Banking e-Bulletin - ASSOCHAM...Development) Act, 2016. The Benami Transaction (Prohibition)...

Banking e-Bulletin

The AssociATed chAmbers of commerce And indusTry of indiAASSOCHAM Corporate Office: 5, Sardar Patel Marg, Chanakyapuri, New Delhi-110 021

Tel: 011-46550555 (Hunting Line) • Fax: 011-23017008, 23017009 Email: [email protected] • Website: www.assocham.org

VolumE-23April 2017

ASSOCHAM Banking e-Bulletin n Volume-23 n 3

SpeecheS

It is a well recognized fact that clear and efficient laws provide confidence to the investing community. Such investments can be by domestic entities or foreign entities or investment overseas by domestic entities. In the recent past, India has embarked upon a number of legislative and regulatory measures that are certain to create a positive impact on the investment climate prevailing in the country and capable of boosting the confidence of investors. A few such measures are also on the anvil.

• insolvency and Bankruptcy Code, 2016: The recent enactment of a comprehensive legislation relating to insolvency of corporates, firms and individuals has been a much awaited move. The Insolvency and Bankruptcy Code, 2016 (IBC) lays down a resolution process that is time bound and undertaken by professionals. It creates an institutional mechanism for insolvency resolution process for businesses operated by companies, individuals or any other entities, either by coming up with a viable survival mechanism or by ensuring their prompt liquidation. The preamble to the Code makes clear the objective of the new law as one to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms

and individuals in a time bound manner, for maximisation of value of assets of such persons to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders. Through this enactment, the Parliament has codified the laws governing insolvency and bankruptcy of both corporates and individuals, which were spread over a number of legislations. A key innovation of the new Code is its four pillars of institutional infrastructure comprising of Insolvency professionals, Information Utilities, Adjudicating Authorities (NCLT & DRT) and Insolvency and Bankruptcy Board of India.

• The Financial resolution and Deposit insurance Bill, 2016 (Draft): The IBC 2016 about which I spoke so far does not provide for resolution of the corporates providing financial services. The need for jurisdictions having a specialized resolution regime applicable to financial service providers has also been recognized internationally. Recently, a draft Bill for this purpose has been recommended by a working group constituted by the Central Government. This Bill aims to establish a framework to carry out the resolution of certain categories of financial service providers in distress, to provide deposit insurance to consumers of

Improving Investor Interest – Recent Legislative And Regulatory Measures (Shri R. Gandhi, Deputy Governor - March 2, 2017 - at the “Asia-Pacific Regional Meeting 2017” Jointly Organised By Link Legal India Law Services and Globalaw

at Hotel Trident, Nariman Point, Mumbai):

4 n ASSOCHAM Banking e-Bulletin n Volume-23

certain categories of financial services and for designation of Systemically Important Financial Institutions by the Central Government for resolution. The draft Bill on Financial Resolution and Deposit Insurance not only consolidates the resolution provisions presently scattered in different statutes, but also introduces new requirements like classification of financial service providers into various categories of risk to viability, submission of resolution / restoration plans, etc. and new methods for resolution, on the lines of prevalent international practices. It also proposes creation of a new specialized authority called the Resolution Corporation, which will be tasked with the responsibility of carrying out speedy and efficient resolution of financial service providers. The authority will also take over the deposit insurance activity presently undertaken by the DICGC. The overall mechanism contemplated under the Bill would certainly bring in more clarity as to the rights of investors in the event of resolution of the investee financial service provider and is expected to improve investor confidence in the Indian financial market.

• Amendments To The SArFAESi Act And DrT Act: Slow pace of recovery of financial debts has been imposing considerable strain on the financial position of the lenders, thus raising concerns for any investor, existing or prospective, of such lenders. Specialized laws establishing Debt Recovery Tribunals (DRTs) and empowering secured creditors to enforce security interest without the intervention of court, have been in vogue for several years now. While, such mechanisms have definitely facilitated faster recovery, there can be no

doubt that much more needs to be done. In this context, some of the changes made to those laws recently are worth mentioning. For instance, certain procedural improvements have been made with respect to the functioning of DRTs like (i) stricter time lines for filing of written statement, conclusion of hearings, etc. to expedite adjudication; (ii) filing of recovery application, documents and written statements in electronic form; and (iii) uniform procedure for conduct of proceedings. Further, specific provisions have been enacted in those laws to clarify regarding the priority of secured creditors over state dues. Another important change brought about is enabling ‘Debenture trustees’ to approach DRTs to recover unpaid debts due under listed debt securities as well as to invoke the provisions of SARFAESI Act to enforce the security interest without the intervention of courts. These measures confer additional recovery avenues for the benefit of debenture holders.

• other legislative Changes: Legislative changes have also attempted to improve the investment horizon in asset reconstruction companies (ARCs). The restriction which existed on a holding company sponsoring an ARC has since been removed. The sponsors of ARCs are now required to be only fit and proper as per RBI guidelines. Further, apart from qualified buyers, non- institutional investors specified by RBI could also invest in security receipts issued by ARCs. Apart from the above, there were a number of legislative measures of substantial significance to the investor community. For instance, a Constitutional amendment was brought in


the previous year for enabling a single Goods and Service Tax throughout the country. In the year 2015, Parliament passed the Arbitration and Conciliation (Amendment) Act providing for various changes to the arbitration laws, with a view to making arbitration quicker, reducing interference by courts and to make India a more attractive destination for foreign investors. In order to take forward and accelerate the agenda of the “Ease of Doing Business” and “Make in India”, the Commercial Courts, Commercial Division and Commercial Appellate Division of the High Courts Act, 2015 was promulgated, which provides for the constitution of Commercial Courts and the establishment of Commercial Divisions and Commercial Appellate Divisions in the High Courts to adjudicate Commercial Disputes for achieving the motive of swift and speedy enforcement of contracts, recovery of monetary claims and compensation for damages suffered to increase investment and economic activity in our country. Other two notable legislative measures important from an investment perspective are Benami Transaction (Prohibition) Amendment Act, 2016 and Real Estate (Regulation and Development) Act, 2016. The Benami Transaction (Prohibition) Amendment Act, 2016 aims to control the menace of black money and its by-product Benami transactions, with the new stringent law and its effective implementation. The Real Estate (Regulation and Development) Act, 2016 (RERA) is designed to provide uniform regulation, protect consumer interests, help speedy adjudication of disputes, improve accountability of developers and boost

transparency. It should help to make the Indian real estate sector more attractive for foreign and domestic investment.

• Foreign investment: Now, let me discuss some of the recent regulatory measures relating to foreign investment. In today’s world, no country can be an island oblivious of the developments in the world around it. With globalization and trade reforms, countries are globally integrated and have trade linkages with each other. Free trade enables lower prices for consumers, increased exports, benefits from economies of scale and a greater choice of goods. In developing nations, including India, free trade has increased the gap of Current Account Deficits as imports exceed exports. To bridge this deficit and also to bridge the gap between domestic savings and investments, India requires forex flows from overseas. These flows help India reach its economic potential by providing capital to finance new industries and enhance existing industries, boosting infrastructure, productivity, and employment opportunities in the process. In other words they aid development and fuel domestic growth. Inward flows can be in the form of debt, equity, deposits or personal remittances. India continues to be among the top ten countries in terms of foreign direct investment (FDI) inflows globally and the fourth in developing Asia, as per the World Investment Report 2016 by the United Nations Conference for Trade and Development (UNCTAD). India also jumped 16 notches again to 39 among 144 countries in the World Economic Forum’s Global Competitiveness Index 2016 that ranks


countries on the basis of parameters such as institutions, macroeconomic environment, education, market size and infrastructure among others.

• External Commercial Borrowings (ECB): Considering the macroeconomic developments and the experience gained in administering ECBs over the years, a liberalized regime for debt capital was introduced through a four track approach for ECBs. The overarching principles of the revised framework are: (a) fewer restrictions on end-uses and higher all in cost ceilings; (b) expand the list of eligible lenders to include long term lenders like sovereign wealth funds, insurance companies and pension funds; (c) small negative list of end use restrictions; (d) nudge borrowers towards rupee denominated debt and (e) permit higher interest for long term foreign currency borrowings. Recognizing the needs of the infrastructure sector, long term borrowing in foreign currency denominated ECB with a minimum average maturity of ten years has been permitted (subsequently reduced to five years in alignment with OECD requirements). Access to alternative sources of credit to eligible borrowers without its concomitant forex risks was made feasible with the introduction of masala bonds.

• Foreign Direct investment (FDi): Foreign investment is one area which economies around the world look at with at most precision. Which sectors to open up to foreign funds, how much control to cede to foreign investors and what all clearances to mandate are some questions that pose challenges to

most Governments. In India the policy on foreign investment is framed by the Central Government. On an annual basis, it issues a consolidated circular detailing the policy stance. The sectoral limits, approval routes and investment linked conditionalities are laid down in the policy stance. It also issues Press Notes as and when changes in the policy are proposed. Regulations are issued under the Foreign Exchange Management Act, 1999 (FEMA) to give a legal backing to these policies. Investment can be received in the form of equity shares, compulsorily convertible preference shares (CCPS) and compulsorily convertible debentures (CCDs). These instruments can contain an optionality clause subject to a minimum lock-in period of one year but without any option or right to exit at an assured price. The inflows on account of foreign investment was US$ 36.485 billion in the financial year 2015-16. In the recent past regulations on investments have been liberalized to ensure increased flows. Following the revisions in the foreign direct investment (FDI) policy announced by the Government, the regulations have been amended so that wherever sectoral limits / caps on foreign investment are in place, such limits / caps are required to be reckoned within a composite manner aggregating both Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI). In addition “control” and “ownership” have been defined for the purpose of arriving at the indirect foreign investment in an Indian company and guidelines have been issued for calculating the ‘total foreign investment’ to be taken as the sum total of direct and


indirect foreign investments. Regulations have also been amended to simplify FDI linked conditionalities, increase sectoral caps and include certain sectors under automatic route. This liberalization had a positive impact on sectors viz., manufacturing, insurance, railway construction, defence, plantation, real estate business, e-commerce in single brand retail, etc. In addition, foreign investment in limited liability partnership (LLP) has been permitted under the automatic route for sectors where 100 per cent FDI is allowed without attendant FDI-linked performance conditionality.

• Ease of Doing Business: Several steps have been initiated for facilitating the ease of doing business and contributing to an ecosystem that is conducive to the growth of start-ups. Accordingly, a dedicated mailbox was set up to provide assistance and guidance to the start-up sector. Further, online submission of Form A2 for outward remittances has been enabled. Certain transactions related to start-ups which were clarified / notified are as under: (i) issue of shares without cash payment through sweat equity was permitted provided that the scheme has been drawn either in terms of regulations issued by SEBI or the Government; (ii) issue of shares against legitimate payment owed by the investee company, remittance of which does not require permission of the Government or the Reserve Bank was permitted, (iii) start-up enterprises were permitted to collect payments on behalf of their subsidiaries abroad; (iv) companies have been permitted to have an escrow arrangement or paying the consideration on a deferred basis for

an amount up to 25 per cent of the total consideration for a period not exceeding 18 months in respect of transfer of shares between a resident and non-resident; (v) startup companies were allowed to issue innovative FDI instruments like convertible notes and (vi) start-ups were permitted to access rupee loans under ECB framework with relaxations in respect of eligible lender, end-use and cost of borrowing, etc. The move towards automation and use of technology for reporting and monitoring has been extended to Foreign Inward Investment and all FDI related returns have been replaced with online filing on the Government’s e-Biz portal.

• Non-resident indians Deposits (Nri Deposits): India has always been a favored investment destination for its diaspora. The flows in the form of deposits (FCNRB and NRE) has been steady in the recent years. As on Dec 2016, the outstanding FCNR (B), NRE and NRO deposits were US$ 20.859, US$ 77.418 and US$ 11.458 billion, respectively. Flows in respect of personal remittances were US$ 44.083 billion and US$ 37.656 billion in the last two financial years. To further facilitate the account holders, policies were changed to permit transfer across non-resident ordinary rupee (NRO) accounts. Further, NRIs and persons of Indian origin (PIOs) have been permitted to open NRO accounts jointly with other NRIs / PIOs. While permitting remittances outside the country from the balances held in NRO accounts maintained by NRIs and PIOs, ADs are now required to obtain a declaration that the remittances represent the account holder’s legitimate


receivables in India and do not represent any borrowing from any other person or transfer from any other NRO account. Non-residents having a business interest in India can open a repatriable special non-resident rupee (SNRR) account with balances commensurate with business operations. An Indian company receiving foreign investment under the FDI route has been permitted to open and maintain a foreign currency account with an AD in India provided it has impending foreign currency expenditure. The account needs to be closed immediately after the requirements are completed or within six months from the date of opening of such account, whichever is earlier.

• overseas investment: India’s external sector management has gained strength over the last few years with a prudent and pragmatic approach to policy aimed at supporting India’s inherently strong macroeconomic fundamentals, which has made India as one of the most attractive destination for foreign investors. At the same time, the growth in magnitude and spread (in terms of geography, nature and types of business activities) of overseas direct investment (ODI) from India reflect the increasing appetite and capacity of Indian business sector in availing the opportunities thrown up by the rapid globalization. The robustness of direct investment flows – both inward as well as outward, serve as an indicator of the maturity and degree of integration of India in the global economy. While the average of total Financial Commitments (FC) under ODI for 2014-15 and 2015-16 at around US$ 30 billion was lower than the average

of preceding two years (US$ 40 billion), the outlook and potential for growth in outward FDI from India remain positive as seen by encouraging trend in proposals. Actual outflows, which are asynchronous with the Financial Commitment have also varied over the period. Overseas investment provides an important gateway for domestic businesses to enter the global marketplace and in recent times, India has taken some significant steps to make its presence felt in the global arena. The increased ODI have also resulted into greater macro-economic co-operation between India and other countries, transfer of technology and skill, sharing of R&D and promotion of brand India. At the same time, the increasing degree of uncertainty in a continuously changing, and in recent times- often a disruptively changing global business environment, also poses some challenges for Indian businesses with respect to their ODI. The policy and regulatory approach has been to balance the need to pave the way for growth of Indian businesses to keep pace with the changing demands of businesses and improve the “ease of doing business” for Indian companies – with the need for managing the potential systemic risks- within the confines of the broad policy based on a calibrated approach to the management of capital account. While the FEMA notification on outward FDI regulates all acquisition of overseas securities denominated in foreign currency, the focus is primarily to regulate acquisition/ incorporation of overseas entities by the Indian corporates. The broad approach has been to facilitate outward foreign direct investment by domestic companies through


joint ventures and wholly owned subsidiaries up to 400% of their net worth; restrictions apply only in respect of investments abroad in real estate and banking. Investment which is also termed as financial commitment can be in form of equity, loan, guarantee and raising funds through pledge of shares, domestic and overseas assets. Further, resident individuals are enabled to undertake outward FDI within LRS limit of US$ 250,000.

• Current issues: During last one decade or so, cross-border businesses involving multi-layered structure of entities have been a common phenomenon. Such layered structure of entities may be a plain vanilla two-tier structure or a complex multi-layered structure. Further, some of the business models resulting in inward FDI through the overseas entities established under ODI are posing major policy challenges including those pertaining to possible tax evasion, money laundering and round tripping. The World Investment Report of United Nations Conference on Trade and Development (UNCTAD) has observed that tax avoidance practices by Multinational Enterprises (MNEs) are a global issue, relevant to all countries. Such structures are created, typically, based on either for transfer pricing reasons or for financing their subsidiaries. While these could be established for tax avoidance purposes, such structures often involve investments in offshore investment hubs as holding entities, through which further investments are made in the step down subsidiaries. Needless to say that even though the motivations range from genuine business / commercial considerations to

taxation benefits which are available to any global investors, at times the underlying motive could be to create opacity through a labyrinth of structures for reasons unjustified which evokes concerns. Treaty shopping and parking of capital and passive incomes in tax havens leads to erosion of the tax base of the countries. Concerns have been raised about the minimization of tax burden by MNEs using legal arbitrage opportunities that arise out of gaps and frictions in the interactions of various domestic laws and / or tax treaties. The international community has taken note of abusive tax practices employed by tax payers to create double non-taxation or taxation at low rates. Base Erosion and Profit Shifting (BEPS) have often been used as a tax avoidance strategy used by MNEs for shifting profits from high tax jurisdiction to low tax jurisdiction. While efforts are on to further rationalize and simplify the extant regulations for undertaking ODI, it would achieve a meaningful impact after the aforementioned issues are resolved effectively.

