Volume-45
February 2019
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THE ASSOCIATED CHAMBER OF COMMERCE AND INDUSTRY OF INDIA
ASSOCHAM Corporate Office: 5, Sardar Patel Marg, Chanakyapuri, Delhi-110 021
Tel: 011-46550555 (Hunting Line) Fax: 011-23017008, 23017009 Email: [email protected] Web: www.assocham.org
BANKING E-BULLETIN
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liberalising the FDI regime and REFLECTIONS ON CURRENT undertaking efforts to provide a POLICY ISSUES FACING THE conducive business climate. Let me INDIAN ECONOMY dwell a bit more on some of these (By Shri Shaktikanta Das, Governor, aspects.Reserve Bank of India, delivered at the Inflation: First, let me talk about Investors' Roundtable, 9th Vibrant inflation. Maintaining price stability in Gujarat Global Summit 2019 on Friday, the economy is a basic mandate for a January 18, 2019):-central bank. Delivering low inflation by As this august audience would know, the central bank induces greater India in recent years has emerged as one confidence among both domestic and of the most vibrant economies in the global investors. India has witnessed world. Not only has India survived many significant disinflation since 2012-13 - global shocks successfully in recent with headline CPI inflation moderating years, it also tops the list of fastest from an annual average of 10.0 per cent growing emerging market economies in 2012-13 to 3.6 per cent in 2017-18 (EMEs) in the world. According to the and 3.7 per cent in 2018-19 so far IMF's database, India's contribution to (April-December). As per the latest world growth has risen from 7.6 per cent reading, headline inflation stood at a low during 2000-2008 to 14.5 per cent in of 2.2 per cent in December 2018. The 2018. Multilateral agencies are further disinflation was marked by the optimistic on this as far as the medium-commitment of the Reserve Bank to term outlook is concerned. Most bring down inflation in a sequential importantly, India's growth story is manner – to 8 per cent by January 2015, b a c k e d b y s t r o n g d o m e s t i c 6 per cent by January 2016 and 5 per cent fundamentals. For instance, (i) inflation by Q4 of 2016-17 – which was called the has eased, (ii) central government glide path for inflation. This, in turn, remains committed to the fiscal targets, paved way for the formal adoption of and (iii) the current account deficit (CAD) flexible inflation targeting (FIT) through is far less than its peak level during the a legislative amendment to the Reserve stress period (i.e., taper talk period of Bank of India (RBI) Act under which price mid-2013). Indian economy has stability has been mandated as the witnessed an accelerated pace of primary objective of monetary policy, domestic reforms in recent years. These while keeping in mind the objective of reforms include, inter alia, the flexible growth. Price has been defined in terms inflation-targeting monetary policy of a numerical CPI inflation target set by framework, the Insolvency and the government at 4 per cent with a Bankruptcy Code (IBC), the Goods and tolerance band of ± 2 per cent. With the Services Tax (GST) and steps for formal setting up of a Monetary Policy enhancing foreign investments by
TOP RBI SPEECHES
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Committee (MPC), there has been a shift the current assessment of the Reserve
to a committee-based approach for Bank, the ratio may further improve to
determining the monetary policy. This 10.3 per cent by March 2019. The new
has enhanced transparency and resolut ion framework with the
accountability of the decision making Insolvency and Bankruptcy Code (IBC) as
process. Since the adoption of flexible its lynchpin and RBI's regulatory
inflation targeting in India, inflation has framework as its facilitator, is a game
been reasonably range bound within the changer. It endeavours to create an
target band. I must add here that easing environment in which maximum value
of global crude oil prices also augured can be realised from troubled assets,
well for our inflation outcomes. bolstered by the early identification of
incipient stress. The shift of power in Financial Sector: Let me elaborate on favour of creditors in the IBC framework some of the major policy developments will facilitate speedier and impartial in domestic financial sector in recent resolution process and help in improving years. Banking sector, We all know that the credit repayment culture. The Indian banking sector had emerged framework has been providing a largely unscathed in the aftermath of the market-driven, time-bound process for global financial crisis. However, insolvency resolution of a corporate headwinds from international and debtor, thereby helping financial domestic economic developments institutions to clean up their balance posed challenges to the banking sector sheets. Most importantly, it is aiding a in recent years. Indian banking system is paradigm shift in the extant credit on the cusp of a transformation, aided by culture and discipline. The progress of recent policy measures to reduce IBC framework so far has been vulnerabilities and improve its financial encouraging and has resulted in better health. Several initiatives are underway recovery as compared to the earlier to strengthen the regulatory and mechanisms. Data available till January accounting frameworks aimed at 3, 2019 suggest that the resolution increasing the resilience of the processes have been approved in 66 institutions. The Reserve Bank's cases, involving around ?800 billion as initiatives in the recent period are aimed resolution value to creditors. The at ensuring better and timely recognition gradually building resilience of the o f s t ressed asse ts , su f f i c i en t banking sector is evidenced by the fact provisioning and an efficient resolution that banks have improved their process. Recent supervisory data profitability ratios and capital positions. suggests that these efforts are bearing Other soundness indicators such as the some results and incipient signs of tier I leverage ratio at 6.7 per cent and improvement in asset quality of banks the liquidity coverage ratio at 134.8 per are emerging. After reaching a peak of cent as at end-September 2018 remain 11.5 per cent in March 2018, the gross well above the minimum regulatory non-performing asset ratio improved to requirements. Provision coverage ratio 10.8 per cent in September 2018. As per
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also increased to 52.4 per cent at end- regulatory approach of RBI has been and
September 2018 from 48.3 per cent at will be aimed at ensuring that the
end-March 2018. Bank credit is banking system withstands the
recovering from the risk aversion of transitory difficult phase and keeps
recent years. Bank intermediation in the playing a positive intermediation role in
flow of resources to the commercial supplementing the financial needs of our
sector is regaining lost ground. The growing economy.
growing size and complexity of the Non-Banking Financial Sector N o n -Indian financial system warrants banking financial sector is another strengthening of corporate governance segment that plays an important role in systems in banks. Incidence of financial the Indian financial system, given its frauds in recent times further un ique pos i t i on i n p rov id i ng underscores the significance of sound complementarity as well as competition corporate governance standards in to banks. This sector, with a size of banks. The Government, the Bank Board around 15 per cent of combined balance Bureau and the Reserve Bank are sheet of scheduled commercial banks currently engaged in developing an (SCBs), has been growing robustly in objective framework for performance recent years, providing an alternative evaluation and this should redefine the source of funds to the commercial contours of corporate governance in the sector. However, the sector has faced public sector banks (PSBs) with a focus challenging times recently. The debt on transparency, accountability and default of a systemically important NBFC skills.0. On the consumer protection highlighted the vulnerability and need front, improvements in grievance for strengthening regulatory vigil on the redressal, introduction of innovative sector in general and on asset liability products for digital payments, and management (ALM) framework in measures to improve cyber security in particular. The Reserve Bank intends to banking are all expected to expand strengthen the ALM framework for financial inclusion and provide financial NBFCs and harmonise it across different services efficiently and cost-effectively. categories of NBFCs with the objective of The Reserve Bank is cognisant of the fact enabling the NBFCs to play a vital role in that deepening of digital payment our economy. In order to allow additional systems will facilitate greater access to access to funding for the NBFC sector in institutional finance by the informal the wake of the recent crisis, the Reserve sector, furthering the cause of financial Bank has relaxed the norms for NBFCs to inclusion. We have very recently securitise their loan books. In addition, constituted a High Level Committee on banks have been allowed to provide Deepening of Digital Payments with Shri partial credit enhancement to bonds Nandan Nilekani as Chairman to suggest issued by the systemically important measures for increasing digitisation of non-deposit taking non-banking payments and enhance financial financial companies and Housing inclusion through digitisation. The Finance Companies. This measure will
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enhance credit rating of bonds and advanced economies are on the path of
enable the companies to access funds monetary policy normalisation, there
from the bond market on improved has been global portfolio rebalancing
terms. We are keen to foster a well- away from EMEs, including India.
regulated, well-functioning and vibrant Another factor that has repercussions
NBFC sector. for India's external sector is the recent
developments around Brexit. There are External Sector I n d i a ' s e x t e r n a l consequential policy challenges for India sector has remained resilient in recent which enjoys strong trade and period despite terms of trade losses due investment relations with UK and the EU. to the firming up of international crude We will carefully weigh the challenges prices and uncertain global demand and opportunities that lie ahead and conditions. The current account deficit undertake appropriate policy responses. since FY 2013-14 (i.e., period after the As regards policy environment relating taper talk) has been below 2 per cent of to the external sector, sectoral norms for GDP, though it rose to 2.7 per cent in the Foreign Direct Investment have been first half of the financial year 2018-19 eased gradually and now 100 per cent reflecting elevated crude oil prices. FDI is permitted in all sectors, barring a Modest current account deficit in recent few prohibited sectors. In recent years, years was accompanied by robust flows the focus has been to simplify the FDI of foreign direct investment (FDI). Strong policy regime by abolishing the Foreign FDI inflows and build-up of foreign I n v e s t m e n t P r o m o t i o n B o a r d , exchange reserve buffers have helped rationalising various procedures, India meet its external financing introducing e-biz portal as a single requirements despite domestic capital window for obtaining clearances from market facing sizeable outflows of the central government and using foreign portfolio investment. As a few
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T a b l e : E x t e r n a l S e c t o r I n d i c a t o r s
( P e r c e n t , u n l e s s i n d i c a t e dt h e r w i s
I n d i c a t o r E n d-M a r .
2 0 1 3
E n d-M a r .
2 0 1 7
E n d-M a r .
2 0 1 8 E n d-S e p . 2 0 1
1 . C u r r e n t a c c o u n t d e
r a t i o * 4 . 8 0 . 6 1 . 9 2 . 7 * *
2 . E x t e r n a l D e b t t o G D 2 2 . 4 2 0 . 0 2 0 . 5 2 0 . 8
3 . R a t i o o f R e s e r v e s
D e b t 7 1 . 3 7 8 . 5 8 0 . 2 7 8 . 5
4 . R a t i o o f S ho r t-t e r m D e b t
R e s e r v e s 3 3 . 1 2 3 . 8 2 4 . 1 2 6 . 1
5 . R e s e r v e s C o v e r o f
( i n n u m b e r o f m o n t h s ) 7 . 0 1 1 . 3 1 0 . 9 9 . 5
* A v e r a g e d u r i n g t h e F i n a n c i a l Y e a r ; * * : A v e r a g e f o r H 1 o f 2-1 9
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information technology as enabler to priority is to preserve domestic
make governance more effective. Two macroeconomic and financial stability,
days ago, we have also substantially especially in a global environment that is
rationalised and liberalised the clouded by high uncertainty. Not only
regulations governing the External downward risks to global growth, trade
Commercial Borrowings by the Indian and investment have risen, the spill over
entities to improve ease of doing effects on emerging markets due to
business. The full impact of all these increase in global interest rates could
reforms and a stable domestic also be profound. We, therefore, need to
macroeconomic environment will brace ourselves for any sudden bout of
fructify in coming years. In fact, gross global financial market turbulence that
FDI inflows in India were at a record high domestic economy and financial markets
may face in the period ahead. In such a milieu, of US$ 61 billion in 2017-18. Further, domestic macroeconomic policy framework external debt to GDP ratio has fallen needs to be supported by sound financial
from 22.4 per cent at end-March 2013 to supervision and regulation. Let me highlight the
20.8 per cent at end-September 2018. key policy challenges that the Indian economy
Other external indicators, viz., import confronts at the present juncture.
o Inflation: A l t h o u g h h e a d l i n e cover and short-term debt to reserves inflation has moderated significantly in recent ratio are also better, relative to the taper years, as discussed earlier, its major components
talk period of mid-2013 when the Indian – inflation in food, fuel, and inflation excluding
rupee had come under severe pressure food and fuel – are exhibiting wide divergences
this year. While food inflation has turned
negative since October 2018 and fuel inflation Challenges And Outlook: India is widely has been highly volatile, inflation excluding food
believed to remain world's fastest-and fuel remains sticky at close to 6 per cent.
growing major economy in the medium Such wide divergences and large volatilities in
to long term. The growth projections of inflation across major groups pose challenges
for inflation assessment. Balancing the several global agencies rank India at the objectives of inflation and growth under a top among the G-20 economies. In the flexible inflation targeting framework would
medium term, annual growth is warrant careful analysis of every new data.
projected at around 7.5 per cent by the o Financial Sector: There is need for
IMF and the World Bank. It is likely that continued vigil on the asset quality of banks as
growth will be more sustainable now, well as resolution of stressed assets with a focus
on implementation of the new resolution propelled by investment and private framework. It will remain critical to ensure that consumption. The latest estimates of further slippages are contained. While
national accounts suggest that technology provides opportunities for growth
investment activity has accelerated by and innovation in the banking sphere, it also
12.2 per cent during 2018-19 as involves newer challenges and risks. Cyber risk is
a ma jo r cha l l enge . Fo rmu la t i on o f compared to 7.6 per cent in 2017-18. comprehensive cyber risk and resilience policies Investment activity is expected to and diligent implementation is critical. Another
strengthen further as the benefits of area where policy action is required is corporate
recent structural reforms begin to governance in banks with a focus on
materialise. Going forward, the foremost transparency and accountability.
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o External Sector: While positive policy of a long day when one is reflecting on settings and continued macroeconomic stability the subject, they start playing all over helped contain India's external vulnerabilities, a
again, without any reason and without close monitoring of external sector is required,
any conscious decision to rewind to given the sharp movements in global crude oil
them. In my case, a few striking images prices and global financial market volatility.
These are the two global shocks that have flash across my eyes. I have tried in what implications for our CAD and financial flows. follows to describe these images and Another challenge that Indian companies may
what their collage means for me. They face pertains to developments around Brexit.
also convey how I try to think about Indian companies and policy makers need to
economics and finance more generally – suitably weigh all opportunities and challenges,
and accordingly re-strategise to respond as the media to understand daily appropriately. situations of households around us and Let me conclude by saying that at the RBI, we are
to derive insights on how these committed to play our role as the monetary
situations could be made better, most authority for maintaining mandated price often in some small ways and stability objective while keeping in mind the
objective of growth; and as the regulator and occasionally with a big bang… After all, supervisor of the banking sector and payment the origin of the word 'economics' is in systems. We will take necessary steps to
the ancient Greek term 'oikonomía', maintain financial stability and to facilitate
meaning 'management of a household'. enabling conditions for sustainable and robust Based on careful research, many [notably growth. In October 2018, when I had absolutely
no clue that I would be landing up in the Reserve Professors Abhijit Banerjee and Esther Bank in December 2018, I had tweeted, “Central Duflo of Massachusetts Institute of Banks across countries have a very critical role at
Technology (MIT)] contend, that it is the the current juncture. The challenge is to try and
poor who often practice the best read the situation and take decisive steps in economics as the costs they face from pursuit of their multiple responsibilities.” As
Governor of the Reserve Bank of India, it would mismanaging their households can be be my endeavour to act according to these rather high. So let me describe these principles.
images that flash across my eyes one by
one.SOME REFLECTIONS ON
Image One: Many evenings or nights MICRO CREDIT AND HOW A when I stroll with my brother on our PUBLIC CREDIT REGISTRY terrace in Mumbai, we are greeted on
CAN STRENGTHEN IT one side by the Pawan Hans Helipad, the
(Dr Viral V Acharya, Deputy Governor, sprawling slums of Nehru Nagar, the
Reserve Bank of India - December 15, deafening din from the Swami
2018 – Delivered at IIT Bombay Tech Vivekananda Road (S V Road), and the
Fest) serene breeze and waves of the Juhu
Sometimes when I sit down to write down Beach. I grew up on a crowded street in
a new set of remarks, the same old Girgaum, in south Mumbai. Observing
thoughts cross my mind, a bit like one's from our first floor window how people
favorite songs that are so deeply went about their lives on the streets was
entrenched in the psyche that at the end a favorite pastime in our childhood days.
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Conditioned by that, while I'm on the ponder for a few seconds but then switch
terrace my eyes invariably end up attention to the incessant honking of the
focusing on the slums of Nehru Nagar. S V Road vehicles.
Far into the narrow alleys, bustling and Image Two: Until about ten years back, I jostling in high density are the slum- used to spend a decent chunk of my time dwellers, appearing as diminutive as a doctoral student, and later as a figurines, with much activity and life all professor, working with an Indian NGO, around. A man is fixing dish antenna on focused on pre-primary and primary top of his blue roof; an old couple are education. This activity had become my perched outside a modest hut, savoring umbilical cord to India. On my holiday what must be some scrumptious desi trips back home from New York or chat; a woman slamming blow after blow London, I would take out a few days to on the clothes she has carefully aligned visit some of their baalwadis (daycares) to wash; and almost always a group of in urban areas, and if travel plans children gleefully running around, permitted, also the delivery centers for mostly playing cricket and seasonally accelerated reading programs in flying kites. Some of the evenings, a villages. These visits made my plane takes off from the domestic or interactions with stakeholders more international airport in the east and credible, engaging and vivid. But they heads westward on its way; and a were also personally rewarding. There chopper swings in and lands at Pawan are a few sights, if any, more uplifting Hans with much acoustic fanfare. As than of a child figuring out the alphabet these sophisticated means of modern for the first time, reading the first book, transportation make their noisy flipping pages over and over again in presence felt, you can see the children boundless excitement and frenzy, or bunch together, one of them pointing at counting and adding up his or her the sky, others galvanising around him collection of stones, subitizing them to marvel at the spectacle. An instant soon after – as in figuring out the exact later of course, the children are count without counting, by merely nonchalantly back to gully cricket or glancing at the collection of treasures! It running after a fallen kite. One cannot might be the innocent spark on the but hope that these children – in that child's face, or that “Aha!” or Eureka brief moment of marvel – have been moment as the child discovers how to imbued with ambition; that their eyes are read, how to count, how to learn – now set on the sky; that they will have the whatever it is, it works like magic in initiative and will get all opportunity to bowling over the beholder. One returned do what it takes to bridge the gap from from these visits with a shot in the arm to their narrow alley to Pawan Hans Helipad do more; one felt like nurturing the next door and to the flight of the giant umbilical cord to India further; one mechanical birds that fly above. Will realised that joyful learning is an these children take off? How will their essential groundwork for the journeys, journey be? Where will they land? I the flights and the ascent that these
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children will undertake in due course. descent.
Image Three: I am usually en route Image Four: Ea r l y on a Sa tu rday
in car to the office at RBI or Bombay morning, already quite bright and sunny,
Gymkhana during early mornings. I need a banker carrying his thela (a shoulder
to be on S V Road before turning for the bag) steps into the passageway next to a
Milan subway or now the flyover, which series of kachcha-pukka homes. The
connects to the Western Express surrounding is semi-urban. By the time
Highway. Just before the turn, before one you have blinked an eye, an army of
reaches the Hanuman temple and about twenty women, mostly in saris, of
Santacruz bus depot, on the left ages spanning from 20 to 50, and a few
sidewalk, there is – always – a mother even 50-plus, have gathered around
toiling away no matter what time of the him. They have all borrowed certain
day. It is clear she is homeless; she has at sums of money from the banker. They
least two children, both roughly of the make their repayments one by one; each
same age. Depending on the time of the transaction is logged in a physical
morning, she has her work cut out. Some register; it is also swiped digitally onto
days she is waking up the kids with some their bank cards with a point-of-sale or
sternness on her face; on others she is POS-style machine. Some of the women
bathing them with water from an are borrowing again; some taking out
ingeniously figured out water-supply; at monies from their accounts. The
times she is getting them dressed in registrar of this group of women,
school uniforms; and then she is often appointed for the month, signs off the
running with the kids, who have their log after checking the account entries
b a c k p a c k s o n , t o w a r d s t h e carefully. Banking is now done. Growth is
neighborhood school. From a distance, about to begin. I am curious to hear more
she seems to be driven with a single- about what these women are doing with
minded focus of ensuring that her kids the money. All of them, without
get their chance to fly and soar. Her role exception, are entrepreneurs. One has
as a mother certainly seems a mighty started a sari trading business, buying
one, as Yudhisthir answered to the them from the city and selling them in
Yaksha Prashna in Mahabharata, when the neighborhood with a margin; she has
asked what is heavier than the Earth. built her enterprise over several years
How does the mother make it all work? and is the recipient of the biggest loan
Can she afford the books and the (one lakh rupees) with the longest
supplies? Is she home when the kids maturity (one year) in the group; her
come back? What job does she do during friend has acquired a sewing machine
the day? Could she be a micro with the loan and is stitching blouses to
entrepreneur? The mind is so fickle, go with the saris; another has opened a
however; as soon as the car turns left at beauty parlor; yet another has started a
the traffic signal and moves onto the soft-drinks stall in her husband's
flyover, it leaves these questions in stationery store as there is extra, unused
background and embarks on its daily space therein, well utilised especially
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during the afternoons when customer our children, the skilling of our youth,
traffic is thin for stationery but the heat and lighting up of their minds with fire
unbearable. There seemed absolutely no and imagination so they can propel
shortage of services to be provided in themselves, their families, and the rest
their immediate sphere of influence. I of us, forward. Education is perceived by
was especially eager to know what many families as ticket to the ride that
prompted these women to become will catapult them out of economic
entrepreneurs in the first place. The stress. Leaving aside minor exceptions,
answer I got was not entirely expected: as a rule education is indeed a ticket to
in nine out of ten cases, women had such ride. A mother taking up an
become entrepreneurs to send their kids enterprise to shape her child's future has
to a 'top, English medium school', or to all the willingness to pay her debt. As the
have extra monies for private coaching child grows, her needs too will rise. She
so the child could excel in the state-level will need a clean credit record to be able
exams, or to get the kid to learn some to borrow again so as to finance her now
computing and programming as that is bigger liquidity requirements. This way,
where future jobs lie! there is full incentive compatibility
between her and the finance provider.
Besides her willingness to pay, the deft Collage Of The Images: As these images handling of her enterprise, induced by flashed across my eyes, I realised that the necessity to keep buying the r a t h e r t h a n b e i n g e n t i r e l y education ticket over time, will compartmentalized, these images were strengthen her ability to pay. At any rate, all linked, that there was a connection the financier can start with a small loan, between finance – my day job, and these use a short tenor to assess repayment images that my mind had been ability, and open for her a bank account subconsciously gathering in mornings, that can help track other payment flows evenings and during holidays. An and improve credit assessment. The important link was established from reputation of the woman entrepreneur financial inclusion to education of as a borrower can build swiftly as she children – from micro finance for women keeps repaying and enable her to secure entrepreneurs to them sending children more credit over longer tenors. to schools, the children in turn having Borrowing as part of a group reinforces their “Aha! I did it!!” moments in reading the strong incentives to repay; default by and counting, and to their taking off for a borrower when all others are repaying the limitless sky and beyond. Access to can lead to stigma. Conversely, finance is the lifeblood of an economy. encouraging of defaults by some can Its judicious allocation is known to lead to vitiation of the otherwise rich unlock opportunity and growth. It can, in credit culture. The financier, in turn, can fact, aid even the most fundamental make a healthy spread over own cost of reform for growth by supporting, borrowing funds, even accounting for directly or indirectly, the education of
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some losses from early defaults, upon these accounts is only 23 per cent of the
whose realisation the entrepreneur can total. Is there a big opportunity for us to
be rationed from future loans or offered rethink and reshape our credit eco-
only stricter loan terms and tenor. This system for the future so that micro credit
way, the availability of micro finance for can thrive to unlock economic value, as I
micro entrepreneurs thrives and benefits laid out in my collage of images? At the
the society all around.So let me turn RBI, we firmly believe so. We have
from these images to my day job at the initiated work on a Public Credit Registry
RBI and what efforts we are undertaking (PCR). We are excited about how we can
to help ensure that micro credit becomes solve in a fundamental way the
available to more borrowers; micro information problem affecting access to
finance provided a robust foundation; credit for micro entrepreneurs. Let me
micro enterprise given an additional elaborate on the information problem
fillip; and indirectly, in the process, our and how a PCR can help get around it.
children offered greater opportunity for Information asymmetry with the
schooling and skilling. borrower is the major difficulty faced by
any lender while granting a loan. Put
simply, the borrower has more Public Credit Registry (PCR) An information about her own economic Important Step to Democratize and condition and risks than the lender. Formalize Credit: In an emerging Credit information systems aim to economy like India, it is always felt that reduce this asymmetry by enabling the the smaller entrepreneurs, mostly lender to know the credit history with operating under the informal economy, past lenders and the cur rent do not get enough credit as they are indebtedness of the borrower. They informationally opaque to their lenders improve efficiency of credit allocation, as who prefer to provide loans to more the lender can use credit information transparent larger businesses. Data as of systems to properly differentiate and March 2018 of scheduled commercial appropriately price (interest rate) as well banks (SCBs) from RBI's basic statistical as alter terms (maturity, collateral, returns (BSR) shows that close to half of covenants, etc.) of the loan. What would the outstanding credit is for ticket size occur without the credit information above a hundred million rupees and systems? As borrowers build history, thirty per cent is above one billion lenders would like to protect the rupees. Credit penetration is particularly information of their profitable low for Micro, Small and Medium customers and may not be ready to share Enterprises (MSME) sector where the it directly with other lenders. This way, ticket size is generally believed to be borrowers can get locked to their initial between one to ten million rupees. Even lenders, become vulnerable to gouging though more than 95 per cent of in loan terms, and worse, be unable to accounts with SCBs are having convey their credit quality to new lenders sanctioned credit limit less than one if existing lenders experience problems million each, the amount outstanding on
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of their own (such as due to capital envisaged the Public Credit Registry
erosion from recognition of losses, as (PCR) to be. The HTF examined the data
was witnessed in India over the past gaps in the current credit information
decade in the form of high retail and system in India and recommended that a
MSME cost of borrowing from banks due PCR be set up, backed by an appropriate
to spillover from their large corporate Act, to improve the information
bo r rowe r l oans tu rn ing non- efficiency of the credit market and
performing). This is where third-party strengthen the credit culture in India.
credit information companies come in to How Will The Public Credit Registry (PCR) play, those that will pool the data from For India Work?: The PCR has been lenders and share the information with envisaged as a database of core credit other lenders as per the laid down policy. information – an infrastructure of sorts Globally, Private Credit Bureaus (PCBs) on which users of credit data can build and Public Credit Registries (PCRs) both further analytics. It will strive to cover all operate in this space. PCBs can be regulated entities (i.e., financiers) in legislatively authorised to receive credit phases and in this way get a 360-degree data; however, being for-profit view of borrowers. It will facilitate enterprises, they may focus primarily on l inkages with related anci l lary those data segments around which it is information systems outside the most profitable to build a business banking system including corporate model (e.g., provision of credit scores filings, tax systems (including the Goods based on data gathered). Indeed, it is and Services Network or GSTN), and found internationally that a PCR, being a utility payments. The PCR will have to be non-profit enterprise, is able to ensure b a c k e d a n d g o v e r n e d b y a much better data coverage than PCBs. In comprehensive Public Credit Registry turn, the PCBs when given access to Act to be brought in consultation with comprehensive data from a PCR can the Government. It will have to follow the provide better and greater value addition latest privacy guidelines based on a laid through data analytics and innovations, down consent framework.complementing the PCR. One can easily The Proposed Public Credit Registry surmise that to be useful, it is important (PCR) Information Architecture: Let me for credit information systems to gather now spend some time on how the PCR complete credit information, possibly will work and help strengthen the credit even asset-side and cash-flow details culture.about the borrower, which is sometimes o First, PCR will make borrower referred to as the '360-degree view'. information more complete with Also, the latest information is more increasing coverage of lending entities. important, giving rise to the demand for In particular, it will eventually reach out near-real-time data. That is how the even to the smallest primary agricultural Report of the High-Level Task Force credit societies. It will also cover entities (HTF) on Public Credit Registry for India, which may not be regulated by the RBI. chaired by Shri Y.M. Deosthalee, has This will have to be done in phases and it
12 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
may take up to three to five years to will help the users to access other data
accomplish, possibly sooner. on borrowers' assets and evolving cash
flows, which are essential for taking o Secondly, PCR will vastly simplify efficient credit decisions.and reduce the reporting burdens on the
lenders. Other entities including o Finally, it will be possible within
regulators and supervisors will be able to the PCR architecture to address privacy
access it for core credit information and concerns and control access to data with
supplement it with only the incremental a proper consent-based framework for
part as per their requirement. Many of appropriate usage, better than what is
the statistical returns presently collected currently feasible. These concerns will
by the RBI may also accordingly be have to balance the objective that the
substantially rationalised and pruned, PCR is just a step in helping the
freeing up resources in the financial eco- democratisation of credit, whereby
system for analysis instead of repetitious credit data is not only used for regulatory
efforts in data collection, follow-up and / supervisory purposes, but also
cleaning. The same would be the case leveraged to expand the credit market
with other entities that presently collect efficiently. In particular,
such data from banks. § While an individual will have
o Thirdly, PCR will have credit data access to her data stored in PCR, she
available digitally at a higher frequency should be empowered to share it with
than at present. Therefore, it will make other lenders for availing credit.
credit decision-making faster and § Similarly, lenders need to be given efficient. access to their own customers' complete
o Fourthly, as the chart here shows, data for monitoring such accounts.
with linkages to other information § Regulators / supervisors will systems like corporate data from the require full access to the data for their Ministry of Corporate Affairs (MCA21) work so that they can address systemic and tax filing or invoicing data (GSTN), it risk concerns with the advantage of a
13 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
holistic view. and being linked to various digital
systems in place (as shown in the chart To appropriately put in place the above), it would be possible to identify required access and control policies, the and get to know well businesses, even High-Level Task Force recommended m i c r o e n t e r p r i s e s a n d m i c r o that a separate Public Credit Registry Act entrepreneurs. In other words, the PCR (PCR Act) be brought in. The PCR Act will could supply the missing link, which is need to ensure adequate safeguards on the complete '360-degree view'- data while at the same time address information of the borrower or extant restrictions on sharing of credit prospective borrower. This will allow data that prevent efficient allocation and lenders to assess the borrower's credit regulatory supervision of credit. The PCR risk keeping in view the viability of cash Act would also have to be comprehensive flows, ask the relevant questions (e.g., so as to bring in data from the section of are there other underlying issues that lenders who do not directly fall under the are affecting ability to pay the loan in RBI regulations. To this end, the RBI spite of healthy cash flows from the plans to engage with the Government micro enterprise?), and price the loan and other regulators in the coming terms without compromising on due months. In the meantime, the RBI has set diligence.Based on these, nearly-up an Implementation Task Force that is au tomated loan sanc t ion and putting the systems infrastructure in disbursement mechanisms can be place to kick-start the PCR with data devised, as are also being attempted by from regulated entities that can be fin-tech companies.In fact, credit covered either under, or with minor products could get transformed with the tweaking, of the extant legislative possibility of sanctioning small ticket framework.loans with short maturity and zero or low Public Credit Registry Can Help collateral requirement. Borrowers and “Sachetise” Micro Credit: To build credit entrepreneurs can build their reputation models for individuals and small credits, and credit quality by repaying well such the financier and its modelers are ideally initial information-building loans. required to know not just outstanding Gradually, they can borrow more and at credit for the micro borrowers, but longer maturities, potentially making possibly also their entire repayment capital investments to enhance history and their cash flow fluctuations, productivity. Once their size increases so as to tailor the terms of credit and they register with the GSTN, tax suitably. In the absence of such invoices can act as the cash-flow information, many borrowers may verification with PCR. Robust credit simply get 'rationed' out of the market history built over a period can work as due to severe information asymmetry sturdy collateral, building the trust of the faced by financiers.With a PCR tracking lenders. Such 'sachetisation' of credit every credit transaction from its can rapidly expand access to credit for origination to closure (initial terms, those micro and small enterprises, repayment, default, restructuring, etc.),
14 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
hitherto not included in the formal credit achieving our mark.”
