26.01.2024 : Today’s Banking / Financial News at a Glance
🍒 SBI warns staff against enrolling customers in insurance schemes without consent : State Bank of India, the country’s largest lender, has alerted its employees against enrolling customers in government-sponsored insurance schemes. In an internal letter, the bank said it has received complaints under the whistle-blower policy regarding customers’ accounts being debited for enrolling on to policies such as Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJY), and Atal Pension Yojana (APY) without a proper mandate from the customers. Moneycontrol has reviewed a copy of the letter. “These transactions are being carried out by officials sitting at the RBOs (regional business offices). This has been viewed very seriously by the top management of the bank,” the bank said in the letter. The bank advised senior officials to discourage such unethical practices. – moneycontrol.
🍒 PNB Q3FY24 Results: Net profit up 253% YoY to ₹2,223 crore; NII grows 12.1% : Punjab National Bank released its Q3 FY24 results today, posting a 253% YoY jump in its standalone net profit at ₹2,223 crore. In the same period last year, the state-run lender reported a net profit of ₹629 crore. Seeing sequentially, the net profit improved by 26.60% as the bank in Q2 FY24 recorded a net profit of ₹1,756 crore. The bank’s net interest income during the reporting quarter jumped to ₹10,293 crore, a 12.13% YoY improvement. In the preceding quarter, the bank reported an NII of ₹9,923 crore. The bank’s operating expenses declined to ₹6,636 crore in Q3 FY24 from ₹6,801 crore in Q3 FY23. Its pre-provision operating profit (PPoP) stood at ₹6,331 crore for the December-ending quarter, registering a growth of 10.75% YoY. In Q2 FY24, the bank reported a PPoP of ₹6,216 crore. – Live Mint.
🍒 PNB raises profit guidance for FY24 to ₹7,000-7,500 crore on strong Q3 show : Encouraged by strong Q3 performance, Punjab National Bank (PNB) has revised upwards its profit guidance for current fiscal to ₹7,000-7,500 crore. This will be higher than the ₹6,000 crore net profit guided earlier by the bank at the time of its September 2023 quarter results, Atul Kumar Goel, Managing Director and CEO, PNB said here on Thursday. Aided by lower provisioning for bad loans and better operating performance, PNB on Thursday reported a 253 per cent increase in standalone net profit for the third quarter ended December 31, 2023 at ₹2,223 crore (₹629 crore). – Business Line.
🍒 Indian Bank’s wholly-owned subsidiary to begin operations next fiscal: MD : Public sector Indian Bank is engaged in floating a wholly-owned subsidiary with a capital infusion of Rs 10 crore and it is expected to commence operations in the next financial year, a top official said here on Thursday. The subsidiary would largely focus on back-office processing, collection, sales and marketing, Indian Bank Managing Director and CEO Shanti Lal Jain said. “Around a week back, we got the financial approval. It will be a wholly-owned subsidiary. We will be putting Rs 10 crore as capital and we are in the process of recruiting people at the top level like CEO, CTO…,” he told reporters. – economc times
🍒 Indian Bank prepares to launch a subsidiary to focus on some business areas : PSU lender Indian Bank is in the process of launching a wholly-owned subsidiary primarily for back-office operations and a few other functions with a capital infusion of ₹10 crore. “RBI has permitted us to start the subsidiary. We are now preparing to float the arm and are in the process of recruiting top leadership team members such as CEO, CTO, etc,” Shanti Lal Jain, Managing Director and CEO, Indian Bank, said here. The subsidiary would largely focus on back-office processing, collections, recovery, sales and marketing, among other functions. It is likely to commence operations during the next financial year. – business line
🍒 Aiming for 12 per cent credit growth by fiscal end: Indian Bank MD & CEO : Chennai-based public sector lender Indian Bank is looking to end FY24 with a credit growth of 10-12% and is on track to achieve the recovery target of Rs 8,000 crore for the current fiscal, managing director and chief executive officer SL Jain said on Thursday. Speaking to select mediapersons, Jain said during the last nine months, the bank has been able to keep the momentum going on both deposits and advances fronts. “In the last nine months, our deposits have grown 10% against our target of 8-10%. Similarly, advances’ growth stood at 13% against our target of 10-12%. The bank is in a better position and would like to close the fiscal with a 10-12% credit growth,” he said. – Financial Express
🍒 Govt, RBI actively engaged on digital currency: FM Nirmala Sitharaman : Finance Minister Nirmala Sitharaman on Thursday said the government and the Reserve Bank are actively engaged in improving the central bank digital currency (CBDC) so that it can be used for cross-border payments. RBI began the pilot project wholesale CBDC and picked up nine banks — State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, YES Bank, IDFC First Bank, and HSBC. Besides, RBI has already rolled out a pilot in the retail version of CBDC or the e-rupee on December 1, 2022. The e-rupee is in the form of a digital token that represents legal tender. – Financial Express
🍒 SBI Card Q3 net up 8% at ₹549 crore : SBI Cards and Payment Services (SBI Card) on Thursday reported an 8 per cent increase in net profit for the third quarter ended December 31, 2023 at ₹549 crore (₹510 crore). This company, which is country’s largest pure play credit card issuer, had recorded a net profit of ₹602 crore in the September 2023 quarter. Total income for the quarter under review surged 30 per cent year-on-year at ₹4,742 crore (₹3,656 crore). The company’s cards-in-force grew by 16 per cent at 1.85 crore as of Q3 FY24 compared with 1.59 crore as of Q3 FY23. Card spends grew by 41 per cent at ₹96,860 crore in Q3 FY24 against ₹68,835 crore in Q3 FY23. – Business Line.