• Conclusion: To conclude, India, with its strong and modern legislative structure, effective legal systems, sound macroeconomic policies, adherence to responsible fiscal management, low and declining Current Account Deficit, stable monetary and financial sector management, robust economic growth prospects, remains an attractive proposition for FDI. India has also found its own niche in ODI. The policy environment is alive to the potential growth in investments, whether domestic, foreign or overseas and remains ready to make adjustments.


• Credit Growth in Exports, Shipping, Farm mark uptick in Sentiment (ASSoCHAm): Export credit grew by a handsome 32% in the current financial year, helped by smart recovery in the global demand, also leading to an upturn in shipping, an ASSOCHAM paper has stated. Analyzing the RBI data, the paper noted that in the current financial year, up to January 20, some of the selective sectors remained in good shape despite an overall dismal credit growth of just about 3.3% in 2016-17. Going by the sector-wise deployment of gross bank credit, exports, agriculture and allied activities, shipping, professional services, consumer durables and vehicles were among the top in seeking funds from the lenders. While the year-on-year export credit grew by 32% as on January 20, 2017 (the latest RBI data), shipping saw higher deployment of funds by 15.7%, consumer durables by 17.1%, and vehicles loans by 18. 2%. As per ASSOCHAM secretary general Shri D.S. Rawat, there are pockets of growth which are keeping the economy on track. They include agriculture and allied activities (other than food credit) which saw a higher bank credit demand by over 8%. The improvement in shipping shows an upward movement in global trade, which is reflected in the smart recovery in the Indian merchandise exports in the current fiscal. Even as exports grew by a cumulative 2.52% between April-February this fiscal, the

expansion has been quite sharp in the later part of the year and in certain specific sector like engineering. For the 11-month period, India’s merchandise exports aggregated $245.41 billion against $239.37 billion in the same period last fiscal. The exports fall under the ‘Priority sector’ lending norms of the banks, adds ASSOCHAM. “Surely, things are further improving for the export sector and so is the demand for money,” the paper pointed out. Services as a key contributor to the Gross Domestic Product also did well in terms of deployment of credit which saw over 8% year on year rise for the period under review. However, the manufacturing still remains a laggard, witnessing a de-growth of about 7% in bank credit deployment. So is the case with other sectors like non-banking finance companies and micro credit. Most of the Non-Performing Assets are locked up in manufacturing in sectors such as steel, besides some infrastructure segments.

• ASSoCHAm- CriSil Suggests 3 pronged Strategy To Deepen Bond market in india: A three-pronged approach based on facilitating larger institutional investment in corporate bonds together with weaning companies away from bank loans and ensuring facilitative policies and infrastructure from perspective of both issuers and investors is imperative for comprehensive development of debt market in India, suggested a recent ASSOCHAM- CRISIL joint study. “Setting up of

ASSOchAM’S ViewS & RecOMMendAtiOnS On BAnking And FinAnciAl SeRViceS


a dedicated team of experts or department within the Ministry of Finance to facilitate development of the corporate bond market and following up on relevant implementation initiatives will help,” suggested the study titled, ‘Giving debt its due,’ jointly conducted by ASSOCHAM and Crisil thereby highlighting the need to put in facilitative policies and requisite infrastructure. As part of facilitating larger institutional investment in corporate bonds - mutual funds, insurance companies and pension funds have best chance of channeling financial savings. While bank financing is by far the most preferred mode of funding, as such more companies should come out with bonds. “The Indian bond market has not grown the way it should have due to structural constraints dominance of banks in lending, risk appetite of investors limited to higher ratings, regulatory arbitrage between loans and bonds and prescriptive regulatory limits on investments,” noted the study. Factors such as dominance of banks in lending, risk appetite of investors limited to higher ratings, regulatory arbitrage between loans and bonds, and prescriptive regulatory limits on investments are hindering the growth of corporate bond market in India. “Also, retail (individuals) participation in debt markets is almost non-existent, even though the Indian investor psyche is skewed towards fixed income instruments with as much as 47 percent of the annual household financial savings flowing into bank fixed deposits”. Highlighting the importance of a thriving corporate bond market the report stated that it would be a win-win for both industry participants and investors - issuers will

benefit from being able to generate stable funding at low costs, while investors can get secure and predictable cash flows with higher returns compared with plain-vanilla bank fixed deposits.” The report further stated that in the long run, this also offers economic benefits to the country as a whole, and is growth-conducive as it becomes especially important for funding the government’s ambitious infrastructure agenda, which will require an estimated Rs. 43 trillion in the five fiscals to 2020. Considering the major role of individual investors, the study highlighted the urgent need to promote vigorous investor education and awareness initiatives as part of encouraging measures undertaken by regulators.


• Banks To Enable All Accounts With Net Banking By march: Shri ravi Shankar prasad: An internal review meeting was conducted in the ministry where presentations on digital banking were given to union minister for electronics and IT, Ravi Shankar Prasad. In the meeting it has been decided that all banks will be given instructions that all accounts have to be net banking enabled by March 31. Currently, there are 30-35% of accounts in which customers have opted not to enable net banking. Banks are being instructed to persuade people to enable net banking. A person who has downloaded BHIM app and wants to transact but doesn’t have net banking facility will be allowed to conduct the transaction by the bankers if the person’s telephone number is authenticated in the system. One of the highlights of the meeting was that the success rate of Bharat Interface for Mobile (BHIM), which was launched by the Prime Minister in December, has been high. So far, there have been almost 1.72 Cr. downloads and financial transactions to the tune of Rs 958 Cr. since it were launched. In February alone, Rs 595 Cr. worth of transaction was done through BHIM. Government’s drive towards electronic transactions gathered pace after the demonetization exercise announced on November 8.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/banks-to-enable-all-accounts-with-netbanking-by-march-ravi-shankar-prasad-holds-a-review/articleshow/ 57396480.cms

Dated: March 1, 2017

• Hp- infy, Fidelity information Eye india post payment Bank project Worth rs 800 Cr.: Technology majors Hewlett Packard Enterprise and Fidelity Information Services are in the race for a massive contract to lay the technology backbone for the department of posts’ payment bank. The India Post Payments Bank project is estimated at Rs 700-800 Cr.. India Post is expected to open the financial bids for the contract in the next few days and pick a winner after these two firms qualified in the technical rounds. Hewlett Packard Enterprise (HPE) has bid along with Indian IT major Infosys which has in-house core banking software Finacle. Fidelity Information Services (FIS) has bid with its own banking software. Digital payment and e-commerce player Paytm has already opted for Infosys’ Finacle to power its upcoming payment bank. India Post’s contract is the latest in a number of large technology contracts following the Reserve Bank of India’s decision to give payment bank licenses to 11 firms. In October that the posts department, which is racing against time to ready India Post Payments Bank, has had to re-tender its technology contract after its first tender received only one bid, from Polaris India. This prompted India Post to tweak some of the regressive clauses in the tender concerning intellectual property rights, cash flow and payment terms, and come out with a fresh tender. After India Post tweaked the contract, it made business sense because of

tOp BAnking newS


which companies were willing to participate. Besides HPE and Fidelity, Tata Consultancy Services too was in the race for the India Post project. India Post Payments Bank will follow a bottoms-up approach, targeting around 500 million people who have feature phones and around 350 million who have no mobile at all. The bank has already started pilots in Ranchi and Raipur, and the idea is to have a office in every district of the country. India Post also plans to make the 12-digit Aadhaar number as a single point payment address. It proposes that over 112 Cr. Indians who have an Aadhaar number till now will be able to transact send and receive money only on the basis of the unique identification number, irrespective of the fact whether it is linked to a bank account or not.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/hp-infy-fidelity-information-eye-india-post-payment-bank-project-worth-rs-800-Cr./articleshow/ 57419870.cms


• Hold Camps on Digital payments From April 1, rBi To Banks: RBI have communicated to banks to organize special camps from April 1 to educate public about digital payments through UPI and 99# USSD code platforms.

The policy on conduct of camps by FLCs Financial Literacy Centers and rural branches of the banks has been revised given the recent developments on withdrawal of legal tender status of old Rs 500/1,000 notes and the focus on going digital. FLCs are advised to conduct special camps for a period of one year beginning April 1, 2017 on Going digital through UPI and *99# USSD. The Reserve Bank of India reported that while revising the guidelines. Unified Payments Interface is a system that powers multiple bank accounts into a single mobile application. The USSD service for fund transfer works without internet. Besides the special camps on going digital, RBI observed that FLCs will continue to conduct the tailored camps for the different target groups. The tailored content for each target group is currently being prepared and is expected to be shared with banks or FLCs in due course of time. FLCs and rural branches of banks can get support for the financial literacy camps to the extent of 60 per cent of the expenditure with a cap at Rs 15,000 per camp. The RBI has detailed reporting mechanism for banks and the financial literacy camps will be assessed or evaluated on an ongoing basis by its Lead District Officers.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/hold-camps-on-digital-payments-from-april-1-rbi-to-banks/articleshow/57434245.cms


• Govt Asks Banks To Enable m-Banking For All By march 31: The government has instructed banks to link all savings accounts with mobile and Aadhaar numbers by March 31, 2017, and enable mobile banking for


such customers. All banks have been advised to undertake this in campaign mode. Mobile number seeding and enabling the same for m-banking are a pre-requisite for making mobile payments while Aadhaar number seeding is a pre-requisite for using Aadhaar Enabled Payments System. The Ministry of Electronics and Information Technology at a recent Cabinet Secretariat notification, has been given the responsibility of promotion of digital transactions, including digital payments. As per an estimate, currently only 65 per cent saving accounts are seeded with mobile numbers and only 50 per cent with Aadhaar. Out of the 65 per cent accounts already seeded with mobile numbers, only 20 per cent are enabled for mobile banking. To make this process convenient to customers, MeitY has advised the banks to explore Over the Air customer consent instead of requiring customers to visit the bank branch or ATM as is required currently.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/govt-asks-banks-to-enable-m-banking-for-all-by-march-31/articleshow/57452051.cms


• Fear of investigation Forces Banks To Defer Essar Steel Debt recast, To Take rs 44,000 Cr. Hit: Banks are set to take a hit of hundreds of Cr.s in the March quarter as the biggest loan restructuring of Essar Steel would be pushed to next fiscal year since none of the bankers want to risk the prospect of being questioned by investigative authorities few years down the line. In January, bankers led by the State Bank of India informally agreed to recast the Rs 44,000 Cr. loans of Essar Steel that has been struggling to

repay for over a year now. However, within days of this development, the Central Bureau of Investigation arrested five IDBI Bank officials, including former CMD Shri Yogesh Agarwal, for lending to the now-defunct Kingfisher Airlines. The arrests of IDBI officials shocked the banking industry leading to paralysis in decision making. This is particularly so because Kingfisher is tagged as willful defaulter for not repaying Rs 9,000 Cr. of loans and its promoter Shri Vijay Mallya fled the country in March 2016. The bank suffered huge losses and the bankers are now behind bars. Bankers have asked the Reserve Bank of India to enhance the scope of the overseeing committee to vet all types of debt recast. As of now, the Overseeing Committee (OC) comprises eminent experts who will independently review the processes involved in preparation of resolution plan of S4A or Scheme for Sustainable Structuring of Stressed Assets. Essar Steel’s debt recast is outside S4A and hence outside the purview of the overseeing committee. A consortium of 17 lenders has already classified the Essar Steel loan as sub-standard in the quarter ending March 2016. Any delay in restructuring the loans now would mean that banks would have to set aside more money as provisions in the fourth quarter. Banks have to set aside 15% in the first year as provisions for bad loans which would increase to 25% in the second year. Beginning March 2017 quarter, banks would have set aside 25% as provisions for Essar Steel. The proposed decision of the Banks to refer all restructuring to the Overseeing Committee (OC) for final approval is a policy


initiative for all cases that are being taken up by the banks. Bankers are willing to take a hit of hundreds of Cr. but do not want to take decisions on big-ticket loan recasts with the fear of being questioned in future by investigative authorities. After two year of negotiations, bankers and Essar Steel finally arrived at a mutually acceptable debt recast package which includes promoters, the Ruias, losing control of the company. Close to 25% would be sold to Farallon Capital for Rs 1,800-2,000 Cr. and banks would convert Rs 2,200 Cr. debt into equity for a 30% stake.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/fear-of-investigation-forces-banks-to-defer-essar-steel-debt-recast-to-take-rs-44000-Cr.-hit/ articleshow/57438173.cms


• Bank loan Growth Slows Further To 4.8 percent: Growth in bank loans, a bellwether for economic activities, has fallen to below 5%, raising doubts over quicker recovery in factory output. Reserve Bank of India data showed that bank loans for the fortnight ending February 17 grew by 4.8% year on year to Rs 75 Lakhss Cr., compared to 11.2% rise in the year ago period. This is the slowest fortnightly loan growth recorded since 2006. The poor credit growth reflects less demand from industries because of low capacity utilization and low consumer spending as per Shri Madan Sabnavis chief economist at CARE Ratings. Banks are not ready to lend to non retail segments because of asset quality concerns. Sticky loans made up 9.1% of total advances as of September 2016 and there are over a dozen public sector banks with gross NPAs above

10%.The slowdown in economic activity has weighed on demand for credit among retail borrowers. This trend is likely to continue over the next few months. They expect asset quality to deteriorate in the current quarter, but Indian banks have sufficient buffers to withstand the impact.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/bank-loan-growth-slows-further-to-4-8-per-cent/articleshow/57451434.cms


• Government Asks Banks To Enable m-Banking For All By march 31: The government has instructed banks to link all savings accounts with mobile and Aadhaar numbers by March 31, 2017, and enable mobile banking for such customers. All banks have been advised to undertake this in campaign mode. Mobile number seeding and enabling the same for m-banking are a pre-requisite for making mobile payments while Aadhaar number seeding is a pre-requisite for using Aadhaar Enabled Payments System (AEPS). The Ministry of Electronics and Information Technology (MeitY), according to a recent Cabinet Secretariat notification, has been given the responsibility of promotion of digital transactions, including digital payments. As per an estimate, currently only 65 per cent saving accounts are seeded with mobile numbers and only 50 per cent with Aadhaar. Out of the 65 per cent accounts already seeded with mobile numbers, only 20 per cent are enabled for mobile banking. To make this process convenient to customers, MeitY has advised the banks to explore ‘Over the Air’ customer consent instead of requiring customers to visit the bank


branch or ATM as is required currently. The campaign is to be launched with immediate effect. The progress of seeding and mobile bank enabling will be monitored by MeitY along with the Department of Financial Services. Banks will have to give adequate publicity in national, regional and local media, besides conducting camps for on-the-spot seeding of bank accounts. Also, they have been advised to utilize their extensive branch network as well as banking mitras or correspondents to carry out an effective outreach programme, especially in rural areas. The process of enabling bank accounts for mobile and Aadhaar based banking is completely voluntary. However, given the benefits of these banking channels, a large number of customers are expected to opt for it. Accordingly, banks have been advised to be prepared with adequate infrastructure to facilitate this process effectively with no inconvenience to customers.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/govt-asks-banks-to-enable-m-banking-for-all-by-march-31/articleshow/57452051.cms


• iFC may invest up To $100 million in l&T infrastructure Finance’s Green Bonds: International Finance Corporation, the private investment arm of World Bank, is looking to invest up to $100 million in L&T Infrastructure Finance Ltd’s proposed green bonds. Proceeds from green bonds are used for allocation for renewable energy and energy efficiency projects. Moody’s Investors Service projected that companies globally are likely to raise a record $206 billion by way of green bonds in 2017, more than double of $93.4 billion mopped up last year. IFC would

subscribe to non-convertible debentures of the non-banking finance company for the purpose of financing solar energy projects in India. The proposed investment is consistent with the World Bank Group’s India Country Partnership Strategy. The solar energy projects helps improve access to electricity and reduce greenhouse gas emissions through energy efficiency and renewable energy. Set up in 2006, L&T Infra Finance has built a niche in financing renewable energy.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/ifc-may-invest-up-to-100-million-in-lt-infrastructure-finances-green-bonds/articleshow/57465461.cms


