All 1.55 lakh post offices to offer payments bank service (BL 14.09.17)
India Post Payments Bank is gearing up to provide its financial services through all of 1.55 lakh post offices and 3 lakh employees by the end of 2018 — which will create India’s second-largest payments bank in terms of reach. “We will have post bank footprint in every district by March 2018, and before the end of the calendar year, all 1.55 lakh post offices and every postman and grameen dak sevak, which is another 3 lakh, will be equipped with a device which will provide full range of payment solutions that we will be hosting,” India Post Payments Bank (IPPB) CEO A P Singh said. In the private space, Airtel Payments Bank, launched in January this year, started operations with a network of 2.5 lakh merchants. Payments banks can accept deposits of up to Rs. 1 lakh per account from individuals and small businesses. The new model of banking allows mobile firms, supermarket chains and others to cater to banking requirements of individuals and small businesses. It will be set up as a differentiated bank and will confine its activities to acceptance of demand deposits, remittance services, Internet banking and other specified services. IPPB offers an interest rate of 4.5% on deposits up to Rs. 25,000, 5% on Rs. 25,000—50,000 and 5.5% on Rs. 50,000-1,00,000. “While our private sector counterparts will, I take it very positively, skim the market from the top, you need someone who works bottoms up. That is our choice,” Singh said.
EU banks close branches, cut jobs as customers go online (BL 14.09.17)
European Union banks closed 9,100 branches and cut around 50,000 staff last year as customers increasingly opted for online banking. The European Banking Federation, which gathered the information, said the number of bank branches in the EU had been reduced to 189,000 at the end of 2016, a 4.6% fall on the previous year. Staff numbers were their lowest since 1997, at around 2.8 million people, according to the analysis. A total of 48,000 branches have been shut across the bloc since 2008 - a reduction of more than one-fifth. But banks hastened closures last year compared with 2015, when 3% of branches shut their doors. With many customers embracing electronic payments and digital and mobile banking and interest rates at rock bottom, banks have slashed their costly brick-and-mortar outlets to save costs. Low interest rates depress what banks can charge for loans or earn on investments, eroding profits. Some countries' banks have responded by closing branches, with British banks alone set to close a record 762 branches this year. Alternatively banks elsewhere have introduced fees on previously free services, including basic bank accounts and withdrawals, to keep businesses afloat. Banks also looked to consolidate or merge to increase profitability - a trend that began in 2009. There were 6,596 lenders across the bloc at the end of 2016, down 6% on 2015.
IIT Madras working on low-cost financial platform for banks (BL 14.09.17)
A low-cost Financial Analytics (FINAL) stack on Open Source Software platform being developed at IIT Madras will be a cost-effective alternative to proprietary products for banks and insurance companies. This project by Department of Computer Science and Engineering is being tested. It will help banks and insurance companies avoid spending on proprietary platforms. It will also benefit start-ups that can become implementation partners. FINAL will be available free of cost to banks and financial institutions as a basic infrastructure platform on Linux, said V Kamakoti of Reconfigurable Intelligent Systems Engineering Lab, Department of Computer Science and Engineering, IIT Madras. They may have to spend about one-tenth the cost of a proprietary product for customising FINAL to their requirement. Ten people, including experts from the IT industry, are working on the initiative. The project is a CSR initiative from City Union Bank that will offer ₹5 Cr for next five years, Kamakoti said. A bank can add any of the customised module like deep learning on the type of asset on top of platform either through their own team or through implementation partners, he said. By having the code, banks will have more control over their data than depending on vendors he said. IIT Madras will own the source code, he said.
Banks' backdoor entry worry on bankruptcy (BS 14.09.17)
Bankers are taking a keen interest in how the Synergies Dooray Automative resolution case unfolds. For, this could create a precedent for the next set of cases at insolvency proceedings and decide how successful the resolution story turns out to be for lenders. The central issue in the resolution process is how much of a haircut (write-off) banks will have to take. There can be no one rule for all and depending on the case, this could be as low as 30% or as high as 80%. However, in the Synergies Dooray case, the haircut was 94%. Bankers are hoping this was an exception. Synergies Dooray was considered the first successful debt recast case at the insolvency proceedings under the new rules in this regard. Edelweiss ARC has challenged this resolution. The argument is that the promoters, through a complex structure, became majority operational creditors of the company and thus passed a resolution process that favoured a steep haircut. “If the Synergies Dooray resolution is okayed by the appellate tribunal, bankers would obviously want cases to be resolved much before these move on to the liquidation stage,” said a senior official of a large public sector bank. “If this is set as the precedent, it is possible that many such cases could come up in the future and banks could end up with nothing.” The insolvency code doesn’t prevent a promoter group or anyone else from presenting a resolution plan. Any such plan has to be approved by the majority of the creditors. Bankers are now saying promoters turning out to be the majority of creditors, through smart structures, is a rude shock to them. “There are ways of making sure that the resolution plans or the bidding process remain constrained to a few players and that the promoter’s plan look the most attractive. This is going to be a major concern for banks,” said another senior banker. Adding: “It is unlikely that outside investors would be interested in a company if there is not much actual realisable value. In this scenario, if promoter affiliates present a case where the value offered is a little higher than the realisable value, that plan becomes acceptable. This is going to be a reality for a majority of smaller accounts.”
