Reserve Bank of India
07:49
Showing posts with label private banks. Show all posts
Showing posts with label private banks. Show all posts
Saturday, 31 March 2018
Thursday, 10 August 2017
Saudi Arabia
18:08
HSBC to add staff in Saudi as kingdom adopts Vision 2030 agenda
HSBC to add staff in Saudi as kingdom adopts Vision 2030 agenda
The programme has created “fantastic” opportunities for its Saudi operations, says regional HSBC chief
HSBC is planning to add staff to its Saudi Arabian operations as the kingdom embarks on one of the biggest economic transformations attempted by any country, the bank’s regional chief Georges Elhedery told Reuters.
Opportunities for investment banks have increased tremendously due to Vision 2030, the reform programme launched by Crown Prince Mohammed bin Salman to diversify the economy and end its reliance on oil exports, Elhedery said in an interview.
Riyadh has ambitious privatisation plans, including to raise $100bn through the listing of five percent of state oil firm Saudi Aramco at home and on one or more overseas markets.
On top of that it is opening up the Saudi stock market – something HSBC estimates could attract up to $20bn in foreign capital – and encouraging local people to save more.
“The transformation is probably unprecedented in the region and has few historic precedents outside the region for that scale,” said Elhedery, who is HSBC’s Middle East and North Africa chief executive.
He cited China’s economic reforms of recent decades and major changes in Britain under prime minister Margaret Thatcher in the 1980s. “Saudi Vision 2030 fits there among these mega transformation plans,” he said.
Competition among the big investment banks to grab deals in the Saudi market is fierce. Citigroup obtained a Saudi investment banking licence in April and Goldman Sachs has applied to the capital markets regulator for a licence to trade equities, sources told Reuters in June. Credit Suisse intends to apply for a full banking licence and JPMorgan is adding bankers.
HSBC, which already has over 12,000 staff across the Middle East and North Africa, had no plans to go on a mass recruiting exercise. However, the London-listed bank would hire some new staff and relocate some existing employees to the kingdom from outside, Elhedery said. New additions would be incremental, he added, but declined to give a number.
HSBC, the largest international bank in the region, is the number one adviser for mergers and acquisitions and debt deals in Saudi Arabia, and the number five for equity capital markets so far this year, according to the latest Thomson Reuters data.
In April it acted as one of the joint global coordinators for Saudi Arabia’s $9bn dollar-denominated sukuk, while it is also one of three banks advising Saudi Aramco on what could be the largest ever share sale, sources have told Reuters.
Other notable deals include advising the Saudi Stock Exchange on its planned public share sale and sovereign wealth fund Public Investment Fund on a possible purchase of a stake in ACWA Power, a developer and operator of power and water plants.
“FANTASTIC” OPPORTUNITIES
The bank was also expecting to expand its business as a result of the opening of the stock market to foreign investors, a move that would create openings for its research, sales, execution, front office and custody services, said Elhedery.
Qualified foreign institutions were allowed to begin investing directly in Saudi stocks in 2015 and qualification requirements were eased last year.
The Capital Market Authority has also been revising rules to help the Saudi market enter international composite equity indexes, which would bring more foreign money.
“Our economic estimate is that if you have FTSE inclusion, as well as MSCI emerging market inclusion for Saudi Arabia, the cumulative number can be in the range of $15 to $20bn in inflows,” he said.
Another cornerstone of Vision 2030 is encouraging Saudis to increase their savings from 6 per cent of total household income now to 10 per cent.
Elhedery said the target created “fantastic” opportunities for its Saudi operations, which include a 40 per cent stake in Saudi British Bank (SABB), and a 49 per cent shareholding in HSBC Saudi Arabia, its investment bank.
“When you increase the savings rate you need to give people products either through equity markets or asset management products or bonds or sukuk products,” he said.
The bank’s Saudi presence will be further strengthened with a merger between SABB and fellow local lender Alawwal Bank. This will create the kingdom’s third biggest bank and could, say analysts, involve HSBC acquiring the 40 per cent owned by Royal Bank of Scotland in Alawwal.