• Banks Approach Courts To recover Topworth Debt: Additions to India’s bloated bad-loans inventory are unlikely to cease soon, with about a dozen lenders now approaching debt-recovery courts to recover a part of their estimated credit exposure of Rs 17,300 Cr. to Mumbai-based Topworth. Lenders led by the State Bank of India (SBI) and Punjab National Bank (PNB) are filing cases in the Mumbai debt recovery tribunal (DRT) either individually or as a consortium against Top worth Urja & Metals, Phoenix Impex and Poscho Steels for cumulative defaults of about Rs 3,200 Cr.. Bank of Baroda has already filed a case against Topworth Pipes & Tubes in Mumbai DRT to recover Rs 356 Cr.. Lenders are seeking quick recovery of loans to Topworth to prevent further deterioration in asset-quality. PNB has Rs 900 Cr. of exposure to Topworth. The recovery initiative comes amid concerns over asset-quality slippages that caused lenders to


recognize sticky loans of Rs 6.97 Lakhss Cr., or 9.3% of total advances until December 31, according to statistics compiled by CARE Ratings. Bad loans have risen 135% from Rs 2.62 Lakhss Cr. in the past two years even after the central bank announcing multiple restructuring packages to provide stragglers the opportunity to revive their businesses. Topworth has disputed the quantum of loans. The total exposure of Rs 17,300 Cr. mentioned by you in your email is way beyond the real numbers.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/banks-approach-courts-to-recover-topworth-debt/articleshow/57487268.cms


• rs 4k Cr. insolvency Claims made: Indian banks and companies have filed claims worth Rs 4,089 Cr. in the past three months under the Insolvency and Bankruptcy Code, which seeks to ensure time-bound settlement of insolvency. The code that came into effect in December has given the lenders a new tool to counter the problem of rising non-performing assets (NPAs), which soared to Rs 6.97 Lakhss Cr. in the quarter to December. Bankruptcy code

is the best option for bankers and if the timelines are met, this will deliver maximum results. Data accessed shows that 41 cases were registered for insolvency resolution with the National Company Law Tribunal (NCLT), the adjudicating body under the new code, between December and February. December and February. Of these, 11 have been admitted by NCLT. Eight of these eleven cases have been filed by corporate debtors, the largest being a Rs 1,405 Cr. loan taken by Hyderabad Kamineni Steel & Power India from seven public sector banks Indian Bank, Oriental Bank of Commerce, Allahabad Bank, Indian Overseas Bank, Central Bank of India, Andhra Bank and Bank of Maharashtra and JM Financial Asset Reconstruction. The RBI had allowed banks to take management control of a defaulting company by converting their loans into equity through the strategic debt restructuring (SDR) scheme introduced in 2015. In 2016, the scheme for sustainable structuring of stressed assets, also involving conversion of loans into equity, was announced. But both these schemes failed to take off, thus resting all hopes of fast track corporate insolvency resolution on the new code. Adoption by banks has been slow so far because as creditors, they want to look at all options before filing for insolvency. Also, a case registered under the code requires a turnaround plan for the business, failure of which could result in liquidation of the company in 180 days.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/rs-4k-cr-insolvency-claims-made/articleshow/57487557.cms



• All Bank Customers To Be Nudged Towards Net Banking: At an internal review meeting, presentations on digital banking were made to Union minister for electronics and IT, Shri Ravi Shankar Prasad. It was decided that all banks will be instructed to make all accounts Netbanking enabled by 31 March. At present, there are 30-35% of accounts in which customers have opted not to enable Netbanking. Banks are being instructed to persuade people to enable Netbanking. A person who has downloaded the BHIM app and wants to transact but doesn’t have Netbanking facility will be allowed to conduct the transaction by the bankers if the person’s telephone number is authenticated in the system. The success rate of BHIM app has been high. So far, there have been almost 1.72-Cr. downloads and financial transactions to the tune of Rs 958 Cr. since it were launched. In February alone, Rs 595 Cr. worth of transaction was done through BHIM. The minister will meet with all bankers to sort out all the issues on this front in the second week of March. The government’s drive towards electronic transactions gathered pace after the demonetization exercise announced on 8 November.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/all-bank-customers-to-be-nudged-towards-netbanking/articleshow/57489985.cms


• punjab National Bank puts up For Sale Bad loans Worth rs 295 Cr.: State-owned Punjab National Bank (PNB) will put on sale four bad assets worth Rs 295 Cr. in a move to shed non-performing assets from its books. As per PNB Managing Director Smt. Usha

Ananthasubramanian, the bank has identified assets worth Rs 1,800 Cr. that will be sold by month-end to recover bad loans. The reserve price has been fixed at Rs 194.79 Cr. on cash basis while on security receipt (SR) basis, it is Rs 216.43 Cr.. The highest NPA of Rs 111.76 Cr. belongs to Ahmednagar-based loss making Indian made foreign liquor maker Tilaknagar Industries. Other accounts include Rs 100.16 Cr. from Mumbai-based Om Shiv Estate; Rs 56.64 Cr. from Bilcare Ltd and Rs 26.23 Cr. from Anand Distilleries. Selling of bad loans to assets reconstruction companies, non-banking financial companies, other banks or financial institutions is pertinent for PNB whose Gross Non-Performing Assets (NPAs) stood Rs 55,627.51 Cr. as on December 31, 2016. In 2015-16, PNB posted net loss of Rs 3,974.39 Cr. due to high level of stressed assets as well as stringent RBI rules that required higher allocation to cover bad loans.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/punjab-national-bank-puts-up-for-sale-bad-loans-worth-rs-295-Cr./articleshow/57500127.cms


• Banks may Get incentives For Digital push: India may give banks an incentive of up to Rs 10 for each transaction to encourage merchants to adopt digital modes of payment, helping achieve the objective of a less-cash economy that makes tax evasion easier to detect. According to a government official, the proposal is to provide an incentive of 0.25% on the value of a transaction capped at Rs 10 made on the biometric-based payment system Aadhaar Pay and UPI platform BHIM. The incentive is also aimed at encouraging banks to onboard merchants for the new


payments ecosystem and builds the requisite infrastructure. The move would also help recoup potential loss of revenue to lenders when buyers use Aadhaar Pay or BHIM instead of debit or credit. Funds will be made available from the India Inclusion Fund of Nabard and the corpus could be as high as Rs 1000 Cr.. Deliberations are now on, involving the ministry of electronics and IT and the department of financial services. The Cabinet Secretariat will soon decide on the proposal. As per the committee of secretaries, if they (banks) don’t have incentives, they may not go and acquire merchants, so let them have incentives, and merchant will not bear cost and it may be borne from the financial inclusion fund. After the impending launch of Aadhaar Pay by banks, including the State Bank of India, the government is also considering a merchant version of the BHIM app that is currently functional for only person to person transactions. As per a senior finance ministry official, although there is no loss of Merchant Discount Rate (MDR) for banks on settlement through BHIM or Aadhaar Pay as they are network agnostic, the plan is intended to promote payments through these. The idea is that merchants should move on to these modules and customers should have a choice. The amount to support this may come from the budgetary allocation of Rs 3,000 Cr. to promote financial inclusion activities. Finance Minister Shri Arun Jaitley had announced in the Union Budget that 20 Lakhss Aadhaar Pay Point of Sale (PoS) machines will be deployed by banks in the current financial year. In February that after Prime Minister

announced on December 30 that Aadhaar Pay would be launched soon and that it would revolutionize the payment ecosystem. Aadhaar Pay will be introduced in the country first with five banks, including Syndicate Bank, IndusInd Bank, and IDFC Bank. Bank of Baroda and Punjab National Bank are also in the process of launching it at the earliest. It’s a new paradigm, a quantum leap for banks. They are yet to harness the full potential of even credit and debit cards, so some initial issues are bound to come up while moving to a new system. The government therefore is trying to handhold the banks on technical issues, and is also looking at whether banks can be subsidized by the government along with some rationalization of charges.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/banks-may-get-incentives-for-digital-push/articleshow/57503628.cms


• iDFC launches Aadhaar pay, Becomes The First To launch Biometric Based payment System: IDFC Bank has become the first bank to launch the biometric-based payment system Aadhaar Pay through its network. The bank aims to onboard anywhere between 50,000-75,000 merchant to the Aadhaar pay module in the next two years with a total target of touching 1,00,000 merchants over the next 36 months or three years. Aadhaar


Pay makes cashless transactions possible even for those who do not have mobile phones, and only requires the merchant to have a mobile phone. All one needs is to get the bank account number linked with Aadhaar. Basic banking services will come to those who even do not have basic mobile phones. IDFC Bank will bear the cost of the biometric device which can be attached to the smartphones and will be provided to the merchants. The device currently costs around Rs 2,500 and the total cost of the device for 1,00,000 merchants will come to around Rs 25 Cr. only. The returns for the banks will also be in terms of new customer additions through the merchants who will adopt Aadhaar Pay. The merchants will also have the opportunity to become banking correspondents and can open bank accounts, accept payments and also withdraw cash on behalf of people. Before this official launch, IDFC Bank piloted the project across 16 states. IDFC Bank has set the trend by launching Aadhaar Pay, which can be accessed by those who don’t have smartphones or even feature phones. Many of banks should follow its lead if they don’t technology will make them redundant. In February that after Prime Minister announced on December 30 that Aadhaar Pay would be launched soon and that it would revolutionize the payment ecosystem. Aadhaar Pay will be introduced in the country first with five banks, including Syndicate Bank, IndusInd Bank, and IDFC Bank. Bank of Baroda and Punjab National Bank are also in the process of launching it at the earliest. The government is mulling a proposal to provide an incentive of 0.25 per cent on the value of

a transaction capped at Rs 10 made on the biometric-based payment system Aadhaar Pay and UPI platform BHIM. The incentive is aimed at encouraging banks to onboard merchants for the new payments ecosystem and builds the requisite infrastructure.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/idfc-bank-puts-in-place-aadhaar-pay-infrastructure/articleshow/57515275.cms


• ESAF microfinance Gets Banking license; issues Commercial paper Worth rs 330 Cr.: ESAF Microfinance, the only company from Kerala to receive the small finance bank license, has issued Commercial Papers worth Rs.330 Cr.. The papers are rated A1 by CARE ratings. The subscribers to the CP are major private sector banks and NBFCs. The bank will give loans for farming, small businesses, housing and education. It will also have a spectrum of deposit options for all customers including non-resident Indians (NRIs). The company hopes to start operations with a network of around 85 branches and 300 plus customer touch points in the first year of operations. Currently ESAF Microfinance has a network of around 285 branches spread across 11 states in India.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/esaf-microfinance-gets-banking-license-issues-commercial-paper-worth-rs-330-Cr./articleshow/ 57519453.cms


• HDFC Bank Digitizes over 1200 Dairy Co-operatives Across india: In line with the government’s push to digitize India, especially the banking sector, HDFC Bank under the aegis of its Milk to Money (M2M) programme


has digitized payments at over 1,200 dairy co-operatives in the country. M2M was launched in 2010 and benefits about 3.2 Lakhss dairy farmers across 16 states. M2M is aimed at bringing dairy farmers into the organized banking system, digitizing the entire dairy value chain, and bringing to them all products meeting their banking and financial needs. Bringing them under the formal financial fold has enabled them to live a better life. Milk to Money ATMs at larger collection points have cash dispensers, while smaller collection points are equipped with Business Correspondent (BC) who operate Micro ATMs, enabling the farmer to withdraw the amount from his account immediately. The payment coming into the farmer’s bank account creates a credit history, with which he can take a loan, buy more cattle, increase business and avail other banking products. The M2M footprint now covers the states of: Gujarat, Rajasthan, Maharashtra, Uttar Pradesh, Punjab, Haryana, Madhya Pradesh, Odisha, Jharkhand, Bihar, Assam, Meghalaya, Tamil Nadu, Kerala, Karnataka, and Andhra Pradesh. The programme has gained momentum post demonetization with massive growth in the number of co-operatives after November 2016.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/hdfc-bank-digitises-over-1200-dairy-co-operatives-across-india/articleshow/57537655.cms


• SBi Justifies penalty; Says Need money To Bear Jan Dhan Costs: Facing a backlash for levying penalty on non-maintenance of minimum balance in accounts, SBI justified its move stating the bank needs to impose

some charges to balance the “burden” of managing a large number of no-frills Jan Dhan accounts. The bank also has not received any “formal communication” from the government for re-considering the penalty and it will take a call “if something comes”. It also clarified the penalty would not apply to Jan Dhan accounts. The country’s largest lender decided to re- introduce penalty on non-maintenance of minimum balance in accounts and also revised charges on other banking services. The new charges would be applicable from April 1. The move by the state-run banking major has faced a lot of criticism, including from the opposition parties. At present, nearly 55 per cent of the bank’s balance sheet comprises retail segment and balance is to large segment.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/sbi-justifies-penalty-says-need-money-to-bear-jan-dhan-costs/articleshow/57540100.cms


• NpCi Says rectified Technical Glitch That Delayed Emis: National Payments Corporation of India (NPCI) has rectified the technical glitch that delayed deduction of Equated Monthly Installments (EMIs) of some bank customers in the past few days. Customers of some of the banks whose EMIs were to be deducted through Electronic Clearing Service (ECS) on a certain date had received messages from their banks about the EMI delay at NPCI due to technical reason. EMI transfer through National Automated Clearing House (Debit) is the most popular mode of collection and hence it is fully sensitive to the needs of the industry to ensure that the system operates as per


schedule. NPCI, set up in 2009, is the central infrastructure for various retail payment systems in the country.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/sbi-justifies-penalty-says-need-money-to-bear-jan-dhan-costs/articleshow/57540100.cms


• Canadian Funds Buy Stake in Kotak mahindra Bank For rs. 2,255 Cr.: Canada Pension Plan Investment Board (CPPIB) and Caisse de depot et placement du Qubec have bought an equity stake in Kotak Mahindra Bank for Rs. 2,255 Cr., through a bulk deal. Shri Uday Kotak has pared his stake in the bank from 33.30 % to 31.80 %, selling shares at Rs. 817 per share. The promoter and promoter Group now hold 32.11 % against 33.61 % earlier. The shareholding of CPPIB, which held a 5.76 % stake in the private sector bank as of December 2016, goes up to 6.26 %. It bought 92 Lakhss shares. Caisse de depot et placement du Quebec, a Canada-based long-term institutional investor that manages funds primarily for public and parapublic pension and insurance plans, picked up a 1 % stake in the bank by buying 1.84 Cr. shares. The stake sale comes in the backdrop of the Reserve Bank of India (RBI) asking the private sector bank to bring down its promoter shareholding to 30 % by June 30, 2017, 20 % by December 31, 2018 and 15 % by March 31, 2020. On August 30, 2016, Kotak Mahindra Bank had informed stock exchanges that the RBI had permitted CPPIB to acquire shares in excess of 5 % and below 10 % of the paid up capital of the bank.

Dated: http://www.thehindubusinessline.com/markets/canadian-funds-buy-stake-in-kotak-mahindra-bank-for-2255-cr/article9576126.ece


• Wrap up Your Banking Before Holi Weekend, indian Banks Association: The Indian Banks’ Association, has appealed the public to complete their branch banking needs on Friday as commercial banks will remain shut for next three days on account of Holi, a traditional festival of colours. Several parts of the country will be having three consecutive bank holidays from Saturday to Monday i.e 11-13 March 2017 (2nd Saturday, Sunday & Holi). In view of above The Indian Banks’ Association appeals to all bank customers to complete the necessary banking transactions on Friday (i. e on 10th March 2017). Small traders, corporate may be inconvenienced due to the extended holidays when the country will celebrate Holi in two/three days, spread across different locations. Moreover, individuals who are not yet used to mobile or internet banking still visit branches, their primary sources for banking transactions. For example, if you want to transfer funds, you can do anytime any day using Immediate Payment System (IMPS), which is available on mobile banking. In absence of it, you have no choice but to visit a bank branch.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/wrap-up-your-banking-before-holi-weekend-indian-banks-association/articleshow/57561440.cms


• ESAF Small Finance Bank Targets rs 20,000 Cr. Business By 2020: ESAF small finance bank, the first private bank in Kerala after India’s independence, which is all set to launch operations on March 17, has targeted Rs 20,000 Cr. business by 2020. It has also aimed at expanding its total number of branches to


500 and increasing its customer base to one Cr.. ESAF Microfinance, which is among the ten financial services firms selected by RBI for setting up small finance banks, currently has a network of 285 branches spread over 11 states. Of this 104 branches are in Kerala. Of the new branches, 25% will have to be opened in unbanked regions. ESAF has identified ten such places in Kerala. As part of the marketing strategy, the bank will use its agents` network to facilitate operation. The bank is planning to introduce new schemes such as Hridaya social deposits targeting high networth individuals and NRIs. The customers of the scheme can choose from sectors like agriculture, housing, education and micro enterprises to invest their deposited money. The minimum deposit will be Rs 15 Lakhss.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/esaf-small-finance-bank-targets-rs-20000-Cr.-business-by-2020/articleshow/57578055.cms


• iCiCi Bank, SBi, Stanchart Top Bank Frauds list: As per RBI data, ICICI Bank topped the list of banks that witnessed most number of frauds during April-December period of 2016 with state-owned SBI taking the second spot. During the first nine months of the current fiscal, as many as 455 fraud cases involving Rs 1 Lakhss and above were detected in ICICI Bank, closely followed by SBI (429), Standard Chartered (244) and HDFC Bank (237). The other banks which reported large number of frauds to the apex bank during the period include Axis Bank (189), Bank of Baroda (176) and Citibank (150). However, in value terms, frauds involving Rs 2,236.81 Cr. were reported in SBI, followed by Punjab National Bank (Rs

2,250.34 Cr.) and Axis Bank (Rs 1,998.49 Cr.). The data provided by RBI to the Finance Ministry also revealed the involvement of bank staffs in fraud cases. In the case of SBI, 64 employees were involved in fraud cases, while it was 49 for HDFC Bank and 35 for Axis Bank. In all, 450 employees were involved in fraud cases in different public and private sector banks during April-December 2016, in 3,870 cases involving a total value of Rs 17,750.27 Cr..