market.As I stressed while describing NEW YEAR CHEER FOR BANKS, the ability to pay and willingness to pay NPAS SEE FIRST FALL SINCE of micro entrepreneurs, it would remain
2015 important not to undermine their
The Reserve Bank of India, which has inherently strong credit culture by
been relentlessly pushing banks to making it easier for borrowers not to
recognize bad loans, believes that they repay. That would compromise the
may be over the worst with the industry essence of how micro entrepreneurs
likely reporting a decline in non-build a reputable credit history to
performing assets (NPAs) in the current differentiate from others and over time
fiscal year for the first time since 2015, grow in size and economic value
when the regulator began tightening creation.
norms. The central bank forecast gross Let Me Conclude: There is a deep bad loans will decline to 10.3% of total connect between the images I started loans by March 2019 from 10.8% at the with, their collage in my mind, and my end of September 2018 and 11.5% in day job at the RBI. Ultimately, while March 2018. The net NPA ratio also central banks are not always visible to registered a decline during the period. In the common person, their policies have a sign of possible recovery from the the potential to touch her in a impaired asset load, the GNPA (Gross meaningful way. As its etymology Non-Performing Assets) ratio of both suggests, this is what economics must public and private sector banks showed help achieve in the end – better a half-yearly decline, for the first time management of the household. It is since since March 2015, the financial perhaps too ambitious a vision of our year-end prior to the launch of asset future to believe that a fundamental quality review. The banking stability change in the f i nanc i a l da ta indicator (BSI) shows that asset quality of infrastructure such as a Public Credit the banks has improved, although Registry can help improve access to profitability continues to erode.” The micro credit as well as improve schooling Indian banking industry was plunged and skilling outcomes for our children into gloom after RBI's asset quality and youth, but so be it. My son's poster review in 2015 forced lenders to at his school last year introduced me to a reclassify many standard loans as bad gem from Michaelangelo, which assets. These had been shown to be underscores why we must keep painting standard by either ever-greening or such a vision and persist with efforts to restructuring on terms that were convert it into reality. It says,“The impossible to achieve. Many corporate greatest danger for most of us lies not in borrowers with revamped loans setting our aim too high and falling continued to struggle and default on short; but in setting our aim too low, and
15 - ASSOCHAM Banking e-Bulletin - Volume - 45
TOP BANKING NEWS
I N D I A
payments. The turnaround will be good the same period, the PCA-PSBs
news for the government, which has registered negative growth in both credit
been looking to shore up credit growth and deposits. Shri Patel quit as RBI
to spur economic activity and generate governor following differences with the
jobs. Financial services secretary Shri government over issues such as the
Rajiv Kumar mentioned that bad loans of restrictions on weak banks under the
state-run banks were declining and that PCA regime, easing liquidity for non-
they had recognized most of their banking finance companies and the level
stressed assets. While the overall of reserves the regulator needed to hold.
https://economictimes.indiatimes.com/industrsituation is improving, the jump in bad y/banking/finance/banking/new-year-cheer-loans under a stress test scenario will for-banks-npas-see-first-fall-since-2015 leave many banks vulnerable and push /articleshow/67331225.cms Dated:Jan 01, 2019
t hem be low m in imum cap i t a l
requirements. Sensitivity analysis RBI ALLOWS RESTRUCTURING
indicates that 18 SCBs (scheduled OF MSME LOANS UP TO RS. 25
commercial banks), including all public CROREsector banks (PSBs) under Prompt The Reserve Bank of India (RBI) has Corrective Action (PCA) may fail to allowed lenders to recast loans of maintain the required CRAR (capital to stressed micro, small and medium risk weighted assets ratio) under a two enterprises (MSME), provided the total standard deviation shock to the GNPA fund and non-fund based exposure to ratio, unless capital infusion takes place such a borrower does not exceed Rs. 25 and banks improve their performance. crore. Such a debt restructuring, would Although the industry shows signs of not lead to a downgrade in asset stabilizing, the gulf has widened classification. RBI has decided to permit between banks under PCA due to their a one-time restructuring of existing weak finances and those with sufficient loans to MSMEs that are in default but capital. There has been a further 'standard' as on January 1, 2019, without widening between PCA and non-PCA an asset classification downgrade. The PSBs. While the non-PCA PSBs' credit government has been pushing RBI to growth improved from 9.1% in March provide relief to the stressed MSME 2018 to 13.6% in September 2018 and sector. The central bank's board on 19 deposits increased from 6.1% to 7.9% in
16 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
November advised RBI to consider a depending on the delay in repayment of
scheme to recast loans of MSMEs, which loans. While borrowers delaying
have been hurt by the disruption caused repayments by up to 30 days should be
by demonetization in late 2016 and the classified as SMA 0, those delaying by
implementation of the goods and 31-60 days and 61-90 days will be
services tax (GST) in July the following classified as SMA 1 and SMA 2,
year. The MSME loan restructuring, respectively. The loans still remain
according to the RBI statement, has to be standard even in these categories and
implemented by 31 March 2020 and a turn bad only after a delay in payment of
provision of 5% of the total outstanding more than 90 days. According to data
loan, in addition to the money already from the central bank, for the six months
set aside to cover potential losses, will ended March 2017 (the latest available),
have to be made for such borrowers. 137,282 MSME loan accounts were
Each bank or non-banking financial referred for resolution. Of these, banks
company (NBFC) should formulate a used rectification in 80,905 cases,
policy for this scheme with board recovery in 54,180 cases and only 2,197
approval which shall, inter alia, include loans were recast. However, the
framework for viability assessment of quantum of loans for these categories is
the stressed accounts and regular not available. The amount of gross bad
monitoring of the restructured accounts. loans in the micro and small enterprises
The regulator also mentioned that sector (no data for medium) has been
MSMEs form an important component of growing over the last few years and
the Indian economy and contribute stood at Rs. 82,756 crore in FY17, up
significantly to the country's gross from Rs. 70,842 crore in the previous
domestic product (GDP), exports, year and Rs. 51,952 crore in Fy15.Source:
https://www.livemint.com/Companies/rgl4JNpindustrial output and employment nGsE7rKerrpaNJJ/RBI-issues-norms-for-generation. Considering the importance restructuring-loans-to-MSMEs.html Dated: Jan
of MSMEs in the Indian economy, it is 02, 2019
considered necessary at this juncture to
take certain measures for creating an COMPLAINTS WITH BANK enabling environment for the sector. The
OMBUDSMAN SURGE 25% IN issue of restructuring of MSME accounts,
FY18RBI added, was discussed in the RBI The number of complaints registered at
board meeting on 19 November and also banking ombudsman offices have seen a
during RBI's recent interactions with 25% increase in the fiscal year 2018, with
banks and other stakeholders. In March majority of these complaints coming
2016, RBI had notified a mechanism for from urban centers owing to increased
resolving stressed MSME loans of up to awareness and poor internal redressal
Rs. 25 crore. As per the guidelines banks mechanisms of banks. The banking
should classify stress in such loans into ombudsman offices in Tier-1 cities like
three categories special mention New Delhi, Mumbai, Chennai, Kolkata,
account (SMA) 0, SMA 1 and SMA 2
17 - ASSOCHAM Banking e-Bulletin - Volume - 45
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Bengaluru and Hyderabad accounted for commitments and mobile banking. In
more than 57% of the total complaints b a n k - w i s e d i s t r i b u t i o n , m o s t
received by all BO offices. The higher complaints received against public
proportion of complaints from urban sector banks were pension-related while
areas in recent years is largely due to most complaints received against
increasing awareness about grievance private banks were for credit cards
redressal mechanism among bank discrepancies. The RBI plans to set up a
customers and also the efficacy of compliance and tracking system portal
internal grievance redressal mechanism to tackle the problem of cyber-fraud
in banks, not being up to the desired under the ombudsman scheme taking in
level. Of all the complaints received at light the growing impetus of banks and
the ombudsman's offices, 97% of them financial institutions on digital
were resolved in 2017-18, up from 92% transactions and the Centre's push to a
a year earlier. Currently, there are 21 less cash economy.
https://economictimes.indiatimes.com/industrfunctional banking ombudsman offices y/banking/finance/banking/complaints-with-in the country. These offices were b a n k - o m b u d s m a n - s u r g e - 2 5 - i n -established under Banking Ombudsman fy18/articleshow/67343150.cms Dated Jan 02,
Scheme, 2006, and are the first points of 2019
contact for consumers seeking
grievance redressals and resolutions BOB SETS SHARE SWAP aga ins t consumer f r auds and
RATIO FOR MERGER WITH discrepancies in the banking system.
VIJAYA, DENA BANKSMost complaints received at these
Bank of Baroda (BoB) has finalized the offices were related to non-observance
share swap ratio for merger of Vijaya of the fair practices code followed by
Bank and Dena Bank with itself. As per those related to ATM, credit and debit
the Scheme of Amalgamat ion, cards, and for failure to meet
18 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
shareholders of Vijaya Bank will get 402 favorable share swap ratio. Recent prices
equity shares of BoB for every 1,000 suggest that traders were anticipating a
shares held. In case of Dena Bank, its swap ratio of not less than 150 shares of
shareholders will get 110 shares for BoB in return for 1,000 Dena Bank
every 1,000 shares of BoB. The shares. The announced ratio of
government in September last year had 110:1,000 comes as a huge let down.
announced merger of state-owned Assuming BoB shares stay where they are
Vijaya Bank and Dena Bank, with larger when trading resumes, Dena Bank's
peer Bank of Baroda, aiming to create the shares need to correct by about 28% to
third largest lender after SBI and ICICI align with reality. Not that this is a
Bank. massive relief for BoB. While the dilution
in its equity will be lower than https://www.livemint.com/Industry/XihVSI
wxVQZEmG1BMqL3BP/BoB-sets-share- anticipated, and may cause a relief rally, swap-ratio-for-merger-with-Vijaya-Dena- the drag from the bank merger is a far banks.html Dated: Jan 02, 2019 bigger worry. It's little wonder that BoB
shares have underperformed the Nifty
MERGER OF DENA BANK, PSU Bank index by about 12% since the
merger was announced in mid-VIJAYA BANK, BOB AN ALL-September. BoB shareholders are getting ROUND LOSING GAMEsaddled with the tattered balance sheet The merger of Dena Bank and Vijaya of Dena Bank, which has low capital and Bank with Bank of Baroda (BoB) was seen no ability to lend. Dena Bank has been as a rescue mission for Dena Bank. Now, barred from lending by the regulator for the share swap ratios confirm that the the last seven months. So, essentially, mission will leave everyone a loser. Even what BoB shareholders are getting is a Dena Bank's shareholders have ended up fistful of deposits and a toxic pile of as losers, in contrast to the earlier loans. Dena Bank has a gross bad loan expectation that they will gain from a
19 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
pile of Rs. 16,140 crore, for which the BOOST FOR BANKS WITH BIG lender has provided for less than 60%. It LOANS AGAINST PROPERTYhas a 13,440 strong workforce, for Banks with a larger share of loans against which BoB will have to make good the property are likely to benefit from the shortfall in provisions towards gratuity RBI's latest relief on small value loans to as per rules. This is over and above the micro and medium level companies and requirement to absorb all employees in lenders like DCB Bank, Federal Bank, City the bank merger. While merger Union Bank and Kotak Mahindra Bank announcements typically talk of cost could see earnings improve, nudging synergies, this one points to an increase them to open up credit lines to ease the in costs. Note that past instances of freeze. RBI has allowed a one-time mergers, including the massive merger restructuring of existing loans to MSMEs of State Bank of India (SBI) with its five that are in default but 'standard' as on associates, show that the months that January 1, 2019, without an asset follow are horrible for the merged entity. c l ass i f i ca t ion downgrade . The SBI had to contend with depressed restructuring has to be implemented by operating performance as its staff March 31, 2020. RBI has allowed the became busy in dealing with new scheme for restructuring of stressed colleagues, new systems and new assets with credit facilities not cultures. Streamlining processes took a exceeding Rs 25 crore as on January 1. toll on the lender and its bad loan ratio When borrowers fail to repay loans due surged, while credit growth slowed. to genuine reasons, lenders relax terms Analysts fear the same fate for BoB. In and conditions for repayments, known the case of Vijaya Bank, the share swap as restructuring in market parlance. The ratio is close to what the markets had RBI move has instilled just such anticipated. But that is little comfort for con f idence . Se lec t banks w i l l its shareholders, as their fortunes have significantly do well in future as also been tracking the drop in the value creditworthiness of small companies is of BoB. The fact that this is despite Vijaya likely to improve giving opportunity for Bank's superior financial performance credit expansion. The latest RBI move makes it even more painful for its was in line with the government's shareholders. In its bid to create the intention. This will help both credit flows third largest lender with a balance sheet and the holistic economy as this will add size of more than Rs. 14 trillion and a confidence among all banks, private and network of 9,489 branches, the public. MSME loans mostly happen government has subjected itself and through loan against properties with other shareholders to a painful merger banks like DCB, IndusInd, Kotak having process. The erosion of value has only larger share. Such banks' earnings would begun. be positively impacted over a period of https://www.livemint.com/Money/9NBbmXVLF time as the move will help in the long 25jWx2EL2dXfJ/Merger-of-Dena-Bank-Vijaya- term. Benefits of the latest MSME relief Bank-BoB-an-allround-losing-ga.html Dated:
are likely to be derived over a long period Jan 03, 2019
20 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
of time in the form of improved GST to genuine reasons, lenders relax terms
compliance and resultant improvement and conditions for repayments, known
in credit flows. The move will be interim as restructuring in market parlance. The
relief for banks in the form of lower RBI move has instilled just such
provisioning requirements. The twin conf idence . Se lec t banks w i l l
impact of demonetization and GST has significantly do well in future as
impacted them negatively and this creditworthiness of small companies is
measure can ensure better credit flows. likely to improve giving opportunity for
Banks can restructure loans only if such credit expansion. This will help both
borrowing companies are GST credit flows and the holistic economy as
compliant. This means, more companies this will add confidence among all banks,
are expected to come under GST regime, private and public. MSME loans mostly
pushing up the government's tax happen through loan against properties
collections. A GST compliant company is with banks like DCB, IndusInd, Kotak
seen as more creditworthy compared to having larger share.Such banks'
non-complaint entities. earnings would be positively impacted
https://economictimes.indiatimes.com/industr over a period of time as the move will y/banking/finance/banking/boost-for-banks- help in the long term. Benefits of the with-big-loans-against-property/articleshow latest MSME relief are likely to be derived /67358901.cms Dated: Jan 03, 2019
over a long period of time in the form of
improved GST compliance and resultant BOOST FOR BANKS WITH BIG
improvement in credit flows. The move LOANS AGAINST PROPERTY
will be interim relief for banks in the Banks with a larger share of loans against
f o r m o f l o w e r p r o v i s i o n i n g property are likely to benefit from the
requirements.The twin impact of RBI's latest relief on small value loans to
demonetization and GST has impacted micro and medium level companies and
them negatively and this measure can lenders like DCB Bank, Federal Bank, City
ensure better credit flows. Banks can Union Bank and Kotak Mahindra Bank
restructure loans only if such borrowing could see earnings improve, nudging
companies are GST compliant. This them to open up credit lines to ease the
means, more companies are expected to freeze. RBI has allowed a one-time
come under GST regime, pushing up the restructuring of existing loans to MSMEs
government's tax collections. A GST that are in default but 'standard' as on
compliant company is seen as more January 1, 2019, without an asset
creditworthy compared to non-c lass i f i ca t ion downgrade . The
complaint entities. restructuring has to be implemented by
https://economictimes.indiatimes.com/industrMarch 31, 2020. RBI has allowed the y/banking/finance/banking/boost-for-banks-
scheme for restructuring of stressed with-big-loans-against-property/articleshow
/67358901.cms Dated: Jan 03, 2019assets with credit facilities not
exceeding Rs 25 crore as on January 1.
MOBIKWIK REPORTS When borrowers fail to repay loans due
21 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
DOUBLING OF REVENUE, BUT PARLIAMENTARY PANEL LOSSES KEEP PILING UP ASKS RBI TO REVIEW CAPITAL The company, which competes with the NEEDS FOR BANKS likes of Paytm and PhonePe, has been In a hard-hitting report, a parliamentary facing tremendous competition from its panel has asked the Reserve Bank to ease rivals in the payments space. Gurugram- capital adequacy norms for banks, based digital payments company review supervisory framework PCA, and Mobikwik has doubled its revenue to Rs urged the government to set up a 85.6 crore in 2018 against Rs 44.3 crore committee to look into issues in 2017, even though losses piled up 51 concerning accountability of the central per cent to Rs 200 crore against Rs 132 bank as a regulator. The standing crore in the same period. The company, committee on finance also asked the RBI which competes with the likes of Paytm to evaluate the efficacy of its own and PhonePe, has been facing guidelines on dealing with frauds. tremendous competition from its rivals Besides, the committee headed by in the payments space. Therefore it has veteran Congress leader and former made an effort to move on to become a Union Minister Shri M Veerappa Moily broader fintech player by entering also suggested increasing the retirement lending and investments as well. Further of age of chiefs of public sector banks to the company also made disclosures that 70 years and effect proper manpower its co-founders Singh and Upasana Taku planning and HR development strategies earned Rs 2.15 crore each during the in PSBs. The report of the committee was reported year. 2018 has also been a very tabled in Parliament. Questioning the critical year for Mobikwik having made RBI's decision to keep capital adequacy its first acquisition in the FINTECH space. norms higher than prescribed under The company acquired Mumbai-based global framework of Basel III, the investment platform Clearfunds. lawmakers mentioned that the central Mobikwik, which was founded way back bank has restricted lending capacity of in 2009, is backed by marquee investors banks and increased the burden on the like Sequoia Capital, American Express government for recapitalization of PSBs. and even counts Bajaj Finance as one of The committee mentioned that it has its strategic backers. It was one of the been informed that while Basel last standalone payment entities till it framework requires application of entered other services as well, since capital standards to internationally Paytm became a bank, Freecharge was active banks of the 21 PSBs, nine PSBs are absorbed by Axis Bank and Citrus not internationally active as also most of Payments got bought by PayU. the older private banks are also not https://economictimes.indiatimes.com/industr internationally active. In respect of the y/banking/f inance/banking/mobikwik- nine PSBs, (Central Bank of India, Andhra reports-doubling-of-revenue-but-losses-
Bank, OBC, Corporation Bank, Vijaya keep-piling-up/articleshow/67369159.cms
Bank, Bank of Maharashtra, United Bank Dated: Jan 03, 2019
of India, Dena Bank and Punjab and Sind
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I N D I A
Bank) which had aggregate risk weighted of these banks and relax/review the PCA
assets of approximately Rs.9.93 lakh framework. With regards to spurt in
crore as of March 2018, this translates frauds in banking system, the panel
into additional capital requirement of asked the RBI to look into and review the
approximately Rs 35,000 crore. As per role and effectiveness of various types of
the parliamentary panel stipulated audit conducted in banks and its inability
additional capital requirement for these so far to mitigate incidence of frauds in
nine banks (who are already under RBI's banks. The RBI should also evaluate the
P C A f r a m e w o r k w i t h l e n d i n g efficacy of their own guidelines of May 7,
restrictions), if waived, will release huge 2015 providing a framework for dealing
funds to the extent of approximately Rs with loan frauds. On the issue of RBI
5.34 lakh crore, representing 51 per cent seeking more powers, the panel
growth in the loan book of these banks. mentioned that it has recommend that
This will lead to generation of additional the government should constitute a
interest income of about Rs 50,000 crore high-powered committee to evaluate
annually, "which will obviate the need" the role, powers and authority of RBI in
for additional capital infusion into these "its entirety", while also appraising the
banks through our fiscally constrained economic impact of the various NPA
national budget. The committee further reso lu t ion gu ide l ines/schemes
notes that the RBI has been tightening formulated by RBI from time to time. The
the screws on the operations of 11 PSBs proposed Committee should look into
including their lending and hiring those provisions of the RBI Act, Banking
activities under the Prompt Corrective (Regulation) Act and other relevant
Action (PCA) framework. The RBI's statutes with a view to ensuring the
revised PCA framework, implemented in accountability of RBI as the regulator of
2017, monitors and classifies banks into the banking sector including the matter
three risk parameters based on their of having RBI nominees on the Boards of
capital adequacy, net non-performing banks. The panel also suggested that a
assets (NPAs), return on assets and three-month overlap may be provided at
leverage. The committee would CEO level to facilitate smooth transition
therefore expect the RBI to provide a in PSBs. Further, with a view to utilizing
coherent and positive road map for each the expertise of senior bankers, the
of these 11 banks to come out of the retirement age of CEOs of PSBs can be
stringent PCA framework within a raised to 70 years as in the case of their
stipulated timeframe, so that they can private sector counterparts. The
resume the i r no rma l bank ing committee also desired that RBI as
operations. The panel "apprehensive" regulator should consider separate
that the PCA framework may end up treatment of NPAs due to willful
bringing more and more PSBs under its defaulters and those where defaults are
ambit. The Committee would therefore because of extraneous reasons such as
urge both the RBI and the government to cancellation of coal blocks and policy
constantly monitor the situation for each interventions by the judiciary and
23 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
general policy changes in various sectors Rajiv Kumar mentioned that they will
such as coal, power, steel, telecom, ensure the merged entity is well-
roads. For this purpose, the concerned capitalized and would provide growth
RBI guidelines/circulars should be capital as well. The government had
reviewed noted in a statement that the
https://economictimes.indiatimes.com/industr amalgamation will help create a strong, y/banking/finance/banking/ parliamentary- globally competitive bank with panel-asks-rbi-to-review-capital-needs-for- economies of scale and enable banks/articleshow/67364976.cms Dated: Jan
realization of wide-ranging synergies. 04, 2018
As per Finance Minister Shri Arun Jaitley,
government would invest 41,000 crore GOVERNMENT, RBI IN TALKS in state-run lenders, over and above
OVER MERGER OF THREE PSU what had been announced earlier, to
BANKSstrengthen their capital base. This would
The government is in talks with the enhance the total recapitalization in the
Reserve Bank of India on the details of current financial year to 1.06 lakh crore
the first three-way merger among public from 65,000 crore. This would augment
sector banks, which will create an entity the lending capacity of public sector
that will become a 'systemically banks and help them exit the RBI's
important financial institution.' The Prompt Corrective Action framework,
U n i o n C a b i n e t a p p r o v e d t h e which imposes curbs on certain business
amalgamation of Dena Bank and Vijaya operations.
Bank with Bank of Baroda. The merger https://economictimes.indiatimes.com/industr
will come into force on April 1, 2019, y/banking/finance/banking/ government-rbi-
making the entity the country's second- i n- t a l k s-ove r-merge r-o f- th r ee-psu-
banks/articleshow/67374848.cms Dated Jan largest public sector bank and third-04, 2019largest lender, with a combined business
of 14.8 lakh crore. The RBI has so far RBI PCA BANKS, QUEUE TO identified the State Bank of India, the
CHECK OUT OF HOTEL largest lender, and privately owned ICICI
Bank and HDFC Bank as domestic CALIFORNIA IS SLOWLY systemically important banks (DSIBs). FORMINGBanks designated as DSIBs have to Dena Bank will be the first lender to exit provide for extra capital based on the the prompt corrective action (PCA) RBI's assessment, in addition to meeting framework, the Reserve Bank of India's regular capital norms. The additional (RBI) intensive care unit. But this exit is Common Equity Tier 1 requirement for through death, as the lender would DSIBs will become fully effective from cease to exist as an entity after April, April 1, 2019. As per Financial services when its merger with Bank of Baroda secretary Shri Rajiv Kumar, after the takes effect. It is hard to say when the cabinet's approval that the key ratios of remaining 10 lenders still quarantined the amalgamated entity are healthy. Shri under RBI PCA framework would come
24 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
out. But the recent commitment of the chance to exit PCA. Bank of India has the
government to infuse capital seems to lowest net bad loan ratio among PCA
suggest that the distance to the door just banks and also has a stronger capital
got reduced. At least, the investors adequacy ratio. A bank is dragged into
holding the scrips of these lenders seem PCA if it breaches thresholds for capital,
to think so, as six of them have surged bad loans, leverage ratio and return on
more than 10% in the last three weeks. assets. The Reserve Bank of India (RBI)
The optimism comes on reports that the looks into the performance of the
government will soon infuse about Rs. lenders on an annual basis to determine
27,000 crore into six PCA banks. It is whether they are strong enough for it to
also willing to pour in Rs. 41,000 crore remove restrictions imposed on them
over and above the original commitment under PCA. The government's capital
of Rs. 65,000 crore into 21 public sector infusion seeks to mend the capital ratios
b a n k s a s p a r t o f t h e b a n k of weak banks under PCA and also help
recapitalization plan. What investors are them make provisions to bring down the
betting on is that the government will be net bad loan ratio to below 6%. In a
the parent who gives the maximum nutshell, fresh money should enable
attention to the weakest child. Hence, banks to get the numbers to exit PCA. Of
the RBI PCA banks would receive the course, some relaxation of norms may
biggest chunk of funds. Indeed, in the still be required from the central bank,
previous round of infusion in fiscal year on parameters such as return on assets,
2018, the government did exactly that. since most state-owned lenders have
The fact that Bank of India received a been running losses. To be fair, some
whopping Rs.10,086 crore infusion last banks have shown marked improvement
month shows how serious the in strengthening their balance sheet, but
government is in putting life back into most others continue to lag. The
the lenders. According to analysts at government's principal economic
Kotak Institutional Equities, the lender adviser Shri Sanjeev Sanyal had chided
needed Rs. 4,100 crore additional capital RBI to have a Hotel California approach
in 2019-20 to offset provision to PCA. To borrow the reference to the
requirements. As of September, Bank of 1970s song of that title by American
India's common equity Tier-I ratio was rock band Eagles, the queue to check out
7.5%, far higher than the regulatory of the hotel is slowly forming.
minimum of 5.5% and the additional
capital infusion will boost this further.
Given the increased elbow room in
capital, the lender can write off loans to
bring down its net bad loan ratio below
the required threshold and exit PCA.
Analysts at Kotak believe that Bank of
India, Oriental Bank of Commerce and
Corporation Bank now have a strong
25 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
https://www.livemint.com/Money/b1qQ2NYdw total currency in circulation amounting itA9M6OwQLK3H/RBI-PCA-banks-Queue-to- to Rs 18,037 billion at the end of March check-out-of-Hotel-California-is-slo.html
2018, Rs 2000 notes accounted for 37.3 Dated: Jan 04, 2019
per cent, down from 50.2 per cent at the PRINTING OF RS 2,000 NOTES
end of March 2017. The old Rs 500 and NOT STOPPED, CLARIFIES
Rs 1000 bank notes that were scrapped GOVERNMENT in November 2016 accounted for around Denying reports that the Reserve Bank of 86% of the total currency in circulation at India (RBI) had stopped the production of the time.Rs 2,000 currency notes, the finance https://www.livemint.com/Companies/dEB2b6ministry mentioned that printing was MlHjRCPuJ18pMuyH/Rs-2000-currency-note-
printing-stopped-government-rbi.htmlplanned according to the projected Dated: Jan 04, 2019requirement. Printing of notes is planned
as per the projected requirement. As per
NAYARA ENERGY TAKES RBI, Economic Affairs Secretary Shri Subhash
Chandra Garg more than adequate notes ED TO COURT OVER FEMAof Rs 2,000 in the system with over 35% Nayara Energy, earlier known as Essar Oil
of notes by value in circulation being of Ltd, has moved the Bombay high court
Rs 2,000. He also mentioned that there seeking a stay on a Reserve Bank of India
had been no decision regarding Rs 2,000 (RBI) order fining it for alleged violation
note production recently. A media report of foreign exchange regulations and an
had earlier claimed the government had invest igat ion launched by the
stopped the printing of the high-value Enforcement Directorate (ED) into the
currency note as it was being used for matter. RBI imposed a penalty of Rs. 4.96
“hoarding, tax evasion and money crore on the refiner after finding it guilty
laundering”. Another report, by PTI, of violating the Foreign Exchange
mentioned that printing of the Rs 2,000 Management Act (FEMA). According to
b a n k n o t e , i n t r o d u c e d p o s t - the central bank, the company breached
demonetisationin November 2016, had the limit for transfer of foreign exchange
been brought down to a minimum. under the Liberalised Remittance
Immediately after the sudden decision to Scheme while issuing global depositary
ban old Rs 500 and Rs 1,000 currency shares in 2010. After the matter came to
notes by the government, the Reserve the attention of RBI, it imposed the
Bank of India had come out with the Rs penalty on 27 April 2017 and directed
2,000 note along with a new look 500 the ED to look into it in January 2018. The
rupee note as part of its remonetisation ED then initiated an investigation in
exercise. According to RBI data, there January 2018 and summoned the
were 3,285 million pieces of Rs 2,000 company's representatives to appear
notes in circulation at the end of March before it. Nayara Energy appealed RBI in
2017. A year later (on March 31, 2018), April 2018 to quash the penalty. This
there was only a marginal increase in the was, however, rejected by the central
number at 3,363 million pieces. Of the bank in May 2018. Nayara Energy, now
,
26 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
https://www.livemint.com/Companies/dEB2b6part of Russian energy major Rosneft MlHjRCPuJ18pMuyH/Rs-2000-currency-note-and Trafigura-United Capital Partners printing-stopped-government-rbi.html Dated
(UCP), said in its application to Bombay Jan 04, 2019
high court: Pass an ad-interim order SYNDICATE BANK MD DRAWS
staying the investigations being carried UP GROWTH, CLEAN-UP PLANSout by the Directorate of Enforcement,
Syndicate Bank MD Shri Mrutyunjay Mumbai pursuant to the summons dated
Mahapatra has drawn up a multi-January 11, 2018, issued by the
pronged plan to clean up bad loans, Respondent No 3 (ED) to the Petitioner
improve advances and grow fee income. No 1 (Nayara Energy). Holding that the
Shri Mahapatra is one of the six SBI letter dated May 25, 2018, issued by the
deputy MDs chosen by the Centre to General Manager, RBI, rejected the
head nat iona l ized banks . The application of Nayara Energy, invoking
government had decided to tap SBI with the supervisory jurisdiction of RBI
the object of bringing some of the best Governor is unreasonable, arbitrary,
practices of the country's largest bank illegal and void as the same is in
into smaller nationalized banks. To contravention of Rule 4(3) of Foreign
improve Syndicate Bank's Tier I capital Exchange (Compounding Proceedings)
adequacy ratio well over the 6.7% Rules 2000. The petition was filed on 2
prescribed by the regulator, its August 2018 and there has been one
committee of directors will meet on hearing so far, on 15 October. A division
January 7 to approve raising Rs 500 crore bench of the Bombay high court,
by issuing equity shares to eligible staff comprising Justices B.P. Dharmadhikari
members under an Employee Stock and S.V. Kotwal, will hear the case again
Purchase Scheme. This capital-raising on 25 January. Law firm Cyril Amarchand
exercise comes on the back of the Mangaldas is representing Nayara
government investing Rs 2,460 crore in Energy while law firm Udwadia & Co is
two tranches. As per Shri Mahapatra, representing the central bank in the case
business plan is to build even as we are A Nayara Energy spokesperson declined
repairing.As part of this mission, the to comment on the ground that the case
bank has created a new stressed asset was filed by the erstwhile management.
vertical. As a result, all troubled loans In August 2017, Russian oil major
above this figure will be referred from Rosneft and Kesani Enterprises (a
the branch to the head office directly consortium of Trafigura group and UCP
without having to go to the zonal or PE Investments) acquired a 49.13% stake
regional offices. To boost lending to each in Nayara Energy Ltd (then Essar Oil
small businesses, the bank has taken Ltd), along with captive port and power
two new initiatives. First, it is tying up assets from the Essar group for $12.9
with FINTECHs to distribute loans. It has billion. Nayara Energy operates a 20
already tied up with Atyati Technologies, million tonne oil refinery at Vadinar in
a FINTECH with a technology platform Gujarat and more than 4,473 petrol
'GANASEVA' to provide loans to hitherto pumps across the country.