🍒 DCB Bank Q3 PAT up 11% at ₹127 crore : DCB Bank posted a net profit of ₹127 crore in Q3 FY24, up 11 per cent year-on-year but flat quarter-on-quarter. Net interest income was up 6 per cent y-o-y and unchanged from a quarter ago to ₹474 crore. Net interest margin (NIM) for the quarter was 3.48 per cent. Advances grew 18.2 per cent y-o-y to ₹38,951 crore. Disbursements in Q3 were at ₹4,307 crore, lower than ₹4,557 crore in the previous quarter and ₹4,598 crore in the previous year. – Business Line.
🍒 RBL Bank expects 20% loan growth over next 2 years led by retail assets : RBL Bank expects a 20 percent growth in its loan book over the next two financial years, largely led by secured retail assets, its managing director and chief executive officer said in an interview on 24 January. In an interview with Reuters, R Subramaniakumar said, “We are trying to get into areas which are futuristic … and have a better management of the capital.” “We have forayed into areas like gold and housing loans where the risk weight is fairly less and capital adequacy is going to be taken care of,” he added. – Live Mint.
🍒 RBI receives bids from banks for allotment of ₹3-lakh cr against notified amount of ₹2.5-lakh cr : The Reserve Bank of India (RBI) received bids aggregating ₹3.08-lakh crore for allotment of funds from banks against the notified amount of ₹2.50-lakh crore at the 15-day variable rate repo (VRR) auction on Thursday in the backdrop of tight liquidity in the banking system. The banking system’s overall liquidity deficit rose to ₹3,46,367 crore on January 24 against ₹3,33,961 crore on January 23 and ₹1,28,794 crore as on January 1. The central bank allotted liquidity aggregating ₹2,50,010 crore to the bidders (banks) at a weighted average rate of 6.73 per cent. – Business Line.
🍒 ICRA revises up bank credit growth estimate to 15% from 13% for FY24 : Ratings agency ICRA has revised upwards its projection of bank credit growth in FY24 to 14.9-15.3 per cent, estimated at an incremental growth of ₹20.4-20.9 lakh crore, from the earlier projection of 12.8-13 per cent equating to a growth of ₹17.5-17.8 lakh crore. “This will be the highest ever incremental bank credit growth and would surpass the previous high of ₹18.2 lakh crore (YoY growth of 15.4 per cent) in FY23,” ICRA said, adding that corporate bond issuances are also expected to touch a record high of ₹9.6-9.9 lakh crore in FY24, higher than ₹8.7 lakh crore in FY23. Bond issuances are seen at ₹9.6-9.9 lakh crore in FY24 and ₹10.0-10.5 lakh crore in FY25 against ₹8.7 lakh crore in FY23. Corporate bond outstanding, estimated at ₹44.7 lakh crore as of December 2023, is seen growing 5-7 per cent on year to ₹45.2-45.5 lakh crore by March 2024 and ₹47.7-48.5 lakh crore by March 2025. – Business Line.
🍒 Widening liquidity deficit: RBI to infuse ₹2.50 lakh cr liquidity via VRR : The Reserve Bank of India (RBI) will infuse liquidity amounting to ₹2.50-lakh crore via a 15-day variable rate repo (VRR) auction on Thursday as the overall liquidity deficit in the banking system has widened to ₹3.34-lakh crore on January 23 as compared with ₹1.29-lakh crore as on January 1st. – Business Line.