FY18 to clock 6.5% growth at most, says SBI research (BS 14.09.17)
The research team of State Bank of India (SBI) has pegged economic growth at 6.5% for 2017-18 with a downward bias. After growth fell to a three-year low of 5.7% in the first quarter of 2017-18, the second quarter would also not give a good news for the Modi government in terms of economic growth, the research team said. "Q2 growth numbers are likely to be muted, almost like the Q1 numbers (below 6%), and the reasons are many," SBI Group Chief Economist Soumya Kanti Ghosh said.
SBI Plans to List 2 Regional Rural Banks (ET 14.09.17)
SBI will likely list two of the 18 regional rural banks (RRBs) it sponsors, unlocking the value embedded in the chosen financiers that have strong profits and robust growth potential. NABARD is working on the proposal sent by SBI, which also plans to merge five RRBs in the Northeast and create one bank with a network across the developing region, said Dinesh Khara, MD, associate and subsidiaries at SBI. “We plan to take Andhra Pradesh Grameena Vikas Bank (APGVB) and Saurashtra and Saurashtra Gramin Bank (SGB) to the market. These banks are profitable, have a good network in rural and urban areas of their states, and can use this money for growth,“ he said. APGVB made a net profit of Rs 352 Cr in FY17, up from Rs 223 Cr a year ago. SGB recorded a Rs 39 Cr net profit, up from Rs 17 Cr a year ago. Khara said the listing may take two years for completion. SBI plans to become the first public sector lender to list its rural lenders after the enactment of the RRB Amendment Bill 2014. The law allows these banks to raise capital from sources other than central and state governments and sponsor banks. The central government owns 50% in all RRBs, states own 15% and sponsor banks own 35% stake in these lenders. The RRB Act says that the combined stake of central government and the sponsor banks cannot fall below 51%. SBI's move comes just months after it took over five associate banks and the Bharatiya Mahila Bank (BMB). “Those banks were in the same commercial lending business carried on by SBI. RRBs by their nature are different but have a great franchise and deposit base,“ he said.
Bank Loan Growth Tepid, Deposits Up in Fortnight Ended Sep 1 (ET 14.09.17)
Bank loan growth continued to remain tepid as with an annualised growth of 6.4% during the fortnight ended September 1. Outstanding loans are at Rs 77.7 lakh Cr, according to the figures released by the Reserve Bank of India. Deposits posted a higher growth of 9.6% during the period to touch Rs 107.49 lakh Cr. While investments in government bonds rose 16.9% to touch Rs 3.48 lakh Cr.
Banks Shy Away from Cos Facing NCLT Action (ET 14.09.17)
Banks are turning their backs on companies taken to the National Company Law Tribunal under the Insolvency and Bankruptcy Code and the latter are struggling to keep their operations going and are being forced to turn to non-banking finance companies that levy stiffer conditions. “The creditors need to realise that if they don't release funds, the value of the company falls further,“ said an insolvency professional with one of the 12 companies referred to NCLT. “For us running the company is of primary concern and banks should consider that these companies wouldn't be heading towards closure if they could sustain themselves on their own.“ The Insolvency and Bankruptcy Code allows resolution professionals to raise `interim finance' during the resolution process after getting approval of the committee of creditors. Several resolution professionals said big companies, including Bhushan Steel, Alok Industries, Amtek Auto and Innoventive industries, are struggling to obtain interim finance. “If banks convince us that our demand for interim finance is not justified, then we have to agree with them but so far they have only made excuses,“ said a resolution professional. “The law says that interim finance has the highest priority and will rank number one when resolution happens, but none of the companies succeeded in raising any funds.“ But banks say it was not easy to dole out interim finance to these beleaguered companies as the exposure to them was already very high. “Banks have a lot of money at stake. Also realise that the objective for the company is to stay afloat, which will not require significant amount of capital,“ said a senior banker.