27 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
uncovered med ium and sma l l duly audited by the bank's statutory
enterprises for up to Rs 10 lakh. It has central auditors every year. PNB has also
also tied up with SREI Equipment apprised that no amount was taken back
Finance, which has a lion's share of the or withdrawn from the trusts' account.
infrastructure equipment finance market With regard to placement of the matter
in India. Under the partnership SREI will before the bank's audit committee of
originate loans for Syndicate Bank.The board (ACB), the bank has further
bank will do a proof of concept by selling apprised that the bank's annual financial
policies in three zones before taking up accounts for the financial year 2016-17
sales on an all-India basis. are audited by the bank's statutory
https://economictimes.indiatimes.com/industr central auditors and have already been y/banking/finance/banking/ syndicate-bank- approved by the ACB and the board. The md-draws-up-growth-clean-up-plans/ bank has also reported that it has articleshow/67376741.cms Dated: Jan 04, 2019
initiated steps to further lay the reference
received as well before the ACB.NO CASE OF PENSION,
https://economictimes.indiatimes.comGRATUITY FUND DIVERSION
/industry/banking/finance/banking/noAT PNB -case-of-pension-gratuity-fund-As per Finance Minister Shri Arun Jaitley,
diversion-at-pnb-fm-arun-jaitley/ Punjab National Bank (PNB) did not
articleshow/67380433.cms Dated: Jan engage in any misappropriation of
04, 2019pension and gratuity funds in the past
and no amount was taken from the trusts' NO JOB LOSSES DUE TO
account. The minister was responding to MERGER OF PUBLIC SECTOR
a question asked by BJP MP Kirit Somaiya BANKSif the government was aware of the As perFinance Minister Shri Arun Jaitley, misappropriation of the Employees' there would be no loss of jobs due to Pension Fund Trust and Gratuity Fund by merger of public sector banks. Earlier PNB in 2016-17, and, if so, the MP also this week, the Cabinet approved merger sought details. PNB has informed that of Vijaya Bank and Dena Bank with Bank there is no misappropriation of funds, of Baroda. As per Shri Jaitley, there would and that the pension fund and gratuity be no job losses due to merger of the fund trusts are separate entities and the banks and that the move would create a bank is not authorized to operate the bigger entity like the State Bank of India trusts' accounts or transfer any amount (SBI). The cost of lending could also from the trust. The bank has further become cheaper. During the Question mentioned that adequate funds for Hour, the minister mentioned that out of pension and gratuity are maintained as the 21 public sector banks, 11 are under per the actuarial valuation report without PAC (Prompt Corrective Action) any exception that the same are in strict framework. PAC is initiated against compliance of accounting standards. banks that have high levels of Non-PNB has informed that these funds are
28 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
Performing Assets (NPAs). The curve of Those studying Nursing Courses formed
non-performing assets would go down the largest category that was unable to
and that the Insolvency and Bankruptcy repay their loans constituting 21.28% of
Code has helped in bringing back around the total education sector bad loan
Rs 3 lakh crore into the system. The State portfolio of banks. Engineering students
Bank of India (SBI) and other public stood third at 9.76% of the total bad loan
sector banks have been making portfolio till March 2018. Loans
operational profits. They incurred losses disbursed towards nursing course in
due to provisioning for non-performing 2017-18 stood at Rs 2,263 crore as
assets. With regard to recapitalization of compared to Rs 1,154 crore in the
Public Sector Banks (PSBs), the minister previous fiscal. RBI declines to share bad
mentioned that Rs 51,533 crore has loan data with SEBI. The Reserve Bank of
been infused into them in the current India has refused to share list of certain
financial year till December 31. In the corporate entities which have defaulted
budget estimates of FY 2018-19, Rs on their loans with market regulator,
65,000 crore has been allocated for Securities and Exchange Board of India
recapitalization of PSBs and an amount (SEBI). Minister of state for finance Shri
of Rs 51,533 crore has been infused in Pon Radhakrishnan informed Lok Sabha
PSBs till December 31, 2018. The in a written statement that SEBI had
minister also mentioned that in recent sought the information in order to
past, Rs 90,000 crore was allocated in enable it to assess the impact on
the Union Budget and infused in various investment vehicles which could have
PSBs by the government during financial invested in such entities. SEBI has further
year 2017-18 informed that, RBI had expressed its
https://economictimes.indiatimes.com/industr inability to share the list of such troubled y/banking/finance/banking/no-job-losses- accounts primarily due to the reasons of due-to-merger-of-public-sector-banks- such defaults/ NPAs not being willful finance-minister-arun-jaitley/articleshow/
defaults and the issue of customer 67379951 .cms Dated Jan 04, 2019
confidentiality. It was informed by SEBI
that the market regulator had sought STEEP RISE IN BAD LOANS IN information from the Reserve Bank of
EDUCATION SECTORIndia (RBI) on list of certain corporate
Banks have reported a steep rise in entities who have defaulted on bank
education loans going bad. As per data credit and/or been classified as Non-
provided by 'Indian Banks Association Performing Assets (NPA). In a separate
(IBA) non performing assets or NPA in response the government informed the
education sector have risen to 8.97% at lower house that as per data till August
the end of March 2018, as compared 2018, state run lenders have registered
with 7.29% in March 2016. The Lok 2,571 FIRs against willful defaulters,
Sabha was informed by the government 9,363 suits have been filed for recovery
that bad loans of PSBs in education from them, and action has been initiated
sector were at 5.70% in March 2015. unde r t he Secu r i t i z a t i on and
29 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
Reconstruction of Financial Assets and strike call materialises, "the workmen of
Enforcement of Security Interest Act, our bank may take part in the proposed
2002 in respect of 7,616 cases of willful strike on the mentioned date, in which
defaulters occasion the normal working of the
https://economictimes.indiatimes.com/industr branches/offices of the Bank may get y/banking/finance/banking/steep-rise-in- affected during the day". Ten central bad-loans-in-education-sector/articleshow trade unions- INTUC, AITUC, HMS, CITU, /67383941.cms Dated: Jan 05, 2019
AIUTUC, AICCTU, UTUC, TUCC, LPF and
SEWA have also called for a nationwide BANKING SERVICES MAY BE
general strike on January 8-9 against HIT AS BANK UNIONS CALL
what they call "anti-people" policies of FOR STRIKE ON JANUARY 8-9 the Centre and have placed a charter of Banking services are likely to be affected 12 demands before the central on January 8-9 as a section of PSU bank government. Earlier on December 26, employees would go on a two-day strike 2018, nine bank unions or close to 1 in support of the nation-wide strike call million employees of various banks, given by 10 central trade unions against including private lenders, had observed the government's alleged anti-worker a one-day strike to protest against the policy. The All India Bank Employees proposed amalgamation of Vijaya Bank Association (AIBEA) and Bank Employees and Dena Bank with Bank of BarodaFederation of India has informed the https://economictimes.indiatimes.com/industr
Indian Banks' Association (IBA) of the y/banking/finance/banking/banking-services-
may-be-hit-as-bank-unions-call-for-strike-two-day nationwide strike on January 8-on-january-8-9/articleshow/67397447.cms 9, 2019, IDBI Bank said in a filing to the Dated: Jan 05, 2019
BSE. In a stock exchange filing,
Allahabad Bank mentioned that the NEARLY 9 PERCENT OF
issues and demands are of industry level EDUCATION LOANS BY PSBS and strike call is also given at industry TURNED BAD IN FY 18level. Therefore, if the strike takes place, Nearly 9 per cent of the education loans the functioning of branches of the bank extended by public sector banks (PSBs) may be affected. The bank is taking all were categorized as non-performing the necessary steps in terms of the assets in the last financial year, existing guidelines for smooth according to the government. As per functioning of bank's branches/offices information provided by Indian Banks' on the day of strike(s), in the event the Association (IBA), NPAs of PSBs increased strike materializes. Public-sector Bank from 7.29 per cent as on March 31, 2016 of Baroda mentioned that in the event of to 8.97 per cent as on March 31, 2018. AlBEA and BEFI proceeding on strike on Among the NPAs of PSBs under January 8-9, 2019, the functioning of education category, the highest 21.28 bank's branches/offices in some of the per cent originated from nursing courses zones may be affected. Private sector followed by engineering (9.76 per cent), Karur Vysya Bank mentioned that if the
30 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
other professions (9.49 per cent), to reduce the wide gap in their
medical profession (6.06 per cent) and compensation package and that of the
MBA (5.59 per cent). As at March 31, private sector peers. Public sector banks
2015, education sector bad loans stood (PSBs) ought to step up hiring at junior
at 5.7 per cent. The banks received and middle levels to ensure there is no
repayment of education loans worth Rs vacuum following retirement of large
13,766.82 crore in 2017-18; Rs number of employees in the near future,
11,548.87 crore in 2016-17; Rs the lawmakers said in a report to
9,124.95 crore in 2015-16 and Rs 8,537 Parliament. In PSBs, 95 per cent of GM
crore in 2014-15. In a separate question level employees, 75 per cent of Deputy
about loans to micro, small and medium GM level employees, and 58 per cent of
enterprises (MSMEs), more than Rs 9.06 Additional GM level employees will retire
crore was disbursed during 2017-18 in 2019-20. The Standing Committee on
across all states and union territories. In Finance has observed there has been
2016-17, the MSME sector got loans of "strangely a discernible" fall in the
more than Rs 7.89 lakh crore from number of candidates registering for
banks, Rs 8.77 lakh crore in 2015-16 clerical, probationary officer and
and Rs 7.76 lakh crore in 2014-15. As specialist officer positions at PSBs as per
per the minister government and the data available from the Institute of
Reserve Bank have taken several steps to Banking Personnel Selection. The
ensure access of credit to MSMEs. He committee believes that while banks
also informed the House that the online reducing their recruitment could be a
lending portal with a majority ownership factor, undue stress and work pressure
of 6 PSBs and financial institutions, their from long hours and difficult working
associate companies have been conditions without commensurate
launched to provide loans of up to Rs 1 compensation/incentive package may
crore in 59 minutes. be discouraging prospective candidates.
https://economictimes.indiatimes.com/industr The panel headed by veteran Congress y/banking/finance/banking/nearly-9-per- leader Shri M Veerappa Moily has cent-of-education-loans-by-psbs-turned- expressed apprehension that there bad-in-fy18/articleshow/67381988.cms
could be "sudden vacuum" because of Dated: Jan 06, 2019
large number of retirements in the near
future in state-owned banks at various FAST-TRACK HIRING TO
levels. The committee desires that OVERCOME MANPOWER proper manpower planning and human SHORTAGE DUE TO resource development strategies should
RETIREMENTS: be put in place in PSBs, so that the
staff/officers groomed into the system, PARLIAMENTARY PANEL TO remain motivated and a sudden vacuum PSBSis not created at the junior/middle levels The committee has made a case for more due to manpower shortage. Further, the incentives and a better remuneration committee has made a case for more package for senior management of PSBs
31 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
incentives and a better remuneration banks, while ensuring the economic
package for senior management of PSBs viability of ATMs for all stakeholders, so
to reduce the wide gap in their that a forced cash crunch is not imposed
compensation package and that of the on the public. The panel headed by
private sector peers. As per the report, senior Congress leader Shri M Veerappa
the committee has desired that in case M o i l y a l s o n o t e d t h a t R B I ' s
the lateral mobility policy of senior r emone t i sa t ion d r i ve has no t
officers in PSBs at the Board level is being augmented/resolved the cash supply to
considered by the government by ATMs in rural/semi-urban areas, forcing
promoting DMDs of SBI, then the shutdown of many ATMs. The committee
"movement should be made both ways, has expressed concern that "there are
that is from SBI to PSBs and from PSBs to just not enough" ATMs being installed or
SBI" added to cater to the rising demand for
https://economictimes.indiatimes.com/industr cash in an expanding economy, even as y/banking/finance/banking/fast-track-hiring- more and more debit cards are being to-overcome-manpower-shortage-due-to- issued and large number of Jan Dhan retirements-par-panel-to-psbs/articleshow
accounts opened by banks. ATMs have /67404318.cms Dated: Jan 06, 2019
become an important channel for
withdrawing money even after the close PARLIAMENT PANEL NUDGES of banking hours. Digital transactions
RBI TO FIX THE PROBLEMare also catching up. Besides ATMs,
A parliamentary panel has asked the basic banking services are provided by
Reserve Bank to address the problem of business correspondents through their
perpetually dysfunctional ATMs so as to micro ATMs.
avoid any situation of forced cash https://economictimes.indiatimes.com/industr
crunch.The Standing Committee on y/banking/f inance/banking/dry-atms-
Finance has also asked banks to install parliament-panel-nudges-rbi-to-fix-the-
adequate number of ATMs. As per a data problem/articleshow/67403917.cms Dated: Jan
06, 2019of RBI, there were 2,21,492 Automated
Teller Machines (ATMs) in the country as
at September-end 2018. These include ANDHRA BANK TO DEPLOY 1,43,844 ATMs of public sector banks, OVER 1,600 BUSINESS 59,645 ATMs of private banks and CORRESPONDENTS TO BOOST 18,003 of foreign banks, payments FINANCIAL INCLUSION banks, small fiance banks and White
PROGRAMMELabel ATMs (WLAs), which are owned and
State-owned Andhra Bank will deploy operated by non-bank entities. As
over 1,600 business correspondents to digital transactions have not become
provide a host of services like account anywhere near universal, the committee
opening, door-step banking, ATM would urge upon RBI to pursue the
deployment and NPA recovery under its lingering problem of dysfunctionality as
financial inclusion project. The bank will well as shortage of ATMs vigorously with
deploy these business correspondents
32 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
mainly in Andhra Pradesh and expected to operate from different
Telangana. The lender has been locations in other states. Andhra Bank
implementing the financial inclusion will give priority to the authorized
project since 2010 through the business functionaries of well-run self-help
correspondent model with micro groups (SHGs) which are linked to banks
ATMs/kiosk banking technology. to act as BC agents. Besides, any
A m o n g o t h e r s , t h e b u s i n e s s individual or entities approved by the
correspondents (BCs) may also be bank, individuals including retired bank
assigned with other financial and non- employees, retired government school
financial transactions like recovery of teachers, kirana shop owners, dealers
loans, enrolment of social security working in public distribution system,
schemes as well as mobilization of new retired government employees and ex-
business for the bank. They may also be servicemen may also be deployed. As per
required to carry on with all government the proposal document, the business
schemes including Aadhaar, mobile and correspondent agent's age should be
PAN seeding, insurance sales, banking preferably between 20 to 40 years, and
transactions and any new initiatives should not exceed 50 years. At present,
taken up by the bank from time to time. Andhra Bank uses separate Financial
The bank has invited bids from corporate Inclusion Gateway (FIG) solution
business correspondents (CBCs) or procured from a third-party vendor for
vendors, who wil l oversee the all financial inclusion transactions. The
d e p l o y m e n t o f b u s i n e s s lender said it also proposes to deploy
correspondents, by January 31, 2019. 2 0 0 - 1 , 0 0 0 d i r e c t b u s i n e s s
Andhra Bank invites proposals for correspondents over five years. The
selection of corporate business bank will procure the devices and the
correspondents (CBCs) for end-to-end selected bidder to provide application
implementation of financial inclusion software for deployed devices and also
project. As of now, the bank has facilitate end-to-end operations by
deployed about 2,200 BC agents acquiring the transactions.
t h r o u g h c o r p o r a t e b u s i n e s s
correspondent (CBC) model across BANDHAN BANK SET TO Andhra Pradesh, Telangana, Odisha and ACQUIRE GRUH FINANCE IN some locations of Maharashtra, Tamil SHARE SWAP DEALNadu, Chhattisgarh and Bihar. The Bandhan Bank Ltd is set to acquire selected vendor will deploy all the mortgage lender Gruh Finance Ltd via a banking applications on the micro share swap, a move aimed at cutting the ATMs/ mobile devices/kiosk without any bank's promoter holding and expanding extra cost to the bank. As per the project, its housing finance portfolio, two people the bank wants to deploy 922 BC agents wi th d i rect knowledge of the in Andhra Pradesh and 695 in Telangana development said. Shareholders of Gruh by March 2019 apart from some mobile Finance, which is 57.83% owned by business correspondent agents who are Housing Development Finance Corp.
33 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
(HDFC) Ltd, will receive three shares of Bandhan Bank. The proposed deal
Bandhan Bank for every five shares held entails HDFC emerging as a promoter for
in the home financier, the people said. Bandhan Bank, apart from being the
The swap is based on the six-month promoter of India's largest private lender
weighted average price of the shares of HDFC Bank, where it owns 19.72% as of
the two companies.As a part of the deal, 30 September. RBI also does not allow
HDFC will also cut its stake further by the promoter of one bank to hold more
around 5.5% (in the merged entity) by than 10% in another bank as a promoter.
selling shares to a clutch of public To meet this requirement, HDFC is in
institutional investors or in the talks with a clutch of institutional
secondary market so that HDFC's total investors to sell at least 5.5% in the
holding as a promoter in the combined combined entity. The report, however,
banking entity is brought down below did not specify any modalities of the
10%, which is in accordance with the deal. In regulatory filings in response to
bank ownership norms stipulated by RBI exchanges seeking clarification on the
(Reserve Bank of India).The merger could news report, the two companies had
be announced as early as this week declined to comment on what they
following board meetings of the two termed market speculation. In the
companies. RBI's banking license rules September quarter, Gruh Finance
required Bandhan Financial Holdings Ltd disbursed loans worth Rs. 2,738 crore.
to halve its stake from 82.3% to 40% The loan book stood at Rs. 16,663 crore
within three years of starting business. at the end of the quarter. The home
RBI had in September placed restrictions financier, which is primarily focused on
on Bandhan Bank for its failure to meet retail segment, recorded a net profit of
the rules by freezing branch expansion Rs. 220 crore for the first half of the
and remuneration of founder and chief current fiscal.
htps://www.livemint.com/Companies/ZdcrOpeiexecutive Shri Chandra Shekhar Ghosh. vAwSFG7ntJpBl I/Bandhan-Bank-set-to-Bandhan Bank currently commands a acquire-Gruh-Finance-in-share-swap-market value of around Rs. 63,000 crore, deal.html Dated: Jan 06, 2019
while Gruh Finance has a market cap of
around Rs. 23,000 crore. The six-month NPA LEVEL OF BANKS ON
volume weighted average prices of THE DECLINE, RBI GOVERNOR
Bandhan Bank and Gruh Finance are at SHRI SHAKTIKANTA DASRs. 528.61 and Rs. 318.50, respectively, RBI's recent FSR report said stress tests on BSE. On that basis, the merger will suggest there would be further result in HDFC's ownership falling to improvement in banks' asset quality in 15.44% in the merged entity and the new year. Reserve Bank of India (RBI) Bandhan Financial's share dropping to Governor Shri Shaktikanta Das around 60.27%. Given that 'Bandhan e x p r e s s e d s a t i s f a c t i o n o v e r Financials stake is still above the RBI-performance of the banking sector stipulated 40% norm, it will have to take saying bad loans have declined, more steps to cut its ownership in
34 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
particularly of state-owned banks. The government bond yields, and quickening
RBI has also initiated stakeholder bad loan recoveries should buttress the
consultation on governance reform in profits at Indian lenders in the December
the banking sector. Various initiatives quarter. Bank credit growth has revived
taken by the government have yielded in the second half of the fiscal, helped by
results, with the bad loans of public a favorable base effect and demand from
sector banks (PSBs) declining by over Rs individuals to buy homes, cars and other
23,000 crore from a peak of Rs 9.62 lakh consumption goods and services.
crore in March 2018. There is Liquidity constraints at NBFCs have
considerable amount of improvements helped banks step up their lending in the
which have to be sustained if banks have fiscal third quarter. Bank credit growth
to fulfil their responsibility and if some improved to a year-on-year rate of 15%
of the banks have to become healthy. in the fortnight ended December 21, the
The RBI's recent FSR report said stress latest RBI data showed, compared with
tests suggest there would be further 10% growth recorded a year earlier.
improvement in banks' asset quality in Analysts said stronger demand for loans
the new year. In the baseline scenario, and better margins are likely to help
the gross NPA ratio might decline from banks in the third quarter. Jefferies
10.8 per cent in September 2018 to 10.3 expects an aggregate 28% on-year
per cent in March 2019 and 10.2 per cent increase in banking profits in the
in September 2019. After a prolonged quarter. Overall credit growth has picked
period of stress, the load of impaired up steadily for banks, although personal
assets was receding, with banks loans continue to grow strongly, credit
reporting their first half-yearly decline in to the services sector has picked up in
the gross NPA ratio since September the past few months. Large corporate
2015. On governance reform in the infrastructure credit has picked up over
banking sector, it is an important issue the past few months, albeit from a low
and the RBI has initiated consultation base. Trading income should provide
with various stakeholders as to what support to banks due to fall in yields. The
kind of reforms can be brought in. value of bonds rises when yields fall.
https://economictimes.indiatimes.com/industr Yields on the benchmark 10-year y/banking/finance/banking/npa-level-of- government bond dropped to 7.36% at banks-on- the-dec l i ne- rb i-gove rno r- the end of December from 8% at the start shaktikanta-das/articleshow/67422586.cms
of the quarter, and that should help Dated: Jan 07, 2018
banks make mark-to-market gains on
their investments. G-sec yields have GOOD CREDIT GROWTH TO sharply declined versus the consensus
HELP BANKS' NUMBERSview, two months ago, of rising interest
Higher credit demand, better pricing rates. This entails positive earnings
power due to liquidity woes at impact for banks in the form of higher
competing para banks, more trading treasury gains, more so for PSU banks
income because of the decline in than private. The recovery of bad loans is
35 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
another area benefitting lenders. Banks conform to RBI guidelines issued after
will benefit from the improvement in the Supreme Court's judgment on
recoveries by the upgradation of the Aadhaar that barred private companies
Jayaswal Neco, Binani Cements and from using the database for paperless
Uttam Galva loan accounts. Jayaswal verification of customers. There is no
Neco, a maker of cast iron pipes, was in eKYC, the RBI has not told us anything
the second list of loans referred to the clearly about the alternative KYC
bankruptcy court by RBI. It owed lenders mechanisms that they plan to approve.
Rs 3,522 crore. Last month, some The deadline is just a few weeks away
lenders led by SBI sold their loans to an and we cannot adhere to (it) with this rate
assets reconstruction company headed of progress.There have been discussions
by Bank of America. SBI has recovered around alternative KYC mechanism like
65% of its Rs 1,363 crore dues from the using video-based verification or XML-
company. based KYC, but neither has been
https://economictimes.indiatimes.com/industr formally approved by the banking y/banking/finance/banking/good-credit- regulator. Mobile wallets kickstarted the growth-to-help-banks-numbers/articleshow Indian digital payment revolution about /67430351.cms Dated: Jan 08, 2018
four years ago but now only a few such
companies remain in the fray. Most of RBI KYC DEADLINE MAY
the PPI license holders such as PUNCH A HOLE IN WALLET MobiKwik, PhonePe and Amazon Pay are COMPANIES PLANS either focusing on Unified Payments As per payments industry executives, Interface business or have diverged into most of India's mobile wallets may other fintech activities. A large chunk of become non-operational by March, as the wallets which were used for they fear companies will be unable to remittance have anyway moved to the meet the central bank's deadline to business correspondent channels complete verification of all customers by because of regulatory restrictions. Only the end of February 2019. Prepaid standalone wallets will be directly payment instruments (PPIs) or mobile affected by the (current impasse). As per wallets were mandated by the Reserve Shri Sachin Seth, FINTECH leader for Bank of India in October 2017 to capture India, Middle East and Africa for EY, only all information required under the those mobile wallets that have know-your-customer (KYC) guidelines. developed compelling use cases will be So far, companies have been able to able to sustain. The entire proposition verify just a fraction of their total user around ease of opening wallets is not base, and are yet to complete biometric there anymore; hence it is now only or physical verification of the majority of about use cases where wallets will be a users. More than 95% of the mobile staging area where you can store money wallets in the country could stop being and transact. After the central bank operational by March. The payments directed wallets to become fully KYC industry has been scrambling to compliant payment instruments in 2017,
36 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
companies like PhonePe, Amazon Pay Association (AIBEA) and Bank Employees'
and Paytm began asking customers for Federation of India (BEFI) have supported
identification documents. Paytm, which the strike, which has impacted banking
had received a banking license, went all operation where these two unions are
out to use biometric dongles and field strong. However, the operation in SBI
agents to convert its existing wallets into and private sector banks remained
full KYC ones and to also open bank unaffected as other seven unions in the
accounts. A company executive banking sector are not part of the strike.
estimates that Paytm has managed to Many public sector banks have already
convert 70% of its user base into full KYC informed their customers about likely
ones. But other payment companies impact on services if strike materializes.
have struggled. These companies are If the strike materializes, a section of the
hoping that Parliament approves bank's employees may take part in the
pending legislation, which allows proposed strike on the said dates, in
voluntary use of the Aadhaar number by which case, the normal functioning of
consumers for online as well as offline the branches/offices of the bank may get
verification. Looking at the convenience affected. A two-day strike on January 8
factor, consumers would opt for Aadhaar and 9 has been called by the central
verification, but it all depends on how trade unions against the alleged
the Act is passed, it would have helped if repressive policies for workers adopted
we could get some assurance from the by the government.
https://economictimes.indiatimes.com/industrcentral banky/bank ing/ f inance/bank ing/bank ing-https://economictimes.indiatimes.com/industroperations-partially-affected-due-to-trade-y/banking/finance/banking/rbi-kyc-deadline-union-strike/articleshow/67432321.cms Dated may-punch-a-hole-in-wallet-companies-Jan 08, 2018plans/articleshow/67430125.cms Dated Jan 08,
2018
BANKS PROPOSE $900 BANKING OPERATIONS MILLION TURNAROUND PLAN PARTIALLY AFFECTED DUE FOR JET AIRWAYS
Local lenders to Jet Airways (India) Ltd, TO TRADE UNION STRIKEA two-day strike on January 8 and 9 has led by State Bank of India (SBI) proposed
been called by the central trade unions a $900 million resolution plan,
against the alleged repressive policies comprising fresh equity infusion and
for workers adopted by the government. restructuring of $450 million of its
Banking operations have been affected loans. The Jet Airways' turnaround plan,
in some parts of the country as a section if approved by all stakeholders, will
of employees refrained from work in trigger a change in Jet Airways'
support of the two-day strike call given shareholding, with founder chairman
by 10 central trade unions to protest Shri 'Naresh Goyals stake falling below
against alleged anti-labor policies of the the current 51%. The resolution plan was
government. All India Bank Employees' shared with Jet Airways' lessors and
37 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
vendors at a meeting chaired by SBI and December that Etihad Airways has
attended by the airline's senior offered to guarantee loans worth $150
management, including Goyal and a million for Jet Airways to keep the airline
representative of Etihad Airways PJSC, operational.According to estimates, Jet
which holds a 24% stake. While the finer Airways needs close to $500 million
details are still being worked upon, the between now and April to meet
broader contours entail that Shri Naresh repayment obligations and manage
Goyal and Etihad will together infuse operat ing expenses.There is a
$450 million in the company, while the possibility that Goyal may cede
Indian lenders will restructure another operational control to Etihad, which can
$450 million of the airline's debt, which increase its stake to 49% under the
is up for maturity between now and current regulation. Requests for
March this year. The final plan will be put comments sent to Jet Airways and SBI
in place by the end of January and the remained unanswered until publishing
lenders are hopeful that the resolution of this story.An Etihad Airways
plan will be in force by 31 March this spokesperson said the airline “does not
year, which is well before the 180-day comment on rumour or speculation”.Jet
period under the Reserve Bank of India's Airways, which has been facing financial
(RBI's) 12 February circular. The 12 turbulence for a while, has been in talks
February RBI circular relates to how with potential investors to raise fresh
lenders need to deal with stressed equity. The various fundraising options
assets. The circular said a resolution it has explored include a stake sale in its
professional should be appointed within loyalty programme, Jet Privilege Pvt. Ltd,
180 days for defaulting accounts with and a stake sale in the airline to the Tata
aggregate exposure of Rs. 2,000 crore group. While the stake sale in the loyalty
and above. Jet Airways defaulted on its programme drew interest from several
debt repayment on 1 January, following private equity funds, including TPG
which ratings agency ICRA Ltd cut from C Capital and Blackstone Group,
to D the long-term rating on loans and discussions with the Tata Group ended
bonds issued by the airline, which has over Goyal's future role at the airline.
reported three consecutive quarterly https://www.livemint.com/Companies/losses of over Rs. 1,000 crore each since bxFwwHNTpH6sbmavKjoujK/Banks-the quarter ended March 2018. The propose-900-million-turnaround-lenders have also assured Jet Airways' plan-for-Jet-Airways.html vendors and lessors that their dues will Dated: Jan 09, 2018be cleared in three tranches till April, by
which time the lenders expect the BANKS UNCERTAIN ABOUT payment cycle to become regular. As RECOVERING THEIR DUES part of the restructuring, the lenders
AFTER FEO TAG ON SHRI have also proposed a moratorium on
VIJAY MALLYArepayments on loan facilities which are Lenders to Shri Vijay Mallya seem due till April. Mint reported on 7
38 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
uncertain about the fate of their dues say the new law would lead to some
after the beleaguered liquor baron was changes in the procedure for banks
declared a Fugitive Economic Offender making their claims. The FEO is a
(FEO) last week, with provisions of the completely different Act and banks will
new law allowing the government and its eventually have to file a separate
agencies to confiscate the defaulter's application in an appropriate forum to
assets. Confiscation makes the seized claim their dues.