🍒 Gap between credit and deposit growth widens: RBI : The gap between credit and deposit growth as of the first fortnight of January 2024 has widened vis-a-vis the last fortnight of September 2023 even as the former continues to outpace the latter on year-on-year (y-o-y) basis, going by RBI data. As on January 12, 2024, credit and deposit growth stood at 19.93 per cent and 12.84 per cent y-o-y, respectively, resulting in a gap of 7.09 percentage points between the two, per RBI data on scheduled banks’ statement of position in India. In the last fortnight of September (22nd), the gap between credit growth (19.42 per cent y-o-y) and deposit growth (12.94 per cent) was relatively lower at 6.48 percentage points. – Business Line.
🍒 RBI authorises Zomato Payments to operate as online payment aggregator : Food delivery platform Zomato on Thursday said the Reserve Bank of India (RBI) has granted a payment aggregator (PA) licence to its subsidiary Zomato Payments Private Limited. The approval will allow the firm to facilitate e-commerce transactions through its platform. “Pursuant to our earlier disclosure dated August 4, 2021, regarding the incorporation of Zomato Payments Private Limited (ZPPL), a wholly-owned subsidiary of Zomato Private to carry out the business, inter alia, as a payment aggregator and issuer of pre-paid instruments, we wish to inform that ZPPL has been granted the certificate of authorisation dated January 24, 2024, from the RBI to operate as a payment aggregator in India,” Zomato said in a regulatory filing. – Live Mint.
🍒 Health insurance: Cashless treatment at any hospital now as insurers launch new initiative : The General Insurance Council on Wednesday announced a drive aimed at making cashless hospitalisation available for policyholders even in non-empanelled hospitals. Hospitals with 15 beds, and registered with the respective state health authorities under the Clinical Establishment Act can offer cashless hospitalisation now. In the event of hospitalisation, policyholders need not pay for treatment out of their pockets as the expenses would be covered by the insurance companies concerned. This is subject to the claim being admissible, as per the council. Under the drive ‘Cashless Everywhere’, efforts will be made to ensure that policyholders can get treated in any hospital they choose with a cashless facility, subject to certain conditions. – economic times
🍒 LIC gets RBI approval to acquire 9.99% holding in HDFC Bank : The Reserve Bank of India on Thursday approved state-run insurer Life Insurance Corporation of India’s (LIC) application to acquire a 9.99% aggregate holding of paid-up share capital in HDFC Bank. “Pursuant to Regulation 30 of the SEBI Listing Regulations, we would like to inform you that the Reserve Bank of India (“RBI”) vide its letter dated January 25, 2024, addressed to Life Insurance Corporation of India (“LIC”), has accorded its approval to LIC for acquiring aggregate holding up to 9.99% of the paid-up share capital or voting rights of HDFC Bank Limited,” the insurance company said in an exchange filing. The central bank’s approval comes in light of an earlier application by the state-run insurer to acquire voting rights in the bank. – economci times
🍒 JC Flower ARC, Prudent submit bids for two NPAs of Yes Bank : JC Flower ARC has submitted a base bid for Indrajit Power for ₹353.6 crore of loans, while Prudent ARC has submitted a base bid for Katerra India for a loan of ₹521 crore. These loans have been put up for sale by Yes Bank. In the initial bidding process, Prudent ARC made an offer of ₹165.6 crore for Katerra India, while JC Flower ARC proposed ₹133 crore for Indrajit Power. Interested bidders will have to submit offers at 7% mark-up to the base bid. – economic times
🍒 Banks to feel capital pain on ‘daylight deals’ : Banks will have to set aside capital on thousands of crores of funds they lend to corporates, brokers, asset managers and even clearing houses during the day. The move would impact several private sector and foreign banks whose capital requirement would go up. Better known as intra—day credit lines — or ‘day-light overdrafts’ (DLOD) — these loan lines are given sometimes for a couple of hours, with the borrower repaying the money before the close of the business hour. – economic times
🍒 India’s private banks hold on to loan growth target despite growing headwinds : Indian private banks expect growth in loans to sustain in the “high teens” over the next fiscal year despite a struggle to raise deposits and tougher capital requirements imposed by the central bank. In November, the Reserve Bank of India (RBI) raised the capital requirements for personal loans, credit cards and for lending to non-banking finance companies (NBFCs) but banks have chosen to absorb the higher capital requirements rather than slow loan growth. While Kotak Mahindra Bank said its loan book would grow in the “high teens” next year, IndusInd Bank expects credit growth of 18-20% for this fiscal year and the next. – economci times