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/icici-bank-sbi-stanchart-top-bank-frauds-list-rbi/articleshow/57604612.cms


• HDFC Bank launches 3-minutes Digital loan Against Securities Service: In an industry first, HDFC Bank has launched digital Loan against Securities (LAS) allowing customers to avail loans in less than 3 minutes. The service will also be available to customers with no credit history. The bank, which will offer 10.5 per cent interest rate on the product, will soon expand the offering to other securities such as mutual funds, bonds and insurance policies. Customers can avail a minimum loan of Rs 1 Lakhss and maximum loan up to Rs 20 Lakhss under this facility. Banks normally disburse 50 per cent of the value of pledged shares as loan. The bank has collaborated with NSDL to seamlessly deliver this product. Private sector banks together account for about Rs 5,000-6,000 Cr. worth loans against securities and HDFC Bank controls 51 per cent of those loans.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/hdfc-bank-launches-3-minutes-digital-loan-against-securities-service/articleshow/57651160.cms



• merger of SBi, Bharatiya mahila Bank To Herald Slew of reforms: The government is expected to initiate reforms in the financial sector soon, starting with merger of Bharatiya Mahila Bank with State Bank of India. Other key decisions that may be unveiled over the next 2-3 months include new capital infusion parameters for 2017-18, a consolidation road map for state-run banks and insurance firms and steps to resolve stressed assets. There are six to seven merger combinations on the table. After being nudged by the government, SBI announced its intent in 2016 to merge its five associate banks and Bharatiya Mahila Bank. The government is open to sell stakes in IDBI Bank in small tranches, including a possible follow-on offer of shares. The government budgeted Rs 10,000 Cr. for supporting banks in this fiscal. The Banks Board Bureau will work with lenders to develop business strategies and capital raising plans. In 2016-17, the government decided to infuse funds early to allow banks to step up lending. It set aside 25% of funds to be disbursed based on performance parameters including more efficiency, growth of credit and deposits and reduction in operation costs. The Non-Performing Assets of public sector banks stood at Rs 5,89,502 Cr. (11.82%) in September.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/merger-of-sbi-bharatiya-mahila-bank-to-herald-slew-of-reforms/articleshow/57658532.cms


• Fresh mDr Charges Not Viable For The payments industry: As per Payments Council of India, the industry body of digital payment companies in the country, The latest charges proposed by the Reserve Bank of India on digital payments will make the payments business unviable and kill innovation. In a typical digital transaction there are always four entities one being the issuer bank which has issued the card, the acquiring bank which has acquired the merchant, the payment network companies like Visa and MasterCard and finally the service provider like Billdesk. The charges levied on digital payments referred to as MDR in industry parlance is to be borne by the merchant and shared by all the four players, which currently is around 1% of the amount being paid. The RBI in its latest guidelines suggested a fresh set of norms reducing the charges. It has suggested a lesser MDR for merchants with annual turnover being less than Rs 20 Lakhss per annum, special category merchants like hospitals and toll booths and government entities. The Council has also suggested equal sharing of charges between the acquiring bank and the issuing bank which presently is lopsided towards the issuing bank.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/fresh-mdr-charges-not-viable-for-the-payments-industry-says-payments-council/articleshow/57672664 .cms


• Shri Vinod rai reaches out To pmo on Bad loans, Suggests Action plan: Banks Board


Bureau chairman Shri Vinod Rai wrote a strongly worded letter to the finance ministry and the Prime Minister’s Office highlighting the lack of action by banks on bad loans and suggesting a possible way ahead. Following this, finance minister Shri Arun Jaitley, Senior Government Officials, Reserve Bank of India Governor Shri Urjit Patel and Two Deputy RBI Governors took stock of stressed assets in state-run banks and sought to firm up measures for quicker resolution. The government set up the BBB in February 2016 with a mandate to recommend candidates for the top posts at state-run banks and financial institutions. Last year, the government expanded its role to also help banks in their capital raising plans and develop business strategies. State-run lenders’ bad loans rose by over Rs 1 Lakhss Cr. in the first nine months of the current fiscal year to Rs 6 Lakhss Cr. on December 31, 2016. The finance ministry had received the letter, which outlined actions that can be taken to fast track the resolution process. It has been suggested that more powers should be given to the oversight committee. They should also be allowed to take decisions under other available mechanisms, including deep restructuring. The oversight committee was set up by RBI last year to review debt recasts. The letter also suggested that the present S4A (Scheme for Sustainable Structuring of Stressed Assets) mechanism should be further liberalized and top bank officials given a framework to follow. It is felt that in some cases banks are delaying the process on account of various issues, including citing the fear of vigilance agencies. The BBB wants bankers to be held

accountable in such cases. The board is not in favor of a state-backed bad bank, given that the required skill set won’t be available in the public sector and that decision making will continue to be an issue. The government has also not firmed up plans to set up a private sector bad bank, as the valuations of assets which will be transferred to such an entity may lead to political issues.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/vinod-rai-reaches-out-to-pmo-on-bad-loans-suggests-action-plan/articleshow/57677771.cms


• rural Demand revival Crucial in resolving Stressed loans: As per State Bank of India greater focus on agriculture was required to give a fillip to rural demand. A revival in rural consumption will help in tiding over banks asset quality woes. The capital constraint and asset quality were the two biggest hurdles Indian banks were facing. The revival will be slow unless rural balance sheets are repaired completely, increased focus on agriculture will contribute to higher GDP growth. Since India has its own set of challenges, growth models which worked globally may not bear much fruit in the Indian context. In order to have a differentiated and sustainable growth, India needed to adopt a model led by the farming sector. According to her the agriculture led


model would work for India because majority of the population reside in rural areas and were dependent on agriculture and allied activities. While the government initiative of doubling farm income by 2022 is a step in the right direction, other measures such as focus on organic farming and financing, which is aimed at increasing agriculture production, will also help the sector.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/rural-demand-revival-crucial-in-resolving-stressed-loans-arundhati-bhattacharya/articleshow/ 57686974.cms


• 29 lakhss Debit Cards Subjected To malware Attack: A total of 29 Lakhss debit cards were subjected to malware attack last year through ATMs that were connected with the switch of Hitachi. As reported by commercial banks, 2.9 million cards were used at ATMs that were connected to switch of Hitachi, which was subjected to malware attack. However, the successful attempts of misuse of compromised cards as reported to the RBI by banks was only 3,291. RBI has informed that Hitachi Payment Services (HPS) appointed SISA Infosec for PCI forensic investigation. The final report suggested that the ATM infrastructure of HPS was breached and the data between May 21 and July 11, 2016 were compromised, but not the POS (Point of Sale) infrastructure. The RBI advised banks to improve and maintain customer awareness and education with regard to cyber security risks. Banks were also asked to educate the customers on the downside risk of sharing their login credentials or passwords etc to any third-party vendor and the consequences

thereof. RBI has set up a Cyber Security and IT Examination (CSITE) Cell within its Department of Banking Supervision in 2015, the bank issued a comprehensive circular on June 2, 2016 covering best practices pertaining to various aspects of cyber security. The total stressed assets (Gross Non-Performing Assets and Restructured Standard Advances) of scheduled commercial banks were Rs 9.64 Lakhss Cr. as on December 31, 2016.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/29-Lakhss-debit-cards-subjected-to-malware-attack-santosh-kumar-gangwar/articleshow/57688962.cms


• rBi may look At penal Action, one-Time Settlement To Fix Bank Defaulters: The Narendra Modi government and RBI are readying a strategy to deal with the bad loan problem, including a one-time settlement scheme for weak sectors and penal action against siphoning of funds. PMO, Finance Ministry and RBI are together working out a comprehensive strategy to nab top 50 defaulters. Government and the central bank are awaiting the report from banks post completion of forensic audit on big defaulters. The department of financial services made a presentation to RBI last week at a high-level meeting on NPAs and has asked the central bank to overhaul the existing tools such as Joint Lenders Forum. Around 3-4 banks with the highest exposure in JLF will be asked to make a decision for bad loans instead of the existing 60% voting requirement. Moreover, PMO is also actively working on contours for a one-time settlement for bad loans. Various bankers are worried to take decisions and agree to one time settlement options, so


government lead panel is working on a one time settlement that will aid decision making, SBI recently announced one-time settlement in the farm sector that make up about 6000 Cr. of doubtful cases on its books. Many more banks could look at similar mechanism for weaker sectors. Gross Non-Performing Assets in the banking system were estimated at around Rs7 Lakhss Cr. as of the end of December.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/modi-government-rbi-may-look-at-penal-action-one-time-settlement-to-fix-bank-defaulters/ articleshow/57689758.cms


• unions To oppose VrS For SBi Associates’ Employees: Bank unions will strongly oppose any Voluntary Retirement Scheme (VRS) that is likely to be announced soon for the employees of five associate banks of State Bank of India, which will be merged on April 1. The five associate banks of SBI are State Bank of Bikaner & Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Patiala and State Bank of Hyderabad. They may announce a VRS any time now. As a matter of principle, unions totally oppose the VRS. About 50 per cent of the total 73,000 workforce of the all five associate banks will meet the eligibility criteria for the proposed VRS which is those on the rolls and having put in 20 years or above 55 years. Eligible employees will be paid an ex-gratia amounting to 50 per cent of the salary for the residual period of service, subject to a maximum of 30 month salary.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/unions-to-oppose-vrs-for-sbi-associates-employees/articleshow/57692844.cms


• paytm Hopes To Start payments Bank By month-End: As per PayTm founder and chief executive Shri Vijay Shekhar Sharma, Paytm Payments Bank, which got the final approval from the Reserve Bank in January, hopes to start operations by the month-end. PayTm payments bank will be built on a new model that will be focused on bringing financial services to the hundreds of millions of un-served/under-served. Taking a swipe at the way banks have dealt with loans given to industrialists and especially in dealing with the big-ticket defaulters, the present financial system penalizes a sincere person, but if someone speaks the language of those in the corridors of power, he takes a loan of hundreds of Cr.s and fails to pay it back. With greater penetration of mobile Internet connectivity, his business will grow further. Paytm currently has about 21.5 Cr. subscribers, as against this SBI has 20.7 subscribers. Paytm does about 20 Cr. transactions a month, while according to RBI data, all other e-wallets put together do 19 Cr. transactions.

Dated: http://economictimes.indiatimes.com/small-biz/startups/paytm-hopes-to-start-payments-bank-by-month-end/articleshow/57690907.cms

Dated: March17, 2017

• After Associate Banks, Now Bharatiya mahila Bank To Also merge With SBi: The Bharatiya Mahila Bank (BMB) will be merged with the country’s largest lender State Bank of India (SBI). Set up in 2013, BMB was considered to be a pet project of the previous government. The objectives of affordable credit to women as well as propagation of


women-centric products need to be quickly achieved through a wider network and lower cost of funds. The merger move will ensure that banking services are provided to more women at a faster pace, given the advantage of the large network of SBI among other things. In the last three years since BMB was established, it has extended loans of Rs 192 Cr.s to women borrowers, while the SBI group has provided loans of about Rs 46,000 Cr. to women borrowers. The SBI is already in the process of amalgamating its five associate banks. SBI has a large outreach of more than 20,000 branches and lowest cost of funds in the sector. Out of the total workforce of around 2 Lakhs employees in SBI, 22% are women. SBI group already has 126 exclusive all-women branches across the country while BMB has only seven, the proportion of administrative and managerial cost in BMB is much higher to reach the same coverage. For the same cost, a much higher volume of loans to women could be given through SBI. The government is committed to enhance the access to financial services to the population at large and women in particular. Under the Pradhan Mantri Jan-Dhan Yojana, preference is given to women for overdraft facility. Pradhan Mantri Mudra Yojana had 73% women borrowers in the previous financial year.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/after-associate-banks-now-bharatiya-mahila-bank-to-also-merge-with-sbi/articleshow/57736246.cms


• rBi issues Draft master Circular For revised ppi Norms: The Reserve Bank of India has asked all prepaid payment license holders

who mostly issue mobile wallets to convert their minimum KYC (Know Your Customer) wallet accounts into full KYC account by June 30 of this year. It has also laid out minimum net worth criteria for wallet issuers to Rs 25 Cr. from minimum paid up capital of Rs 5 Cr. earlier. In also a major step forward the regulator has proposed making PPIs interoperable across the banking system but only after the entity meets all the regulatory criteria it has laid out. All entities authorized by the RBI under the Payments and Settlement Systems Act 2007 shall have a minimum net worth of Rs 25 Cr. as per the last audited balance sheet and shall be maintained at all times. The circular further laid out details about those who have already been licensed by the regulator would need to meet the capital requirements by September 30 of 2020, failing which they will be stopped from functioning further. It has further instructed PPI issuers to move completely to the electronic format like mobile wallets, magnetic cards or smart cards and thereby instructed them to stop issuing paper vouchers anymore. The RBI has also introduced strict KYC norms for wallet holders with maximum balance limit of Rs 20,000 who otherwise were allowed to operate with minimum KYC requirements. PPI issuers shall ensure that all the existing minimum detail PPIs are converted into full KYC semi closed PPIs by June 30, 2017. The RBI has also instructed PPI issuers to close the accounts of those who have kept it dormant for more than a year after providing due intimation to the customer. In order to keep money kept in mobile wallets


safe the regulator has specified various security arrangements essential on the part of the PPI. Starting from putting additional factor of authentication for transactions to proper secured access mechanisms to be developed by the PPI license holders. It has also asked entities to introduce a cooling period between funds loaded into the wallet and used for transactions in order to prevent fraudulent siphoning off of money from wallets.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/rbi-issues-draft-master-circular-for-revised-ppi-norms/articleshow/57737026.cms


• Willful Defaulters owe rs 91,155 Cr. To pSBs: There were more than 9,100 willful defaulters who together owed Rs 91,155 Cr. to public sector banks at December-end. Banks declare willful defaulters as per the norms stipulated by the Reserve Bank of India. There were 9,130 willful defaulters who owe Rs 91,155 Cr. to public sector banks. The NPAs of the state-run banks reduced by Rs 37,815 Cr. in 2016. The reduction was Rs 41,236 Cr. in the previous year.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/wilful-defaulters-owe-rs-91155-Cr.-to-psbs/articleshow/57758393.cms


• Axis Bank Dismisses CEo resignation Buzz: Private sector lender Axis Bank has clearly stated that its MD & CEO Ms. Shikha Sharma is not resigning. The news appearing in section of social media stating the impending resignation of the MD & CEO of the Bank, which please note is false, speculative and is being circulated with the mala fide intention

of misleading the investors and the general public. Axis Bank has been under pressure over a sharp fall in third quarter profits along with Income Tax Department raids on some of its branches post-demonetization. There is also a buzz about the bank’s merger with Kotak Mahindra Bank. Axis Bank had reported 73 per cent decline in net profit to Rs 580 Cr. for the October-December quarter on account of rise in bad loans.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/axis-bank-dismisses-ceo-resignation-buzz/articleshow/57767058.cms