https://economictimes.indiatimes.com/industrassets the property of the government, y/banking/finance/banking/banks-uncertain-leaving some bankers rather worried about-recovering-their-dues-after-feo-tag-that they may lose the right to recover on-vijay-mallya/articleshow/67450105.cms
their loans. Under the provisions of the Dated Jan 09, 2019
Prevention of Money Laundering Act
(PMLA), the properties were attached and ICICI'S SHRI SANDEEP lenders could make an application for
BAKHSHI IS CLEARING the sale and release the assets to the new
COBWEBS AS THE BANK owners, helping recover their dues. The CEOnew act, however, is unclear on this ShriBakhshi has started on a similar provision. Top legal experts say the laws note. If he pulls it off, he may well turn applicable under PMLA are not out to be India's Gorman. The 11th floor applicable under FEO and bankers will executive dining arena at the ICICI Bank need further clarity before staking claim Towers in Mumbai's financial district had to the confiscated assets estimated at an unwritten rule on who sits where on Rs. 12,200 crore. The lenders, as the table. That was mostly driven by interested parties, were part of the hierarchy. That has changed since Shri application filed by the Enforcement Sandeep Bakhshi occupied the corner Directorate (ED) to declare Mallya a office in October 2018. And that's just fugitive. However, there is no clarity on the beginning. Succeeding someone as a how to make the claims. There is a chief executive when the scenario is provision under this law for interested normal is an ideal position to be in, but parties like creditors and even unrelated Shri Bakhshi does not have that luxury. parties, who could have purchased Even for troubled institutions, the assets from Mallya that were later challenge mostly would be either attached. Bankers say they hold the first financial or a tarnished public image. For right on pledged shares as a charge was Bakhshi, after a tumultuous 2018 for the created while disbursing loans to Shri bank, it is both. As Shri Bakhshi sets out Mallya and his companies. The ED is to reinvent the institution that has compiling a list of immovable property played a role for over six decades in for confiscation. Bankers said under the different avatars, the job on hand is to PMLA, the ED could sell assets where remove the cobwebs that have grown there is no charge, but banks held the over the years, project an image that's right to pledged shares where a charge compliant and friendly, and also lay out a has already been created. Top lawyers
39 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
path that would be less bumpy in the as the CEO. Enterprises evolve to survive
future. Along the way, there would be and thrive, else they perish. The Global
compromises and confusion though. Financial Crisis showed how giant
The intentions are right and the strategy financial services firms such as
is clear. But the more difficult part is to Citigroup, Morgan Stanley and JPMorgan
junk past priorities and direct staff to reoriented themselves to grow. In the
think and act differently. Now, they will local market, ICICI Bank is a standing
be averse to sectors where they have example of how reinvention helped it
burnt their fingers. Shedding the past is survive the onslaught of market
more important for a struggling economy in the 90s, when its peers of
institution than executing new ideas yesteryears such as IFCI and IDBI Bank
because the weight of the past if allowed struggle to stay afloat. Under the
to fester could leave any new initiative universal bank model spearheaded by
ineffective. In what could well be the Shri Kamath, it grew substantially in
most significant statement of his retail while still doing project funding.
stewardship, Shr i Bakhshi has When the dependence on wholesale
mentioned no to project funding the funding got the bank into trouble, his
seed which was sown in 1994 as successor Ms. Kochhar fixed it by
Industrial Credit and Investment growing retail deposits aided by
Corporation of India that evolved into executive director Rajiv Sabharwal. When
ICICI Bank. The aversion to project even the state-run banks are struggling
funding is understandable. The banks' for low-cost deposits, ICICI Bank has
stressed assets bad loans plus the nearly half of its deposits in the low-cost
restructured loans is at 8.54% of total current and savings accounts. Just like
loans. The chunk of bad loans is because Shri Kamath's record Rs 25,000-crore
of lending to power projects and other equity helped it tide over the stress, the
infrastructure related ones. While that retail buffer built by Ms. Kochhar could
may be the way to go in an era when well be the springboard for the next take
individual consumers have become more off. With the buffer of low-cost funds, it
dependable than billionaire corporates is looking to expand the retail footprint
with stretched balance sheets and poor enabled by cost-effective technology
equity positions, every burnt lender is and into small and medium enterprises,
going the same way. But that means which have now become bankable
compromise on size. The days of heady because of the Goods and Services Tax.
assets growth may well be behind it. Retail, which comprises 57.3% of its
Under Ms. Chanda Kochhar, who quit last overall loans, may grow further in the
year amid a probe into her corporate next few years. SME which is at 4.6%, will
governance practices, the bank's assets also see a fresh boost with the its centres
grew 1.5 times to Rs 8.74 lakh crore in sanctioning loans nearly doubling to 70.
September 2018, from Rs 3.79 lakh Risk-adjusted profitability will go up.
crore in March 2009, the year when she Some of the mistakes of last time will not
was elevated to succeed Shri KV Kamath be repeated. Algorithms would get
40 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
bigger than humans at ICICI retail, as it the key functions of cost control and
pushes the 'insta' of everything. It will manpower allocations were determined
eliminate paper and human intervention at the head office, but that has since
to the last level. The direction on been given to local offices and branches
everything is insta. Cost of acquisition is with specific targets. This would enable
zero. No one questions decisions. more freedom to managers at midlevel
Conserve branch staff for advisory, and generate more involvement and
despite turning to technology, it would responsibility. Shri Bakhshi has been
net hire 3,500 staff this fiscal. Despite working towards easing internal
the well-meaning directional changes, processes and removing bottlenecks to
projects could falter if things on the enable faster turnaround time for
ground do not change. It could hold true customers.A shift to prudence always
for ICICI Bank as well. So, how is the leads to lower growth rate and investor
execution planned? Decongest.Cutting anxiety, but ultimately leads to
the clutter in the process is the priority sustained growth as seen with the likes
for Bakhshi. There is a lot of delegation of Morgan Stanley under James Gorman
that's going on at the front end. As an since the credit crisis. The most
insider, if a job took two days, now it important thing we are focused on is the
happens in less than half a day. culture of our management team to
Processes that have accumulated over never put our shareholders or society in
the years are getting weeded out. Earlier, the kind of jeopardy like in 2008.
41 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
https://economictimes.indiatimes.com/industr people, and Suryoday 200-250 people. y/banking/finance/banking/icicis-sandeep- Other small-finance banks are also bakhshi-is-clearing-cobwebs-as-the-bank-
expanding their networks. With 464 ceo/articleshow/67464881.cms Dated:
branches, Ujjivan has hired 5,729 people Jan 10, 2019
in the last nine months to take the SMALL BANKS TO HIRE 5,000 current staff strength to 14,304. The MORE STAFF IN 3 MONTHSdiversification at these smallfinance Banking in India is spreading beyond its banks into areas such as two-wheeler urban bailiwick, and small banks are financing, affordable homes, and SME taking something more durable than just financing requires a new talent pool. loan funds to the hinterland – Smallfinance banks have intensified jobs. AU, Ujjivan, Utkarsh, Suryoday and their recruitment drive creating job ESAF, the leading names in India's small-opportunities in smaller towns and finance banking business, are set to hire cities. AU Small Finance Bank's human about 4,000-5,000 people in smaller resource head Shri Manoj Tibrewal towns between January and March, mentioned that the bank would recruit executives heading the expansions at around 500 people every month t h e l a s t m i l e l e n d e r s t o t h e between January and March for branch underprivileged told ET.While hiring has banking business to add to the current been a continuous process in the strength of 13,000 people. This hiring is fledgling small-finance banks, the pace part of our preparation for next year as is quickening as all these lenders are in this is the season for campus the final lap of opening branches in line placements. Small-finance banks, as a with their initial plans.Larger branch group, have total loans outstanding of Rs footprint is leading to more job creation 24,972 crore as on Septemberlast year and relocation opportunities for people with a share of 17% in the country's Rs to want to move to their home-towns. 1,46,741-crore microfinance portfolio. AU Small Finance Bank is looking to hire These banks are hiring both fresh about 1,500 people in the next three graduates and experienced bankers. months, while Ujjivan would add about Talent with experience at overseas 600 people. ESAF wants to hire 500 lenders wants to work in these banks
42 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
that have a restricted lending mandate. related parties as a condition for fund
According to TeamLease, the jobs on based working capital finance by way of
offer include those in analytics, investor pre-shipment or packing credit in
relations, operational risk, and branch foreign currency. Also, all existing
management. borrowers with outstanding of Rs 50
https://economictimes.indiatimes.com/industr crore or more would have to convert y/banking/finance/banking/small-banks-to- partnership firms into corporates by h i r e-5000-more-s t a f f - i n-3-months/ December 2019 - a move that would articleshow/67464600.cms Dated Jan 10, 2019
increase their tax liability. Diamond
houses that are unable to transform into STRICT BANK RULES FORCE
corporates would have to bring in CHANGES IN DIAMOND
additional collateral and pay half a TRADE PRACTICES percentage point higher interest on A year after the Nirav Modi-Mehul Choksi loans. SBI's policy, which could be scam rattled the nation, diamond houses emulated by some state-owned banks, in India are being pushed to change the follows instances of frauds, money-way they have been doing business for laundering and sharp practices that few many decades. Harsh new rules laid diamond houses indulged in. Some down by large banks would force them to restrictions have put a question mark on restructure their entities, change the way they function. Introducing business associates and spend more. restrictions based on geography would The largest lender to diamantaires, State hurt the trade badly. One can understand Bank of India, has imposed funding the exclusion of Dubai. But a quarter of restrictions on borrowers for exports to polished stone exports is to Hong Kong, countries other than USA and Europe, with China, along with Hong Kong, capped exposure at Rs 1,000 crore per emerging as one of the largest borrower, and set stiff credit rating manufacturing centre for studded condition on diamond houses for jewellery. Today, Belgium and Hong additional finance. In its credit policy for Kong are the largest centres for diamond houses, finalized in 2018-end, distribution and trade. The curbs on the bank has stipulated that borrowers dealings with related parties would would have to give an undertaking that compel many diamond houses to rejig rough or cut and polished stones are not themselves in a trade that is known for its procured from associate concerns or secrecy and dealings among community 43 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
members. As per the latest rules by SBI, incremental credit expansion of Rs. 6.3
advance payments for procurement of trillion in the current fiscal, Rs. 4.8
rough diamonds will be permitted to only trillion was in the last four months ended
mining companies as per the list December. The divergence between
approved by the RBI and Gems & credit growth and deposit growth has
Jewellery Export Promotion Council. widened to 600 bps (basis points), as per
While diamond traders validate some of the RBI data. This means a few banks
the safeguards that SBI is putting in have become more aggressive in lending
place, they feel some conditions could be post the liquidity tightness for NBFCs
stif l ing. A corporate, unlike a (non-banking financial companies).
partnership, would have to disclose to Several small NBFCs with lower credit
the Ministry of Corporate Affairs the r a t i n g s h a v e b e e n c u r t a i l i n g
charges on assets against loans. So, disbursements for want of adequate
there would be greater disclose, they funds. The good thing is that
agree. They also admit that the incremental credit growth that had
restriction on advance payment probably slowed down in October has again
follows a few parties making multiple picked up robust pace in November. This
remittances from different banks. is encouraging and clearly evident
https://economictimes.indiatimes.com/industr across retail loans, including housing y/banking/finance/banking/strict-bank-rules- and personal loans (loans to salaried f o r c e - c h a n g e s - i n - d i a m o n d - t r a d e - class, etc) and industry. One of the practices/articleshow/67465635.cms
reasons for the widening gap between Dated: Jan 10, 2019
credit and deposit growth could be the
flow of funds from the bond market to BANK LOAN GROWTH PICKS the credit market. Over the last one year,
UP PACE EVEN AS DEPOSITS bond yields have climbed up from 6.48%
STAGNATE on 1 September 2017 to 8.18% by 9 The loan-to-deposit ratio, or how much November 2018. Also, the recent a bank lends out of its deposits, touched liquidity squeeze because of defaults by a 47-year high in December as IL&FS led to a disruption in the companies approached banks for funds commercial paper market, resulting in a after defaults by Infrastructure Leasing boost to credit growth. Deposit growth and Financial Services Ltd (IL&FS) dried has been stagnating over the last few up demand for commercial papers. months and credit growth has been According to a 7 January report by JM pushing up. With elections approaching, Financial, banks' credit-to-deposit (C- currency leakage could continue and D) ratio rose to 78.6% in December, the slow down deposit accretion to banks. highest since March 1971, when it was That could weigh on credit growth over 79.3%. Credit grew 15.1% from a year the next two months. According to earlier in December, while deposits grew brokerage JM Financial, banks are likely 9.2% in the same period, Reserve Bank of to raise deposit rates if the high C-D India (RBI) data showed. Of the total ratio persists. SBI's analysis says
44 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
incremental retail credit expansion in YES BANK DIDN'T CONSULT the three months to November at Rs. SHRI RANA KAPOOR, MS. 73,800 crore was the highest in a MADHU KAPUR ON CEO decade. It also mentioned credit to NAMESindustry picked up in November, with
The board of Yes Bank Ltd has food processing, fertilizer, cement and
independently shortlisted two potential infrastructure leading the way.
successors to its managing director (MD) Incremental credit to NBFCs fell further
and chief executive officer (CEO) Shri to Rs. 3.7 trillion from Rs. 16.5 trillion in
Rana Kapoor without the consent of the October and Rs. 56.5 trillion in
two estranged promoters of the bank- September, while that to MSMEs showed
Ms. Madhu Kapur and Shri Rana Kapoor. negative growth. Despite all this, credit
Private lender Yes Bank's knotty articles to NBFCs and retail account for 45% of
of association (AoA), which was incremental credit expansion for the
registered with the ministry of corporate three months till November.
affairs in 2005, states that the https://www.livemint.com/Industry/1urZtxOI7
appointment of any whole-time director 7iSqYlL2B83UI/Bank-loan-growth-picks-up-
of the bank will require the joint approval pace-even-as-depos i ts-s tagnate .html
of the two promoters. The board has Dated: Jan 10, 2019
shortlisted the names after the
nomina t ion and r emunera t i on
committee of the bank approved the
n a m e s a c c o r d i n g t o t h e
recommendations of the search and
selection committee and the appointed
leadership advisory firm Korn Ferry. The
two promoters have not been asked for
their recommendations or consent in
this entire process. This is significant
because the bank's AoA states that
without the approval of the promoters
and the Reserve Bank of India (RBI), a
whole-time director cannot be
appointed. A managing director is a
whole-time director. The Bombay high
court ruled in 2015 that the bank must
follow the AoA. Section 127A of Yes
Bank's AoA mentions that to appoint any
whole-time director, the board shall
follow the recommendation made by the
promoters. It also says that the board
may appoint one of its members as a
45 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
whole-time director, but even that BIMAL JALANwould be subject to the AoA and RBI Shri Jalan went on to voice hope that
approval. The conflict between Yes differences with the government would
Bank's promoters began in 2009, a year be settled. The Reserve Bank of India is
after co-founder Shri Ashok Kapur was accountable to the government and
killed in the 2008 terrorist attack in should make policies within the
Mumbai. The board declined to appoint framework set by the government,
Ms. Shagun Gogia, daughter of Shri according to a former central bank chief
Ashok Kapur, as a director because it now heading a panel tasked with framing
was felt she might not meet RBI's fit- guidelines for the transfer of the RBI's
and-proper criteria. In 2013, Ms. Madhu surplus funds to the government. Shri
Kapur (widow of Shri Ashok Kapur) and Bimal Jalan, the 77-year-old ex-
her daughter Ms. Gogia approached the bureaucrat, was appointed to chair the
Bombay high court seeking greater say panel late last month, just weeks after a
in appointing directors and wanted the f i e r ce row over cen t ra l bank
court to uphold their right to jointly independence led to a change at the top
nominate directors. In case Yes Bank of the RBI. Having clashed with the
wants to appoint a whole-time director, government over policy issues for
joint approval of the promoters will be several months, Shri Urjit Patel resigned
required. On 21 November, Mint as governor on Dec. 10, and was swiftly
reported that the bank's promoters were replaced by a former finance ministry
seeking a mutual resolution to ensure official, Shri Shaktikanta Das. One of the
better support and coordination for most contentious issues between the RBI
outstanding issues. Despite the two and Prime Minister Narendra Modi's
promoters initiating talks to settle their government was how much of the profit
family feud, over the past two weeks, Yes made from central bank's trading in
Bank's shares have fallen almost 50% bonds and currencies should be
from its peak in the past year on BSE. The transferred to the government, and how
bank has recently taken measures to much should be retained to build up
improve its corporate governance, reserves. Shri Modi faces an election by
accounting and audit processes. The May and his government is urgently
bank has sent a report on the recent seeking extra funds to finance populist
measures in this regard to RBI in measures like financial aid to farmers
October. and tax cuts for small businesses and the
https://www.livemint.com/Companies/dA27vX middle class. Shri Jalan, who was the Xdx1tk0hwrHs0gfM/Yes-Bank-didnt-consult- RBI's governor between 1997 to 2003, Rana-Kapoor-Madhu-Kapur-on-CEO-
declined to comment on his committee's name.html Dated Jan 10, 2019
recommendations, but he set out his
view on the relationship between the RBI ACCOUNTABLE TO
government and the central bank. The GOVERNMENT, SAYS
RBI is accountable to the government for RESERVES PANEL CHIEF SHRI executing the kind of monetary policy
46 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
that has been announced. There may be RBI TO SCAN Q3 RESULTS differences of views between the BEFORE DECIDING ON RELIEF autonomous institution and the FOR PCA BANKSgovernment. In this case, the Eleven Indian state-owned banks will government should take a larger view have to wait for about a month before depending on what the political situation knowing which of them will have lending is, what is actually happening on the curbs eased after a Reserve Bank of India ground. On the other hand, the (RBI) panel reviews their December autonomous institution has to deliver quarter results. The government has the services that the government has been pressuring the central bank to ease approved as part of policy framework. the curbs on at least some of the banks in Shri Jalan went on to voice hope that an attempt to boost lending and the differences with the government would economy ahead of a general election due be settled, now that the central bank was to be held by May. The RBI's Board for under new management. Soon after Financial Supervision (BFS), chaired by taking office on Dec. 12, Shri Das the central bank's new Governor Shri mentioned that he would consult more Shaktikanta Das, met and looked at closely with the government on policy estimates for the financial performance issues. Under Shri Das, the central bank of the banks in the October-December is likely to transfer an interim dividend of quarter. Based on those estimates, about 300-400 billion rupees ($4.32 billion- three to four of these banks, which in $5.8 billion) to the government by recent years were targeted by the RBI for March, Reuters reported earlier citing tough lending restrictions because of a three sources with direct knowledge of surge in bad loans, capital depletion and the matter. Shri Das has also struck a mounting losses. However, the panel will dovish tone on prospects for inflation wait to examine audited results of banks, and the economy, hinting that the RBI before making a final decision, the might adopt a more growth-friendly source said. The results are due by the monetary framework under his watch, as end of the month but it is unclear when desired by the government. The the next panel meeting will be. The government also wants the RBI to release government has infused capital in some more liquidity to the shadow banking of the banks to help them to adhere to sector and relax its provisioning norms the central bank's capital ratios. for banks. The RBI was open to infusing However, the panel would like to be sure "need-based" liquidity into the financial which of the banks will be able to system, noting that the shadow banking maintain minimum capital ratios under sector was facing a funding crunch scenarios such as a delay in the recovery https://economictimes.indiatimes.com/industr of bad loans in bankruptcy cases. There y/banking/finance/banking/rbi-accountable-
are 21 listed state-run banks in India to-government-says-reserves-panel-chief-
that provide about two-third of the total bimal-jalan/articleshow/67471721.cms
loans in the economy. With nearly half of Dated Jan 10, 2019
them under a PCA plan and the rest
47 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
cautious due to a record $150 billion in the appointment of the new MD and CEO
bad debt, the government is keen the of Yes Bank. On receipt of the RBI
curbs be relaxed to boost their ability to approval, the bank shall duly make the
lend. The government is anxious to woo requisite disclosures to the stock
voters especially farmers and small exchanges, in terms of 'Regulation 30 of
businesses that were hit hard by a high- the Listing Regulations'. There has been
value currency note ban in late 2016 and widespread speculation on Shri Rajat
the introduction of a goods and services Monga, Senior Group President -
tax in mid-2017. However, the RBI was Financial Markets, Yes Bank and former
reluctant to ease the curbs, triggering a MD and CEO of Max Life Insurance Shri
bitter public war of words between the Rajesh Sud as being the front-runners
government and the central bank that for the post. An IANS story on had
ended with former governor Shri Urjit incorrectly referred to Shri Rajat Monga
Patel. as the Executive Director of Yes Bank.
https://www.livemint.com/Industry/3jtHiFRPle The SSC was set up to find a successor to XZnJefxw8IXI/RBI-to-eye-December-quarter- the company's MD and CEO Shri Rana results-before-easing-lending-cu.html Dated: Kapoor. It had been mandated to Jan 10, 2019
evaluate both internal and external
candidates and make su i tab le YES BANK SUBMITS
recommendations to the Board of SHORTLISTED NAMES FOR
Directors within stipulated timelines for MD, CEO POST TO RBI the RBI's final approval. In October 2018, Mumbai, Lending major Yes Bank has the RBI had reaffirmed that a successor submitted the names of the potential to Yes Bank's MD and CEO Shri Kapoor candidates for its Managing Director and should be appointed by February 1, Chief Executive post to the Reserve Bank 2019.of India (RBI). According to the bank, the https://economictimes.indiatimes.com/industr
Board has submitted an application to y/banking/f inance/banking/yes-bank-
submits-shortlisted-names-for-md-ceo-post-the RBI to seek its approval for the names to-rbi/articleshow/67472854.cms Dated: Jan of the selected candidates. The bank in a 10, 2019
regulatory filing after its Board meeting
it has finalized the names which it will SYNDICATE BANK HINTS
disclose only after the RBI's approval. THAT LOAN WAIVER MAY According to the bank, the candidates CHALLENGE NPA REDUCTION were finalized on the basis of
EFFORTSrecommendations made by the Search
Syndicate Bank has hinted that the spate and Selection Committee (SSC) and the
of farm loan waivers by several states in Nominat ion and Remunerat ion
the recent times may challenge its Committee (NRC). As mandated under
efforts to reduce NPA. The bank, which is the extant RBI norms, the Bank's Board
hoping to break even at the end of this will submit an application to the RBI on
fiscal year, has taken a series of January 10, 2019, seeking approval for
48 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
measures to bring down NPA level. The recommendation on the managing
bank has sizeable NPA exposure in director and chief executive to the
corporate and agriculture sectors. The Reserve Bank of India (RBI) after its board
farm loan waiver is a matter of concern meeting on January 9. Names were
for us and could make recovery difficult. shortlisted by a search and selection
The bank has started seven stress asset committee, which had the mandate to
management branches in the country evaluate both internal and external
with instructions to recover NPA above candidates and make su i tab le
Rs 5 crore. The stress asset management recommendations to the board within
branch usually deals with NPA of Rs 50 the stipulated timelines for RBI's final
crore and above. The bank is expecting a approval. In October, RBI had mentioned
growth of 3 to 5% in the current year. The that a successor to Yes Bank's MD and
bank recently proposed to raise Rs 500 CEO Shri Kapoor be appointed by
crore by issuing stock to its members February 1, 2019. The two estranged
under the ESPS scheme. It is also looking promoters, Ms. Madhu Kapur and Shri
at other avenues like rights and bond Rana Kapoor, have been holding
issues to raise capital. conversations to settle the CEO and
https://economictimes.indiatimes.com/industr chairman selections.y/banking/finance/banking/ syndicate-bank- https://economictimes.indiatimes.com/industrhints-that-loan-waiver-may-challenge-npa- y/banking/finance/banking/rajesh-sud-pulls-reduction-efforts/articleshow/ 67475472.cms out-of-race-for-ceos-post-at-yes-bank/
Dated: Jan 10, 2019 articleshow /67480391.cms Dated Jan 11, 2019
SHRI RAJESH SUD PULLS OUT OF RACE FOR CEO'S POST AT YES BANKnext Chief Executive, has pulled out of
the race for the top job, leaving insider
Shri Rajat Monga as the sole
recommendation for the regulator to
approve. Shri Sud pulled out of the race
after having shown interest earlier. Shri
Sud was reportedly in the reckoning,
along with Yes Bank veteran Shri Monga,
BANDHAN BANK CLEANSED to head the private sector lender. The
central bank has cut short the executive ITSELF OF IL&FS BEFORE GRUH tenure of Shri Rana Kapoor to January 31. MERGERShri Monga has been with the bank since Microlender-turned-universal bank its inception in 2004. He serves as senior Bandhan Bank Ltd seems to have realized group president of financial markets at its folly of venturing too far into non-Yes Bank and also been its chief financial microloans. Its exposure to beleaguered officer. The bank has sent its Infrastructure Leasing and Financial
49 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
Services Ltd (IL&FS) has sucked out Rs. rewards. But as this column pointed out
385 crore from its profits in the earlier this week, the acquisition was
December quarter (Q3) by way of expensive, valuing Gruh Finance at
provisions. That amounts to nearly 13% almost 14 times its net worth. Needless
of the bank's trailing 12-months pre-tax to say, Bandhan Bank has to work extra
profit. The lender has provided for all of hard to make the acquisition accretive in
its exposure to IL&FS, even as other terms of earnings per share. The 'banks
banks continue to dither on this. As per stock has lost 11% since the merger
Bandhan Bank's chief Shri Chandra announcement as a result of the high
Shekhar Ghosh he has learnt his lesson share dilution. Despite the Gruh Finance
from believing in AAA-rated paper. merger, Bandhan Bank still has to bring
Indeed, small microloans are where his down promoter stake by another 20% to
strength is. The exposure has worsened meet regulatory requirements, which
the bank's NPA ratio to 2.4% for means investors may be staring at
December from 1.67% a year ago. Had it another large dilution. The stock trades
not been for IL&FS, Bandhan Bank's gross at four times its estimated book value for
bad loan ratio would have been 1.3%, fiscal year 2020. For it to be taken
according to Ghosh. But that is about it seriously by investors, it will have to fix
as far as the bad news for the lender its promoter stake to meet regulatory
goes. Bandhan Bank's third quarter approval.
https://www.livemint.com/Money/xJnBBKO7wZmetrics were encouraging if one ignores j7tq5SJq2zbN/Bandhan-Bank-cleansed-itself-the IL&FS debacle. Credit growth came at of-ILFS-before-Gruh-merger.html Dated: Jan a brisk 46%, led by 27% growth in 11, 2019
microloans and 35% growth in non-
microloans. The robust disbursements RBI SLAPS RS 3 CRORE
led to a core income growth of 54% and a PENALTY ON CITI BANK
net profit growth of 10% for the quarter. INDIAThe Q3 results were impressive enough The Reserve Bank of India (RBI) has for investors to forgive the lender for its imposed a penalty of Rs 3 crore on IL&FS mistake, as was evident from the Citibank India for not complying with 3.8% rise in the stock after the earnings directions regarding the 'fit-and-proper declaration. Now that Bandhan Bank has criteria' for directors of the bank. The RBI put that mistake behind, it would have to in a statement, however, added that the make sure the merger with Gruh Finance action is based on deficiencies in Ltd is smooth. Considering Gruh regulatory compliance and is not Finance's pristine asset quality, Bandhan intended to pronounce upon the validity Bank would not have to worry about toxic of any transaction or agreement entered loans. That Shri Ghosh is aware of the into by the bank with its customers. The bank's strengths in small-ticket loans is Reserve Bank of India (RBI) has, by an what makes investors confident that the order dated January 4, 2019, imposed a entry into affordable housing through monetary penalty of Rs 30 million on the Gruh Finance merger will reap
50 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
Citibank NA India (the bank) for founder and chairman of Capital First
deficiencies in compliance with the RBI Ltd, as managing director and chief
instructions on 'Fit and Proper' criteria executive officer of the merged entity.
for directors of banks," it said. In July The combined entity will serve 7.2
2013, the RBI had issued a "cautionary million customers through 203 bank
letter" to Citibank for violations of branches, 129 ATMs and 454 rural
instructions regarding know your business correspondent centers.
customer or anti-money laundering. The https://economictimes.indiatimes.comUS-based Citibank has been operating in /industry/banking/finance/banking/idfIndia for over 115 years. The bank has 35 c - b a n k - r e - n a m e d - i d f c - f i r s t -branches in India and a network of 541 bank/articleshow /67502933.cmsATMs, according to the latest RBI data. Dated Jan 12, 2019https://economictimes.indiatimes.com
/industry/banking/finance/banking/rbi RBI CAUTIONS GOVERNMENT - p e n a l i s e s - c i t i g r o u p s - i n d i a - OVER NPA SPIKE IN MUDRA unit/articleshow/ 67491639.cms LOANS:Dated: Jan 11, 2019
The Reserve Bank of India (RBI) has raised
a red-flag on the spike in non-IDFC BANK RE-NAMED IDFC performing assets (NPAs) under the FIRST BANK government's flagship scheme to The combined entity will serve 7.2 support micro enterprises in the million customers through 203 bank country- the Pradhan Mantri Mudra branches, 129 ATMs and 454 rural Yojana. According to Finance Ministry business correspondent centers. Private sources, RBI has cautioned the ministry sector lender IDFC Bank mentioned its that the scheme might turn-out to be the name has been changed to IDFC First next big source of NPAs, which have Bank Ltd with effect from Saturday. The plagued the banking system. The central name of the Bank has been changed from bank has flagged that bad loans under IDFC Bank Ltd to 'IDFC First Bank Limited' PMMY have risen to Rs 11,000 crore. As with effect from January 12, 2019 by per the annual report of PMMY, 2017-virtue of 'Certificate of Incorporation 18, total disbursements under the pursuant to change of name' issued by scheme stood at Rs 2.46 trillion in FY 18. the Registrar of Companies, Chennai". Out of this, 40 per cent were disbursed IDFC Bank and non-banking financial to women entrepreneurs and 33 per cent company Capital First had announced to social categories. More than 4.81 completion of their merger on December crore micro borrowers have benefited 18, creating a combined loan asset book through PMMY during the year FY2017-of Rs 1.03 lakh crore for the merged 18. The PMMY was launched on April 8, entity. Following the merger, the board 2015. Under the scheme, banks are of IDFC Bank had approved the required to finance micro and small appointment of Shri V Vaidyanathan, entrepreneurs for up to Rs 10 lakh.