HSBC has already made staffing changes to help its Saudi business, including the secondment in April of Samer Deghaili, co-head of equity capital markets in the region, to its Saudi subsidiary.
Some banking sources told Reuters that one reason HSBC was able to secure some deals in Saudi Arabia was by offering to accept lower fees for investment banking business.
Elhedery dismissed this idea. “The client gives business to those who deserve it,” he said. “The fees in this region in general terms have been lower than fees in the U.S. in the industry. But that … is just the nature of this market.”
Source:GulfBusiness.com
Saturday, 18 March 2017
private banks
08:35
Kerala gets first private bank
Kerala gets first private bank
Thrissur: ESAF Small Finance Bank, Kerala's first private sector bank, was launched here on Friday By chief minister Pinarayi Vijayan.The bank,Promoted by ESAF Microfinance and Investments (P) Ltd, Has announced that in its first year it will open 85 branches.
As per RBI guidelines, the bank is required to open 25 percent of its branches in unbanked rural centers besides in cities like bengaluru,Kolkata,Mumbai,Delhi and Hyderabad in the First Year.
ESAF Microfinance which presently has a network of 285 branches in 93 districts spread over 11 states
Tuesday, 19 July 2016
Monday, 6 June 2016
public sector banks
15:59
The big bank retail rush
The big bank retail rush
Banks have been wooing customers with all kinds of loans. It is time to exercise caution.
There is a sense of déjà vu of the pre-2008 days as banks are once again wooing customers with all kinds of loans, be it personal and auto loans or credit cards. Numbers certainly reveal that banks have changed course radically in the last two years, steadily increasing their share from retail loans. After unceremoniously abandoning personal loans and credit cards in 2008, banks have been growing the portfolio aggressively in recent times.
In the 2016 fiscal, retail loans have grown by a strong 19 per cent, even as growth in corporate loans slipped to an abysmal 2-odd per cent. The over 20 per cent growth in personal and vehicle loans as well as credit card business has led the growth in retail loans. Given tepid investment climate and stretched balance sheets of corporates, it may only seem natural that banks are now growing their retail business to offset the sluggishness in corporate lending.
But if stalled projects and stress in core sectors have spelt doom for banks, then they can also run similar risk from their huge unsecured retail loan portfolio, much like during the financial crisis, when many private banks burnt their fingers. It is time for banks to take stock and exercise caution.
Past lessons
From late 1990s to about 2005-06, retail lending in India boomed, growing over 25 per cent annually due to factors such as increased competition, higher disposable income, growing middle class acceptance of loans etc. One other key factor that led to such a steep growth was banks’ perception of low risk in such loans, a theory that was turned on its head during the financial crisis. While among retail loans, housing loans being secured carry lower risk, banks earn thin margins given the intense competition in this segment. It is hence the more profitable unsecured loans such as personal loans and credit cards that banks turned to in the heydays.
In the two fiscals before 2008, retail loans grew by 30-40 per cent, with all segments firing including personal loans and credit cards. But that soon changed. Retail loan growth slipped to a modest 4-5 per cent growth in 2009 and 2010, with private banks taking conscious and tough calls to write off unsecured loans.
For instance, ICICI Bank used the 2009-11 period to aggressively write off its unsecured retail book, which nearly contributed to its downfall during the 2007-08 crisis.
Retail bad loans had shot up to 7-8 per cent, constituting a chunk of its bad loans. Axis Bank’s personal and credit cards that were about 20 per cent of its retail portfolio, was down to 10 per cent by 2013-14.
Where’s the rush?