• Government okays rs 1,100 Cr. Capital infusion in indian overseas Bank: Chennai-based state lender Indian Overseas Bank will get Rs 1,100 Cr. as “turnaround-linked capital” infusion from the government. The bank has received a communication from the Finance Ministry for a capital allocation of Rs 1,100 Cr. as part of turnaround linked capital infusion plan. The government has approved the second tranche of capital infusion in public sector banks to enhance their capital base. The first tranche was announced in July with the objective of enhancing their lending operations and enabling them to raise more money from the market. It has already announced a fund infusion of Rs 22,915 Cr., out of the Rs 25,000 Cr. earmarked for 13 PSBs for the current fiscal. The second round of funding entailing about Rs 8,000 Cr. is based on strict parameters.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/govt-okays-rs-1100-Cr.-capital-infusion-in-iob/articleshow/57779199.cms



• iDFC Bank To Set up 30,000 micro Atms And 75,000 Aadhaar pay merchant points in Two Years: IDFC Bank plans to build a network of more than one Lakhs points-of-presence in the next two years to enable people in the farthest corners of the country to transact digitally, a move that comes amid the government’s digitization drive. The Mumbai-based private lender plans to set up 30,000 micro ATMs and 75,000 Aadhaar Pay merchant points as part of its plan. While the micro ATMs function as a bank-in-a-box, most of the Aadhaar Pay merchants will be converted into business correspondents and will deliver basic financial services. It will digitize transactions across all retail customer segments those with a smartphone but new-to-digital, the feature phone and phone-less population. The plan envisages coverage of 250,000 villages across 300 districts to serve nearly one Cr. customers. The bank currently has about 7,000 points-of-presence, including branches, ATMs, micro ATMs, e-PDS outlets, Aadhaar Pay merchant points and the network of Grama Vidiyal Microfinance, the company it had acquired last year. The 30,000 micro ATMs will be installed in rural and unbanked locations and will be placed at fair price shops and panchayat offices, among others. The bank currently operates in 19 states spanning 20 cities, 60 districts and 40,000 villages. In the pilot phase spanning three months, more than 1,500 merchants across 16 states have enabled digital transactions for customers of all banks, using IDFC Aadhaar Pay on their smartphones. The bank now plans to expand this network to 25 states. The bank also plans

to convert most of these agents into a full-fledged banking service point armed with a micro ATM. Aadhaar Pay, which addresses the needs of the phone-less, enables users to transact digitally for small value payments free of cost. IDFC Bank is the only bank in the country at present that allows smartphone users or customers using its micro ATM to open a savings account and a fixed deposit account using a completely digital process that requires no paperwork and takes under four minutes.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/idfc-bank-to-set-up-30000-micro-atms-and-75000-aadhaar-pay-merchant-points-in-two-years/articleshow/57786211.cms


• india Said To plan using New Tool From April To manage Cash: India is planning to introduce a new monetary-policy tool in the coming financial year to better manage a banking system swimming in excess cash. The so-called Standing Deposit Facility, or SDF, will help the Reserve Bank of India absorb surplus funds without having to provide lenders collateral in exchange. The Finance Ministry will discuss the plan with the nation’s banks at a meeting. Indian banks were flooded with cash after Prime Minister invalidated 86 percent of the nation’s currency in circulation late last year and mandated the worthless notes be deposited with lenders. Banks scrambled to park these funds with the RBI, forcing the central bank to raise the limit on a scheme it uses to mop up excess liquidity. The surplus, however, has persisted, restricting the RBI’s ability to intervene in currency markets at a time when


the rupee is appreciating. The pricing of the planned facility will be key to whether banks respond to it. The SDF will largely replace the Market Stabilization Scheme, which uses bonds issued outside the government’s regular borrowings to mop up liquidity. The government in December raised the scheme’s limit twenty-fold to tackle the deluge of funds. Indian banks had about 3.8 trillion rupees ($58 billion) in surplus funds. In 2014, a panel led by RBI Governor Shri Urjit Patel who was at that time a deputy had proposed the introduction of the SDF as part of measures to improve the monetary-policy framework. Patel took over as Governor in September.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/india-said-to-plan-using-new-tool-from-april-to-manage-cash/articleshow/57809668.cms


• remain open on All Days Till April 1, rBi To Banks: The Reserve Bank of India has directed banks to remain open on all days till April 1, 2017 to facilitate government receipt and payment functions including collection of taxes. Few select RBI offices will also remain open during the period. To facilitate government receipt and payment functions, all Agency Banks have been advised to keep all their bank branches dealing with government business open on all days in the current financial year and on April 1, 2017”. The concerned departments of the Reserve Bank undertaking government business will also remain open on the above days.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/remain-open-on-all-days-till-april-1-rbi-to-banks/articleshow/57816329.cms


• Spell out mou Terms For Capital infusion: The All India Bank Employees Association (AIBEA) will decide on signing the tripartite MoU with the government and bank management after knowing its contents. Contrary to its earlier stand of infusing fresh capital in strong banks, the central government has decided to infuse fresh capital totaling Rs 8,586 Cr. into 10 weak banks subject to commitment to quarterly milestones by bank boards, management, employees and unions. As per the government, SBI Caps will draw a bank wise action plan based on which a tripartite agreement between the government, bank management and employee unions will be signed committing themselves towards certain milestones. SBI Caps have not given any detail about the bank wise action plan. Some banks managements want the unions to agree. But agree to what is not spelt out. Way back in 2002 when Indian Bank was in serious financial trouble, the union had signed an agreement to forgo some of the employee benefits-like leave travel allowance, overtime allowance and others. The Indian Bank management had agreed that top officials will not use air travel, officers would not claim travelling allowance and such things. Now there is no information as to the contents of the proposed MoU. The central government in a letter to the 10 bank heads had listed out five parameters under which the milestones would be fixed for capital infusion. These are: (a) active management of non-performing assets (NPA), strengthening of lending and monitoring processes; (b) arranging capital from the market; (c) plan for disposal of non-core assets; (d) divesting stakes in


subsidiaries, closure of loss-making domestic and international branches; (e) reduction in operational expenses including employee benefits to would be reversed once the banks turns around. Going by the past experience, the banks would turnaround and then start building up bad loans calling for another turnaround with sacrifices by the employees. The amount of capital to be infused by the government are: Allahabad Bank (Rs 418 Cr.), Andhra Bank (Rs 1,100 Cr.), Bank of India (Rs 1,500 Cr.), Bank of Maharashtra (Rs 300 Cr.), Central Bank of India (Rs 100 Cr.), Dena Bank (Rs 600 Cr.), IDBI Bank (Rs 1,900 Cr.), Indian Overseas Bank (Rs 1,100 Cr.), UCO Bank (Rs 1,150 Cr.), and United Bank of India (Rs 418 Cr.).

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/spell-out-mou-terms-for-capital-infusion-aibea/articleshow/57824822.cms


• union protests rBi Decision To Keep Branches open Next Week: Bank officers’ union AIBOC has registered a protest against the RBI’s decision to keep bank branches open on all holidays till April 1 to facilitate government tax collection. The necessity to open the branches for transacting government business on all holidays one week before the end of the financial year is not at all required. There are four full normal working days between 25th and 31st March 2017, which is more than enough to complete all government transactions. In a letter written to RBI Governor Shri Urjit Patel, All India Bank Officers’ Confederation (AIBOC) stated that due to the notification, bank employees won’t be able to celebrate

Navaratri, Ugadi, Gudi Padwa and many other festivals falling between March 25 and April 1. It is nothing short of hurting the religious sentiments of our people who worked under lot of pressure during demonetization. Many branches across the country reported nil tax collection as people were not aware of RBI late night notification. Most of the field functionaries received the communication in the morning, therefore branches opened late and hardly a few customers turned up. The announcement at the eleventh hour by RBI was a futile exercise as no data centers were prepared for collection of tax. Neither were customers properly informed, nor bankers.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/union-protests-rbi-decision-to-keep-branches-open-next-week/articleshow/57830655.cms


• After merger, SBi Eyes Full integration in Six Weeks: The SBI’s merger of associate banks with itself will be the largest consolidation exercise in the country adding 6,200 branches to SBI’s network of 17,000. Despite the scale, SBI will be one of the fastest transitions and expect full data integration within six weeks. As far as customers of associate banks are concerned they will get the full SBI experience from April 1. It is only for availing non-home branch services like accessing their account from other SBI branches they will have to wait for six weeks. SBI has made investments in IT hardware to take over database of new customers. While this merger will catapult SBI into the world’s top 50 banks, the PSU major with around $450 billion in assets would still be fourth after Japan Postbank ($2,022bn) the smallest


of top 10 banks globally. But the scale of the merger is in the number of branches, where SBI ranks number two globally. China’s ICBC has the largest number of branches. With this merger SBI should be at least a close second. Although system integration would take place immediately the bank would be restoring historical data of customer transactions on its own servers and the whole process would be completed in six weeks. A few associate bank customers, whose account numbers match the numbers in SBI, would also see their account details change. Preparations for SBI merger have been in the works for several years, included having common networks for ATMs and common IT providers. Compared with this, complete consolidation of systems of Kotak Mahindra with ING Bank took over a year.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/after-merger-sbi-eyes-full-integration-in-six-weeks/articleshow/57848013.cms


• Supreme Court rejects Bank’s plea For Exchange of rs 371 Cr Scrapped Currency: The Supreme Court has dismissed the plea of Nashik District Central Cooperative Bank Ltd seeking quashing of the RBI letter barring it from exchanging Rs 371 Cr. it had deposited in demonetized currency. A bench headed by Chief Justice J S Khehar dismissed the plea of the bank which stated that barring of the exchange before March 31 will lead to closure of 281 branches in Nashik district. To maintain the ratio, Rs 371 Cr. need to be exchanged with the central bank. The RBI letter which barred the bank from exchanging the demonetized currency deposited with it by customers between November 8 and

November 14, 2016, should be quashed. The NABARD has inspected the details of the bank deposits and to have certain liquidity ratio, the amount of demonetized currency needs to be exchanged with the RBI. The closure of branches of the bank will lead to serious issues as it deals mostly with agriculture loans given to farmers. Meanwhile, in another case, the apex court has also rejected the petition filed by a firm Ranu Enterprises Ltd which has been declared as a non-performing asset (NPA) to deposit Rs 10 Cr. in demonetized currency. The company had sought a direction for the RBI to permit deposit of money in old currency notes.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/supreme-court-rejects-banks-plea-for-exchange-of-rs-371-cr-scrapped-currency/articleshow/57860195 .cms


• Axis Bank To raise $10 million From Dubai Centre: Axis Bank board has approved raising USD 10 million by allotting debt securities through MTN programme to be launched from Dubai international centre. The board of directors of the bank has passed a resolution approving the allotment of 3 year senior floating rate notes aggregating to USD 10 million under the MTN programme. The capital will be raised through its Dubai International Financial Centre (DIFC) branch. Last week, the private sector Axis Bank had informed about raising USD 16.2 million by floating bonds through its Dubai financial centre branch.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/axis-bank-to-raise-10-million-from-dubai-centre/articleshow/57860391.cms



• GVK Asset Sale, Syndicate Bank Weighs Fresh options To recover Dues: Having failed to evoke response from prospective buyers for the proposed auction of land assets of GVK Power & Infrastructure for recovering Rs 175 Cr. of dues, Syndicate Bank is now exploring fresh options to recover its dues. Debt-ridden GVK group had faced the threat of its assets being auctioned off with Syndicate Bank serving notices early this month, putting on block over 2,500 acres of land at GVK Perambalur special economic zone (SEZ) in Tamil Nadu. GVK group, which operates Bengaluru and Mumbai airports, utilities and other businesses, it was trying to stave off an auction by repaying the money that’s owed. GVK Power & Infrastructure announced raising Rs 2,202 Cr. from Shri Prem Watsabacked Fairfax India Holdings by selling a 33% stake in Bengaluru international airport. GVK Power & Infrastructure, the holding company for 29 firms into energy, airport, transportation and resources, currently has a consolidated debt of over Rs 32,000 Cr. and is finding it difficult to service loans amid dwindling revenues and accumulating losses.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/gvk-asset-sale-syndicate-bank-weighs-fresh-options-to-recover-dues/articleshow/57868441.cms


• Banks looking For lower Savings Account interest rates: Falling growth in loans is making banks to look at the possibility of lowering the interest rates on savings bank accounts so as to improve their pre-provision operating profits. In an industry note on Indian banking sector about the concerns

of investors after the US road shows. Falling loan growth doesn’t augur well with NIMs (Net Interest Margin). According to the report, with falling loan deposit ratios, weak loan growth and compressing spreads, banks are looking at the possibility of lowering the savings interest rates. Most banks currently offer four per cent, while some of the private sector banks offer a much higher rate. According to the report, a 50 basis point cut in savings rate would result in around 8 per cent improvement in the sector’s core pre-provision operating profits. Most investors saw valuations and weak earnings growth for the sector as an immediate headwind. But there was comfort with the longer-term investment thesis driven by government initiatives. Power sector overhang needs a faster asset quality resolution. Investors were concerned about the lack of asset quality resolution which could stall the medium term loan growth for the banks.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/banks-looking-for-lower-savings-account-interest-rates/articleshow/57871211.cms


• SBi Spent rs 775 Cr. in maintaining Jan Dhan Accounts: The total cost of operation of Jan Dhan accounts by State Bank of India is Rs 774.86 Cr.. Bank-wise and year-wise information on the cost of operation of Pradhan Mantri Jan Dhan accounts is not maintained. However, the total cost of operation of Jan Dhan Yojana (PMJDY) accounts as reported by State Bank of India as on December 31, 2106, is Rs 774.86 Cr.. The number of zero balance Jan Dhan accounts was 5.93 Cr. as on November 9, 2016, and


6.32 Cr. as on December 28, 2016. The balance of deposit in PMJDY was Rs 45,636 Cr. as on November 9, 2016 and Rs 71,036 Cr. as on December 28, 2016. The public banks, regional rural banks and 13 private lenders have reported that as on March 24, 2017, 92,52,609 accounts were frozen under the PMJDY due to lack of transaction in the last one year. As per report received from public sector banks, RRBs and 13 private banks, as on March 15, there are 28.02 Cr. Jan Dhan accounts and 1.8 Cr. operational ones have deposits of more than Rs 5,000.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/sbi-spent-rs-775-Cr.-in-maintaining-jan-dhan-accounts-santosh-kumar-gangwar/articleshow/57872731 .cms


• india To use regional-Based model To Consolidate public-Sector Banks: India plans to adopt a regional-based model for consolidating its bloated public-sector banks. As per Shri Santosh Gangwar, minister of state for finance, India’s lenders had stressed loans of 9.64 trillion rupees ($147.33 billion) as of end-December, with nearly 90 percent of the pile with government-run institutions. Consolidation of India’s public-sector banks is seen as a final step in rebuilding a financial system capable of underwriting credit growth and job-creating investment in Asia’s third-largest economy. In reply to a question on whether he had any targeted market share that private banks and public sector banks should have in India. Finance Minister Shri Arun Jaitley has earmarked 700 billion rupees ($10.5 billion) in bank capital injections from budgets covering a four-year

period ending March 2019. Some of India’s public-sector banks are listed, including Bank of Baroda, Bank of India and Canara Bank. The government is thinking that more minority shareholders will invest in such institutions as “these banks are trading at less than their book value”.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/india-to-use-regional-based-model-to-consolidate-public-sector-banks-official/articleshow/57873952.cms