51 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
Loans can be granted under three STATE BANK OF MAURITIUS categories - up to Rs 50,000 under FILES COMPLAINT WITH 'Shishu'; Rs 50,001-Rs 5 lakh under SINGAPORE POLICE TO TRACK 'Kishore' and between Rs 5,00,001 and DOWN HACKERSRs 10 lakh under 'Tarun' category. In
The State Bank of Mauritius (SBM) has addition, RBI's caution comes at a time
filed a complaint with the Singapore when the country's financial system in
police to track down unknown hackers reeling under sevier stress due to the
who allegedly withdrew Rs 19 crore from IL&FS crisis which continues to hurt
its branch in Mumbai. A complaint about banks with impairments, the most recent
the hack was first filed with the Mumbai case being IndusInd Bank. On January 9,
police in November 2018. SBM had IndusInd Bank in its latest quarterly
alleged then that its SWIFT payment earnings result statement without
gateway had been hacked on October 2 naming the IL&FS Group mentioned,
in an attempt to transfer Rs 147 crore. Advances granted to various companies
Although the attempt was stopped after and SPVs belonging to a Group in the
one of the four remitting foreign banks infrastructure sector against certain
raised queries about the transaction with identified cash flows and pertaining to
SBM, the bank had lost close to Rs 19 specific assets are 'Standard' as at
crore by then. Bank officials have December 31, 2018 on the basis of the
intimated us about lodging a complaint conduct of the accounts till date. Since
with the Singapore police, mentioned October 1, 2018, certain governance and
police inspector Shri Kishore Parab, who management changes have taken place
is in charge of the bank fraud in the Group and measures to turn it
department of the Economic Offences around through a Resolution Plan are
Wing (EOW), a specialized unit of the underway. The bank mentioned it was
Mumbai Police that probes financial monitoring the developments and
frauds. Since the company in whose implications of the 'Resolution Plan'. In
account the funds were transferred is the interim, as a prudential measure, the
registered in Singapore, the bank has bank has made a contingent provision of
lodged a complaint with them. The FIR Rs 255 crore on these 'Standard' assets
copy of the complaint lodged with the during the quarter ended on December
Mumbai police has been shared with the 31, 2018, in addition to an amount of Rs
Singapore police. Bank has filed 275 crore made during the quarter
complaints with the Singapore Police and ended on September 30, 2018. Total
Mumbai Police, EOW on the cyber provisions attributable to this exposure
hacking incident. The hack at SBM's are Rs 600 crore.
Nariman Point branch was stopped after https://economictimes.indiatimes.com/industr
a London bank got suspicious when y/banking/finance/banking/rbi-cautions-
multiple remittance requests were raised government-over-npa-spike-in-mudra-
within the span of a few hours on an loans/articleshow/67511045.cms Dated:
Jan 13, 2019 Indian bank holiday. The requests
52 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
exceeded the amount typically raised on salary, performance bonus and stock
a single working day and that prompted options to the senior most executive.
the London bank to immediately raise a The regulatory guidance that exists
query with SBM, after which the process today is a general directive on the
was stopped. The bank found that the remuneration of senior officials in broad
email requests to release the amounts functions like 'business', 'control' and
were sent from an email ID similar to the 'risk'. What is being considered is one
one used by the in-charge of SWIFT that specifically relates to CEO
transactions at its Nariman Point branch. compensation. Even today RBI clears the
The bank managed to stop most of the remuneration of a bank CEO and has the
transactions. The Mumbai Police found powers to claw back a slice of it in case of
that the amount of Rs 19 crore was non-performance or governance lapses.
routed to an account in a Hong Kong However, a framework would ensure that
based bank in the name of a Singapore the board does not have to shoot in the
company. The Hong Kong bank had also dark while approving the package for the
figured in a case involving Pune-based CEO and referring it to RBI for its
Cosmos Bank, which had been hacked in clearance. Though such a framework
a similar manner in August 2018. would be significant for private banks, it
According to sources, the amount was would also hold relevance for PSU banks
further transferred from the Hong Kong which are considering incentives and
bank to several other accounts, some of ESOPs for employees. Central bank
them in Nigeria. The EOW now plans to officials have shared the idea with senior
send Letters Rogatory (LRs) to tie up the bankers in the course of conversation. In
investigation. the wake of instances of large non-
performing assets, sharp practices like https://economictimes.indiatimes.cominadequate provisioning of sticky loans, /industry/banking/finance/banking/stair-brushing financials to prop up a t e - b a n k - o f - m a u r i t i u s - f i l e s -profitability, and evidence of fiduciary complaint-with-singapore-police-to-negligence by board of directors, the track-down-hackers/articleshow/ regulator is bringing about finer changes 67519597.cms Dated: Jan 14, 2018in its supervision style some of which are
aimed at assessing the performance of RBI TO FRAME RULES FOR bank boards. For instance, RBI BANK CEOS' PAYinspectors are beginning to ask banks The Reserve Bank of India (RBI) is whether any of the independent working on a set of rules that would link directors have given a dissent on certain remuneration of banks CEOs to proposals which a board and the parameters like balance sheet size of a management may have eventually bank, loan delinquency, profits and passed; whether such dissent notes have governance record. The proposed been properly recorded. Also, in some framework is expected to provide a RBI has insisted that the non-executive broad template to the board of directors chairman and the head of bank audit of banks while approving increase in
53 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
committee are present in the meeting by inducting specialists from the private
that follows the completion of the annual sector. The government is looking at
inspection of a bank by the regulator. RBI how the bank boards can be empowered
wants to know whether these external to rate the performance of the MDs and
directors have been kept in the loop on EDs, which will require KRAs to be
certain decisions and what they think reworked on the basis of EASE, or
about these decisions. More than ever, Enhanced Access & Service Excellence
the regulator is keen to know about the the road map for re-orienting banks that
quality of debate within bank boards, was implemented last year. The
and the involvement of independent department of financial services is in the
directors. In other words, a non- process of rating banks on the basis of
executive chairman or other outside compliance of the 60 parameters listed
directors cannot get way easily. under EASE. While the government has
https://economictimes.indiatimes.com/industr undertaken consolidation in PSBs by y/banking/finance/banking/rbi-to-frame- merging SBI associates with the parent, rules-for-bank-ceos-pay/ articleshow/ and Bank of Baroda, Vijaya Bank and 67519638.cms Dated: Jan 14, 2018
Dena Bank, Kumar indicated that further
steps will have to wait as the government GOVERNMENT TO REWARD
is also pushing other banks to focus on TOP PERFORMERS IN PSBS
niches. Over the last few years, the The government is readying steps to
government has been focusing on reward top-performing employees of
revamping state-run lenders that have Public Sector Banks (PSBs), apart from a
been weighed down by non-performing board-driven appraisal of the top
assets, which Shri Kumar mentioned is management and governance reforms,
now fully recognized and loan recoveries while identifying lenders such as Indian
have been impressive so far this year. Overseas Bank and Punjab & Sind Bank
https://economictimes.indiatimes.com/industrfor focus on niche banking. The y/banking/finance/banking/ government-to-
government will slowly reduce its stake reward-top-performers-in-psbs/articleshow/
67521854.cms Dated:Jan 14, 2019in PSBs to 52% in the coming months
after a series of recapitalization pushed
STAGE SET FOR RBI RATE up its shareholding. While the next
round of capital will be given after the CUT AS RETAIL INFLATION parliamentary sanction for disbursal of FALLS TO 2.19%additional funds is received, the sale of India's retail inflation and wholesale non-core business and closing down of inflation fell to multi-month lows in overseas operations of some of the December amid signs of weakening banks will help them meet funding economic recovery, creating wiggle requirements. As per financial services room for the Reserve Bank of India's (RBI) secretary Shri Rajiv Kumar, banks are monetary policy committee to cut being asked to bolster treasury, risk interest rates at its meeting on 7 management and technology functions February. Data released by the Central
54 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
Statistics Office (CSO) showed consumer Bank, expects the RBI's monetary policy
price index (CPI) based inflation at an committee to change the stance to
18-month low of 2.19% in December neutral in the February policy and remain
against 2.33% a month ago, as food on an extended pause on policy rates.
prices continued to slide. The wholesale Despite the sharp fall in petrol and diesel
price index (WPI) data released earlier by prices in December, the core inflation
the Department of Industrial Policy and (CPI) was elevated. This was due to the
Promotion showed that wholesale price high sequential inflation seen in health
inflation decelerated to an eight-month and education sub-groups. CPI
low of 3.8% from 4.64% the previous trajectory is likely to remain benign till
month, on the back of softening inflation H1 FY20, after which it may show an
for fuel as well as manufactured items. uptick. Ms. Shubhada Rao, chief
With crude oil prices falling 40% in past economist at Yes Bank, going forward,
three months, higher oil production in she expects further downside in her
the US and weakening oil demand, average inflation projection of 4% in
analysts do not expect oil prices to rise FY19, closer to the 3.5-3.7% band. This
further. While the Indian crude basket paves way for the MPC to not just change
declined to $57.8 billion per barrel in its stance to neutral but also mull over a
December from $65 billion per barrel a possible rate cut. However, Shri Sunil
month ago, the rupee appreciated to Kumar Sinha, principal economist at
70.72 per dollar in December from 71.79 India Ratings, mentioned RBI may watch
per dollar in the previous month, slowing out for the fiscal deficit target of 3.3% of
fuel inflation. Slower-than-expected GDP in 2018-19 which may be missed.
economic growth projection and a Finance minister Shri Arun Jaitley will
benign inflation scenario may force RBI present his Interim Budget on 1 February
under its new governor Shri Shaktikanta ahead of the general elections due in
Das to change its stance and cut rates to April-May. The government has already
support growth. India's factory output exhausted 112% of the full-year fiscal
growth measured by an index and deficit target in the first eight months
industrial production (IIP) crashed to its (April-November) of the fiscal year.
lowest in 17 months at 0.5% in Subdued collections in goods and
November, the outcome of an services tax (GST) and slow progress in
unfavorable base effect as well as its disinvestment programme have put
contraction in manufacturing, data pressure on the government's fiscal
released by CSO on Friday showed. The math for the current year. RBI governor
CSO's full-year growth estimate Shri Shaktikanta Das, who took charge
suggests that in the second half last month, mentioned at his first press
(October-March) of 2018-19, the conference that inflation remained
economy may slow down to grow at within RBI's target and its outlook was
6.75% compared to 7.65% in the first half benign. Principal economic adviser in the
(April-September). Shri B. Prasanna, finance ministry Shri Sanjeev Sanyal had
head, global markets group at ICICI in an interview mentioned that RBI needs
55 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
to structurally reduce interest rates as denied another three-year term in
the government has anchored inflation September last year by the RBI. The bank
to a lower level. has until January 31 to find a
https://www.livemint.com/Politics/U4w4XXdot replacement, according to a timeline set 4oaF9lVmEgzPK/Indias-retail-inflation-falls- by the banking regulator. Executive to-219-in-December-2018.html Dated: Jan 14, search firm Korn Ferry was appointed to 2018
help the search panel, which included DEUTSCHE BANK'S SHRI
former Insurance Regulatory and RAVNEET GILL LEADS INSIDER Development Authority chairman Shri TS SHRI RAJAT MONGA IN RACE Vijayan and three members of the
FOR YES BANK CEO board's nomination and remuneration
Deutsche Bank's India CEO Shri Ravneet committee- Brahm Dutt, Mukesh
Singh Gill is the frontrunner in a two- Sabharwal and Subhash Kalia. The panel
horse race for the chief executive's post had initially shortlisted eight names
at Yes Bank. Shri Gill and Yes Bank CFO including a CEO from an insurance
Shri Rajat Monga were the two company, present and former executives
recommended by the board of the bank from HDFC Bank and also some Indian
for the position to the Reserve Bank of expat CEOs from abroad. Many of them
India (RBI). These two names have gone declined any interest in the bank and
to the RBI and Shri Gill, by virtue of being these two names have finally made the
an outsider along with his experience as cut. Among the people who were
CEO of a bank, is the frontrunner. Yes approached but mentioned they weren't
Bank has been on the hunt for a new CEO interested were Shri Rajesh Sud, Vice
since founder Shri Rana Kapoor was Chairman at Max Life Insurance. Another
56 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
https://economictimes.indiatimes.com/industrDubai-based foreign banker of Indian y/banking/finance/banking/ deutsche-banks-origin also confirmed that he had ravneet-gill-leads-insider-rajat-monga-in-
declined an offer. With Shri Gill and Shri r a c e - f o r - y e s - b a n k - c e o / a r t i c l e s h o w /
Monga in the fray, the bank board thinks 67534587.cms Dated: Jan 15, 2019
they have two strong candidates. Shri CENTRAL BANK OF INDIA CEO Monga has been with the bank almost MOVES TO TURN AROUND since inception and is ready to take over
LENDERfrom tomorrow. Shri Gill has been
Shri Pallav Mohapatra, the new managing Deutsche India CEO since 2012 and has
director and chief executive officer at been granted an all-clear by RBI just in
loss-making Central Bank of India, July 2018. His experience and pedigree
prefers to take a hands-on approach in cannot be ignored. Shri Gill has spent his
running the bank. His 10am meeting 32-year banking career at the German
with the bank's executive directors and lender and taking over as India chief
general managers for risk and treasury executive in July 2012. Shri Gill has
sets the tone for the day. Shri Mohapatra, handled capital markets, treasury,
who was at State Bank of India (SBI) till structured finance, foreign exchange,
September, has initiated steps to turn transaction banking, risk management
around Central Bank, which has been and private banking.
reporting losses for the last 12 quarters
since December 2015. One of the
changes is to take a bullish approach
toward the commercial paper market
(CP), instead of letting excess liquidity
idle away in Statutory Liquidity Ratio
(SLR) holdings. The bank is trying to
lower its SLR holdings from the current
29% to around 23% gradually, by moving
the excess liquidity to the commercial
paper market. The bank has been under
the Reserve Bank of India's (RBI) prompt
corrective action framework since 14
June 2017 which curtails its lending
power in favour of conserving capital.
Every day, for the treasury operations, he
devote half-an-hour to my treasury
team. He looked at how things are
moving and he tells them from which
sources they should pull out and where
should they invest in. He added that by
doing so, the bank is attempting to
reduce the volatility associated with the
57 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
bond market. Instead of this, if he sees a not worsen any further. At the end of
better yield in a CP, he would like to September quarter of FY19, the bank's
reduce the excess SLR investment. Since gross bad loans stood at Rs. 37,411
there is a risk associated with CPs, he crore and slippages stood at Rs. 2,611
have done a risk assessment to decide in crore. Their plan for the current year is to
which CPs he should invest in, in case of not have more than Rs. 1,500-2,000
lack of good CPs to invest in, the bank crore in slippages every quarter of FY19.
will go into high-yielding treasury bills Next year, he want to contain slippage to
or in the state development loans (SDLs) less than Rs. 1,000 crore per year, this
rather than the overnight market. That will restrict the interest reversal on
apart, Shri Mohapatra is putting in place account of slippages.
https://www.livemint.com/Companies/avLjE7ca structure where a couple of corporate EgwQgXkkLNyJvhK/Central-Bank-of-India-loan branches will be created to handle CEO-moves-to-turn-around-lender.htmlloans of Rs. 50 crore and above. These Dated: Jan 15, 2019
branches will directly report to the
general manager for credit at the head MUDRA NPAS NO ISSUE,
office. Similarly, the bank is creating a FINANCIAL SERVICES vertical for stressed assets and has SECRETARY SHRI RAJIV received board approval for it. In the
KUMARearlier structure, branch managers
The government is not worried over reported to regional managers, who
delinquencies in Mudra Yojana, its reported to field managers, who
flagship scheme for promoting reported to vertical heads and who in
entrepreneurship and small businesses turn, reported to executive directors.
as most of the loans are securitized. Now, when the credit and stressed assets
Financial Services Secretary Shri Rajiv are taken out from the field, the focus of
Kumar mentioned that small borrowers the field GMs will be on retail deposits
are far more responsible and responsive and loans. As of today bank has around
than large corporate borrowers. Mudra 13 zonal offices and we will be
loans are a transformative and a consolidating them, although they have
directional shift in the entire Indian not decided into how many, this
banking system which will strengthen streamlining would cut down the
the Medium and Small Enterprises turnaround time. The bank is also
(MSEs). As per Shri Kumar, there is a case planning to shut 20 branches in metro
for relaxation of capital norms and for and semi-urban areas and has also
them aligning with the international identified some currency chests to
Basel III norms, considering the steps the surrender to the RBI. It has also identified
government has taken to adequately some high-rental metro and urban
capitalize lenders. According to reports, branches from where it wants to exit.
around Rs 11,000 crore of lending under With more than 21% of its loans having
Mudra has gone bad. But as per Shri turned bad, the bank wants to contain
Kumar, most of the loans below Rs 1 slippages so that the asset quality does
58 - ASSOCHAM Banking e-Bulletin - Volume - 45
I N D I A
59 - ASSOCHAM Banking e-Bulletin - Volume - 45
crore are securitized. In corporate loans, separate vertical comprising around
however, in many cases, it is secured 1,200 of its existing staffers to recover
against the future earnings. If you look at its Non-Performing Assets (NPAs)
the cases in Debt Recovery Tribunals, amounting to around Rs 27,000 crore.
most loans below Rs 1 crore are The 'Stressed Asset Management (SAM)'
securitized,such loans are also the way vertical would comprise legal as well as
forward, given the economy is getting credit experts who would help branch
formalized and you want the youth and managers to device plans to recover
unfunded to get out of money lenders' dues from NPAs , including large
clutches. As on December 2018, there corporates, mentioned executive
are 29.972 million loan accounts with Rs director of the PSU bank Shri Ajay K
1.51 lakh crore disbursed under the Khurana. Out of Rs 27,000 crore which
Pradhan Mantri Mudra Yojana (PMMY). have been declared as NPAs, the share of
Around 74% of the beneficiaries under large corporates is around Rs 14,000
the scheme are women. Mudra has given crore. The team members of SAM have
support to these smaller entrepreneurs been given training regarding the
which are a necessity for social security functioning of National Company Law
and social inclusiveness. The Medium Tribunal(NCLT) and various aspects of
and Small Enterprises (MSEs) form the insolvency, and will be deployed in all the
'missing middle' which needs to be regions depending on the number of
strengthened if India Inc. needs to gain NPA accounts. The PSU bank is now
momentum. Around 11 crore people are focusing more on giving loans to MSME
dependent on self-enterprises or in the and retail sector rather than large
MSME space as per the latest surveys. An corporates. Syndicate Bank aims to give
entire digital pipeline has been created loans worth Rs 10,000 crore to MSMEs
through opening of accounts, linking during the next two months. In coming
them with the GeM portal, with financial months, Syndicate Bank is planning to
institutions on the other end. A borrower introduce a system of giving in-principle
at the lower end is far more responsive, approval for MSME loans up to Rs 5 crore
responsible and concerned about his within just 15 minutes.
https://www.livemint.com/Politics/3FEsadlozreputation in the society and therefore,
does not want to deliberately default.
https://economictimes.indiatimes.com/industr LARGE BORROWERS FALL IN y/banking/finance/banking/mudra-npas-no- LINE AFTER RBI'S ONE-DAY issue-financial-services-secretary-rajiv-
DEFAULT NORMkumar/articleshow/67532207.cms
A central bank rule mandating disclosure Dated: Jan 15, 2019
of loan default even if it is just by a day is
putting the fear of god in big borrowers. SYNDICATE BANK CREATES Borrowers, who owe more than Rs. 5 VERTICAL TO RECOVER RS crore, are gradually regularizing 27,000 CRORE NPASrepayments following the 'Reserve Bank
The Syndicate Bank has created a
I N D I A
60 - ASSOCHAM Banking e-Bulletin - Volume - 45
of Indias (RBI) 12 February circular longer want any stressed asset on their
asking banks to disclose any payment books and, subsequently, the amount of
default. Responding to a Right to loans under special mention accounts
Information (RTI) query from Mint, RBI (SMA) has also dropped. To some extent,
mentioned the total outstanding loans of the introduction of the Insolvency and
borrowers, who defaulted on bank loans Bankruptcy Code (IBC) had also helped,
(under the one-day default norm), has he added. Asset quality of banks
declined more than 60% to Rs. 55,070 improved in Q2 FY19, with gross NPAs as
crore on 30 September 2018 from Rs. a percentage of total loans declining
1.53 trillion on 30 June. To be sure, these from 11.5% in March 2018 to 10.8% in
are not soured assets, but loans where September 2018. The one-day default
borrowers did not pay instalments on norms were initially not received well by
time. However, the data also shows that the industry and a section of lenders. So
one-day defaults dipped to a low of Rs. much so that in April last year, RBI
50,306 crore on 31 August from Rs. deputy governor Shri N.S. Vishwanathan
91,280 crore on 31 July and rose 9% in explained in a speech that the revised
September. There is a clear change in framework tries to reduce the arbitrage
borrowers' behavior and banks are also borrowers are currently enjoying while
more alert in taking up these incidents. A raising funds through borrowing from
message has been sent to errant banks, as against raising funds from the
borrowers that defaults would not be capital markets. If a borrower delays
tolerated. Large borrowers, experts coupon or principal payment on a
mentioned having started paying up on corporate bond even for a day, the
time due to fears of their companies market would penalize the borrower
being referred to the bankruptcy court heavily, but defaults in bank borrowings
and eventually losing control of their have not led to a similar reaction. There
assets. In its circular, the central bank is a need to change this and restore the
asked lenders to institute a board- sanctity of the debt contract, lest bank
approved policy for resolution of debt becomes subordinate even to
stressed assets. Banks were told to start equity. According to RBI data, the top
the resolution process as soon as a 100 large borrowers accounted for 16%
borrower defaults on a term loan and of gross loans and 21.2% of gross NPAs
were given 180 days to cure it, failing of banks at the end of the September
which the account would have to be quarter of FY19. For large borrowers, the
referred to the National Company Law proportion of outstanding loans with any
Tribunal (NCLT). Under previous signs of stress (including SMA 0, 1, 2,
guidelines, lenders had the freedom to restructured loans and NPAs) has come
initiate the resolution process after 60 down from 30.4% in March 2018 to
days of default. Earlier, only the NPA 25.4% in September 2018. Some experts
(non-performing asset) classification say the one-day default norms are hard
was taken seriously by borrowers, not on some borrowers, who default due to
defaults. That has changed as banks no genuine business concerns. Former RBI
I N D I A
61 - ASSOCHAM Banking e-Bulletin - Volume - 45
sZYsMBsQPLtlK/Large-borrowers-fall-in-line-deputy governor Shri S.S. Mundra after-RBI-one-day-default-norm.htmlmentioned that while it is critical to keep Dated: Jan 16, 2018
strict timelines for monitoring credit
quality, it has burdened bankers who are BANKS SEEK QUICK RELEASE already pressed for time. In some cases, OF VIJAY MALLYA ASSETS FOR where the defaults occur owing to
LIQUIDATIONgenuine cash flow issues, banks A 12-bank consortium led by State Bank nonetheless have to start the resolution of India (SBI) has moved a Mumbai court process, arrange meetings and look for seeking the release of Vijay Mallya's revival plans. This has to be done each assets that the Enforcement Directorate time a borrower defaults and it has to be (ED) has attached so that these can be stopped as soon as they repay, leading sold “immediately” to realize the best to an exercise that could have been value. The banks urged the court hearing avoided had there been a buffer period. the Prevention of Money Laundering Act However, the former RBI deputy (PMLA) case that the assets be restored governor added that not only has IBC to them so that they can “appropriate the changed the way a borrower looks at the proceeds” without delay. The banks system, but bankers also have begun contended that the attached assets were timely stress assessment exercises.“amenable to market fluctuations and
any delay in liquidating those assets may
reduce their value”. Hence, there is a
“need for immediate and speedy
disposal of the assets to realize their
best value”. The lenders urged the court
to allow their request “in the interest of
economy and the banking system, which
face dire circumstances due to
unrecovered NPAs (Non-Performing
Assets). They added that the “rights of
the banks, which are second creditors to
recover their dues, would take
precedence over the state's right to
attach the assets of Mallya after being
declared a proclaimed offender”. The
application mentioned if the court lifts
the attachment order, banks will be able
to liquidate the assets through the Debt
Recovery Tribunal (DRT), Bengaluru, and
recover their money. The “amounts
sought to be recovered is public money”
and in initiating this action, the banks https://www.livemint.com/Industry/4qEIqln9Q
I N D I A
62 - ASSOCHAM Banking e-Bulletin - Volume - 45
are “only safeguarding public interest”. December 21, 2010. They have already
The court had attached the assets on sought to assert their rights but are
November 11, 2016, at ED's request. unable to proceed due to the court's
Banks have claimed a “legitimate attachment order of November 2016,
interest” in all properties belonging to they said. Apart from SBI, the parties to
Kingfisher Airlines (KAL), United the case are Bank of Baroda, Corporation
Breweries Holdings (UBHL), Mallya, and Bank, Federal Bank, IDBI Bank, Indian
Kingfisher Finvest India (KFIL), including Overseas Bank, Jammu & Kashmir Bank,
movable and immovable properties. Punjab & Sind Bank, Punjab National
Banks claim Mallya owes them over Rs Bank, UCO Bank, United Bank of India
6,230 crore with an interest of 11.50%, and JM Financial Asset Reconstruction.
as held by DRT in February 2017. The lenders provided both fund and
Inclusive of interest and other penalties, non-fund based working capital
the banks have said Mallya owes Rs facilities and rupee term loan facilities
9,000 crore as repayments for loans to including short-term loans to KAL
Kingfisher Airlines. Mallya, who is starting 2005. However, KAL failed to
fighting extradition from the UK, adhere to the terms of the loan pacts,
recently became the first person to be they said. ED had passed an attachment
declared a fugitive economic offender in order on September 3, 2016, attaching
India under the provisions of the Fugitive several of Mallya's assets. The court's
Economic Offenders Act, which came November order followed this.
into effect in August last year. Wanted
fo r ques t ion ing about money
laundering, criminal conspiracy and
fraud charges over Kingfisher Airlines'
loan defaults, Mallya has denied
accusations of wrongdoing and
mentioned he wants to settle with the
banks. The ED plans to auction Mallya's
equity holdings attached by the agency
once the PMLA court passes its order on
confiscating his assets, likely in the
second week of February. The PMLA
court will decide next month if the
attached properties are free of
encumbrances. If the court does not
detach the properties allowing the banks
to liquidate them and recover their dues,
the rights of banks will “suffer
irreparable loss and injury. The banks
have staked their claim by virtue of
https://economictimes.indiatimes.com/industrMallya's personal guarantee dated
I N D I A
63 - ASSOCHAM Banking e-Bulletin - Volume - 45
y/banking/finance/banking/banks-seek- 2,000 crore. The society registered quick-release-of-vijay-mallya-assets-for- under the Multistate Co-operative liquidation/articleshow/67549955.cms
Soc ie t ies (MSCS) Ac t 2002 i s Dated: Jan 16, 2019
headquartered in Ahmednagar, RS 2,000 CR. HAWALA SCAM,
Maharashtra. The society got the license ENFORCEMENT to extend its area of operation to DIRECTORATE TO SEEK Gujarat, Madhya Pradesh, Andhra
DETAILS FROM AXIS BANK Pradesh, Karnataka and Delhi in
The bank has been working closely with December 2012. Sources said the
the authorities concerned on this issue society flouted MSCS norms.
and shall fully cooperate with them in https://economictimes.indiatimes.com/industr
y/banking/finance/banking/rs-2000-cr-this regard. The Mumbai wing of the hawala-scam-enforcement-directorate-to-Enforcement Directorate (ED) will soon seek-details-from-axis-bank/articleshow
seek details from Axis Bank as part of the /67550093 .cms Dated: Jan 16, 2019
probe into a Rs 2,000-crore hawala scam
centered on an Ahmednagar-based SPEED UP 59-MINUTE LOAN urban credit cooperative society. The
SANCTION, GOVERNMENT society had its account with the private
TELLS PSU BANKSbank. The central agency will seek to Amid criticism of its promised 59-know if the bank verified KYC details of minute loan scheme for micro, small and the credit society, if there were any medium enterprises (MSMEs), the transaction of suspicious nature, and finance ministry is pushing state-run whether any alerts were raised and the banks to bridge the gap between accounts into which monies were proposals that receive preliminary credited were checked. The case approval and final sanction. Since its pertains to the predicate offence formal launch by PM a little over two registered by the Mumbai Police against months ago, around 60% of the Yogeshwar Diamonds Pvt Ltd, Charbhuja preliminary approvals done online have Diamonds Pvt Ltd and Kanika Gems Pvt been converted into formal sanctions, Ltd for allegedly routing Rs 2,000 crore with the total loan amount adding up to overseas through shell companies by over Rs 24,000 crore. This has raised submitting forged bills with IndusInd questions over the effectiveness of the Bank (Opera House branch). Following scheme, where loans up to Rs 1 crore are this, the ED registered an Enforcement available to MSMEs that have a credit Case Information Report (ECIR) and last history, pay income tax and are part of week arrested Machindra Khade, a the GST network. The quick loan-former manager with the Nagpur branch sanction scheme was part of the o f the Renukamata Mul t i s ta te government's outreach to the MSME Cooperative Urban Credit Society on the sector, which was complaining about allegations of laundering Rs 120 crores. liquidity shortage due to RBI's policies The scam involving the Mumbai and adverse impact of demonetization companies is estimated to be worth Rs and GST on a segment that is a
I N D I A
64 - ASSOCHAM Banking e-Bulletin - Volume - 45
significant contributor to GDP, jobs and But, the government appears satisfied
exports. Officials said part of the reason with the initial response, with some
for the conversion rate hovering around officials saying that some of the private
the 60% mark is the absence of lenders too wanted to join the 59-
documents. While basic documents are minute loan-sanction scheme, since it
available, banks do undertake due was meant for those with a prior credit
diligence since everyone is answerable in and tax history.
https://economictimes.indiatimes.com/industrcase something goes wrong. The y/banking/finance/banking/speed-up-59-exercise requires things like the cash minute-loan-sanction-government-tells-psu-flow statement. Often the loan applicant banks/articleshow/67551962.cms Dated:
takes time to furnish papers. Banks have Jan 16, 2018
also been advised to be proactive and
reach out to those who do not come SBI PUTS ON SALE ESSAR back. Besides, the lenders have been told
STEEL LOAN OF RS 15,431 that there has to be a valid reason for
CRORErejecting a loan proposal and it cannot
With last minute-litigation delaying be whimsical. This will also require a
recovery of Essar Steelloan, State Bank change in the mindset, which will not
of India (SBI) has put on sale its Rs happen overnight. The government had
15,431-crore exposure to the
steelmaker on a full-cash basis. In the
sale notice on its website, the aggregate
reserve price for the bidding has been
set at Rs 9,588 crore. These include
categories like working capital, term
l o a n , c o r p o r a t e l o a n , e x p o r t
performance bank guarantee (EPBG) and
standby letter of credit (SBLC). The bank
mentioned that the loans may be
assigned in whole or in part to buyers
and all the security in relation to that will
be transferred and shared pari-passu to
the extent of the amount sold. As per SBI
the loan could be sold to asset
reconstruction companies (ARCs), other
banks and non-banking financial
companies (NBFCs). This is SBI's second
attempt to sell its Essar Steel exposure
after it withdrew from the process in
September last year. Other lenders like promised to process the loan application
HDFC Bank, Axis Bank, ICICI Bank and using technology in a time-bound
Federal Bank have sold their exposures, fashion but did not guarantee a loan.