MFIs' Role as Banking Correspondents Pays Off (ET 14.09.17)
RBI's decision to allow micro finance institutions (MFIs) as business correspondents for banks is proving to be a success in ensuring steady flow of funds towards the unbanked sector despite the fact that several micro lenders face difficulty in raising growth capital. Last fiscal saw 27% growth in business correspondents with the share of this off-balance sheet portfolio for MFIs rising to 20% from 13% in the preceding fiscal, according to data from the Bharat Microfinance Report 2017. RBI allowed MFIs, NGOs and other civil society organisations to work as banking intermediaries for providing financial and banking services in January 2006. The loans MFIs deliver as banks' partners are not in their balance sheet and therefore this model helps their business grow without additional fresh capital. “This is the way of optimising capital, especially by smaller MFIs which cannot raise it easily,“ said Manoj Nambiar, MD at Arohan Financial Services. “If such partnership is done properly, it would be a value creator.“ Total BC portfolio of MFIs was 10,131 Cr out of their gross loan book of 46,842 Cr. Banks and MFIs, which enjoy the last-mile connect with a cost effective delivery model, benefit from such partnerships. While banks fulfill their priority sector obligations through indirect lending, MFIs can grow customer base with bank loans and earn a fee. The gross loan portfolio of 168 MFIs including NBFC-MFIs and NGOMFIs stood at 46,842 Cr. This was excluding the portfolios of Equitas, Ujjivan Financial Services and four other MFIs which transformed themselves into small finance banks. “With the transformation of larger MFIs into small finance banks, the MFIs' sector may not see high growth like 40-50% any more. Yet there would be sufficient demand for micro loans as the country still lacks financial penetration and one can expect 15-20% growth in the next couple of years,“ Sa-Dhan executive director P Satish said.
30% of Bank Jobs at Risk From Technology: Pandit (ET 14.09.17)
Vikram Pandit, who ran Citigroup Inc during the financial crisis, said developments in technology could see some 30% of banking jobs disappearing in the next five years. Artificial intelligence and robotics reduce the need for staff in roles such as back-office functions, Pandit, 60, said on Wednesday in an interview with Bloomberg Television's Haslinda Amin in Singapore. He's now chief executive officer of Orogen Group, an investment firm that he cofounded last year. “Everything that happens with artificial intelligence, robotics and natural language -all of that is going to make processes easier,“ said Pandit, who was Citigroup's CEO from 2007 to 2012. “It's going to change the back office.“ Wall Street's biggest firms are using technologies including machine learning and cloud computing to automate their operations, forcing many employees to adapt or find new positions. Bank of America Corp's COO Tom Montag said in June the firm will keep cutting costs by finding more ways technology can replace people. While Pandit's forecast for job losses is in step with one made by Citigroup last year, his timeline is more aggressive. In a March 2016 report, the lender estimated a 30% reduction between 2015 and 2025, mainly due to automation in retail banking. That would see full-time jobs drop by 770,000 in the US and by about 1 million in Europe, Citigroup said.
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India FY18 GDP growth likely at 7.1% as firms resort to restocking: Nomura (BL, BS 14.09.17)
India's GDP growth is expected to be around 7.1% this fiscal following a likely pick up in industrial production as firms resort to 'restocking' post-Goods and Services Tax (GST) especially ahead of festive season, says a Nomura report. According to the Japanese financial services major, post-GST restocking is likely to drive a faster pace of industrial output growth in the coming quarters. Before the implementation of GST, destocking was triggered largely owing to a steep fall in demand from consumers as they delayed purchases. Post GST implementation, restocking might pick up in anticipation of rising demand conditions. Nomura further said the ongoing remonetisation will have a positive impact on the cash-intensive services sectors and this, in turn, will help to augur growth numbers. "On the growth front, we expect industrial production to gradually pick up as firms focus on restocking after GST and especially ahead of the festive season; hence we think the recovery will likely continue to be led by consumption," Nomura said. "Overall, we expect GDP growth of 7.1% year-on- year and GVA growth of 6.7% in 2017-18 (year ending March 2018)," it said.