That was two years back. With the pain of excessive exposure to such loans fading away, banks have been upping the ante. But chasing risky unsecured loans is a cause for worry. The credit card business that peaked at about ₹30,000 crore in 2008 and almost halved by 2011, has been growing steadily by over 20 per cent annually in the last two years -- now a ₹37,000 crore business. Personal loans too have been growing at a fast clip, ending the 2016 fiscal with a 25 per cent increase. Vehicle loans, while secured, are nonetheless riskier than housing loans, as they are offered against a depreciating asset. Surprisingly these loans too have had a splendid run, despite the not-much-to-write-home-about auto sales numbers. One reason for this anomaly could be that buyers are now using more credit than cash to purchase vehicles. This paints an even worrisome picture. Weak economic growth adversely impacting personal incomes, can nudge people to borrow more to keep up their spending, no matter what their credit absorption capacity.
Testing the waters
Instead of indiscriminately offering all kinds of loans, banks need to choose caution over profitability. Inadequate origination and monitoring can lead to unexpected slippages in the coming years. What is particularly worrisome is that PSU banks reeling under high levels of stressed corporate loans are now testing the waters, with retail loans. These banks have been late adopters to the usage of credit bureaus, and unless back end processes of underwriting customers are streamlined, adhoc focus on retail can spew problems. Remember, the reason for unnaturally lower delinquencies in unsecured loans has mainly been due to banks’ relatively lower expansion into these segments. Delinquencies can soon play catch up, if unbridled growth is not backed by proper credit practices.
Retail lending is just a decade old trend, and Indian banks still lag far behind their western counterparts, in adopting analytics and risk prediction models. It is worrisome enough that banks will have to carry their legacy corporate bad loans for sometime to come. If retail delinquencies gather steam, banks would find it way too difficult to drag themselves out of their morass of stressed loans, even if the economic cycle turns.
Source:The Hindu Business Line
Saturday, 21 November 2015
Reserve Bank of India
15:56
RBI clarifies capital adequacy norm under new pvt bank licence
RBI clarifies capital adequacy norm under new pvt bank licence
The Reserve Bank today clarified that the capital adequacy norms will be applicable on a consolidated basis on wholly-owned Non-Operative Financial Holding Company (NOFHC) of the entities in the private sector banking.
As per RBI guidelines for Licensing of New Banks in the Private Sector, the entities or group in the private sector are required to set up wholly-owned Non-Operative Financial Holding Company (NOFHC) for carrying out business of banking and other permissible financial activities.
The guidelines further stipulate that the capital adequacy norms would be applied to the NOFHC on consolidated basis as applicable to existing banking groups.
“In this context, it is clarified that consolidated (Group) level capital adequacy would also mean application of consolidated capital adequacy norm to the NOFHC after consolidating the relevant entities held by it,” RBI said in a notification.
As per RBI guidelines, the NOFHC are required to be wholly owned by the promoter or promoter group to run the bank.
Also, the NOFHC are mandated to hold the bank as well as all the other financial services entities of the group.
Source :BankingUpdates
Friday, 13 November 2015
private banks
23:28
Private banks to gain with easing of Foreign Direct Investment
Private banks to gain with easing of Foreign Direct Investment
Axis Bank, Kotak Mahindra Bank and YES Bank are likely to be the biggest beneficiaries of the central government’s decision to ease foreign investment limits in the sector.
The decision was to scrap the sub-limits for foreign direct investment and foreign institutional investment (FII), instead having a composite cap of 74 per cent. HDFC Bank and ICICI Bank already have a very high foreign shareholding and won’t benefit from this change in norms.
As the process of capital raising will become simpler, lenders actively looking to do so will gain. For instance, YES Bank was planning to raise Rs 6,607.5 crore; it might now go for qualified institutional placement, instead of an issue of American or global depositary receipts. It had said it was preparing for both routes of doing so.
“There will be more capital flowing into the system and significantly ease the procedural investment decisions by foreign investors. YES Bank had got board approval in April and an enabling approval from our shareholders for increasing FII limit up to 74 per cent in the annual general meeting in June. So, we have head room to substantially increase FII holding and this will enhance the flexibility of various capital-raising options,” said Rana Kapoor, its managing director.
Analysts said this move could be a key reason in attracting more capital into the sector to meet the capital adequacy norms under Basel-III rules. At present, all private sector banks are well above the requirement.