I N D I A
65 - ASSOCHAM Banking e-Bulletin - Volume - 45
either partly or in full, over the last few about Rs 54,389 crore. In October last
years. Essar Steel owes more than Rs year, the Supreme Court allowed
49,000 crore to over two dozen banks ArcelorMittal and Numetal Mauritius to
led by State Bank of India. It runs a 10- bid for Essar Steel, provided they paid
million-tonne steel mill at Hazira in the dues of defaulters connected to them
Gujarat, which is involved in ore within two weeks. At Ahmedabad NCLT,
beneficiation, pellet-making, iron- CoC and the resolution professional
making, steel-making, and downstream have opposed ESAHL's debt recast plan
facilities. The committee of creditors claiming it was against the apex court's
(CoC) of Essar Steel, on 25 October, order and was also against the
2018, voted in favour of handing over insolvency law and that such proposals
the debt-laden company to ArcelorMittal by Essar Steel shareholders have been
after it cleared pending dues of Uttam rejected by them in the past. While
Galva and KSS Petron. ArcelorMittal's ArcelorMittal and the lenders have been
resolution plan envisages an upfront seeking nod of the tribunal for
payment of Rs 42,000 crore to lenders completion of the debt resolution
and an additional Rs 8,000 crore towards process, Essar Steel Asia Holdings,
capital expenditure. SBI mentioned that Standard Chartered Plc and several
the resolution plan has been approved operational creditors have objected to
and filed in NCLT Ahmedabad. As per the ArcelorMittal's proposal.
https://www.livemint.com/Companies/aPnvjLpa p p r o v e d r e s o l u t i o n p l a n o f Z1VDkBT5vv22esI/SBI-puts-on-sale-Essar-ArcelorMittal, minimum recovery to SBI Steel-loan-of-Rs-15431-crore.html Dated: Jan is Rs 11,313.42 crore and the reserve 16, 2019
price of Rs 9588 crore is on the basis of
net present value (NPV) of minimum RBI GOVERNOR SHRI
recovery discounted at 18%. Earlier this SHAKTIKANTA DAS TO MEET
month, the Ahmedabad bench of the INDUSTRY CHAMBERS National Company Law Tribunal (NCLT) TOMORROWsaid it will pronounce before 31 January Reserve Bank of India (RBI) Governor Shri its order on a petition filed by Essar Steel Shaktikanta Das will meet industry shareholders for submission of its chambers to understand their issues and proposal to settle dues worth Rs 54,389 concerns. After his taking over as 25th crore. The pronouncement came after Governor of the RBI last month, he has observations made by the National been holding consultations with various Company Law Appellate Tribunal stakeholders including banks, non-(NCLAT), which had asked NCLT banking financial companies and micro, Ahmedabad to expedite the insolvency small and medium enterprises. Will meet case filed against Essar Steel (India) Ltd. the apex chambers/associations of Essar Steel Asia Holdings Ltd (ESAHL), industry and commerce tomorrow (17th which holds 72% of shares in Essar Steel, January). The meeting comes ahead of has submitted to NCLT Ahmedabad a the sixth bi-monthly monetary policy proposal for settling the entire debt for
I N D I A
66 - ASSOCHAM Banking e-Bulletin - Volume - 45
statement for 2018-19 scheduled to be and is not intended to pronounce upon
announced on February 7. Industry has the validity of any transaction or
been pitching for the rate cut amid agreement entered into by the bank with
falling inflation and factory output. its customers. Last year, the RBI had
Continued decline in food prices pulled imposed a penalty of Rs 1 crore on BoM
down retail inflation to an 18-month low on account of delay on the part of the
of 2.19 per cent in December 2018. bank to detect and report fraud in an
Another set of official data showed that account
https://economictimes.indiatimes.com/industrthe wholesale inflation also eased to an y/banking/finance/banking/rbi-slaps-rs-1-eight-month low of 3.80 per cent in c r o r e - f i n e - o n - b a n k - o f -December on softening fuel and food maharashtra/articleshow/67560312.cms
prices. The inflation based on the Dated: Jan 16, 2019
Consumer Price Index was 2.33 per cent
in November and 5.21 per cent in BOMBAY HIGH COURT GIVES December 2017. The RBI, which mainly
A LEEWAY TO HSBC BANK factors in retail inflation, has been
(MAURITIUS) IN tasked by the government to maintain
REASSESSMENT DISPUTE the inflation near 4 per cent. The factory WITH INCOME TAXoutput based on movement in the Index In what could benefit several companies of Industrial Production (IIP) slumped to tackling disputes with the income tax a 17-month low of 0.5 per cent in department, the Bombay High Court has November on account of contraction in said that re-assessment cannot be the manufacturing sector, particularly carried out beyond four years. The court consumer and capital goods.was ruling in the case of HSBC Bank https://www.livemint.com/Politics/Wx4(Mauritius) and the income tax 8OlzNQJ1dzPkn6Yr40H/RBI-governor-department. The bank was assessed for Shaktikanta-Das-to-meet-industry-2011/12. In the original scrutiny the tax chambers-tomor.html Dated: Jan 16, officer had allowed the bank to claim 2019interest income on external commercial
borrowings (ECB) of Rs 143 crore. RBI SLAPS RS 1 CRORE FINE ON However, the tax officer at a later stage
BANK OF MAHARASHTRA scrutinized the transaction and said this
The Reserve Bank of India(RBI) has transaction would not be allowed. The
imposed a Rs 1-crore penalty on state-tax officer claimed that the bank had
owned Bank of Maharashtra (BoM) for failed to satisfy some criteria and hence
non-compliance of Know Your Customer the transaction would not be allowed.
guidelines and fraud-classification The court rejected the tax officer's action
norms. This penalty has been imposed of disallowing the ECB transaction in re-
taking into account the failure of the assessment proceedings. The bank had
bank to adhere to directions issued by claimed that it should get benefits of
the RBI. This action is based on India-Mauritius tax treaty and the
deficiencies in regulatory compliance
I N D I A
67 - ASSOCHAM Banking e-Bulletin - Volume - 45
transaction should not be taxed trillion over two fiscal years to its
domestically. The court ruled that even struggling lenders under the PSU bank
during the original scrutiny the tax recapitalization plan. In December, it
officer had examined the transaction upsized its commitment by another Rs.
and allowed it. The court observed that 41,000 crore, considering PSU banks
the tax officer's stance in the weren't able to raise money from the
reassessment was a “change of opinion.” markets. One may argue that the centre
Tax experts mentioned that the ruling can't be blamed, considering it did its job
would impact several companies where of helping the banks as the largest
the tax officers have changed opinions in shareholder by infusing money. But from
the reassessment. The ruling would also a minority shareholders' perspective, the
impact on the time period in which the equity dilution has been immense in
reassessment can be carried out by the these banks, with the government
income tax officers. having waited far too long to act on bank
https://economictimes.indiatimes.com/industr recapitalization. While the government y/banking/finance/banking/bombay-high- dragged its feet over recapitalization, cour t-g i ves-a- leeway- to-hsbc-bank- there was an erosion of market value and mauritius-in-reassessment-dispute-with-
net worth of these banks. It too suffered income-tax/articleshow/67574474.cms
as a shareholder due to the erosion. Dated: Jan 17, 2019
Now, it also finds itself in a situation
where coming down to the desired 52% FORGET PRIVATIZATION, stake looks like a pipe dream. Another GOVT HAS HUGGED ITS fallout of the increase in government
BANKS TIGHTERownership is that these banks are now
A stitch in time saves nine. The flouting minimum public shareholding
government has, over the years, received norms set by the capital market
advice from numerous quarters to regulator. This, in turn, has led to a slew
reduce its stake in Public Sector Banks of announcements by public sector
(PSU banks) to below 51%, so that these banks to make large issuances under the
lenders have sufficient capital for employee stock option mode, with a view
growth. While the government has to meet these norms. Syndicate Bank, for
rejected this line of thought, it had itself instance, will issue as many as 300
talked of reducing its stake from existing million shares to employees, on an
levels to around 52% by allowing banks equity base of 1.6 billion shares. Part of
to raise equity capital from other the capital infusion in FY18 was done
sources. But things have gone in the through recapitalization bonds. In this
opposite direction, as the chart below route, the government issues bonds to
shows, with the government's stake banks and uses the proceeds to buy their
rising above 95% in one case. This is a shares to infuse capital. This route was
direct outcome of the unprecedented frowned upon since the banks ended up
capital infusion the government has shifting money from their investment
done after it committed to give Rs. 2.11 book to their capital base. The
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68 - ASSOCHAM Banking e-Bulletin - Volume - 45
government in its rescue mission has constant growth witnessed in the
increased its hold on banks in direct economy, RBI Governor Shri Shaktikanta
contrast to what it had promised in Das mentioned that India's growth story
2014. Recall that when the current is backed by strong domestic
government was formed a slew of fundamentals. efforts are being made to
banking reforms were promised, one of strengthen corporate governance in the
which was to bring down the center's public sector banks to effectively check
stake in the banks it owns. incidence of financial frauds. In his first
public speech after assuming the charge
as RBI Governor in December, Shri Das
also flagged challenges that Indian
companies may face on account of
developments around the Brexit.
Speaking at the 9th Vibrant Gujarat
Global Summit 2019, the RBI chief
mentioned that the central bank is
committed to play its role as the
monetary authority for maintaining
mandated price stability objective while
keeping in mind the objective of growth.
As the regulator and supervisor of the
banking sector as also payment systems,
the Reserve Bank "will take necessary
steps to maintain financial stability and
facilitate enabling conditions for
sustainable and robust growth. The RBI
governor further mentioned that the
growing size and complexity of the
Indian financial system warrants
strengthening of corporate governance
systems in banks. Citing incidence of https://www.livemint.com/Money/86BDC9r6zq
financial frauds in recent times, he gl995QQ7qJiL/Forget-privatisation-govt-has-
hugged-its-banks-tighter.html Dated: Jan 18, mentioned that such cases further 2019 underscore the significance of sound
corporate governance standards in COMPLEXITY OF INDIAN banks. The government, the Banks Board FINANCIAL SYSTEM Bureau and the Reserve Bank are
WARRANTS ROBUST CORP currently engaged in developing an
objective framework for performance GOVERNANCE IN BANKS, evaluation and this should redefine the SHRI SHAKTIKANTA DAScontours of corporate governance in the Commenting on the reasons behind the Public Sector Banks (PSBs) with a focus
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on transparency, accountability and economies are on the path of monetary
skills. The PSBs have been hit by a series policy normalization, there has been
of frauds in the recent past, including the global portfolio rebalancing away from
much-talked about Rs 14,000 crore emerging market economies, including
fraud at Punjab National Bank. Referring India. Another factor that has
to the problems being faced by the non- repercussions for India's external sector
banking financial sector, the RBI chief is the recent developments around
mentioned that the debt default of a Brexit, there are consequential policy
systemically important NBFC highlighted challenges for India which enjoys strong
the vulnerabil ity and need for trade and investment relations with the
strengthening regulatory vigil on the UK and the EU. RBI will carefully weigh
sector in general and on asset liability the challenges and opportunities that lie
management (ALM) framework in ahead and undertake appropriate policy
particular. The Reserve Bank intends to responses. Indian companies may face
strengthen the ALM framework for pertains to developments around Brexit,
NBFCs and harmonies it across different Indian companies and policy makers
categories of NBFCs with the objective of need to suitably weigh all opportunities
enabling the NBFCs to play a vital role in and challenges, and accordingly re-
our economy. In order to allow additional strategise to respond appropriately. On
access to funding for the NBFC sector in his appointment as RBI Governor, Shri
the wake of the recent crisis, the Reserve Das mentioned that he had no clue that
Bank has relaxed the norms for NBFCs to he would get the job at the central bank.
securities their loan books, he added. On Months before his appointment, he had
challenges before the economy, Shri Das in October tweeted 'central banks across
mentioned that the foremost priority is countries have a very critical role at the
to preserve domestic macroeconomic current juncture. The challenge is to try
and financial stability, especially in a and read the situation and take decisive
global environment that is clouded by steps in pursuit of their multiple
high uncertainty. Not only downward responsibilities'.
https://economictimes.indiatimes.com/industrrisks to global growth, trade and y/banking/finance/banking/indias-banking-investment have risen, but also the system-is-on-the-cusp-of-a-transformation-spillover effects on emerging markets shaktikanta-das/articleshow/67591553.cms
due to increase in global interest rates Dated: Jan 18, 2019
could be profound. RBI therefore, need
to brace ourselves for any sudden bout GOVERNMENT SACKS TWO of global financial market turbulence
PUNJAB NATIONAL BANK that domestic economy and financial
EXECUTIVES FOR ALLEGED markets may face in the period ahead. In LAPSES IN $2 BILLION FRAUDsuch a milieu, domestic macroeconomic India has sacked two senior executives policy framework needs to be supported of state-run Punjab National Bank (PNB) by sound financial supervision and for allegedly failing to prevent a $2 regulation. As a few advanced
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70 - ASSOCHAM Banking e-Bulletin - Volume - 45
billion fraud, nearly a year after the MD, DMDScountry's biggest bank scam came to IDBI Bank, which has becomes a
light. The firing of the two executive subsidiary of LIC, has decided to
directors, whom the federal police have continue with the existing top
accused of breaching central bank management, including Shri Rakesh
guidelines, is the first instance of Sharma as the managing director of the
sacking of the bank's employees since it bank. Insurance giant LIC has completed
mentioned that billionaire diamond acquisition of 51 per cent controlling in
jeweller Shri Nirav Modi and his uncle the bank. However, the bank's board also
had for years fraudulently raised billions approved the appointment of Shri Rajesh
of dollars in foreign credit by conspiring Kandwal as an additional director and
with staff at the bank. Shri Modi and his LIC's nominee director on the board of
uncle Shri Mehul Choksi, who left India IDBI Bank. Shri Kandwal is the director
before the fraud was discovered, have and the chief executive officer of LICHFL
denied the accusations. In a stock Care Homes Ltd. The board of IDBI Bank
exchange filing late on Friday, the has in its meeting held on January 21
country's second-biggest state bank approved continuation of office of Shri
mentioned that the government had Rakesh Sharma, Shri K P Nair and Shri G
removed Shri K. Veera Brahmaji Rao and M Yadwadkar as directors and as MD &
Shri Sanjiv Sharan "from the office of CEO and DMDs (Deputy Managing
executive director" with immediate Director), respectively, of the bank till
effect. The filing did not give a reason. such time as the board approves
The government then fired them appointment of" new management
because "they failed to use global following the due process". Consequent
payments network SWIFT to detect the to the allotment of shares under final
fraud", declining to be identified Tranche II to LIC, amendment in the
because the reasons for the sacking have bank's Articles of Association has come
not been made public. They were not into effect.
able to supervise and there was https://economictimes.indiatimes.comdereliction of duty on their part. Phone /industry/banking/finance/banking/idcalls to PNB Chief Executive Shri Sunil bi-bank-decides-to-continue-with-Mehta as well as to Shri Rao and Shri ex ist ing-md-dmds/art ic leshow/ Sharan went unanswered. 67622499.cms Dated: Jan 21, 2019https://economictimes.indiatimes.com/industr
y / b a n k i n g / f i n a n c e / b a n k i n g / i n d i a n - CBI REGISTERS CRIMINAL government-sacks-two-punjab-national-
CASE AGAINST MS. CHANDA bank-executives-for-alleged-lapses-in-2-
b i l l i o n - f r a u d - s o u r c e s / a r t i c l e s h o w / KOCHHAR67610035.cms Dated: Jan 20, 2019 In a move that spells trouble for former
ICICI Bank Chief Executive Officer (CEO) IDBI BANK DECIDES TO Ms. Chanda Kochhar, the Central Bureau
CONTINUE WITH EXISTING of Investigation registered a criminal case
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71 - ASSOCHAM Banking e-Bulletin - Volume - 45
against her along with her husband and owned by Shri Deepak Kochhar for Rs. 9
NuPower Renewables founder Deepak lakh, six months after receiving the loan
Kochhar and Videocon group managing from ICICI Bank an allegation that
director (MD) Shri Venugopal Dhoot. With Kochhar had earlier denied to Mint.
https://www.livemint.com/companies/news/cbthe probe agency naming Kochhar as an i-registers-fir-in-icici-bank-videocon-loan-accused in a loan fraud case at a time case-1548309939916.html Dated: Jan 24, 2019when she was at the helm of affairs at the
bank, the case brings back the spotlight PNB'S $45 MILLION FRAUD on financial crimes involving the top
CLAIM DISMISSED BY ENGLISH brass of the banking sector. Punjab
National Bank MD and CEO Ms. Usha COURTAnanthasubraman ian i s under The High Court of England and Wales
investigation by the CBI for her alleged dismissed a USD 45-million deceit claim
involvement in the Rs. 14,356 crore brought by the UK subsidiary of Punjab
scam. Earlier in the day, the CBI carried National Bank (PNB) against seven
out searches at four locations in Mumbai individuals and two companies, based in
including the Mumbai offices of Videocon India and the US. London-based Punjab
and NuPower. The FIR and the raids are in National Bank International Limited's
connection with the ICICI-Videocon loan (PNBIL) claim concerned eight loans it
case, an alleged case of quid-pro-quo. made between March 29, 2011, and
While Shri Deepak Kochhar declined December 1, 2014, for oil re-refining
comment on the matter, calls and and wind energy generating projects in
messages to Shri Venugopal Dhoot the US. PNBIL had accused the
remained unanswered. In March, the CBI individuals and companies in question of
registered a preliminary enquiry against breach of contract, misrepresentation
Shri Deepak Kochhar and Shri Venugopal and deceit. In his judgment at the High
Dhoot, chairman of Videocon group, to Court's Chancery Division, Chief Master
investigate irregularities in the Rs. Marsh concluded that the bank had
40,000 crore loan made by a consortium failed to make an "arguable case in
of lenders. It pointed to an alleged deceit against the defendants". "The core
conflict of interest in a Rs. 3,250-crore components of a claim in deceit are
loan grant to Videocon group by ICICI absent; or if they are present, they are
Bank. The amount was granted as part of provided as such a high level of
a Rs. 40,000-crore loan by a consortium abstraction as to be totally inadequate,"
of 20 banks in 2012. Dhoot allegedly he notes. Referring to the case as having
gave Rs. 64 crore in 2010 through a fully "an unfortunate history", the judge also
owned entity to NuPower Renewables Pvt pulls up PNBIL for a lack of "frankness"
Ltd, which he had set up with Shri Deepak with the court. "It is disturbing that the
Kochhar and two of his relatives. It was US claim was not brought to the
al leged that Dhoot transferred attention of the court in a plain and
proprietorship of the company to a trust direct manner from the outset. It is
I N D I A
72 - ASSOCHAM Banking e-Bulletin - Volume - 45
equally disturbing that the claimant's actions of the defendants following the
intention to bring proceedings in granting of loans amounting to USD 45
Chennai was not investigated and details million to companies in the US and India
of the claim was not revealed to the controlled by the individual defendants.
court," the judgment order states. The The bank also alleged that money had
judge further observed that the failure to been siphoned off and payments due
draw to the attention of the court the had not been made under the loan
existence of the foreign claims was a facilities and guarantees. All the
"serious breach" of the claimant's duty to defendants, except one who is US-
the court. UK-based law firm Zaiwalla & based, are resident in India and PNBIL,
Co represented eight of the defendants represented by UK-based Cubism Law,
against PNBIL – Ravi Srinivasan, Trishe had served the proceedings by email on
Resources INC (USA), Vathsala the defendants in India and the US. PNBIL
R a n g a n a t h a n , P e s c o B e a m is the wholly-owned subsidiary of
Environmental Solutions INC (USA), Punjab National Bank (PNB) in India,
Pesco Beam Environmental Solutions which started its UK operations in 2007
Private Limited, Anantharaman Shankar, and operates through seven branches
Luke Staengl and Anantharam around the country. It is yet to officially
Subramamium. The court noted that it comment on the ruling.
https://economictimes.indiatimes.com/industrwas common ground that none of the y/banking/finance/banking/pnbs-45-million-defendants have any connection with fraud-claim-dismissed-by-english-court England. However, the contracts were /articleshow/67676191.cmsDated: Jan 24, 2019
executed in England, the loans were
negotiated here and the loan accounts CBI BOOKS FORMER ICICI
are all held and operated in London. BANK CHIEF MS. CHANDA
PNBIL had relied on these facts and the KOCHHAR FOR CRIMINAL willingness of the borrowers and their CONSPIRACYdirectors to travel to London for the
purposes of arranging the loans as part The CBI has booked former ICICI Bank
of its case. The decision serves as a head Ms. Chanda Kochhar on charges of
reminder that serious allegations of criminal conspiracy, cheating and abuse
fraud have to be supported by cogent
facts and evidence: speculative claims
will not be permitted to proceed to trial.
The decision of the court has saved
everyone concerned a great deal of time
and money by being dismissed at an
early stage, although the bank will still
face claims for substantial costs as well
as having to pay its own costs. PNB
International Ltd had claimed that it had
been misled and defrauded by the
I N D I A
73 - ASSOCHAM Banking e-Bulletin - Volume - 45
of official position for “dishonestly which the CBI is expected to soon
sanctioning loans to the Videocon summon Chanda and Deepak Kochhar as
Group”. Ms. Kochhar, who was the MD of well as Dhoot for further questioning.
ICICI Bank until last October, is accused Sources added that Shri Dhoot was in his
in the CBI FIR of allegedly receiving Mumbai office when the searches took
“illegal gratification through her place. He was quizzed by the CBI sleuths.
husband, Shri Deepak Kochhar, from This was just preliminary questioning.
Videocon MD Shri VN Dhoot for He will be summoned on a later date to
sanctioning a term loan of Rs 300 crore be confronted with the seized items. An
to Videocon International Electronics individual close to Ms. Chanda Kochhar,
Ltd”. This apart, her alleged role in however, claimed the FIR is technically
influencing disbursal decisions in flawed. Eight ICICI Bank executives
relevant committees of the bank has also besides Ms. Chanda Kochhar have been
been brought under the scanner. The CBI named in the FIR. If this is a case of quid
has also registered a case against Shri pro quo, then how do you prove that for
Deepak Kochhar and Shri VN Dhoot. It these executives? This is a basic flaw in
has also mentioned unknown public the FIR and while we will cooperate with
servants in the FIR. The agency is the authorities, we will also fight this
probing allegations of 'quid pro quo' in FIR.” According to the FIR, ICICI Bank
the loans granted to Videocon by ICICI disbursed six “high-value loans”
Bank. As per the FIR, role of senior bank between June 2009 and October 2011.
officials, including former chairman Shri “On August 26, 2009, a rupee term loan
KV Kamath (currently president of New of Rs 300 crore was sanctioned to
Development Bank, formerly BRICS Videocon International Electronics Ltd
Bank), current ICICI Bank MD Sandeep (VIEL) in contravention of rules and
Bakhshi, K Ramkumar, Sonjoy Chatterjee policy by the sanctioning committee. Ms.
(CEO, Goldman Sachs India), NS Kannan, Kochhar was one of the members of the
Zarin Daruwala (CEO, Standard sanctioning committee, who in criminal
Chartered India), Rajiv Sabharwal (CEO, conspiracydishonestly by abusing her
Tata Capital) and Homi Khusrokhan, official position sanctioned this loan in
might also be probed. These individuals favour of VIEL,” the FIR mentioned. On
were part of the sanctioning committee September 7, 2009, this loan was
that cleared loans amounting to Rs transferred to VIEL, On September 8,
1,575 crore. The CBI conducted searches 2009, Dhoot transferred Rs 64 crore to
at the Nariman Point offices of Shri NuPower Renewables, managed by Shri
Deepak Kochhar's company NuPower Deepak Kochharthis was the first major
Renewables Limited (NRL), the Videocon capital received by NRL to acquire its first
Group and Supreme Energy Pvt Ltd power plant. The allegation against Ms.
(SEPL). Videocon's offices in Aurangabad Chanda Kochhar is that she received
were also searched. Sources told ET the “illegal gratification through her
raids have led to seizure of what they husband from Dhoot for sanctioning the
described as key documents based on Rs 300 crore loan”. The FIR further
I N D I A
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mentioned that ICICI Bank also which was incorporated in December
sanctioned loans in violation of its credit 2008. Dhoot al legedly al lotted
policy to the Videocon Group to help it 1,997,500 warrants to Deepak Kochhar
repay unsecured loans. Loans to at the rate of 10 per warrant, on an initial
Videocon Industries Ltd (VIL) and its payment of Re 1 per warrant. In June
group of companies were declared non- 2009, shares of NRL held by Dhoot and
performing assets (NPAs) on June 30, Kochhar's Pacific Capital Services Pvt Ltd
2017. On the role of other senior were transferred to Supreme Energy Pvt
officials, most of whom have left ICICI Ltd, which became a 95% shareholder of
Bank, the agency mentioned that NRL. Dhoot resigned from the
between June 2009 and October 2011, directorship of SEPL in January 2009 and
loans amounting to Rs 1,575 crore were subsequently transferred control of the
sanctioned by various committees company to Deepak Kochhar by
having senior officials of the bank as selling/transferring his shares to
members. These loans included: Rs 175 Pinnacle Energy Trust managed by
crore to MillenniumAppliance India Ltd Kochhar. All these entities- VIEL, VIL,
on June 30, 2009; Rs 240 crore to Sky NRL and SEPL have been identified as
Appliances Ltd and Rs 110 crore to accused in the FIR. Amid these
Techno Electronics Ltd on November 17, allegations and probes by multiple
2010; Rs 300 crore to Applicomp India agencies, ICICI Bank appointed a
Ltd on May 30, 2011; and Rs 750 crore to committee under former Supreme Court
VIL on October 31, 2011.These loans Justice BN Srikrishna to investigate
have turned NPAs resulting in wrongful allegations of conflict of interest and
loss to ICICI Bank and wrongful gain to quid pro quo against Ms. Chanda
the borrowers and accused persons. The Kochhar. She stepped down last
role of these senior officials may also be October.
https://economictimes.indiatimes.com/industrinvestigated,” the FIR mentioned. The y/banking/finance/banking/cbi-files-case-CBI's case is that Ms. Chanda Kochhar, against-former-icici-bank-chief-chanda-who took over as MD of ICICI Bank in May kochhar/articleshow/67671367.cms Dated Jan
2009, was one of the key committee 25, 2019
members. Credit limits to the above-
mentioned group companies were INDIA POST PAYMENTS BANK sanctioned after she took over the
CROSSES 1.25 LAKH charge of the bank as MD, these loans
BRANCHES, SOON TO HIT 1.5 were sanctioned by different sanctioning
LAKHScommittees. Ms. Kochhar was one of the As per communications minister Shri committee members which sanctioned Manoj Sinha, the government has RTL of Rs 300 crore to VIEL and Rs 750 opened around 1.25 lakh branches of crore to VIL,” the FIR mentioned. On the India Post Payments Bank and soon, it alleged role of her husband, the FIR will have operations across over 1.5 lakh mentioned Deepak Kochhar, Dhoot and locations. Department of Posts (DoP) has Saurabh Dhoot were directors of NRL,
I N D I A
75 - ASSOCHAM Banking e-Bulletin - Volume - 45
opened India Post Payments Bank for meet the CEOs of public sector banks to
unbanked and underbanked people. take a stock of the banking sector, and
There are lump sum 1.25 lakh branches. discuss ways to improve their financial
Shortly, it will have 1.5 lakh branches. hea l th . The meet ing assumes
Prime Minister has launched IPPB on significance as it comes just three days
September 1 last year with an aim to take ahead of the Budget 2019-20, the last
banking services to the doorstep of every from this government before the general
citizen by arming three lakh postmen elections expected to be held in April-
and 'Grameen Dak Sewaks' with digital May. The full-day meeting is likely to be
aids to deliver financial services. The attended by Reserve Bank of India
payments bank can accept deposits of Governor Shri Shaktikanta Das, who is
up to Rs 1 lakh, offer remittance going to announce his first monetary
services, mobile payments/transfers/ policy review on February 7. Shri Goyal,
purchases and other banking services who was given additional charge of the
such as ATM/debit cards, net banking finance ministry as Shri Arun Jaitley is
and third-party fund transfers. However, away to the US for a treatment, is his
it cannot offer loans directly, or issue expected to discuss a host of issues
credit cards. "Since the time of including credit offtake and bad loan
independence, there were around 1.3 position of lenders. Among the key
lakh bank branches, we are going to issues, sources mentioned that the
provide more bank branches than that. meeting will review progress of various
Talking about the stamp launch, the schemes of the government being
minister mentioned that earlier, it was a implemented through the government.
trend in this country that post stamps of It will also review the credit flow to
only special people from prime families MSMEs, agriculture and retail sectors.
were issued.After 2014, under the Besides, the meeting will also review
direction of Prime Minister, Department financial performance of the banks for
of Posts had a mandate to issue post the nine months ended December 2018.
