of going to press.
According to the latest documents filed by Paytm with the Registrar of Companies (RoC), the company has pledged cash assets as security with the bank. Last year, Paytm had taken a small loan of Rs 15 crore for working capital requirements from HDFC Bank which has been repaid by the Noida-based company, RoC documents show.
Paytm, which is backed by Chinese e-commerce major Alibaba, started as an online payments platform but later started its own commerce platform, where it competes with the likes of Flipkart, Snapdeal and Amazon. Though the payments business is operationally profitable, the commerce platform is burning cash. Paytm is now gearing up to launch a payments bank, which would require additional capital. The company is hoping to garner fresh equity funds for this.
Source:BankingUpdates
Source:BankingUpdates
Sunday, 8 November 2015
madhya Pradesh
14:52
Fact that public sector banks are going to be significantly capital-constrained in future -IDFC Bank Managing Director
Fact that public sector banks are going to be significantly capital-constrained in future -IDFC Bank Managing Director
IDFC Bank looks to cash in on capital-starved state-run banks
The newest private sector lender IDFC Bank hopes to fill the space being left by the inability of state-run banks to expand their balance sheet due to capital constraints, as it builds its retail franchise.
"The fact that public sector banks are going to be significantly capital-constrained in future, thanks to their legacy and asset problems, creates an opportunity for new private sector banks," IDFC Bank managing director and chief executive Rajiv Lall told PTI in an interview.
"So for us, starting from a small base but with strong capital, a strong management team and state-of-the-art technology, I believe it is very much possible to get a nice franchise over the next five years," Lall said.
Lall said the bank, which began operations on October 19 after getting an RBI licence in April 2014 by converting into a commercial bank from being an infra lender, will be focusing non-core income side to accrue capital which he hopes to pump back for rural play.
He noted that retail expansion, especially into rural areas, will take some time as it needs to shore up capital.
Lall also said out of the 23 branches opened so far, 15 are in rural areas of Madhya Pradesh.
"While we build on our existing historical strengths, we will be diversifying the revenue base from existing customers, and serve them much wider products, and build our non-interest income base.. these will be the engines that will drive IDFC Bank," Lall said.
He further said the bank will use the capital accrued from these verticals to drive rural expansion. "We will re-invest some profits generated from wholesale and commercial banking into building our rural franchise and a personal and business banking franchise," he added.
Lall said rural franchise is very important not only for meeting PSL targets but also for getting opportunity to build a profitable business in a segment that has not seen much competition.
Stating that personal and business banking will be a marathon, Lall said this stream of banking will be focused on top 50 centres as 80 per cent of corporate and household savings sit on these 50 centres.
The bank was listed on Friday at Rs 70.50 and closed at Rs 70.70 on the BSE. On this he said it shows that the market has understood the basis on which the demerger was undertaken.
On the asset quality, he said there is no worry on the bank as they have already provided for the next five year, going out of their way to clean up the book.
"We've effectively taken very deep provisions against our legacy portfolio. Our belief is that for next four-five years we will not need to provide anything more against the legacy portfolio," he said.
On the just reforms in the power distribution arena, Lall said though the bank and its parent have no direct exposure to discoms, the bailout package will "help improve operations of discoms which in turn will help the power sector, where it has huge exposure, and therefore the reforms will help our portfolio."
He further said advantage of the reforms of discoms "could be that if these reforms take off we will be writing back some of the provisions we made as this will only strengthen our legacy portfolio and the ability to extract more value than we have provided."
On the proposed bankruptcy laws, he said the new legal provisions will hasten recovery related to asset quality problems. It will also help banks prepare for the next cycle (of bad assets) as and when that happens.
When asked about the performance of the bank since the launch, Lall said he is very pleased that their complex technology platform is working very well.
Source:dnaindia
Source:dnaindia
Sunday, 30 August 2015
Goldman Sachs
12:27
Goldman Sachs to Buy General Electric Capital Bank's Online Deposit Platform
Goldman Sachs to Buy General Electric Capital Bank's Online Deposit Platform
Goldman Sachs, the US based investment firm, is broadening its efforts to offer banking services to people with a wider array of incomes than it has traditionally served. On Thursday, the firm announced about its plan to acquisition of General Electric Capital Bank's online deposit platform.
The American multinational investment banking firm said in a statement that the acquisition will result in shift of $8 billion from GE Capital Bank to Goldman in online deposit accounts and $8 billion in brokered certificates of deposits.
“This transaction achieves greater funding diversification and strengthens the liquidity profile of GS Bank by providing an additional deposit gathering channel”, said Goldman treasurer Liz Beshel Robinson.
GE said in a statement that the move is part of a strategy to scale back its finance operations to focus more on industrial operations. The shift comes as large financial institutes face stiffening regulatory requirements.
Keith Sherin, GE Capital chief executive, said this transaction is another key step and will advance GE Capital's new strategic direction by facilitating closure of one of our two US bank charters, which they believe will help them to become less systemically important.
Historically, Goldman has been an investment bank catering almost entirely to corporate clients, with a small business offering private banking services to the wealthy elite.
During the financial crisis, Goldman was forced to convert to a bank holding company. Since then, Goldman has slowly been trying to take advantage of its new classification, which also allows it to take deposits and lend money.
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