The government was in favour of raising the overall cap on foreign investment to 100 per cent but the Reserve Bank of India had reservations. The central bank felt such a move might blur the distinction between foreign banks operating in India and Indian banks with 100 per cent foreign investment.
Source:Business Standard
Friday, 18 September 2015
Reserve Bank of India
07:41
100 Percentage FDI in Private Banks on Cards
100 Percentage FDI in Private Banks on Cards
NEW DELHI: To increase foreign funds inflows into the country, the government is considering to relax investment norms by increasing foreign direct investment (FDI) limit to 100 per cent for private banks from existing 74 per cent.
According to a Commerce Ministry official, the Department of Industrial Policy and Promotion (DIPP) has sent a proposal to hike the FDI limit in the private banking industry to the Finance Ministry for its views.
At present, only 74 per cent FDI is permitted in the private sector banking, of which up to 49 per cent is allowed under the automatic route and beyond that through the approval of the Foreign Investment Promotion Board (FIPB).
The move will help the existing private sector banks, payments banks and small finance banks tap overseas markets to enhance their capital base.
Earlier, the Reserve Bank of India (RBI) granted in-principle approval to 11 entities to set up payments banks and 10 for small finance banks.
The government has also introduced the concept of composite caps where it removed separate caps for FDI and foreign portfolio investments (FPI) by replacing them with single upper limit in a bid to make foreign investments easier. But given the sensitivities in the sector, the government has said foreign institutional investors (FIIs) cannot exceed the cap prescribed for portfolio investments in private sector banks. The limit of portfolio investment in banking is capped at 49 per cent
The government is taking several steps to boost FDI and has relaxed FDI norms for sectors such as medical devices, defence and construction activities. During April-June of this fiscal, FDI into the country grew 31 per cent to $9.50 billion.
Source :The New Indian Express.
Friday, 4 September 2015
SBI
18:58
PSBs need govt support for viability of social schemes, says SBI chief
PSBs need govt support for viability of social schemes, says SBI chief
MUMBAI, AUG 28: PTI
SBI chief Arundhathi Bhattacharya today said the government needs to thinkabout “ways and means” to sustain social security schemes like PradhanMantri Jan Dhan Yojana in the long run and compensate public sector banks(PSBs) to make such initiatives commercially viable.
“The government wants that it (PMJDY) should be a sustainable kind ofinitiative... that we should not do it and then allow it to die because it is notcommercially viable. So obviously, the government will have to think of ways and means to ensure that these accounts, once they come in, become commercially viable accounts,” she told reporters.
“We are already working on it with the government. I don’t think the government intends not to give anything. But we are working on what it should be,” she added.
The remarks from SBI chief came a day after Reserve Bank Governor Raghuram Rajan stressed on the need to compensate PSBs to maintain a level playing field as many of the private sector banks do not get pinched by such measures.
“We should recognise that PSBs undertake public interest activities (like the roll—out of accounts under PMJDY) that are not always fully compensated.
Government should endeavour to keep the competitive playing field level by fully compensating banks for activities it wants to undertake in the public interest,” Rajan wrote in the Overview section of RBI’s annual report.
Source :http://aibea.in/upload/flashnews/20150901.pdf
Monday, 31 August 2015
SBI
20:34
HDFC Bank Slashes Base Rate to 9.35%, EMIs Set to Fall
HDFC Bank Slashes Base Rate to 9.35%, EMIs Set to Fall
In a huge relief for consumers, private lender HDFC Bank cut its base rate, or minimum lending rate, from 9.70 per cent to 9.35 per cent on Monday, Press Trust of India reported. HDFC Bank is the country's second largest private sector bank by assets.
The surprise rate cut is likely to force other major lenders into reducing rates, analysts say. HDFC Bank competes with ICICI Bank and State Bank of India, both of which give loans at 9.7 per cent currently.
The revised rates are applicable from Tuesday, after which all loans linked to the base rate will become cheaper. The reduction in rates will help drive demand for auto and home loans, analysts say.