stamps of people of eminence who made Non-performing assets (NPAs) would
special contribution at national and also come up for deliberation, they
international level. added. Public sector banks (PSBs) have
https://economictimes.indiatimes.com/industr seen decline in bad loans by over Rs y/banking/finance/banking/india-post- 23,000 crore from a peak of Rs 9.62 lakh payments-bank-crosses-1-25-lakh-branches- crore in March 2018 due to various s o o n - t o - h i t - 1 - 5 - l a k h - m a n o j - s i n h a /
initiatives taken by the government. At articleshow/ 67689557.cms Dated: Jan 25, 2019
the same time, PSBs have also made a
record in recovery of Rs 60,726 crore in FINANCE MINISTER SHRI the first half of the current financial year,
PIYUSH GOYAL TO MEET which is more than double the amount
HEADS OF PSU BANKS ON recovered in the corresponding period MONDAY last year. According to the latest finance Finance Minister Shri Piyush Goyal will ministry data, non-NPA accounts
I N D I A
76 - ASSOCHAM Banking e-Bulletin - Volume - 45
overdue by 31 to 90 days (Special or fraudster if they think the person may
flee the country. The CMDs and CEOs of Mention Accounts 1 & 2) of PSBs have
PSU banks can now ask the Home declined by 61 per cent over five
Ministry, Ministry of External Affairs, successive quarters - from Rs 2.25 lakh
Customs and Income Tax Departments, crore as of June 2017 to Rs 0.87 lakh Directorate of Revenue Intelligence, CBI, crore in September 2018. In his first stint regional passport officers and police to as finance minister for 100 days last issue an LOC to alert immigration check year, Shri Goyal was instrumental in posts to stop anyone leaving India. The setting up a committee headed by non-SFIO and PSU banks can initiate the executive chairman of Punjab National process if they suspect that the defaulter Bank Shri Sunil Mehta to examine may leave the country to escape the law. whether c reat ion of an asset Earlier, investigating agencies would reconstruction company or asset request LOCs in cognizable offences management company to help in faster under the IPC or other laws in case the resolution of stressed assets.accused evaded arrest or did not appear
https://economictimes.indiatimes.com/industrbefore court despite issuance of non-y/banking/finance/banking/finance-minister-
bailable warrants and other coercive piyush-goyal-to-meet-heads-of-psu-banks-
on-monday/articleshow/67707986.cms measures and there was a likelihood of Dated: Jan 27, 2019 the accused leaving the country to
escape arrest. An LOC is valid for a year GOVERNMENT EMPOWERS unless its duration is specified. The
govt's fresh move came after three high-PSU BANKS TO SEEK profile escapes involving liquor baron LOOKOUT CIRCULARS Shri Vijay Mallya and diamantaires Shri AGAINST WILFUL Nirav Modi and Shri Mehul Choksi rocked
DEFAULTERSthe country, inviting embarrassment for
In a bid to prevent big economic the government. Shri Mallya left India on
offenders like Shri Vijay Mallyaand Shri March 2, 2016 after defaulting on loan
Nirav Modi from fleeing the country, the amounting to Rs 9,000 crore he had
government has empowered PSU banks taken for his now-defunct Kingfisher
to request lookout circulars (LOCs) Airlines. Jewellery designer Shri Modi
against wilful defaulters and fraudsters. and his uncle Shri Choksi, managing
The Home Ministry has also authorized director of Gitanjali Gems Ltd, fled the
the Serious Fraud Investigation Office country in January 2018. They are
(SFIO), a statutory corporate fraud accused of cheating the state-run
investigation agency, to request LOCs if Punjab National Bank to the tune of Rs
it feels the suspect may escape from 13,000 crore. The government had last
India. The ministry issued two circulars year brought the Fugitive Economic
recently, authorizing chairman-cum-Offenders Act, empowering the
managing directors or chief executive authorities to attach and confiscate the
officers of public sector banks and the proceeds of crime and properties of
SFIO to request designated authorities to economic offenders, l ike bank
issue LOCs against any wilful defaulter
I N D I A
77 - ASSOCHAM Banking e-Bulletin - Volume - 45
fraudsters or loan defaulters who fled new rule came into effect. The idea is to
the country. The law is aimed at quickly place the facts before everyone at a time
recovering losses to the exchequer or when the industry associations are
PSBs in cases of frauds. putting forward their views against the
https://economictimes.indiatimes.com/industr February 12 circular before the new y/banking/finance/banking/ government- governor. Mint Street memos, released empowers-psu-banks-to-seek-lookout-
by RBI from time to time, are brief c i r c u l a r s - a g a i n s t - w i l f u l - d e f a u l t e r s /
reports and analyses on contemporary articleshow/67711663.cms Dated: Jan 28, 2019
topics. The documents are prepared by
the staff of RBI and Centre for Advanced RBI HAS A MEMO THAT Financial Research & Learning (CAFRAL),
COULD PERMANENTLY an independent body set up by the
SILENCE DOUBTERS OF ITS central bank. Among other things, RBI's
NPA MOVE February 12 notification directed banks The Reserve Bank of India (RBI) is to classify loans as 'special mention weighing a plan to release data that accounts' immediately on default, and would demonstrate that the number of file insolvency application (in case of corporates defaulting on bank loans borrowers having outstanding debt of Rs have dipped following the central bank's 2,000 crore or more) if the debt stern directive on February 12 last year resolution plan to revive the company is that had rattled large, influential not implemented within 180 days from borrowers and irked many within the the date of default. The notification has government . The regu la tor i s been legally challenged with several understood to have sounded out the borrowers taking a stand that the government on the proposed move that decision to invoke the 'Insolvency and could counter arguments of industry Bankruptcy Code 2016' should be left to lobbies and defend the directive at a time lenders and not directed by the banking it has been challenged in the court of regulator. “Even though the subject is law. There is a proposal to come out with sub judice (with the petitions against the a 'Mint Street Memo' that will show circular lying before the Supreme Court), improvement in default data since the the regulator can always come out with
I N D I A
78 - ASSOCHAM Banking e-Bulletin - Volume - 45
reports based on facts which are not itself. However, of close to 250 operators
classified. Indeed, according to data employed with these agencies, nearly
compiled by India's largest credit rating half were penalized in the last two
agency Crisil, the number of defaults is months and were either deactivated or
the lowest in the first half of 2018-19 blacklisted. This brought SBI's Aadhaar
compared with the corresponding enrolments to a halt at many branches,
period of FY14, FY15, FY16, FY17 and causing the bank to fail to meet targets
FY18. It is a common knowledge that and face penalties. One of those
there was a time when some of the senior penalised was 40-year-old Vikram, who
government functionaries were against worked for a monthly salary of Rs 10,000
the February 12 circular and former as an Aadhaar operator at the SBI branch
governor Shri Urjit Patel had faced the in a small village called Uchana in
pressure. The message sent out by the Haryana's Jind district. On December 26,
February 12 circular is that the outcome 2018, UIDAI fined him more than Rs 33
of default should be automatic, lakh. According to UIDAI, Vikram had
immediate, and transparent. The used his operator ID to generate Aadhaar
directive, say people in banking circles, cards using fraudulent documents
comes across as harsh because it marks between November 9 and November 17,
a shift to an inflexible, rule based system 2018. It was done using “multiple station
in dealing with NPAs and recovery.
https://www.livemint.com/Politics/3FEsadloz
SBI ALLEGES AADHAAR DATA MISUSE, UIDAI RUBBISHES CHARGEOfficials ofSBI have alleged that data of
the Unique Identification Authority of
India (UIDAI) has been misused. Logins
and biometrics of their Aadhaar
operators have been misused to
generate unauthorised Aadhaar cards,
bank off ic ials informed UIDAI.
Countering the charge, UIDAI mentioned
that Aadhaar database is fully secured
and no security breach, biometric or
otherwise. SBI, like other banks, was
given an Aadhaar enrolment target for
which i t selected vendors FIA
Technology Services Pvt Ltd and Sanjivini
Consultants Pvt Ltd in the Chandigarh
region which covers Haryana, Punjab,
Himachal, J&K and the UT of Chandigarh
I N D I A
79 - ASSOCHAM Banking e-Bulletin - Volume - 45
IDs” in Vikram's name, which allowed January 9, the authority finally
Aadhaar cards to be made from multiple introduced an additional step in the
devices 143, to be precise. Every device, registration of Aadhaar operators as an
like a laptop, desktop or tablet, used for extra security measure. Also, some
Aadhaar enrolment is registered with unscrupulous elements have been
UIDAI and identified by the “station ID”. attempting to register multiple
SBI officials pointed out that as machines but UIDAI has an inherent
“registrar” (as all banks entrusted with system in place to detect any such
Aadhaar enrolment are), only they could attempt and appropriate action is taken
have approved multiple station IDs but on a daily basis on operators who err.
they had not done so. The bank's UIDAI imposes financial disincentives
officials in Chandigarh wrote to their and blacklists errant operators.
corporate office in Mumbai to raise the However, it relooks into the issue if
issue with UIDAI, saying they did not someone is wrongly penalised. It would
create these multiple station IDs and be pertinent to mention here that
there must have been lacunae in UIDAI's divulging details of any specific case
security system that allowed “someone under inquiry would not be appropriate
to hack the system and generate in the interest of the case.
https://economictimes.indiatimes.com/industrmultiple station IDs” in Vikram's name. y/banking/finance/banking/sbi-alleges-Even more baffling was the misuse of aadhaar-data-misuse-uidai-rubbishes-V i k r a m ' s p e r s o n a l b i o m e t r i c s charge/articleshow/67734688.cms
(fingerprints in this case) to generate Dated: Jan 29, 2019
Aadhaar cards, carry out unexplained
transactions at places like the I-T YES BANK CO-PROMOTERS department, Maharashtra government,
AGREE TO NOMINATE ONE MP government, National Informatics
DIRECTOR EACH ON BOARDCentre and various banks, and even Yes Bank promoters Shri Rana Kapoor withdraw money from his personal and Ms. Madhu Kapur have agreed to accounts. All this time, UIDAI did not act nominate one representative director against any bank official, which would each on the bank's board as part of truce have been the case had there been a under the works. The bank in November lapse or wrongdoing by SBI officials. SBI had said that efforts were underway for deputy general manager Shri B Rajendra mutual resolution and truce between Kumar confirmed that he was aware of Shri Rana Kapoor group and Ms. Madhu the “misuse of the biometrics” of Vikram Kapur and her family, the two co-and problems facing their sub-promoters groups of the private sector vendors.In its reply, sent January 18, lender. Yes Bank recently selected senior UIDAI refused to share the details of the board of directors of the bank had case but admitted that an inquiry was on. interacted with Ms. Kapur and her family. Meanwhile, almost all the operators, Shri Madhu Kapur Group and Ms. Rana except Vikram, were cleared by UIDAI Kapoor Group have agreed to nominate and allowed to return to work. On
I N D I A
80 - ASSOCHAM Banking e-Bulletin - Volume - 45
one representative director each on the sister of Shri Rana Kapoor's wife Ms.
bank's board, subject to the completion Bindu and the two co-promoters of the
of the necessary documentation. The bank have been working towards
two new directors will be announced at reaching a settlement.
https://economictimes.indiatimes.com/industrthe next scheduled board meeting in y/banking/finance/banking/yes-bank-co-April 2019. This is intended to ensure promoters-agree-to-nominate-one-director-better coordination and support by the each-on-board/articleshow/67742675.cms
two promoter groups with the new MD & Dated: Jan 29, 2019
CEO and the board of directors of the
bank. Yes Bank also mentioned that its TAXMAN TARGETS BANKS board approved and recommended the
FOR FREE LOGO USE BY name of a senior board member of the
SUBSIDIARIESbank to the Reserve Bank to temporarily The tax department has started issuing hold the office of the MD&CEO as an notices to banks that allow subsidiaries, interim special duty officer. The senior such as mutual fund and insurance units, official will hold the position as "Board to use their logos for free. The tax Director on Interim Special Duty (MD & department wants the banks to pay 18% CEO's responsibilities)' from Feb 1, 2019 GST on the “deemed” value of such till such date Shri Ravneet Gill assumes transactions and has even calculated office in March, 2019," it said. Last week, how much these are worth. State Bank of Yes Bank had appointed Deutsche Bank India, Citibank, ICICI Bank, Bank of India head Shri Ravneet Singh Gilll as its Baroda, Kotak Mahindra Bank and others Managing Director & Chief Executive have received show-cause notices or are Officer (MD&CEO) as incumbent Shri being scrutinized and could soon be Rana Kapoor is required to step down on getting them. Subsidiaries use logos for January 31. The bank has named Shri the promotion of related products with Ajai Kumar, the non-executive non-the understanding sometimes included independent director on its board to be in a contract that no fees have to be paid. acting an interim MD&CEO for the RBI's The tax department says these are recommendation. In September, the “related party transactions” and hence Reserve Bank had asked Kapoor to find a should be subjected to valuation replacement for himself. Shri Kapoor had regulations as per the GST framework. co-founded the bank in 2004 along with This follows banks being asked last year his late brother-in-law Shri Ashok to cough up taxes on services provided Kapur, who died in the 2008 Mumbai free to customers. The department has terror attacks, post which his wife Ms. arrived at a value for such transactions Madhu Kapur became the co-promoter and imposed GST on that. As per Tax of the bank. Shri Kapoor and Ms. Kapur experts nothing under the GST have been caught-up in a legal battle f ramework is considered free. since 2015 on some issues including Everything has a value and hence tax has nominating members of their choice on to be paid on the amount. Under GST, a the board of the bank. Ms. Madhu is
I N D I A
81 - ASSOCHAM Banking e-Bulletin - Volume - 45
“supply of brand” is deemed to have and interest on free services offered to
taken place from the bank to the c u s t o m e r s . T h e d e m a n d w a s
subsidiaries, which are related parties. retrospective with a 12% service tax
Logos and trademarks are licensed by claimed since 2012, 18% interest on the
the bank that holds them to its amount and a 100% penalty. This issue
subsidiaries. This didn't attract attention could also come to haunt the banks
previously because there were no again under the GST regime.
https://economictimes.indiatimes.com/industrregulations that dealt with free supply of y/banking/finance/banking/taxman-targets-services between related parties. The b a n k s - f o r - f r e e - l o g o - u s e - b y -critical aspect to be considered is subsidiaries/articleshow/67748885.cms
whether there is a supply and if there is a Dated: Jan 30, 2019
supply only then consider the valuation
of the supply. It needs to be appreciated JUSTICE SRIKRISHNA PANEL that neither service tax legislation or
INDICTS CHANDA KOCHHAR, state VAT (value added tax) legislation
ICICI BANK SACKS HERcontained conditions that mandated an The Srikrishna committee that was arm's length pricing of supplies between tasked to probe the quid-pro-quo related parties this was on account of the transactions in ICICI Bank submitted its extreme difficulty in complying with report, mentioning that Ms. Chanda such provisions as also administrating Kochhar violated the banks code of the same. The incremental revenue on conduct. Post these findings, the bank this count would be nominal in the mentioned that it would treat Kochhar's overall scheme of things, he said, adding exit as 'Termination for Cause' under the that the government should consider Bank's internal policies. This essentially simplifying the valuation rules. As means revocation of all her existing and receipt of consideration was a future entitlements such as any unpaid prerequisite for an activity to qualify as a a m o u n t s , u n p a i d b o n u s e s o r service, taxability of free-of-cost increments, unvested and vested & services was not an issue in the erstwhile unexercised stock options, and medical service tax regime. However, the GST benefits), and require the claw back of all regime contemplates tax on free bonuses paid from April 2009 to March supplies between related parties. Banks 2018. Responding to the findings of may not be able to claim input tax credit Srikrishna committee, Chanda Kochhar on this count.Where the GST paid is mentioned that she is utter ly available as a pass-through, there are no disappointed, hurt and shocked by the concerns. However, this may create decision. Certain that truth will disruptions where credit cannot be ultimately prevail, mentioned Ms. offset in its entirety by the recipient. This Chanda Kochhar. The enquiry report also is the second big issue banks are facing concluded that she failed to discharge with the indirect tax department. In her fiduciary functions to rescue herself notices served in April last year, all banks to avoid any conflict of interest. The were asked to pay service tax, penalties
I N D I A
82 - ASSOCHAM Banking e-Bulletin - Volume - 45
Central Bureau of Investigation has respect to annual disclosures as required
already named Ms. Chanda Kochhar her by the Bank in terms of its internal
husband Shri Deepak Kochhar and policies, the ICICI Bank Code of Conduct
Videocon group managing director Shri and applicable Indian laws, rules and
Venugopal Dhoot for criminal conspiracy regulations on her interests (direct or
and cheating. Ms. Chanda Kochhar was indirect) towards avoidance of conflict of
on the bank's credit committee that interest, when considered that the
sanctioned a loan of Rs 3,250 crore to Bank's processes were dependent solely
the Videocon Group in 2012. Videocon's on the directors discharging their
promoter Shri Venugopal Dhoot was one fiduciary duty to recuse themselves and
of the first investors in NuPower avoid conflict, implies that the Bank's
Renewables promoted by Shri Deepak processes were rendered ineffective by
Kochhar, Ms. Chanda Kochhar's her approach to such disclosures and
husband, in 2008. The Audit Committee avoidance of conflict. The Bank notes
of the Bank had on June 6, 2018 that there are no implications of the
appointed former Supreme Court judge, Enquiry Report on its published financial
Hon'ble Mr. Justice (Retd.) B. N. statements (Indian or US GAAP) for the
Srikrishna as the Head of Enquiry (HOE) relevant periods. Following the receipt of
to undertake a comprehensive enquiry the Enqu i r y Repor t , and due
on allegations against Ms. Chanda consideration of the Enquiry Report and
Kochhar. The HOE was assisted by a law the conclusions thereat, after due
firm, and a forensic and investigative deliberations, the Board of Directors
services firm for the conduct of the decided to treat the separation of Ms
enquiry. The Bank has received the Chanda Kochhar from the Bank as a
Enquiry Report from HOE, and the Board 'Termination for Cause' under the Bank's
of Directors considered the same at the internal policies, schemes and the Code
Board Meeting held on January 30, 2019. of Conduct, with all attendant
The Enquiry Report, with the scope consequences (including revocation of
period of April 1, 2009 to March 31, all her existing and future entitlements
2018 (unless specific information such as any unpaid amounts, unpaid
required enquiry into transactions or bonuses or increments, unvested and
facts of an earlier period), concluded, vested & unexercised stock options, and
primarily on account of ineffectively medical benefits), and require the
dealing with conflict of interest and due clawback of all bonuses paid from April
disclosure or recusal requirements, that 2009 until March 2018, and to take such
Ms Chanda Kochhar was in violation of further actions as may be warranted in
the ICICI Bank Code of Conduct, its the matter. Certain statements in this
framework for dealing with conflict of release relating to a future period of time
interest and fiduciary duties, and in (including inter alia concerning our
terms of applicable Indian laws, rules future business plans or growth
and regulations. The Enquiry Report also prospects) are forward-looking
concluded that her lack of diligence with statements intended to qualify for the
'safe harbor' under applicable securities is possibly trying to align itself to the
laws including the US Private Securities new generation and positioning the
Litigation Reform Act of 1995. Such organization for the next 5-6 years.
forward-looking statements involve a Organizations move to role-based
number of risks and uncertainties that designations from level/grade- based
could cause actual results to differ designations when they want to move
materially from those in such forward- away from hierarchical thinking to
looking statements. functional thinking focusing on the
https://economictimes.indiatimes.com/industr accountability of the role. HR experts y/banking/finance/banking/justice-srikrishna- mentioned that the challenge is to have report-indicts-chanda-kochhar-says-she- the culture to pull it off. That could be violated-banks-policies/articleshow/67758632
the conceptual anchor for such a move .cms Dated Jan 31, 2019
but the question is whether you have the
culture to pull it off and that is the SENIOR MANAGEMENT AT challenge.My guess is ICICI will manage
ICICI BANK TO HAVE NO to make it work.
TITLEShttps://economictimes.indiatimes.com/industr
India's second largest private lender y / b a n k i n g / f i n a n c e / b a n k i n g / s e n i o r -
ICICI Bank has decided to scrap management-at-icici-bank-to-have-no-
titles/articleshow/67765816.cms Dated: Jan 31, designations at senior management 2019level to inspire more efficient teamwork
by making the processes less
hierarchical. Designations at the bank
will now be indicative of the function or India's overall exports (Merchandise and the job that a person is expected to Services combined) in April-December perform. Executives at the senior 2018-19* are estimated to be USD management level will have the job title 396.73Billion, exhibiting a positive of 'head' followed by their function or growth of 13.79per cent over the same department, they said. Grades such as period last year. Overall imports in April-assistant general manager, deputy December2018-19* are estimated to be general manager, senior general USD 479.46Billion, exhibiting a positive manager, and general manager will be growth of 14.63per cent over the same removed from the title and will be used period last year.only for internal annual appraisals for
increase in salary and allowances. These *Note: Services data pertains to April-
role-based designations are being November 2018-19 as November 2018
aligned with appropriate decision- is the latest data available as per RBI's
making powers so that we can respond Press Release dated 15th January 2019.
to market opportunities in a faster It is arrived at by adding Month-wise QE
manner. Shri K. Ramkumar, former dataof RBI's press release for April to
executive director and head of human November 2018-19. This data is
resources at ICICI Bank mentioned, ICICI provisional and subject to revision by
INDIA'S FOREIGN TRADE: DECEMBER 2018
I N D I A
83 - ASSOCHAM Banking e-Bulletin - Volume - 45
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84 - ASSOCHAM Banking e-Bulletin - Volume - 45
RBI. In addition, it may be noted that data Imports: Imports in December 2018
for December 2018 is estimated and were US $ 41.01 Billion (Rs. 2,90,032.95
added to the April-November 2018-19 Crore), which was 2.44 per cent lower in
data of RBI to calculate the Overall Trade Dollar terms and 7.41 per cent higher in
Deficit for April-December 2018-19. It Rupee terms over imports of US $ 42.03
will be revised based on RBI's next press Bil l ion (Rs.2,70,015.44Crore) in
release for December 2018. December 2017. Cumulative value of
imports for the period April-December
2018-19 was US $ 386.65 Billion Merchandise Trade(Rs.26,97,306.82 Crore), as against US $ o xports (Including Re-Exports):343.34 Billion (Rs.22,14,370.92 Crore) Exports inDecember 2018 were US $ during the period April-December 27.93 Billion, as compared to US $ 27.83 2017-18, registering a positive growth Billion in December 2017, exhibiting a of 12.61 per cent in Dollar terms (21.81 positive growth of 0.34per cent. In per cent in Rupee terms). Major Rupee terms, exports were Rs. commodity groups of import showing 1,97,535.86 Crore in December 2018, high growth in December 2018 over the as compared to Rs. 1,78,802.77 Crore in corresponding month of last year are:December 2017, registering a positive
growth of 10.48 per cent. In December o Crude Oil And Non-Oil Imports:Oil 2018, major commodity groups of imports inDecember 2018 were US $ export showing positive growth over the 10.67 Billion (Rs. 75,486.52 Crore), corresponding month of last year arewhich was 3.16 percent higher in Dollar Cumulative value of exports for the terms (13.58 percent higher in Rupee period April-December 2018-19 was US terms), compared to US $ 10.35 Billion $ 245.44 Billion (Rs.17,11,905.60 Crore) (Rs. 66,458.79 Crore) in December as against US $ 222.77 Billion 2017. Oil imports in April-December (Rs.14,36,614.25 Crore) during the 2018-19 were US $ 108.10 Billion (Rs. period April-December 2017-18, 7,55,255.78 Crore) which was 42.85 per registering a positive growth of 10.18 cent higher in Dollar terms (54.73 per cent in Dollar terms (19.16 per cent percent higher in Rupee terms) in Rupee terms). Non-petroleum and compared to US $ 75.67 Billion (Rs. Non Gems and Jewellery exports in 4,88,125.91 Crore), over the same December 2018 were US $ 21.11 Billion, period last year. In this connection it is as compared to US $ 20.88 Billion in mentioned that the global Brent price December 2017, exhibiting a positive ($/bbl) has decreased by 12.07 % in growth of 1.08 per cent. Non-petroleum December 2018 vis-à-vis December and Non Gems and Jewellery exports in 2017 as per data available from World April-December 2018-19 were US $ Bank (Pink Sheet). Non-oil imports 177.66 Billion, as compared to US $ inDecember 2018 were estimated at US $ 164.66 Billion for the corresponding 30.33 Billion (Rs.2,14,546.43 Crore) period in 2017-18, an increase of 7.90 which was 4.27 per cent lower in Dollar per cent.
I N D I A
85 - ASSOCHAM Banking e-Bulletin - Volume - 45
terms (5.40percent higher in Rupee Trade Balanceterms), compared to US $ 31.69Billion o Merchandise: T h e t r a d e
(Rs. 2,03,556.65 Crore) in December deficit for December 2018 was
2017. Non-oil imports in April- estimated at US $ 13.08Billion as against
December 2018-19 were US $ 278.54 the deficit of US $ 14.20Billion
Billion (Rs.19,42,051.04 Crore) which inDecember 2017.
was 4.06per cent higher in Dollar terms o Services: As per RBI's Press (12.50percent higher in Rupee terms), Release dated 15th January 2019, the compared to US $ 267.66 Billion (Rs. trade balance in Services (i.e. Net 17,26,245.01 Crore) in Apr i l- Services export) for November, 2018 is December2017-18. Non-Oil and Non- estimated at US $ 6.57Billion.Gold imports were US $ 27.76 billion in o Overall Trade Balance: T a k i n g December 2018, recording a negative merchandise and services together, growth of 1.86per cent, as compared to overall trade deficit for April-December Non-Oil and Non-Gold imports in 2018-19* is estimated at US $ 82.72 December 2017. Non-Oil and Non-Gold Billion as compared to US $ 69.63Billion imports were US $ 253.89 billion in in April-December 2017-18.April-December 2018-19, recording a
*Note: Services data pertains to April-positive growth of 5.32per cent, as
November 2018-19 as November 2018 compared to Non-Oil and Non-Gold
is the latest data available as per RBI's imports in April-December 2017-18.
Press Release dated 15th January 2019. Trade In Services It is arrived at by adding Month-wise QE o Exports (Receipts):E x p o r t s i n data of RBI's press release for April to November 2018 were US $ 16.68 Billion November 2018-19. This data is (Rs.1,19,831.25 Crore) registering a provisional and subject to revision by negative growth of 0.82per cent in dollar RBI. In addition, it may be noted that data terms, vis-à-vis October 2018. (as per for December 2018 is estimated and RBI's Press Release for the respective added to the April-November 2018-19 months). data of RBI to calculate the Overall Trade
o Imports (Payments): Imports Deficit for April-December 2018-19. It
inNovember2018 were US $ 10.11Billion will be revised based on RBI's next press
(Rs.72,637.41Crore) registering a release for December 2018.
positive growth of 0.10per cent in dollar
terms, vis-à-vis October 2018. (as per
RBI's Press Release for the respective
months).
I N D I A
86 - ASSOCHAM Banking e-Bulletin - Volume - 45
Merchandise Trade
Services Trade
Note: Services data pertains to April-November 2018-19 as November
2018 is the latest data available as per RBI's Press Release dated
15thJanuary 2019. April-November 2018-19 data is arrived at by adding
Month-wise QE data. This has been used along with the estimate of
service exports and imports for December 2018, as explained in page-1
for the purpose of this Press note.
Exports & Imports: (US $ Billion)
December April-December
Exports (Including Re-Exports)
2017-18 27.83 222.77
2018-19 27.93 245.44
%Growth 2018-19/ 2017-18 0.34 10.18
Imports
2017-18 42.03 343.34
2018-19 41.01 386.65
%Growth 2018-19/ 2017-18 -2.44 12.61
Trade Balance
2017-18 -14.2 -120.57
2018-19 -13.08 -141.2
Exports & Imports (Rs. Crore)
December April- December
Exports(Including Re-Exports)
2017-18 178802.77 1436614.25
2018-19 197535.86 1711905.6
% Growth 2018-19/ 2017-18 10.48 19.16
Imports
2017-18 270015.44 2214370.92
2018-19 290032.95 2697306.82
% Growth 2018-19/ 2017-18 7.41 21.81
Trade Balance
2017-18 -91212.68 -777756.67
2018-19 -92497.09 -985401.22
Exports & Imports (Services) (US $ Billion)
Nov-18 April-November 2018-19
Exports (Receipts) 16.68 134.56
Imports (Payments) 10.11 82.78
TRADE BALANCE 6.57 51.78
Exports & Imports (Services) (Rs. Crore)
Nov-18 April-November 2018-19
Exports (Receipts) 1,19,831.25 9,36,338.94
Imports (Payments) 72,637.41 5,75,771.15
Trade Balance 47,193.84 3,60,567.79
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87 - ASSOCHAM Banking e-Bulletin - Volume - 45
Quick Estimates For Selected Major Commodities For December 2018 Trade: Export
Note 1: Grand total is inclusive of component 'Other'.
Note 2: The figures for DECEMBER'18 and DECEMBER'17 are provisional and
subject to change
S. No. Commodities (Values in Rs. crores) % Change
Dec'17 Dec'18 Dec'18
1 Tea 584.82 572.82 -2.05
2 Coffee 486.79 346.55 -28.81
3 Rice 4089.11 4562.55 11.58
4 Other Cereals 106.37 170.75 60.53
5 Tobacco 543.08 630.83 16.16
6 Spices 1780.06 1874.5 5.31
7 Cashew 535.06 506.48 -5.34
8 Oil Meals 914.87 1367.62 49.49
9 Oil Seeds 918.11 737.86 -19.63
10 Fruits & Vegetables 1342.91 1285.9 -4.25
11 Cereal Preparations & Miscellaneous
Processed Items
850.43 904.81 6.39
12 Marine Products 4214.13 4294.81 1.91
13 Meat, Dairy & Poultry Products 3251.48 2698.63 -17
14 Iron Ore 926.95 862.12 -6.99
15 Mica, Coal & Other Ores, Minerals
Including Processed Minerals
2097.52 2479.73 18.22
16 Leather & Leather Products 3032.97 3092.13 1.95
17 Ceramic Products & Glassware 1229.89 1940.3 57.76
18 Gems & Jewellery 20761.8 18467.2 -11.05
19 Drugs & Pharmaceuticals 10735.1 11739.7 9.36
20 Organic & Inorganic Chemicals 12229.1 14205.1 16.16
21 Engineering Goods 47493.5 50658.4 6.66
22 Electronic Goods 3555.42 5903.51 66.04
23 Cotton Yarn/ Fabs./ Made-Ups,
Handloom Products etc.
6055.88 6301.07 4.05
24 Man-made Yarn/Fabs./ Made-Ups etc. 2682.88 2915.4 8.67
25 RMG Of All Textiles 8590.47 9720.59 13.16
26 Jute Mfg. including Floor Covering 200.83 217.57 8.33
27 Carpet 807.08 944.11 16.98
28 Handicrafts Excl. Handmade Carpet 946.49 1071 13.15
29 Petroleum Products 23883.9 29762.1 24.61
30 Plastic & Linoleum 4035.19 5339.28 32.32
Sub Total 168882 185573 9.88
Grand Total 178803 197536 10.48
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88 - ASSOCHAM Banking e-Bulletin - Volume - 45
Note 1: Grand total is inclusive of component 'Other'.Note 2: The figures for DECEMBER'18 and DECEMBER'17 are provisional and subject to change
Quick Estimates For Selected Major Commodities For December 2018Trade: Export
S.
No
.
Commodities (Values In Million
USD)
%
Chang
e
Dec'17 Dec'18 Dec'18
1 Tea 91.03 80.99 -11.03
2 Coffee 75.77 49 -35.33
3 Rice 636.51 645.06 1.34
4 Other cereals 16.56 24.14 45.77
5 Tobacco 84.54 89.19 5.5
6 Spices 277.09 265.02 -4.36
7 Cashew 83.29 71.61 -14.02
8 Oil Meals 142.41 193.35 35.77
9 Oil seeds 142.91 104.32 -27
10 Fruits & Vegetables 209.04 181.8 -13.03
11 Cereal preparations & miscellaneous processed
items
132.38 127.92 -3.37
12 Marine Products 655.97 607.2 -7.43
13 Meat, dairy & poultry products 506.13 381.53 -24.62
14 Iron Ore 144.29 121.89 -15.52
15 Mica, Coal & Other Ores, Minerals including
processed minerals
326.5 350.59 7.38
16 Leather & leather products 472.11 437.17 -7.4
17 Ceramic products & glassware 191.44 274.32 43.29
18 Gems & Jewellery 3231.8 2610.9 -19.21
19 Drugs & Pharmaceuticals 1671.04 1659.76 -0.68
20 Organic & Inorganic Chemicals 1903.58 2008.32 5.5
21 Engineering Goods 7392.87 7162.11 -3.12
22 Electronic Goods 553.44 834.64 50.81
23 Cotton Yarn/ Fabs./ Made-Ups, Handloom
Products Etc.