🍒 HDFC Bank sees period of consolidation as it absorbs mega merger : HDFC Bank, India’s largest private sector lender, will take 4-5 years to fully digest its merger with its parent last July but expects to restore a key financial metric to pre-merger levels at the end of that period, two sources familiar with the bank’s thinking said. The lender’s quarterly earnings last week prompted a sharp 15% decline in the stock, even as its profit beat expectations, as analysts raised concerns about lending margins and sluggish deposit growth in its second quarterly report since merging with Housing Development Finance Co. – economic times
🍒 Maruti Suzuki ties up with J&K Bank to provide financing solutions to dealers : Maruti Suzuki India on Thursday said it has joined hands with Jammu & Kashmir Bank to provide financing solutions to its dealer partners. The Memorandum of Understanding (MoU) inked with Jammu & Kashmir Bank would empower over 4,000 Maruti Suzuki sales outlets across the country with comprehensive inventory funding options for their working capital requirements, the auto major said in a statement. “Our collaboration with J&K Bank will focus on innovative financing solutions for inventory funding for our dealer partners,” Maruti Suzuki India Ltd (MSIL) Senior Executive Officer (Marketing & Sales) Shashank Srivastava said. – economic times
🍒 Banks, non-banks should reorient their grievance redress framework to support Internal Ombudsman: RBI DG Swaminathan : Regulated entities should reorient their grievance redress framework to support the Internal Ombudsman (IO) mechanism to ensure smooth functioning of the overall internal grievance redress process, according to RBI Deputy Governor Swaminathan J. This observation comes in the backdrop of an ever-rising trend of complaints against these entities (banks, non-bank system participants, non-banking financial companies and Credit Information Companies) under the alternate grievance redress mechanism of the Reserve Bank of India (RBI), he said. – Business Line.
🍒 Shriram Finance PAT up 2.3%, AUM growth strong but higher opex weighs : Shriram Finance’s net profit for Q3 FY24 rose 2.33 per cent y-o-y and 3.85 per cent q-o-q to ₹1,818 crore. On-year profitability was muted largely owing to the three-way merger of Shriram City Union Finance and Shriram Capital with Shriram Transport Finance in December 2022. Net Interest Income (NII) was up 15.04 per cent y-o-y and 5.72 per cent q-o-q at ₹5,094 crore. Other income was up 101.6 per cent on year but fell 0.27 per cent on quarter to ₹823 crore. Operating expenses rose 27.4 per cent y-o-y and 4.7 per cent q-o-q to ₹14,869 crore, weighing on the bottomline. Staff costs were up 26.7 per cent on year and other operating expenses by 28 per cent. – Business Line.
🍒 Cholamandalam Investment posts 28% rise in Q3 PAT, disburses about ₹64,000 cr in 9 months : Murugappa Group NBFC Cholamandalam Investment and Finance Co Ltd has maintained its robust growth momentum during the December 2023 quarter with a strong double-digit increase in net income and loan disbursements, which have helped the company sustain its good growth in bottomline. The company’s board approved an interim dividend of 65 per cent (₹1.3 per share) for the year ending March 31, 2024, according to a statement. For the quarter ended December 31, 2023, the company’s standalone profit after tax grew by 28 per cent at ₹876 crore compared with ₹684 crore in the year-ago period. – Business Line.
🍒 Sensex plunges 360 pts, Nifty settles below 21,400; IT stocks lead the decline amidst disappointing results : Sensex, Nifty updates on 25 January 2024: The BSE Sensex fell 359.64 pts or 0.51% to close at 70,700.67. The NSE Nifty declined 101.35 pts or 0.47% to 21,352.60. This downturn was influenced by disappointing results from Tech Mahindra and the persistent decline in financial stocks. Noteworthy stocks hitting a 52-week high on the NSE included Malu Paper Mills (19.98%), Oswal Agro Mills (19.97%), Balkrishna Paper Mills (19.95%), Urja Global (19.95%), and Rajshree Sugars & Chemicals (19.94%). Geojit Financial Services’ Chief Investment Strategist, VK Vijayakumar, highlights the ongoing struggle between FIIs and DIIs, urging investors to capitalise on market volatility. He recommends adjusting portfolios, acknowledging significant valuation discrepancies across sectors, with some sectors flourishing based on order flows, while others, like banking, maintain fair value with promising performance. – Business Line.
🍒 Rupee settles 1 paisa higher at 83.11 against US dollar : The rupee rose 1 paisa in a range-bound trade to close at 83.11 (provisional) against the US dollar on Thursday, as the support from weak American currency overseas was negated by rising crude oil prices. Forex traders said the rupee is trading in a narrow range as muted domestic equities and sustained foreign fund outflows dented investor sentiments. At the interbank foreign exchange market, the local unit opened at 83.13 against the greenback. The unit oscillated between an intraday low of 83.14 and a high of 83.08 and finally settled at 83.11 (provisional) against the dollar, 1 paisa higher from its previous close. On Wednesday, the rupee had settled at 83.12 against the US dollar. – Business Line..
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