• levy For Not Keeping minimum Balance in Banks Should Be reasonable: As per the government, banks can impose penal charges for not keeping minimum balance in accounts but the levy should be “reasonable” and not out of line with the average cost of providing these services. As per the RBI guidelines, banks should inform at least one month in advance existing account holders about any change in the prescribed minimum balance and charges that may be levied. Several banks impose charges for non-maintenance of minimum balance and also on cash deposits and withdrawals beyond a specified threshold and number of transactions during a month. With regard to minimum balance, banks can levy penal charges on the amount of difference between the actual balance maintained and minimum balance as agreed upon at the time of opening of account. Banks may finalize a suitable slab structure for recovery of charges. Banks should also ensure that such penal charges are reasonable and not out of line with the average cost of providing the services.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/levy-for-not-keeping-


minimum-balance-in-banks-should-be-reasonable-govt/articleshow/57874491.cms


• ESAF Small Finance Bank Eyes rs 5,000 Cr. Business in First Year: Kerala-based ESAF Small Finance Bank, which was launched recently, hopes to double its balance sheet to Rs 5,000 Cr. by the end of fiscal 2018. The company, as a micro lender has a balance sheet of Rs 2,500 Cr. when it got converted itself into a small finance bank which began operations on March 20, thereby becoming the first private sector lender in Kerala after the Independence. As an MFI, the company is present in 11 states, which includes all the Southern states, barring Andhra Pradesh and Telengana; Madhya Pradesh, Maharashtra, Chhattishgrah, Jharkhand, Bihar and Bengal among others. The bank began operations with 15 branches in Kerala, in Maharashtra the company will be focusing on the Vidharbha region. The first Mumbai branch will be opened in Andheri shortly, in the first year of operations it plans to have 85 branches nation-wide. The bank currently has Rs 350 Cr. in tier 1 capital and plans to raise Rs 200 Cr. in tier 2 capitals sometime this year and is already in talks with investors. While ESAF MFI, which also functions as multi-state cooperative agri society, owns 64 per cent in the bank. ESAF Small Finance Bank is among the first five out of the 10 licensees which got permission from RBI in August 2015. Its urban plan includes entering Bengaluru, Kolkata, Mumbai, New Delhi and Hyderabad in the first year. ESAF MFI has 285 branches in 93 districts spread over 11 states all of which be converted into bank branches.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/esaf-small-finance-bank-eyes-rs-5000-Cr.-business-in-first-year/articleshow/57876507.cms


• SBi To raise Stake in SBi Card To 74% By June-End: The country’s largest lender State Bank of India (SBI) will increase its stake in SBI Card to 74 per cent by June end. Stake will be increased by first quarter of next financial year there are few regulatory issue that is being sorted out. The board of SBI has already given approval for hike of the bank’s stake in its two credit card joint ventures with General Electric Company to 74 per cent. The bank has approval to infuse Rs 1,160 Cr. in the two JVs- SBI Cards and Payment Services Pvt Ltd (SBICPSL) and GE Capital Business Processes Management Services Ltd (GECBPMSL) through purchase of equity shares from GE Capital so as to increase the bank’s stake in both the companies to 74 per cent. Asked about remaining 26 per cent stake, the decision has to be taken by GE. Within next one month there should be finality on the remaining stake sale. The American company seeks to exit SBI Cards. SBI currently holds 60 per cent stake in SBICPSL and 40 per cent in GECBPMSL. The balance being held by GE Capital in both the ventures. As per an agreement between SBI and GE Capital at the time of formation of SBI Cards, it was decided that whenever any party decides to exit the JV, the decision has to be on the basis of mutual understanding. SBI, the nation’s largest lender, entered credit card business in 1998 by roping GE Capital India, the consumer finance arm of US-based GE Capital. SBI Card, having 4.3 million


user. As the nation progresses on the path to digitization, SBI Card has introduced the Unnati card in an effort to bring new users into the fold of cashless transactions, thereby contributing to India’s transformation towards a digital economy. The card, to be issued to person with balance of Rs 25,000, will be offered through network of 20,000 plus SBI branches. To encourage adoption of credit cards and facilitate expansion in the reach of digital payments, the SBI Card Unnati will be offered free, at zero annual fee, for four years. It will cater to the credit card requirements of new users and especially to those without any prior credit history. The nation is progressing towards becoming a less cash economy for which a slew of digital initiatives have been made available to the population at large. On the back of its features, the Card company expects 300 per cent growth within one year.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/sbi-to-raise-stake-in-sbi-card-to-74-by-june-end/articleshow/57878314.cms


• SBi To Complete merger of 6 Banks in Three months: State Bank of India which would start merger process of five associates and Bharatiya Mahila Bank (BMB) from April 1, expects integration to be completed in three months. SBI has sought three-month time from RBI for merger. The merger has to be done in phases. As data are integrated, the new passbook and cheque books would be issued. The complete integration of various banks should take 3 months. Post merger, about 1,500 branches to be shut because of duplication. There are many duplication and

they need to be rationalized. About 1,500-1,600 branches have to be rationalised. The closure could be of SBI or associate bank depending on location. The government has already given approval for merger of State Bank of Bikaner & Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Patiala (SBP), State Bank of Hyderabad (SBH) and BMB. With the merger of all the five associates, SBI is expected to become a lender of global proportions with an asset base of Rs 37 trillion (Rs 37 Lakhs Cr.) or over USD 555 billion, 22,500 branches and 58,000 ATMs. It will have over 50 Cr. customers. SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of Indore was merged with it. The board of SBI earlier approved the merge plan under which SBBJ shareholders will get 28 shares of SBI (Re 1 each) for every 10 shares (Rs 10 each) held. Similarly, SBM and SBT shareholders will get 22 shares of SBI for every 10 shares. SBI had approved separate schemes of acquisition of State Bank of Patiala and State Bank of Hyderabad. There will not be any share swap or cash outgo as they are wholly-owned by the SBI.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/sbi-to-complete-merger-of-6-banks-in-three-months/articleshow/57879171.cms


• SBi To offer ‘Zero Annual Fee’ Credit Cards To Accounts With rs 20,000: State Bank of India will offer credit cards to every account holder who has a balance of Rs 20,000-25,000, without going into credit history. This is the first major joint collaboration between


Smt. Arundhati Bhattacharya-led SBI and SBI Card after the bank hiked its stake in the joint venture to 74% by buying out part of its partner GE Capital’s stake for Rs 1,168 Cr.. GE Capital will sell its remaining stake to a private equity investor in coming days. In an attempt to encourage adoption of credit cards and facilitate expansion in the reach of digital payments, SBI Card “Unnati” will be offered free, at zero annual fee, for four years. Presently, lack of credit history has been a challenge in increasing the card penetration in the country. In such a scenario, this card is likely to facilitate in generation of credit history for new users, which will help bringing them into organised financial stream.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/sbi-to-offer-zero-annual-fee-credit-cards-to-accounts-with-rs-20000/articleshow/57885691.cms


• SBi Expects 6,000 Employees To opt For VrS As it readies To merge With Associates: State Bank of India, is expecting to see 50 percent or about 6,000 employees opting for its Voluntary Retirement Scheme (VRS). The employees opting for VRS is on expected lines. SBI has estimated about half or 50 percent of the employees taking that option. The VRS has been offered to about 12,000 employees of the associate banks. The eligibility criteria for the proposed VRS are employees who are on the pay rolls of the bank and have put in 20 years at the bank or are above 55 years. Eligible employees will be paid an ex-gratia sum amounting to 50 percent of the salary for the residual period of service, subject to a maximum of 30 months salary. SBI will be merging its five associate banks with itself

from April 1 to become the 45th largest bank in the world. The five associate banks of SBI are State Bank of Bikaner & Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Patiala and State Bank of Hyderabad. The associate banks have a total strength of 73,270 employees while SBI has a total staff of 200,820. SBI has a high attrition rate, with 12,750 leaving the bank during the current financial year. The bank has also recruited about 7,000 employees. Post the merger, SBI will trim its new hiring to 50 percent from about 10,000 on an average annually. SBI will also shut 47 percent of its associate bank offices to avoid duplication and overlapping of the services in the same regions. Out of the five head offices of the associate banks, only two will exist. The remaining three will be unbound along with 27 zonal offices, 81 regional offices and 11 network offices of the associate banks. With this, about 1,107 employees are estimated to be directly affected by these shutdowns and will be redeployed, mostly in customer-interface operations. Many may not be willing to relocate and some may not be comfortable with the changes in the bank. The VRS in the subsidiary banks would help SBI limit its staff costs from rising after the merger. SBI’s staff expense in the quarter ending December 2016 was Rs 7,137 Cr., rising 16.5 percent year-on-year. Its pension obligation is estimated to be around Rs 3,500 Cr.. This would increase once associate bank employees come under the SBI fold. Reports suggest SBI is likely to see an average payout of Rs 12 Lakhs to Rs 15 Lakhs depending on the VRS applications. The five associate banks will cease to exist as


legal entities and become a part of SBI from April 1, but the various data and other merger processes will start only after April 24, once the balance sheets of the five entities are audited and added. After the merger, SBI will have a combined balance-sheet size of Rs 41 Lakhs Cr., with 22,500 branches and 58,000 ATMs servicing over 50 Cr. customers.

Dated: http://www.moneycontrol.com/news/business/sbi-expects-6k-employees-to-opt-for-vrs-as-it-readies-to-merge-with-associate-arms-2248845.html


• Centre To Give rs 10,000 Cr relief To Banks For Sour loans of power projects: The Centre is set to clear an estimated Rs 10,000 Cr. relief package for banks, which are facing the prospect of loans to 25 mega power projects turning sour, because promoters are unable to find buyers for their capacity in the current surplus market condition. The package, expected to be taken up by the Cabinet, proposes extending the time limit by another 60 months for sealing PPAs (Power Purchase Agreements) for the entire capacity of a project. Simultaneously, it is being proposed that lenders will release bank guarantees furnished by the promoters in proportion to the capacity for which PPA is signed. But to safeguard the interest of banks, the released funds will go to the lenders towards servicing of debt. The proposals could well be worth Rs 10,000 Cr. in relief, going by the current outstanding loans and their repayment status. The proportionate unlocking of bank guarantee will de-stress projects as the released money will go towards servicing debt. This, in turn, will also help loans from not being categorized as NPAs. Power plants

of 1,000 MW and above are categorized as `Mega’ projects, which get customs duty benefit on equipment and other benefits. The customs duty benefit, however, entails furnishing of bank guarantee which is released after PPAs for the entire capacity of a project are signed. These 25 mega projects were approved in 2012 with the aim of fast ramping up of generation capacity since the country was facing acute shortage of power. The projects were given 60 months to tie up PPAs, which did not appear too difficult in a sellers’ market as long-term contracts offered cheaper rates. The government’s initiatives in the last three years have changed the narrative from `shortage’ to `surplus’. As a result, the promoters are struggling for PPAs in buyers market as even utilities with old PPAs prefer to buy cheaper power from electricity exchanges than to getting tied down with new agreements. So, a majority of the promoters have found their bank guarantees locked up, even in cases where the projects are complete or PPAs have been inked for part of the capacity.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/centre-to-give-rs-10000-cr-relief-to-banks-for-sour-loans-of-power-projects/articleshow/57886755.cms



• BoB money laundering Case, ED Arrests 2 Businessmen: The Enforcement Directorate has arrested two people in connection with its probe in the Rs 6,000-crore Bank of Baroda money laundering case. Shri Manmohan Singh and Shri Gagandeep Singh, were placed under arrest under the provisions of the Prevention of Money Laundering Act (PMLA). The two will be produced before a court for further custody. The businessmen have been accused of channeling an alleged Rs 300 crore through the Ashok Vihar branch of the bank here to foreign locations using suspected shell companies. The case had emerged last year and is being probed both by the Enforcement Directorate and the CBI. At least four people have been arrested by the ED in this case earlier. The ED had earlier termed this case to be an alleged incident of trade-based money laundering, where accused traders evaded Custom duties and taxes to generate slush funds. The CBI had also arrested BoB AGM Shri S K Garg and Shri Jainish Dubey, who headed the Foreign Exchange division, under various provisions of the IPC and the Prevention of Corruption Act.

Source: http://www.thehindubusinessline.com/money-and-banking/ed-arrests-two-people-in-connection-with-the-rs-6000-crore-bank-of-baroda-money-laundering-case/article9605691 .ece


• Bug in upi App Costs Bank of maharashtra rs 25 Cr in one of india’s Biggest Financial Frauds: In what is possibly the biggest financial frauds in recent years, As per NPCI around Rs 25 crore has been moved out of Bank of Maharashtra (BoM) accounts due to

a bug in its UPI application. All the corrective steps have been initiated and the process of recovering the money from 19 banks where it was transferred to, is on. Total amount of loss, as reported by BoM, is about Rs 25 crore. They’ve recovered some amount and some amount is still pending. They’ve filed a police complaint also and the investigation is on. BoM had procured a Unified Payment Interface (UPI) solution from a vendor (Reported To Be City-Based InfrasoftTech) which had a bug that resulted in the fund moving out of the accounts without the sender’s account having the necessary funds. Even if the core banking has declined a transaction, the UPI at the bank-level used to send a success message to NPCI. The fraud was first reported to it on February 22. About 50-60 people in Aurangabad discovered this loophole possibly through trial and error method. They have collected a good deal of money. They’ve accounts in 19 other banks. They’re trying to recover money now. There were three other banks, including Bank of India, which had bought a similar solution from the same vendor but they’ve not reported any mishap, thorough checks have been carried out. The fraud was first reported in the media last week after a few arrests in Maharashtra, but the total amount transferred was under Rs 2 crore. It can be noted that breach of card details due to a compromise at Hitachi’s end last year, which led to a replacement of 3.2 million debit cards, had a financial loss of under Rs 2 crore. Maintaining that it is up to BoM to take action on its vendor, NPCI has learnt a lot from this episode. The learning from this


is that we’re not allowing any bank to join UPI unless they’ve a thorough reconciliation process and audited their package by the best of auditors.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/bug-in-upi-app-costs-bank-of-maharashtra-rs-25-cr-in-one-of-indias-biggest-financial-frauds/ articleshow/57921505.cms


• lenders Get No Takers For Shri Vijay mallya’s properties Again: Lenders to Shri Vijay Mallya’s Kingfisher Airlines Ltd. are stuck with his properties that they-’ve attached with potential buyers not bidding for them fearing further litigation by the fugitive former liquor baron and between banks claiming the assets. This is a high-profile case where multiple parties are staking claim to the same asset and if the matter enters litigation then it’s possible it will be a prolonged battle, hence potential buyers are shying away. Despite clear property titles, buyers don’t want future litigation. Prospective buyers are uncertain about any claims to the properties, which include real estate, bungalows and expensive cars. Some banks have declared Shri Mallya a willful defaulter. Auctions of the properties have failed even after lowering the reserve price. In March, the fourth attempt to sell the multi-storied Kingfisher House in Mumbai drew a blank with a reserve price of Rs 103.5 Cr. about 10% lower than the previous floor price of Rs 115 Cr. in December. Buyers stayed away from bidding for Kingfisher Villa in Goa after the reserve price was lowered by 10% to Rs 73 Cr. Kingfisher Airlines owes about Rs 9,000 Cr. to a consortium of 17 banks led by the State Bank of India.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/lenders-get-no-takers-for-vijay-mallyas-properties-again/articleshow/57926469.cms


• rBi restricts Banking ops of Kapol Co-operative Bank: The Reserve Bank of India has barred depositors of The Kapol Co-operative Bank from withdrawing more than Rs 3000 from their savings and current bank account. The troubled co-operative bank will also not be able to grant or renew any loans or advances without prior approval in writing from the Reserve Bank. The bank will also not make any investment, incur any liability including borrowal of funds and accept fresh deposits without RBIs approval. Despite these fresh restrictions, As per RBI the latest notification should not be construed as cancellation of the bank’s license. The issue of the directions by the Reserve bank should not, per se, be construed as cancellation of banking license by the Reserve Bank. The bank will continue to undertake banking business with restrictions till its financial position improves.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/rbi-restricts-banking-ops-of-kapol-co-operative-bank/articleshow/57936048.cms


• Bandhan Bank Cuts Deposit rates With Effect From march 31: Bandhan Bank has revised its deposit rates downwards by up to 50 basis points, narrowing the interest rate differential with other banks like State Bank of India and HDFC Bank. The Kolkata-based lender, which is one of the two latest entrants in the universal banking space along with IDFC Bank, now offers 7.50% for


one year deposits compared with 7.80% earlier. The long term 10 year deposits now carries 6.5% rate compared with 7% earlier. The new rates are effective from March 31. This is the second time that Bandhan cut deposit rates after demonetization. Banks have no alternative but to cut deposit rates as they have lesser opportunity to deploy the fund. Banks are flush with funds as the government’s move to ban 87% of currency notes has forced people to park their stack of cash in banks. Bandhan Bank’s highest deposit rate is 7.50% while HDFC Bank offers highest at 6.9% for one year one day to one year three days period. Axis Bank offers 7% as its highest rate for one year to less than two years. The bank has built a base of Rs 22,000 crore of deposits since its inception in August 2015. Its credit growth has been nearly 30% with outstanding credit portfolio of Rs 23,000 crore.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/bandhan-bank-cuts-deposit-rates-with-effect-from-march-31/articleshow/57939663.cms