942.66 890.85 -5.5
24 Man-made Yarn/ Fabs./ Made-Ups Etc. 417.62 412.18 -1.3
25 RMG of all Textiles 1337.2 1374.3 2.77
26 Jute Mfg. including Floor Covering 31.26 30.76 -1.6
27 Carpet 125.63 133.48 6.25
28 Handicrafts excl. handmade carpet 147.33 151.42 2.78
29 Petroleum Products 3717.79 4207.78 13.18
30 Plastic & Linoleum 628.12 754.87 20.18
Sub Total 26288.3 26236.5 -0.2
Grand Total 27832.6 27927.7 0.34
Note 1: Exports include Re-Exports.
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89 - ASSOCHAM Banking e-Bulletin - Volume - 45
Note 2: The figures for DECEMBER'18 and DECEMBER'17 are provisional and subject to changeNote 3: Grand total is inclusive of component 'Other'.
Quick Estimates For Selected Major Commodities For December 2018 Trade: Import
S.
No
.
Commodities (Values In Rs. Crores) %
Change
DEC'17 DEC'18 DEC'18
1 Cotton Raw & Waste 158.51 181.16 14.29
2 Vegetable Oil 5432.96 5103.64 -6.06
3 Pulses 1357.44 976.37 -28.07
4 Fruits & vegetables 1329.03 1309.25 -1.49
5 Pulp and Waste paper 616.16 744.19 20.78
6 Textile yarn Fabric, made-up articles 1061.83 1094.1 3.04
7 Fertilisers, Crude & manufactured 2642.42 5234.35 98.09
8 Sulphur & Unroasted Iron Pyrites 143.43 123.39 -13.97
9 Metalliferous ores & other minerals 4992.61 5069.53 1.54
10 Coal, Coke & Briquettes, etc. 13046.1 15999.9 22.64
11 Petroleum, Crude & products 66458.8 75486.5 13.58
12 Wood & Wood products 3164.15 3517.68 11.17
13 Leather & leather products 548.25 597.03 8.9
14 Organic & Inorganic Chemicals 11218.5 12688 13.1
15 Dyeing/tanning/colouringmtrls. 1604.94 1725.01 7.48
16 Artificial resins, plastic materials, etc. 7363.96 8546.31 16.06
17 Chemical material & products 4057.29 4665.07 14.98
18 Newsprint 357.8 620.22 73.34
19 Pearls, precious & Semi-precious stones 22564.5 17868.4 -20.81
20 Iron & Steel 7935.85 10101.6 27.29
21 Non-ferrous metals 7097.44 8806.02 24.07
22 Machine tools 2081.96 2878.08 38.24
23 Machinery, electrical & non-electrical 18264.2 21793.8 19.33
24 Transport equipment 14271.5 13405.8 -6.07
25 Project goods 1222.74 2041.82 66.99
26 Professional instrument, Optical goods, etc. 2765.41 3385.6 22.43
27 Electronic goods 30022.7 30062.5 0.13
28 Medicinal. & Pharmaceutical products 3496.63 3797.87 8.62
29 Gold 21805.7 18166 -16.69
30 Silver 1267.33 2078.42 64
Sub Total 258350 278068 7.63
Grand Total 270015 290033 7.41
Note 1: Grand total is inclusive of component 'Other'.
Note 2: The figures for DECEMBER'18 and DECEMBER'17 are provisional and
subject to change
I N D I A
90 - ASSOCHAM Banking e-Bulletin - Volume - 45
Quick Estimates For Selected Major Commodities For December 2018 Trade: Import
Note 1: Imports include Re-Imports.Note 2: The figures for DECEMBER'18 and DECEMBER'17 are provisional and subject to change.Note 3: Grand total is inclusive of component 'Other'.
S.
No
.
Commodities (Values in Million USD) %
Chang
e
Dec'17 Dec'18 Dec'18
1 Cotton Raw & Waste 24.67 25.61 3.81
2 Vegetable Oil 845.7 721.56 -14.68
3 Pulses 211.3 138.04 -34.67
4 Fruits & vegetables 206.88 185.1 -10.53
5 Pulp and Waste paper 95.91 105.21 9.7
6 Textile yarn Fabric, made-up articles 165.28 154.68 -6.41
7 Fertilisers, Crude & manufactured 411.32 740.04 79.92
8 Sulphur & Unroasted Iron Pyrites 22.33 17.44 -21.9
9 Metalliferous ores & other minerals 777.15 716.73 -7.77
10 Coal, Coke & Briquettes, etc. 2030.77 2262.07 11.39
11 Petroleum, Crude & products 10345 10672.3 3.16
12 Wood & Wood products 492.53 497.33 0.97
13 Leather & leather products 85.34 84.41 -1.09
14 Organic & Inorganic Chemicals 1746.28 1793.84 2.72
15 Dyeing/tanning/ colouring mtrls. 249.83 243.88 -2.38
16 Artificial resins, plastic materials, etc. 1146.28 1208.28 5.41
17 Chemical material & products 631.56 659.55 4.43
18 Newsprint 55.69 87.69 57.46
19 Pearls, precious & Semi-precious stones 3512.41 2526.25 -28.08
20 Iron & Steel 1235.3 1428.17 15.61
21 Non-ferrous metals 1104.79 1245 12.69
22 Machine tools 324.08 406.9 25.56
23 Machinery, electrical & non-electrical 2843.02 3081.22 8.38
24 Transport equipment 2221.51 1895.31 -14.68
25 Project goods 190.33 288.67 51.67
26 Professional instrument, Optical goods, etc. 430.47 478.66 11.19
27 Electronic goods 4673.36 4250.25 -9.05
28 Medicinal. & Pharmaceutical products 544.29 536.94 -1.35
29 Gold 3394.28 2568.32 -24.33
30 Silver 197.27 293.85 48.96
Sub Total 40215 39313.3 -2.24
Grand Total 42030.8 41005 -2.44
I N D I A
91 - ASSOCHAM Banking e-Bulletin - Volume - 45
part-time chairman of Yes Bank's board RBL BANK APPOINTS SHRI up till July 4, 2020 as Shri Dutt attains the PANKAJ SHARMA AS ITS age of 70 years. Shri Dutt has been on CHIEF OPERATIONS OFFICERthe board of the bank since July 2013 as Private sector lender RBL Bank has an independent director, and has appointed Shri Pankaj Sharma as its chief contributed to almost all the sub-operations officer to mainly overlook the committees of the board over the past corporate services function and the 5.5 years, Yes Bank mentioned in a bank's overall operations. Shri Sharma regulatory filing. He is currently also the who was previously with Axis Bank where Cha i r o f the Nominat ion and he was heading retail operations. He had Remuneration Committee. During his spearheaded the ATM channel, phone career in the IAS for 37 years, he held banking and branch automation and several posts in Karnataka government digital initiatives at Axis Bank. He as well as in the Central Government. previously worked with GE countrywide, Before retirement from the service, he ICICI Bank and ICICI Prudential Life worked as Secretary in the Cabinet InsuranceSecretariat and in the Ministry of Road https://economictimes.indiatimes.com/industr
Transport and Highways for over three y/banking/f inance/banking/rb l-bank-
appoints-pankaj-sharma-as-its-chief- and half years. Yes Bank's board also operations-officer/articleshow/67347137.cms includes Mukesh Sabharwal, Subhash Dated: Jan 02, 2019
Kalia, Ajai Kumar, Pratima Sheorey,
Uttam Prakash Agarwal, TS Vijayan, and YES BANK APPOINTS SHRI
Rana Kapoor (Managing Director and BRAHM DUTT AS NON- CEO). Meanwhile, Yes Bank executive EXECUTIVE PART-TIME Rajat Monga and a CEO of a foreign bank
CHAIRMAN have been shortlisted to succeed long-
Yes Bank's board also includes Mukesh serving Managing Director and Chief
Sabharwal, Subhash Kalia, Ajai Kumar, Executive Officer Rana Kapoor at the
Pratima Sheorey, Uttam Prakash bank, sources had said Friday. Earlier
Agarwal, TS Vijayan, and Rana Kapoor this week, the bank informed stock
(Managing Director and CEO). Yes Bank, exchanges that it has shortlisted the
India's fourth largest private sector names of potential candidates to
bank, has appointed Shri Brahm Dutt as succeed Kapoor, who is to demit office
non-executive part-time chairman to by month-end.
the board. In a statement, Yes Bank https://economictimes.indiatimes.com/industr
y/banking/f inance/banking/yes-bank-mentioned, "Vide its letter dated January appoints-brahm-dutt-as-non-executive-part-11, 2019, the Reserve Bank of India, time-chairman/articleshow/67499732.cms
pursuant to the provisions of the Dated Jan 12, 2019
Banking Regulation Act, 1949has
approved his (Dutt's) appointment as
TOP BANKING APPOINTMENTS
I N D I A
92 - ASSOCHAM Banking e-Bulletin - Volume - 45
was the founder and chairman of Capital ICICI BANK APPOINTS SHRI B FirstSRIRAM, SHRI RAMA https://economictimes.indiatimes.com/industrBIJAPURKAR INDEPENDENT y/banking/finance/banking/rbi-approves-
DIRECTORS appointment-of-v-vaidyanathan-as-md-ceo-
Private sector ICICI Bank has inducted of-idfc-first-bank/articleshow/67591410.cms
Dated Jan 18, 2019former SBI Managing Director Shri B
Sriram on its board as independent
SHRI RAVNEET GILL TO director . Besides, management
consultant Shri Rama Bijapurkar was also REPLACE RANA KAPOOR AS appointed director. Both were appointed YES BANK CEOfor 5 years, subject to the approval of Yes Bank has appointed veteran banker shareholders. Shri Sriram retired as the Shri Ravneet Singh Gill as its new MD & managing director of IDBI Bank in CEO and the lender has also received the September 2018. Prior to IDBI Bank, he RBI's approval. Shri Gill, currently the was the managing director of SBI. chief of Deutsche Bank's India https://economictimes.indiatimes.com/industr operations, will replace Shri Rana y/banking/finance/banking/icici-bank-
Kapoor. In September last year, RBI had appo in t s-b-s r i r am-rama-b i j apu rka r-
asked Shri Rana Kapoor, Managing i n d e p e n d e n t - d i r e c t o r s / a r t i c l e s h o w /
Director & CEO of Yes Bank, to step down 67530915.cms Dated Jan 14, 2019
by the end of January, sending its stock
p lung ing and caus ing severa l RBI APPROVES resignations from its board. The central APPOINTMENT OF SHRI V bank had asked the lender to find a new VAIDYANATHAN AS MD, CEO CEO by February 1. The Bank has
OF IDFC FIRST BANK received RBI approval for its new MD &
Prior to this, Shri V Vaidyanathan was the CEO, Shri Ravneet Singh Gill for him to
founder and chairman of Capital First. join on or before March 1, 2019. Shri Gill
The Reserve Bank has approved the joined Deutsche Bank in 1991 and has
appointment of Shri V Vaidyanathan as worked across different businesses
MD and CEO of IDFC First Bank for a including corporate banking, capital
period of three years, according to a markets and wealth management. The
regulatory filing. His tenure is effective private sector bank posted a 7% fall in
from December 19, 2018. Last month, third-quarter net profit as it set aside
IDFC Bank and non-banking financial higher provisions. Net profit fell to Rs.
company Capital First completed their 1,002 crore in the three months to
merger, creating a combined loan asset December 31 from Rs. 1,077 crore a year
book of Rs 1.03 lakh crore for the earlier. That missed analysts' average
merged entity IDFC First Bank. Following estimate of Rs. 1,060 crore according to
the merger, the board of IDFC First Bank Reuters estimate. Commenting on the
approved the appointment of Shri results and financial performance, Shri
Vaidyanathan as MD and CEO of the new Rana Kapoor mentioned that Yes Bank
entity. Prior to this, Shri Vaidyanathan
I N D I A
93 - ASSOCHAM Banking e-Bulletin - Volume - 45
has once again delivered satisfactory Systems), bill payments recharges and
performance across income growth, even undertake remittance activities
margins, profitability and capital across different bank branches.The
accretion, despite the recognition and pioneering ePDS digital initiative has
provision impact from a stressed helped us eliminate more than 10 lakh
Infrastructure conglomerate. Retail bogus ration cards in Maharashtra and
Assets growth momentum continues, made the inventory management for
while growth in Corporate business government and shop owners fully
segments has been rebalanced after digital. ePDS initiative will also
witnessing strong market share driven significantly boost the livelihood of shop
growth over the last few preceding owners by giving them additional
quarters. revenue through the various services
https://www.livemint.com/companies/people/ they can now offer to the citizens.The yes-bank-ceo-ravneet-gill-appointment-rana- government is hoping to get Jan Dhan kapoor-managing-director-md-1548323 account holders to use this service for all 047040.html Dated: Jan 24, 2019
their financial requirements. The Bank
remains committed to improving last
mile inclusion and translating financial
access into enhanced convenience &
usage for smoother delivery of YES BANK PARTNERS WITH
Government to Citizen (G2C) services MAHARASHTRA
through simple digital solutions. GOVERNMENT FOR https://economictimes.indiatimes.com/industrELECTRONIC PDSy/banking/f inance/banking/yes-bank-
Private sector lender Yes Bank has partners-with-govt-of-maharashtra-for-
partnered with Government of electronic-pds/articleshow/67644049.cms
Maharashtra to onboardPDSshops which Dated: Jan 22, 2019
are popularly referred to as ration shops
onto the electronic PDS initiative through
which they can become agents of the
bank. Under the partnership, Yes Bank PAYMENTS BANKS SEE will empower more than 20,000 ration SECOND STRAIGHT YEAR OF shops which can offer last mile basic LOSSES (RESERVE BANK OF
INDIA)banking services to more than seven
According to RBI's trends and progress lakh beneficiaries. The bank will cover
report, Payments banks, launched to almost 40% of all the PDS shops across
make the country more financially locations like Palghar, thane, Kolhapur,
inclusive, seems to be giving the Latur, Pune and others. Customers at
regulators and investors a cause for these shops will be able to make
concern as they continue with their payments using Aadhaar Pay, small
second straight year of losses with little value cash deposit or withdraw cash
signs of turning the corner. The using AePS (Aadhaar enabled Payment
TOP EXPERT REPORTS
TOP BANKING DEVELOPMENTS
I N D I A
94 - ASSOCHAM Banking e-Bulletin - Volume - 45
consolidated balance sheets for the These include Aditya Birla Payments
operational payments banks showed net Bank, Airtel Payments Bank, India Post
losses of Rs 516.5 crore for the fiscal Payments Bank, Fino Payments Bank, Jio
year 2018, almost double that of the Payments Bank and Paytm Payments
fiscal year 2017 when they lost Rs 242.2 Bank.
https://www.livemint.com/Companies/rgl4JNpcrore,. The losses of payments banks are nGsE7rKerrpaNJJ/RBI-issues-norms-for-attributed to high operating expenses as restructuring-loans-to-MSMEs.htmllarge capital expenditure had to be Dated: Jan 02, 2019
incurred in se t t ing up in i t ia l
infrastructure. It may take some time for BANKS EXPECTED TO
payment banks to break even as they REPORT HIGHER CREDIT expand their customer base by offering GROWTH, MARKET SHARE their unique banking products.The
(RESERVE BANK OF INDIA)operating profits of these banks also
Citing Reserve Bank of India (RBI) data, remained negative with a loss of Rs
the report mentioned systemic credit 522.1 crore for fiscal 2018, up from Rs
growth in November was highest since 240.7 crore a year before. High
March 2014, mainly led by services at o p e r a t i o n a l c o s t s d u e t o
28.1 per cent (YoY) and personal loans at infrastructuresetup required by these
17.2 per cent (YoY). Given the upturn in banks to tap the underpenetrated
non-food and industrial credit as markets in the country are the prime
reported by the RBI, banks are expected reason for their financial weakness.
to report higher credit growth and Things are showing no signs of
market share at the cost of non-banking improvement with even the regular
finance companies (NBFCs) and housing banks ramping up their technology
finance firms. Centrum Broking initiatives. In the first half of this fiscal
mentioned in a report that with the they were making losses and it may well
current slowdown in the NBFC segment continue for many quarters. While
and non-performing assets (NPAs or bad financial metrics remained weak, there
loans) issues stabilizing for banks, the was hope in other with the share
latter are expected to report higher deposits of these banks marginally
credit growth, resulting in a further rising from 5.7% to 9% during this
boost to overall credit growth. According period. The net interest income also
to the RBI credit data on sectoral improved from Rs 151.1 crore to Rs 30.7
deployment for November 2018, overall crore and the total liabilities/assets rose
non-food credit grew 13.8 per cent YoY to Rs 4,891.6 crore from Rs 1,193.9
(year-on-year) to Rs 80.9 trillion (80 crore. About 81% of the business the
lakh crore), the highest since March payments bank made was on account of
2014. This growth was again led by inward and outward transactions
services and personal loans, mentioned through mobile and ewallets, according
the report titled "RBI sectoral credit - to the central bank. The RBI as of date
trajectory intact for November 2018", has given licences to 11 payments bank
authored by Shri Aalok Shah and Shri of which six are currently operational.
I N D I A
95 - ASSOCHAM Banking e-Bulletin - Volume - 45
Gaurav Jani. The uptrend in industrial CIBIL)credit continues, reporting the highest A study by credit bureau Trans Union
level since February 16. On a MoM CIBIL notes that millennial and
(month-on-month) basis, NBFC credit Generation X consumers are driving
growth faced headwinds and credit to much of this growth and comprise well
housing inched up. The momentum in over half of all retail accounts and
agriculture credit continues. Citing balances. In 1985, a survey by the
Reserve Bank of India (RBI) data, the government supported think tank
report mentioned systemic credit growth NCAER estimated that the size of the
in November was highest since March Indian middle class, which had a
2014, mainly led by services at 28.1 per promising potential to spend on
cent (YoY) and personal loans at 17.2 per consumer goods, was bigger than the US
cent (YoY). Given the slowdown in the economy then. This report attracted the
NBFC segment and the NPA cycle attention of global consumer goods
peaking, we expect overall credit growth companies. With the progressive
to remain high. In contrast to NBFC opening of the economy, India's growth
credit, banks' housing credit has risen story has become consumption-driven
MoM. and more than 25 years since the
https://economictimes.indiatimes.com/industr liberalization in 1991, the Indian y/banking/finance/banking/banks-expected- consumer has gone a step further and to-report-higher-credit-growth-market-
does not hesitate to borrow to meet its share-report/articleshow/67542408.cms
consumption aspirations. This trend in Dated Jan 15, 2019
consumer behavior has resulted in an
opportunity for banks to lend outside NPA-HIT BANKS FIND NEW their traditional constituency businesses
LOVE IN MIDDLE CLASS AND and large corporates. In the last four
IT MAY REVIVE INDIAN years, with corporate lending becoming ECONOMY (TRANSUNION
I N D I A
96 - ASSOCHAM Banking e-Bulletin - Volume - 45
unviable due to the rise in defaults and somewhat safer as banks are heavily
losses, the push toward retail lending relying on credit bureaus that help them
has become even stronger. An with the credit history of borrowers and
international comparison shows that also help assess default risks. Another
India's retaliation of bank credit is the factor that has brought about a growth in
lowest among peers. Household credit the retail loan book is that more people,
as a percentage of GDP was 11.2% as of especially those below 40, are now
June '18, compared with the average of coming to banks and shifting from
36% in emerging economies and 72% for informal channels, particularly in the
advanced markets. But India may have to hinterland. A study by credit bureau
look internally to justify the surge in Trans Union Cibil notes that millennial
retail loans. Any loan by an individual and Generation X consumers are driving
impacts his savings and, hence, local much of this growth and comprise well
money available for investments. Over over half of all retail accounts and
the 10 years since the global crisis, fresh balances. It is (also) more to do with the
financial savings of Indian households fact that financial inclusion has
have more than doubled. But their net expanded with Jan Dhan accounts, etc,
financial liabilities have risen at double and BoB is are going to see more of that.
that pace, leaving less for investments. Also, semi-urban and rural India's GDP
This means India may have to rely on distribution has changed over the last 8-
overseas money to fund growth. India's 10 years. There is tremendous amount
current account deficit, which is of self-employment. There is a change,
vulnerable to global oil prices, is at 2.9% which HDFC is betting on. The use of
of GDP. Still, even corporate-focused technology has also helped deepen the
banks are keen on retail loans. Over the customer reach for banks. HDFC Bank is
past few years, there has been a using virtual robots to substitute
structural shift in banks' loan books. The repetitive functions and save time. HDFC
share of the retail portfolio has risen will distribute digitally. It is giving loans
from 18.3% in 2013 to 24.8% in March in 10 seconds. It delights customers and
2018 and the latest data for October put changes my cost dynamics. The bank's
this share at 25.5%. For the country's personal loans are done in 10 seconds
three largest lenders State Bank of India, and 50-60% credit cards are done within
HDFC Bank and ICICI Bank retail accounts 10 seconds. In semi-urban and rural
for more than half of their loan books. areas, all its products are available in
Even for some private banks like Axis feature phone in 11 languages. Most
Bank and Kotak Mahindra Bank, retail retail loan products, excluding home
accounts for almost half of their loan loans, earn banks a wider margin
books. What is driving the retail push in compared to corporate loans. The rate of
the last four years is a combination of interest on unsecured loans will be more
factors. Banks have turned cautious on than what you lend to Levers (Hindustan
their traditional constituency. Also, Levers). Besides, bad loans are also now
lending to retail has now become lower than 3%, which has given banks
I N D I A
97 - ASSOCHAM Banking e-Bulletin - Volume - 45
more confidence to focus on retail. SBI (WWF) report released mentioned water
expects retail portfolio to constitute 60% risks could pose further "liquidity
of loans by the end of this fiscal because constraints" on the strained balance
the corporate demand is still very-very sheets of banks. Launched with the
muted. But it is not picture perfect for Indian Banks' Association(IBA), the WWF-
banks. Delinquency rates increased India report 'Hidden Risks and Untapped
year-over year for both home loans and Opportunities: Water and the Indian
credit cards by 22 and 28 basis points, Banking Sector' provides evidence for
respectively, to 1.73% and 1.78%, why water presents a material risk for
according to a study by credit bureau banks in India, particularly how water
TransUnionCibil. In case of loans against risks could lead to stranded assets in the
property, it increased 73 bps year-over- power and agriculture sectors, two
years to 3.03% in CYQ3 2018. Lenders sectors that account for the highest
must judiciously monitor their risk gross credit exposure of Indian banks.
management processes. For example According to the report, close to 40 per
the loan against property, at the same cent of the gross credit exposure of
time, delinquency rates for these loans Indian banks is in sectors where water
have now crossed 3% for the first time in risks are significant. Reeling under a
several years. Lenders must now crisis of non-performing loans with
determine if the rapid demand for these close to 10 per cent of gross-advances
loans, which are an excellent revenue of the Indian banks facing a risk of non-
generator, outweighs the recent payment from debtors, these risks can
delinquency increases. place further liquidity constraints on the
https://economictimes.indiatimes.com/industr already stressed balance sheets of banks y/banking/finance/banking/retail-loans-may- in India. Citing NITI Aayog's observation, revive-indian-economy-banks/articleshow it mentioned that the current water crisis /67550031.cms Dated: Jan 16, 2019
in the country is its worst ever. With
water being a shared resource, what the WATER CRISIS IN INDIA
country requires is a comprehensive and COULD FURTHER WORSEN
sustainable water management plan by BANK NPA PROBLEM (WORLD various stakeholders. While banks are WILDLIFE FUND) exposed to the risks of water as lenders With water being a shared resource, what to businesses, it also places them in a the country requires is a comprehensive unique position to influence businesses and sustainable water management plan to proactively handle various water by various stakeholders. Water problems related risks, including using WWF's could push the non-performing assets Water Risk Filter and enabling flow of of banks higher as many lenders have capital towards solutions which address loan exposure in sectors where there are such risks.risks to water resources. At a time when https://economictimes.indiatimes.com/industr
y/banking/finance/banking/water-crisis-in-the banking sector is grappling with india-could-further-worsen-bank-npa-mounting NPAs, the World Wildlife Fund
I N D I A
98 - ASSOCHAM Banking e-Bulletin - Volume - 45
Circular
Number
Date Of
Issue
Department Meant For
RBI/2018-
2019/111
Ref.No.IDMD/2
050/08.02.032/2
018-19
28.1.2019 Internal Debt
Management
Department
All Scheduled Commercial Banks All
State Co-operative Banks/All Scheduled
Primary (Urban) Co-operative Banks
/All Financial Institutions/ All Primary
Dealers.
RBI/2018-
2019/110
Ref.No.IDMD/1
958/08.02.032/2
018-19
21.1.2019 Internal Debt
Management
Department
All Scheduled Commercial Banks All
State Co-operative Banks/All Scheduled
Primary (Urban) Co-operative Banks
/All Financial Institutions/ All Primary
Dealers
RBI/2018-
2019/109
A.P. (DIR
Series) Circular
No. 17
16.1.2019 Foreign
Exchange
Department
All Category-I Authorised Dealer Banks
RBI/2018-
2019/108
Ref.No.IDMD/1
824/08.02.032/2
018-19
14.1.2019 Internal Debt
Management
Department
All Scheduled Commercial Banks All
State Co-operative Banks/All Scheduled
Primary (Urban) Co-operative Banks
/All Financial Institutions/ All Primary
Dealers
RBI/2018-
2019/107
DBR.Dir.BC.No
.22/04.02.001/2
018-19
11.1.2019 Department of
Banking
Regulation
All Scheduled Commercial Banks
(excluding RRBs) Small Finance Banks
and Primary (Urban) Cooperative Banks
RBI/2018-
2019/106
DBR.BP.BC.No
.20/21.06.201/2
018-19
10.1.2019 Department of
Banking
Regulation
All Scheduled Commercial Banks
(Excluding RRBs and LABs)
RBI/2018-
2019/105
DBR.No.Ret.BC
.21/12.16.091/2
018-19
10.1.2019 Department of
Banking
Regulation
All Scheduled Commercial Banks
RBI/2018-
2019/104
DBR.IBD.BC.1
9/23.67.001/201
8-19
09.1.2019 Department of
Banking
Regulation
All Scheduled Commercial Banks
(excluding RRBs)
RBI/2018-
2019/103
DPSS.CO.PD
No.1463/02.14.0
08.1.2019 Department of
Payment and
Settlement
Systems
The Chief Executive Officer / President
All authorised card payment networks
TOP RBI CIRCULARS
I N D I A
99 - ASSOCHAM Banking e-Bulletin - Volume - 45
Circular Number
Date Of
Issue
Department
Meant For
RBI/2018 -2019/99
Ref.No.IDMD/1669/08
.02.032/2018 -19
31.12.2018 Internal Debt
Management
Department
All Scheduled Commercial Banks All State
Co-operative Banks/All Scheduled Primary
(Urban) Co-operative Banks /All Financial
Institutions/ All Primary Dealers.
RBI/2018 -2019/98
DBR.BP.BC.No.17/21.
04.098/2018 -19
28.12.2018 Department of
Banking
Regulation
All Scheduled Commercial Banks (Excluding
RRBs) & Small Finance Banks (SFBs)
RBI/2018 -2019/97
DBR.No.Ret.BC.16/12
.06.152/2018 -19
27.12.2018 Department of
Banking
Regulation
All Scheduled Commercial Banks
RBI/2018 -2019/96
DBR.Leg.No.BC.15/0
9.08.020/2018 -19
27.12.2018 Department of
Banking
Regulation
All Scheduled Commercial Banks ( Including
RRBs), Small Finance Banks, Local Area
Banks, All Co -operative Banks, All NBFCs
and All India Financial Institutions
RBI/2018 -2019/95
IDMD.CDD.No.1637/
13.01.299/2018 -19
27.12.2018 Internal Debt
Management
Department
The Chairman & Managing Director State
Bank of India & 18 Nationalised Banks Axis
Bank Ltd., ICICI Bank Ltd., HDFC Bank Ltd.,
Stock Holding Corporation of India Ltd.
(SHCIL)
RBI/2018 -2019/94
Ref.No.IDMD/1631/08
.02.032/2018 -19
24.12.2018 Internal Debt
Management
Departm ent
All Scheduled Commercial Banks All State
Co-operative Banks/All Scheduled Primary
(Urban) Co -operative Banks/All Financial
Institutions/ All Primary Dealers.
RBI/2018 -2019/93
Ref.No.IDMD/1548/08
.02.032/2018 -19
17.12.2018 Internal Debt
Management
Depar tment
All Scheduled Commercial Banks All State
Co-operative Banks/All Scheduled Primary
(Urban) Co -operative Banks /All Financial
Institutions/ All Primary Dealers
RBI/2018 -2019/92
A.P. (DIR Series)
Circular No.16
06.12.2018 Foreign Exchange
Department
All Category – I Authorised Dealer Banks
RBI/2018 -2019/91
DBR.No.Ret.BC.14/12
.16.006/2018 -19
06.12.2018 Department of
Banking
Regulation
All Scheduled Commercial Banks
RBI/2018 -2019/90
DBR.No.Ret.BC.13/12
.06.071/2018 -19
06.12.2018 Department of
Banking
Regulation
All Scheduled Commercial Banks
RBI/2018 -2019/89
FIDD.GSSD.CO.BC.N
o.11/09.16.03/2018 -19
06.12.2018 Financial
Inclusion and
Development
Department
The Chairman/ Managing Director & CEO All
Scheduled Commercial Banks & Small
Finance banks
RBI/2018 -2019/88
DGBA.GBD.No.1397/
06.12.2018 Department of
Government and
The Chairman/Managing Director/Chief
Executive Officer/ Agency Banks Handling the
I N D I A
99 - ASSOCHAM Banking e-Bulletin - Volume - 45
RBI/2018 -2019/88
DGBA.GBD.No.1397
/15.01.001/2018 -19
06.12.2018 Department of
Government and
Bank Accounts
The Chairman/Managing Director/Chief
Executive Officer/ Agency Banks Handling
the Special Deposit Scheme 1975
RBI/2018 -2019/87
DBR.BP.BC.No.12/2
1.04.048/2018 -19
05.12.2018 Department of
Banking
Regulation
All Scheduled Commercial Banks Small
Finance Banks
RBI/2018 -2019/86
DBR.No.Ret.BC.10/1
2.02.001/2018 -19
05.12.2018 Department of
Banking
Regulation
All Scheduled Commercial Banks (including
Regional Rural Banks) Local Area Banks,
Small Finance Banks, Payments Banks
Primary (Urban) Co -operative Banks (UCBs)
State and Central Co -operative Banks (StCBs
/ CCBs)
RBI/2018 -2019/85
Ref.No.IDMD/1359/0
8.02.032/2018 -19
03.12.2018 Internal D ebt
Management
Department
All Scheduled Commercial Banks All State
Co-operative Banks/All Scheduled Primary
(Urban) Co -operative Banks/All Financial
Institutions/ All Primary Dealers
I N D I A
100 - ASSOCHAM Banking e-Bulletin - Volume - 45
LIST OF ASSOCHAM BANKING & FINANCIAL SERVICES PUBLICATIONS
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14th Social Banking Excellence Awards-cum-
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26th
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Hotel Four Seasons,
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Insolvency and Bankruptcy Code Council
Meeting
March 2019
New Delhi
ASSOCHAM Banking E-Bulletin 10th
March 2019 Vol.- 46
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