HDFC Bank's latest rate cut comes after continuous prodding by Reserve Bank Governor Raghuram Rajan, who has been nudging banks to cut their lending rates.
The central bank has cut its repo rate by a combined 0.75 per cent or 75 basis points this year, but commercial banks have been behind the curve in reducing rates.
The lack of transmission in interest rates has rendered Dr Rajan's repo cuts useless, analysts say.
Source :Banking Updates.
Sunday, 30 August 2015
Saturday Leave
11:16
No payment systems to work on 2nd, 4th Saturdays from Sept 1: RBI
No payment systems to work on 2nd, 4th Saturdays from Sept 1: RBI
With effect from Thursday, payment systems would not work on the second and fourth Saturdays of a month, but would operate the full day on working Saturdays, the Reserve Bank of India (RBI) said.
The payment systems that would not work include Real Time Gross Settlement (RTGS), National Electronic Fund Transfer and Electronic Clearing Service (ECS).
This is because all scheduled and non-scheduled banks, public, private, foreign, cooperative, regional rural and local area banks, will have a holiday on the second and fourth Saturdays from September.
The other payment systems that would not work on these days include cheque clearing including the grid-based Cheque Truncation System, Regional Electronic Clearing Service and National Electronic Clearing Service.
RBI said the processing of future value dated transactions with a value date falling on the second and fourth Saturdays will not be undertaken under RTGS and ECS.
Following a pact between public sector bank employees and officers with the management, it was decided that all branches in the country would remain closed on all the second and fourth Saturdays from July. Subsequently, the government issued a notification enabling the same for all banks. RBI has clarified it will continue to operate fixed rate reverse repos as well as the marginal standing facility windows on all working Saturdays. It will also operate a fixed rate liquidity adjustment facility repo window on all working Saturdays.
The central bank also said that as a regulator of banks, financial markets and payment and settlement systems, it had made supporting changes in the working of some of its operational areas. The arrangements would be reviewed after six months.
Saturday, 11 July 2015
RBI
23:47
Bank employees to go on strike on Sept 2 against proposed amendments to the labour labours
Bank employees to go on strike on Sept 2 against proposed amendments to the labour labours
Around five lakh employees of public sector banks are planning to go on a strike on September 2. The strike is to protest against the proposed amendments to the labour laws to the detriment of the workers.
Bank employees have also decided to hold demonstrations demanding that Kingfisher Airlines' owner Vijay Mallya be declared as a wilful defaulter.
More than five lakh bank employees and officers of public sector banks, private banks, foreign banks, Regional rural banks and co-op. bank will join the strike, said C H Venkatachalam, general secretary, All India Bank Employees' Association (AIBEA)
AIBEA will also launch national-level agitation against banking sector reforms from July 19. The central committee of AIBEA has also decided to launch a national-level agitation by bank employees against the banking reforms measures being pursued by the NDA/BJP Government.
AIBEA members would meet the customers and general public and obtain one crore signatures in the mass petition to Prime Minister Narendra Modi demanding strengthening of public sector banks and stopping bank privatisation, granting of banking license of corporate companies, and licence to private people for starting small banks and payment banks with a view to dilute public sector banks. AIBEA will meet the Prime Minister and hand over these mass petitions demanding remedial action to ensure a vibrant banking sector.
AIBEa claimed that bad loans in the banks are increasing month after month and touched more than Rs 3 lakh crores today. "This is in addition to more than Rs 3 lakh crore of bad loans re-structured and shown as good loan. Further, huge bad loans are being sold to private Asset Reconstruction Companies at cheaper prices," said Venkatachalam, adding that AIBEA will be publishing the latest list of big loan defaulters during the monsoon session of the Parliament.
AIBEA is demanding the government and RBI to publish the list periodically and take stringent action on the defaulters. AIBEA is demanding that wilful default of bank loan be deemed as a criminal offence and criminal action be taken against such defaulter.