• State Bank of Travancore To Bid Adieu Tomorrow: Seventy two years after coming into being in Kerala, the curtains will come down on the State Bank of Travancore (SBT) tomorrow following its merger with parent State Bank of India (SBI). Besides the State Bank of Travancore, the State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Patiala and State Bank of Hyderabad will also be merged with the State Bank of India, and the assets of these banks will be transferred to the parent bank tomorrow. The customers need not worry, adding that there

would not be any change in their accounts, passbooks and cheque books. The State Bank of Travancore has about 14,000 employees on its payroll. In the honor of “Kerala’s own bank”, the state Postal Department will also release a post cover with pictures of SBT emblem. The merger has come into effect despite strong opposition from both ruling CPI-M led LDF and Congress-headed UDF Opposition in the state. A ‘Save SBT’ forum with people drawn from different sections of society also held a state-wide campaign to put pressure on the Centre to avoid the merger. The Kerala Assembly had passed a unanimous resolution asking the Centre and RBI to desist from the merger move. The resolution stated that SBT had played a major role in the economic growth of the state and that the new dispensation would adversely affect the state’s economy. State Bank of Travancore was established as Travancore Bank Ltd in 1945 and sponsored by the erstwhile Princely State of Travancore. It became an associate of the State Bank of India in 1959.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/state-bank-of-travancore-to-bid-adieu-tomorrow/articleshow/57939787.cms


• SBi Gets rs 1,400 Cr. loan From European investment Bank: The European Investment Bank (EIB) has okayed Rs 1,400 crore (EUR 200 million) loan to State Bank of India to fund solar power projects. The long-term loan will support total investment of EUR 650 million in five different large-scale photo-voltaic solar power projects. This will contribute to India’s National Solar mission and reduce


dependence on fossil fuel power generation. Four solar power projects at a generation capacity of 530 MWac have already been identified under this funding. The new cooperation between the State Bank of India and the European Investment Bank will scale up investment in large scale solar power generation across India. Close cooperation between technical and financial teams from both institutions will ensure that world class projects are supported. This new project reflects the shared commitment of India and the European Union to tackle climate change and implement the Paris Climate Agreement. The 20 -year long-term EIB loan will support individual projects. Projects in Tamil Nadu and Telangana are amongst those to be funded under this agreement. This funding will be in addition to financing from Indian banks and project promoters. One of the largest lenders in renewable energy investment, EIB has financed projects of EUR 1.7 billion (about Rs 11,900 crore) in India since 1993. Owned by the 28 member states of the European Union, it is the world’s largest international public bank.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/sbi-gets-rs-1400-crore-loan-from-european-investment-bank/articleshow/57946103.cms


• National Housing Bank Disburses rs 421-Crore Subsidies: National Housing Bank (NHB), as a central nodal agency (CNA), has disbursed housing subsidies worth Rs 421 crore so far this year and expects to double this next year. The bank will also accelerate the middle income group (MIG) programme, MD and CEO of NHB Sriram Kalyanaraman.

“NHB, as a CNA, has disbursed subsidies of Rs 421 crore so far and expects to double this next year and also accelerate the MIG programme. Maharashtra and Gujarat accounted for 65 per cent share of the subsidies in the (credit-linked subsidy scheme) CLSS programme, which is open to people with annual household income of Rs 6-18 lakh,” he added. In all, 38 primary lending institutions, including banks, housing finance companies and a small finance bank entered into MoUs with NHB for implementation of the scheme.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/national-housing-bank-disburses-rs-421-crore-subsidies/articleshow/57946223.cms



(Amount* In USD Million)

monthEquity Loan Guarantee issued

Total Financial Commitment

1 2 3 1+2+3January 2017 246.37 483.78 1,085.51 1,815.66

February 2017 390.03 199.96 277.54 867.53

monthEquity Loan Guarantee issued

Total Financial Commitment

1 2 3 1+2+3February 2016 514.78 288.83 1,407.75 2,211.36February 2017 390.03 199.96 277.54 867.53

*The data published is provisional and subject to change based on the online reporting by the AD banks’.

global Market Rates

Name of interest rate Country/ region Current rate Directionprevious

rateChange

American Interest Rate (FED)

United States 1.000 % 0.750 % 03-16-2017

Australian Interest Rate (RBA)

Australia 1.500 % 1.750 % 08-02-2016

Banco Central Interest Rate

Chile 3.000 % 3.250 % 03-16-2017

Bank Of Korea Interest Rate

South Korea 1.250 % 1.500 % 06-09-2016

Brazilian Interest Rate (BACEN)

Brazil 12.250 % 13.000 % 02-22-2017

British Interest Rate (BoE) Great Britain 0.250 % 0.500 % 08-04-2016

Canadian Interest Rate (BoC)

Canada 0.500 % 0.750 % 07-15-2015

Chinese Interest Rate (PBC)

China 4.350 % 4.600 % 10-23-2015

Czech interest rate (CNB) Czech Republic 0.050 % 0.250 % 11-01-2012

Outward Foreign direct investment (OFdi) Based On Reporting date comparative position- February 2017


Danish Interest Rate National Banken

Denmark 0.050 % 0.200 % 01-19-2015

European Interest Rate (ECB)

Europe 0.000 % 0.050 % 03-10-2016

Hungarian Interest Rate Hungary 0.900 % 1.050 % 05-24-2016

Indian Interest Rate (RBI) India 6.250 % 6.500 % 10-04-2016

Indonesian Interest Rate (BI)

Indonesia 6.500 % 6.750 % 06-16-2016

Israeli Interest Rate (BOI) Israel 0.100 % 0.250 % 02-23-2015

Japanese Interest Rate (BoJ)

Japan 0.000 % 0.100 % 02-01-2016

Mexican Interest Rate (Banxico)

Mexico 6.250 % 5.750 % 02-09-2017

New Zealand interest rate

New Zealand 1.750 % 2.000 % 11-10-2016

Norwegian Interest Rate Norway 0.500 % 0.750 % 03-17-2016

Polish Interest Rate Poland 1.500 % 2.000 % 03-04-2015

Russian Interest Rate (CBR)

Russia 9.750 % 10.000 % 03-24-2017

Saudi Ariabian Interest Rate

Saudi Arabia 2.000 % 2.500 % 01-19-2009

South African Interest Rate (SARB)

South Africa 7.000 % 6.750 % 03-17-2016

Swedish Interest Rate (Riksbank)

Sweden -0.500 % -0.350 % 02-11-2016

Swiss Interest Rate (SNB) Switzerland -0.750 % -0.500 % 01-15-2015

Turkish Interest Rate (CBRT)

Turkey 8.000 % 7.500 % 11-24-2016


FOReX Rates (*As On 27/March/2017)


• HDFC Bank launches Chatbot Eva For Customer Services: HDFC Bank has announced the launch of an electronic Virtual Assistant (EVA), an artificial intelligence-driven chatbot, for customer services. Eva is India’s first AI-based banking chatbot and can answer millions of customer queries across multiple channels instantly. Eva can assimilate knowledge from thousands of sources and provide answers in simple language in less than 0.4 seconds. Within the first few days of its launch, Eva has answered over 1 Lakhss queries from thousands of customers from 17 countries across the globe. With the launch of Eva, bank’s customers can get information on its products and services instantaneously and it also becomes smarter as it learns through its customer interactions. Going forward, Eva would be able to handle real banking transactions as well, which would enable HDFC Bank to offer the true power of conversational banking to its customers.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/hdfc-bank-launches-chatbot-eva-for-customer-services/articleshow/57481943.cms


• SBi launches ‘Work From Home’ Facility For Employees: Country’s largest lender State Bank of India has launched a new facility to enable its employees to work from home. The Board of the bank has recently approved the ‘Work from Home’ policy to enable its employees to work while at home using mobile devices to address any urgent requirement they may have, that prevents

their travelling to work. The lender will be using mobile computing technologies and shall have continuous control over all the enabled devices centrally to manage and secure the data and applications on the mobile devices. The use of technology and services shall be monitored through carefully designed MIS and dashboard to enable improvements and refinements. The bank is going forward cross-sell, marketing, CRM, social media management, settlement & reconciliation, complaints management applications will also be enabled to make the work from home services comprehensive and increase the employee productivity multi-fold.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/sbi-launches-work-from-home-facility-for-employees/articleshow/57521437.cms


• Karur Vysya Bank launches Fastags, upi App, utility Bill payment Service: To keep pace with technology across the globe, Karur Vysya Bank (KVB) has launched three technology services for the benefit of customers. FASTag was launched in association with Indian Highways Management Company, a subsidiary of National Highway Authority of India, wherein pre loaded tags affixed to vehicles help them move on without having to join queues at toll plazas and handing cash for payment. FASTags can be pre-loaded with amounts and the toll amount will automatically be debited by the toll plazas through sensors. The tags can be reloaded as

tOp BAnking deVelOpMentS


and when required and tags are valid at all toll lazas throughout the country. The second service, United Payments Interface (UPI) is a mobile app that helps customers to transfer funds inter-bank, 24 X 7 through their smartphones. A single mobile application can access different bank accounts without the customer having to share his bank details or having to remember user IDs and passwords. The transfer is affected through the Immediate Payment Service platform of NPCI (National Payment Corporation of India). Supported by the security of two factor authentication, payment requests can be initiated by the beneficiary or scheduled by the remitter, the KVB UPI can be downloaded from Android Play Store. The third one is Bharat Bill Payment System (BBPS), a facility offered through NPCI where in customers can make utility bill payments like electricity, water, gas, DTH and telecom services through a single utility, instead of accessing multiple sites.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/karur-vysya-bank-launches-fastags-upi-app-utility-bill-payment-service/articleshow/57536595.cms


• indusind Bank confirms deal talks with mFi Bharat Financial: Mid-sized private lender IndusInd Bank is in talks with multiple entities for business expansion, including the widely speculated merger of Bharat Financial Inclusion (BFI). The management has been exploring strategic alternatives, and engaging in discussions from time to time with various parties, including Bharat Financial, as and when required In the statement issued to bourses following media reports that

IndusInd and BFI (formerly SKS Microfinance) are likely to announce a merger in an all-stock deal, the bank management has been authorized to evaluate strategic opportunities for business expansion. It soon added that no decision has yet been made in this regard by either the board or any of the committees and also termed the media reports as “speculative”. As per the reports, the merger ratio is likely to be 10:7, wherein shareholders will get seven shares of IndusInd Bank for every 10 shares of BF. Speculation regarding a deal between the two has been on for many months now and as per some reports the Hinduja Group-promoted bank may be looking at buying a minority stake in BFI. But off late the buzz has shifted to takeover. There have been a slew of deals between private sector lenders and MFIs as the former eye to expand their network in the hinterland which will help them meet the priority sector lending mandates and offer cross-sell opportunities. As per Australian brokerage Macquarie such a merger was positive from a medium-term perspective for the bank but flagged execution as the key given the stress on MFI’s books. A merger can enhance IndusInd’s return on assets by up to 0.25% and make it among the highest in the industry. BFI already has a business correspondent relationship with IndusInd in Karnataka for many years now. The then SKS had a tumultuous time four years ago as it first faced a repayment crisis in its largest market of Andhra Pradesh and a corporate battle over leadership which ended with the exit of founder Vikram Akula. If the merger fructifies, it will be the third deal for IndusInd


Bank, after Deutsche Bank’s credit card portfolio in 2011 and RBS’ diamond financing book in 2015. Both IndusInd and BFI counters have seen a rally this year, but the stocks today corrected 0.26 per cent and 1.40 per cent respectively on the BSE. Other banks, including IDFC Bank, Kotak and RBL, have either acquired or taken minority stakes in MFIs in past 18 months.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/indusind-bank-confirms-deal-talks-with-mfi-bharat-financial/articleshow/57561862.cms


• SBi Creates Wholly-owned Subsidiary To manage real Estate: The country’s largest lender State Bank of India has incorporated a specialized firm SBI Infra Management Solutions Pvt Ltd (SBIIMS) that will manage its premises and real estate property across the country. The move is seen as public sector banks’ efforts to exit non-core activities to improve balance sheet as they have piled up huge bad assets over the past few years. With strict guidelines from government, many state-owned banks are exiting their non-core activities as well as selling their bad loans to asset reconstruction companies and other financial entities. The new entity has been established to save time of banks’ executives who are involved in managing these non-core businesses. The primary role of the new entity will be to handle transaction management/ advisory services, project management, facility management and implementation of policies and initiatives. SBIIMS will have its circle office in each local head office centre of SBI and about 100 zonal offices at administrative office centers of SBI

on pan India basis. Initially, this subsidiary will look after work related to premises and estate of SBI group only.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/sbi-creates-wholly-owned-subsidiary-to-manage-real-estate/articleshow/57594975.cms


• iCiCi Bank launches New App For rural Customers With Features For Agri Services And Agri Credit: ICICI Bank by consolidated assets, announced the launch of a mobile banking app for rural customers that allow them to access banking services as well as information on agri services. The app is open for both bank customers as well as others and is available in eleven different languages. Named ‘Mera iMobile’, it allows users in rural areas to avail as many as 135 services some of which are unprecedented in the industry on their mobile phone, helping them to save the time and cost of visiting a branch to avail these services. The list of services includes Kisan Credit Card, Gold Loan, Farm Equipment Loan and loans to Self-Help Groups (SHGs). The app also enables them to undertake an array of frequently used banking services from their smartphone, without using mobile internet services. Additionally, it is the first banking app to offer agriculture related information like crop-wise mandi prices of nearly 230 crop varieties across 460 mandis. It also displays taluka-wise weather update for close to 3700 talukas across and over 300 districts, aiding farmers to plan their sowing and harvesting activities conveniently and in an informed manner. ‘Mera iMobile’ is the only banking app to provide these value added services in one single app for the


rural customer. In line with this philosophy, ICICI Bank has pioneered many innovative solutions for its customers like internet, mobile, Tab and ‘Touch Banking’ branches among others. To enable easy download and proper functioning of the app in areas with low internet speed, the app has been made light wight. The bank is further going to introduce Wifi hostpots at its 700 rural and semi urban branches. The Bank also plans to mount these posters on vans and cycles to enable download of the app at places with high footfalls like haats and common areas in villages.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/icici-bank-launches-new-app-for-rural-customers-with-features-for-agri-services-and-agri-credit/articleshow/57730729.cms


• iCiCi Bank partners Truecaller For upi-Based mobile payment: ICICI Bank has partnered with Truecaller to launch a UPI-based mobile payment service called ‘Truecaller Pay’. It will allow users of the Truecaller app to instantly create a UPI id, send money to any UPI id or a mobile number registered with the BHIM app. It will also enable users to recharge their mobile number from within the app itself. Any user of Truecaller app, including non-ICICI Bank customers can link their bank account of any bank (Participating in UPI) to create a UPI id and instantly make payments. Truecaller is very excited to launch Truecaller Pay together with ICICI Bank and as a first stop Truecaller will offer peer-to-peer solutions right from your contacts as well as recharge happening naturally from your dialer and SMS app. ICICI Bank believe this association shall make UPI payments seamless for a larger audience and

will also play a crucial role in strengthening the Government’s ‘Digital India’ mission.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/icici-bank-partners-truecaller-for-upi-based-mobile-payment/articleshow/57871658.cms


• Axis Bank Ties up With Wells Fargo For inward remittances: Axis Bank has tied up with Wells Fargo, the third largest American bank by assets, to offer real time remittances from the Indian diaspora to their relatives back home. Under the arrangement between the two banks, any member of the Indian diaspora with an account with the Wells Fargo will be able to transfer money to their relatives back home and there will be no transaction fee applicable to the money transfers from USA. But the relative or the beneficiary in India will need to have an account with Axis Bank. The beneficiary will get a competitive price for a real time transfer. Axis Bank has already finished IT integration with that of Wells Fargo for the purpose. Wells Fargo has similar tie-ups with ICICI Bank and HDFC Bank. The American Bank has so far only tapped private banks as these banks have a large consumer banking base and the bank sees cross selling opportunities through such tie-ups. Significantly, the tie-up has been signed at a time when remittances to India have been slowing down. In 2016 remittances to India were estimated to have dipped by 5% to $65.5 billion, according to World Bank data. Despite the slowdown in inward remittances to India, Wells Fargo is very bullish on India. Indian community in the Unites States has the largest number of millionaires.


Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/axis-bank-ties-up-with-wells-fargo-for-inward-remittances/articleshow/57896716.cms


• You Can pay Via upi By Scanning Qr Codes: The National Payments Corporation of India (NPCI) has launched a new retail initiative, which enables payments in shops using the Unified Payment Interface (UPI) platform by scanning QR codes. Reliance Retail has become the first organized retail chain to accept payments under the new facility. The initiative is live in over 200 Reliance Retail stores across various formats, including Reliance Fresh and Reliance Digital. The facility will be extended to all Reliance Retail stores across the country. In-store UPI payment has been enabled through a dynamic QR-code interface, designed by payment aggregator Innoviti, which runs on existing Point of Sale (PoS) terminals card swipe machines. The payment options being offered by Samsung and Apple are all card-based and expensive. Under UPI, the Merchant Discount Rate (MDR) the fee borne by the seller to provide services is 0.25% for payments below Rs 1,000 and 0.65% for all other charges. The MDR on UPI could come down if the RBI reduces the fee on debit cards. The RBI needs more time to decide on new rates on debit cards. NPCI has also developed the BHIM app, which is among the various applications for UPI payment. The application makes it possible to enable QR code-based acceptance without any additional capital. All that is required is an upgrade of the software on the card swipe machine. In some of the newer machines it can be done by a

remote, while older machines may require a visit from our representative. Reliance Retail, which stands to gain from lower charges, is incentivizing customers to use the new mode of payment by offering discounts in form of cashback.

Source: http://economictimes.indiatimes.com/industry/banking/finance/banking/you-can-pay-via-upi-by-scanning-qr-codes/articleshow/57930241.cms



MOnetARy pOlicy RAteS (AS On 6th ApRil 2017)

policy rates:-

Policy Repo Rate 6.25%*

Reverse Repo Rate 6.00%*

Marginal Standing Facility Rate 6.50%*

Bank Rate 6.50%*

reserve ratio:-

CRR 4%*

SLR 20.50%*

lending Deposit rates:-

Base Rate 9.25% - 9.65%*

MCLR (Overnight) 7.75% - 8.20%*

Savings Deposit Rate 4.00%*

Term Deposit Rate > 1 Year 6.50% - 7.00%*

The Second Bi-monthly monetary policy Statement For 2017-18 Will Be Announced on Jun 07, 2017.


• Consumer prices in india increased 3.65 percent year-on-year in February of 2017, following a record low rise of 3.17 percent in January and higher than market expectations of 3.58 percent. Food inflation accelerated to 2.01 percent from 0.53 percent. Inflation Rate in India averaged 7.25 percent from 2012 until 2017, reaching an all time high of 12.17 percent in November of 2013 and a record low of 3.17 percent in January of 2017. Consumer prices in India increased 3.65 percent year-on-year in February of 2017, following a record low rise of 3.17 percent in January and higher than market expectations of 3.58 percent. Food inflation accelerated to 2.01 percent from 0.53 percent. Year-on-year, cost of food and beverages rose 2.46 percent (1.29 percent in January), provisional estimates showed. The food index alone rose 2.01 percent compared to 0.53 percent in the previous month. Prices increased more for sugar (18.83 percent from 18.69 percent in January) and fruit (8.33 percent compared to 5.81 percent) and fell less for vegetables (-8.29 percent compared to -15.62 percent). Inflation also increased for fuel and light (3.9 percent from 3.42 percent) but slowed slightly for housing (4.9 percent from 5.02 percent) and clothing and footwear (4.38 percent from 4.71 percent). The corresponding provisional inflation rates for rural and urban areas are 3.67 percent and 3.55 percent (3.36 percent and 2.9 percent respectively in January).

• indian Wholesale prices rose 6.55 percent year-on-year in February of 2017, following a 5.25 percent gain in January while markets expected a 5.90 percent rise. It was the eleventh straight month of increase and the highest since November 2013, driven by a surge in prices of food while cost of manufactured products and petrol rose further. On a monthly basis, wholesale prices went up 0.5 percent, compared to a 1.0 percent rise in the prior month. Producer Prices Change

indiA inFlAtiOn RAte


in India averaged 7.28 percent from 1969 until 2017, reaching an all time high of 34.68 percent in September of 1974 and a record low of -11.31 percent in May of 1976. Indian wholesale prices rose 6.55 percent year-on-year in February of 2017, following a 5.25 percent gain in January while markets expected a 5.90 percent rise. It was the eleventh straight month of increase and the highest since November 2013, driven by a surge in prices of food while cost of manufactured products and petrol rose further. In February, food prices went up 2.69 percent from a year earlier, following a 0.56 percent drop in the preceding month. Among food prices, wheat recorded the largest increase (8.36 percent), followed by fruits (7.14 percent), cereals (6.09 percent), rice (4.40 percent) and milk (3.93 percent) and egg, meat & fish (3.79 percent). In contrast, cost fell for: onions (-18.85 percent), potatoes (-8.84 percent), vegetables (-8.05 percent) and pulses (-0.79 percent). Cost of manufactured products increased by 3.66 percent, compared to a 3.99 percent rise in the previous month. Petrol prices rose 16.72 percent year-on-year, following a 18.14 percent gain in January. Cost of diesel also increased by 33.14 percent, compared to a 31.10 percent rise in a month earlier. On a monthly basis, wholesale prices went up 0.5 percent, compared to a 1.0 percent rise in the prior month.


• Shri B.p. Kanungo Appointed rBi Deputy Governor in place of r. Gandhi: The government appointed Shri B.P. Kanungo as a deputy governor of the Reserve Bank of India (RBI). In a notification on its website, the Appointments Committee of the Cabinet (ACC) stated that Shri Kanungo will take charge on 3 April, after present deputy governor Shri R. Gandhi’s retirement. Shri Kanungo is a career central banker and was appointed as an RBI executive director on 1 March 2016. He has been in charge of the foreign exchange department, internal debt management department and department of government and bank accounts. Earlier, he has also held positions of regional director at the Jaipur and Kolkata offices of the Reserve Bank and has been the banking ombudsman for Madhya Pradesh and Chhattisgarh. Shri Kanungo, a post graduate in Arts, is a certified associate of the Indian Institute of Bankers. He also holds a bachelor’s degree in law. The ACC has also named Shri Dilip S Shanghvi as member, Western Local Board of RBI. The appointment of Shri Shanghvi, the promoter of Sun Pharmaceutical Industries Limited, to the post is for a period of four years.

Dated: http://www.livemint.com/Industry/Pq9PaDmW5xGK386DK266pI/BP-Kanungo-appointed-RBI-deputy-governor-in-place-of-R-Ga.html


• Government plans To Swap CEos of iDBi Bank And indian Bank: In a fresh attempt to revive the ailing IDBI Bank the government plans to swap the CEOs of Indian Bank and

IDBI Bank. Swap is in hope that a CEO with a longer tenure would be better positioned to turnaround the loss-making IDBI Bank. This would be first instance of a CEOs of a large bank moving to a smaller bank. In the past, government has elevated chief of smaller bank to bigger bank. This development comes at a time when IDBI Bank has put a freeze on lending and branch expansion plans and is focusing on recovery of bad loans. The bank has also to contend with low morale after Central Bureau of Investigation took custody of five bank officials alleging impropriety in sanction of loans to Kingfisher Airlines. Reserve Bank of India and the government felt that IDBI Bank needs a CEO with a long tenure to draw up and implement a strategy to get the bank back on the rails. IDBI Bank posted historic loss of Rs 2255 Cr. in the third quarter ending December 2016 as the bank had to make huge provisions for bad loans which were 15% of the total loan book. Due to poor demand for loans and non-payment of dues by defaulters, the net interest income too was down 45% to Rs 850 Cr. while non-interest income fell 5% to Rs 551 Cr. Rating agency, ICRA has downgraded the borrowings of the bank on concerns that the huge loss posted by the bank may erode the capital of the bank. The bank would need at least Rs 9000 Cr. to stay afloat, which is way above the money budgeted by the government for all PSU banks. Indian Bank under the leadership of Jain posted 700% rise in profit to Rs 373 Cr. in third quarter.

tOp BAnking AppOintMent


Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/ government-plans-to-swap-ceos-of-idbi-bank-and-indian-bank/articleshow/57686156.cms


• Nomura Names Shri prabhat Awasthi As New india Head: Global investment bank Nomura has appointed Shri Prabhat Awasthi as its new India head. Shri Awasthi, who is currently Head of Equities, India, will replace Shri Vikas Sharma as the country head from April 1. Shri Vikas Sharma has been elevated to Head of Asia Ex-Japan from April 1. Shri Awasthi, who is based in Mumbai, will be responsible for running Nomura India’s franchise spanning fixed income, equities and investment banking. Shri Vikas Sharma, current Head of India, has been elevated to Head of Asia ex-Japan, also from April 1, following his exceptional work leading and building Nomura’s India business over the past 10 years. Shri Awasthi will report to Sharma. Awasthi joined Nomura in October 2008 as Head of Equity Research, India from Lehman Brothers, where he had held the same position.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/nomura-names-prabhat-awasthi-as-new-india-head/articleshow/57890924.cms



• 70% Want Charges imposed on Cash Transactions To Be removed (local Circles): As per a survey, the recent changes made by private banks around charges being imposed on cash transaction have been met with opposition from consumers, with 70 per cent saying that these levies should be removed. While banks are posing this move as another step towards making India a cashless economy, consumers are calling it a bad decision, according to survey conducted by Local Circles. Around 70 per cent respondents of the 11,081 citizens voted on this poll want charges imposed by private banks on cash dealings to be removed, while 14 per cent stated they will be fine with such levies once cashless transaction cost reduces. Asked about the latest charges imposed by private banks on cash transactions, 56 per cent stated that they did not support this move and want the RBI to make the banks withdraw these levies immediately, 26 per cent stated these charges don’t matter as four free transactions were enough for them, and 4 per cent stated that they were anyways using cashless operations. The survey noted that the charges on cash transactions is likely to prompt people to withdraw more than their requirements in one go and may actually result in higher magnitude of withdrawals and increased volume of cash transactions. Consumers are also concerned with the cost of digital transactions and many of them have reported that merchants are still charging 2 per cent additional for debit,

credit or wallet transactions. In a separate LocalCircles survey, consumers had indicated that debit card charges must be brought to zero while credit card and wallet charges must be capped at 0.5 per cent. A submission has been made by LocalCircles to the Department of Consumer Affairs, requesting them to take the matter with Reserve Bank of India and Ministry of Finance.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/70-want-charges-imposed-on-cash-transactions-to-be-removed-survey/articleshow/57497993.cms


• indian Banks risk Skipping Coupons, Despite Forbearance (Fitch): As per Fitch Ratings, Some Indian banks remain at risk of skipping coupon payments on capital instruments over the next couple of years; despite measures by the Reserve Bank of India. Mid-sized state banks are the most at risk of breaching capital triggers. Distributable reserves at small- to mid-sized state banks were down by one third in 9M17 compared with financial year 2015, reflecting persistent losses and weak internal capital generation. Five state-owned banks suffered losses that were equivalent to more than 30% of distributable reserves in 9M17 alone. The RBI’s recent decision to allow banks to make Additional Tier 1 (AT1) coupon payments from statutory reserves may have helped mitigate short-term coupon-deferral risks, but state banks’ reserves are likely to continue falling. The RBI has made several regulatory adjustments in the last few years to avoid potential damage to sentiment in

eXpeRtS View


the domestic market for capital instruments. These changes have been applied to the sector as a whole and are not unique to India, but their timing suggests the RBI has felt pressure to provide headroom to state banks. Some banks are also at risk of missing coupon payments on capital instruments as a result of breaching minimum capital requirements. Fitch’s analysis indicates that the total Capital Adequacy Ratio (CAR) of 12 banks was at or below the 11.5% minimum that will be a prerequisite for payment of coupons on both legacy and Basel III AT1 capital instruments by FYE19. There were also 11 banks with CET1 ratios at or below the 8% minimum that will be required to make coupon payments on AT1 instruments by FYE19.

Dated: http://economictimes.indiatimes.com/industry/banking/finance/banking/fitch-indian-banks-risk-skipping-coupons-despite-forbearance/articleshow/57549791.cms



Circular Number Date of issue Department meant For

RBI/2016-2017/263A.P. (DIR Series) Circular No. 42

30.3.2017 Foreign Exchange Department

All Authorized Persons

RBI/2016-2017/262FIDD.CO.LBS.BC.No.26/02.01.001/2016-17

30.3.2017 Financial Inclusion and Development Department

The Chairmen and Managing Directors SLBC Convenor Banks



The Chairmen and Managing Directors SLBC Convenor Banks

RBI/2016-2017/256DBR.No.Leg.BC.55/09.07.005/2016-17

24.3.2017 Department of Banking Regulation

All Agency Banks

RBI/2016-2017/255DPSS.CO.CHD.No./2656/03.01.03/2016-17

23.3.2017 Department of Payment and Settlement Systems

The Chairman and Managing Director / Chief Executive Officer All Scheduled Commercial Banks including Regional Rural Banks/ Urban Co-operative Banks / State Co-operative Banks / District Central Co-operative Banks/Local Area Banks


21.3.2017 Financial Markets Regulation Department

All Authorised Dealer Category - I Banks



All Category - I Authorised Dealer Banks




RBI/2016-2017/251IDMD.CDD.No.2347/14.04.051/2016-17

16.3.2017 Internal Debt Management Department

The Chairman/CEO/ Managing Director, All Authorised Banks, (All Banks to which Banking Regulation Act, 1949 applies)

RBI/2016-2017/250DGBA.GAD.No.2377/42.01.029/2016-17

16.3.2017 Department of Government and Bank Accounts

All Agency banks

RBI/2016-2017/249DGBA.GAD.No.2376/42.01.029/2016-17


All Agency Banks



The Chairmen & Managing Directors All Lead Banks

RBi ciRculARS


RBI/2016-2017/245DNBR (PD) CC.No.086/03.10.001/2016-17

09.3.2017 Department of Non Banking Regulation

All NBFCs

RBI/2016-2017/244DBR.No.Ret.BC.54/12.07.150/2016-17

09.3.2017 Department of Banking Regulation

All Scheduled Commercial Banks

RBI/2016-2017/243DGBA.GAD.No.2294/15.04.001/2016-17


All Agency Banks

RBI/2016-2017/242DNBR.PD.CC.No.085/03.10.001/2016-17

02.3.2017 Department of Non Banking Regulation

All Non-Banking Financial Companies







RBI/2016-2017/236FIDD.FLC.BC.No.22/12.01.018/2016-17


To Chairman/MD & CEO Scheduled Commercial Banks (Including RRBs)


list Of ASSOchAM Banking & Financial Services publications

Name of report Cost

ASSOCHAM-CRISIL-APAS Knowledge Report on Bond Market, “Giving Debt Its Due” -2017

Rs. 1,200/-

12th Annual Banking Summit-cum-Social Banking Excellence Awards-2016, “Inclusive Growth for Sustainable Development”

Rs. 1,000/-

National Summit on Microfinance- Servicing Trending Microfinance “Knocking at the door of Aspiring Entrepreneurs”- 2016

Rs. 800/-

ASSOCHAM- India First Insurance Awareness Survey Report (2016-17) Rs. 1,500/-

ASSOCHAM-CRISIL Knowledge Report on 6th National Summit on Infrastructure Finance, “ Building A New India”

Rs. 1,000/-

3rd Non Banking Finance Companies, “The Changing Landscape”- 2016 Rs. 1,000/-

2nd Bankers Borrowers Business Meet, “ Empowering MSME”- 2016 Rs. 800/-

*For Purchasing Any Of These Report Please Contact The Editorial Committee

Recent conferences of ASSOchAM Banking & Financial Services

12th National Banking Summit cum Social Banking Excellence Awards

2016 03rd march 2017

Hotel Four Seasons, Worli, mumbai

National Conference on Bond market- 2017

23rd march 2017Hotel Taj Coromandel,

ChennaiNational Conference on Bond

market- 201707th April 2017 Hotel Taj Vivanta, Bangalore

National Conference on insolvency & Bankruptcy Code - 2017

28th April 2017 & 29th April 2017

Hotel Ashok, New Delhi

ASSoCHAm Banking E-Bulletin 10th may 2017 Vol.- 24

ASSoCHAm insurance E-Bulletin 10th may 2017 Vol.- 4

For Further Details, Please Contact :Kushagra Joshi

m: +91-9411922291 • E: [email protected]

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