FY19 to see harsher earnings cut; remain positive on markets: Credit Suisse (BS, FE 14.09.17)
Despite a near 20% rise in the markets in calendar year 2017 (CY17), Credit Suisse remains optimistic on the road ahead and sees no major downside, unless global cues disappoint. In its 'India Market Strategy' report, the global research and brokerage house expects domestic flows to remain robust thanks to improvement in financial savings and support the market on every correction. That said, Neelkanth Mishra, MD, equity research at Credit Suisse does caution on more corporate earnings downgrades going ahead. On a calendar year-to-date (CYTD) basis, all sector except metals, Mishra says, have seen EPS cuts, with the sharpest cuts in telecom (from profit to loss), pharma (cut by 35%), PSU banks (30%) and discretionary (20%). In this backdrop, he maintains a negative view on pharma and PSU banks. "FY18 consensus EPS growth of 11% is likely to settle in mid-single digits. FY19 EPS growth is currently building in sharp rebound. The cuts are likely to be harsher for banks, discretionary, pharma and consumer staples sectors as the overall growth remains benign. Private sector banks, however, remain an overweight in our portfolio," Mishra says. On a more macro view, Credit Suisse remains concerned on the muted economic growth - as reflected by the drop in demand for oil, cement, power and truck rentals. It also believes the impact of the goods and services tax (GST) on tax collection and overall economy is still unknown. "With 40% of India's taxes getting affected, frequent changes suggest revenue neutrality may be harder to achieve; centre-state split of 50:50 also to have an impact. Though food inflation is likely to stay muted, a reversal of declines is equally likely," Mishra says. While the economy is going through too many unknowns, Credit Suisse believes, that the relationship between the economy and the markets is tenuous at best.
Indian economy looking up after GST shock, but China recovering faster, OECD data shows (FE 14.09.17)
While the disappointing fall of India’s GDP growth to 5.7% in the fiscal first quarter April-June pit the country behind China on the list of the fastest growing major economies, there seems to be a reason to cheer now, with the OECD’s leading indicator showing that the Indian economy is not just recovering but is also gaining momentum. Albeit, again to the disappointment of the die-hard nationalists, China is growing at a much faster rate. The Composite Leading Indicators (CLIs) designed by the Organisation for Economic Co-operation and Development show that the Indian economy recovered in June and July from an economic slowdown in March and April this year, which was apparently caused by uncertainty related to the GST rollout. India, which had hit a low of 99.39 points on the 100-point indicator in March and April this year, recovered in subsequent months, and gained momentum in July at 99.67 points, the CLIs showed. Meanwhile China, which had hit its lowest at 98.99 in January this year, showed a steep rise and touched the 100-point trend line in July, making a recovery of 1.1 points in a span of just seven months. Although, India’s growth is seen as speeding up, it continues to remain below the 100-point trend line unlike China.
Rural distress may lessen even as agriculture growth may stay flat (FE 14.09.17)
The distress in rural India on account of a glut-induced crash in prices of farm commodities will likely alleviate soon as prices tend to look up, but statistical factors will keep farm-sector growth subdued in the short-term. A crash in prices kept growth in nominal gross value added (GVA) for the agriculture and allied sector above the expansion in real term in Q1FY18 for the first time in five years, but the situation may reverse as early as the second quarter. This is because inflationary pressure has returned from July with the post-harvest seasonal hardening of food prices and a conducive base effect has waned, especially at the retail level. This means the GDP deflator for the farm sector is set to rise during the second quarter, reversing the growth balance in favour of nominal instead of real GVA. However, an unfavourable base will still weigh on the farm sector growth in real terms this fiscal, especially from the third quarter. So, even if the country maintains last year’s record kharif grain output of 138.5 million tonnes in 2017-18, as suggested by agriculture secretary SK Pattanayak recently, the sector’s growth will remain subdued. The sector had grown at a decent pace of 6.9% and 5.2% in Q3 and Q4 of the last fiscal, respectively; in current prices, the growth rates were even higher at 8.8% and 7.9% respectively. In Q1FY18, the nominal GVA in agriculture grew just 0.3% against the real expansion of 2.3%, thanks to a 1.7% decline in wholesale price food inflation in Q1 from a year earlier.
Cash Deposits Before DeMo on Govt. Checklist (ET 14.09.17)
If you thought cash deposits made prior to November 8 last year -when the government announced its demonetisation exercise -will escape the eagle eye of the tax department, you would be mistaken. Tax authorities have sought explanations related to deposits of cash made in FY11. Not only that, notices have also been sent to homebuyers where the declared value of a purchase has been found much lower than the guidance, or indicative prices based on past transactions in the area. A reassessment can be ordered if the tax authorities don't receive a response or they don't find the reply satisfactory. “Cases on the basis of information available have been classified into two categories -high risk and low risk,“ said a senior income tax official. “High-risk category cases have to be immediately attended to.“ Cases from FY11will soon become time-barred owing to the statute of limitations, hence the rush, the official added. These have been classified as high priority and general queries have been issued. The department has asked these individuals and entities to furnish permanent account numbers as well as returns filed for the financial year in question. Tax authorities have the power of assessment or reassessment of any income chargeable to tax under Sections 147 and 148 of the Income Tax Act. Formal notices will be issued if the explanation is found to be unsatisfactory.
'RBI awaiting govt. notification for coming out with P2P lending norms’ (BL 14.09.17)
The Reserve Bank is waiting for a gazette notification from the government on getting peer-to-peer lenders under its regulatory ambit before coming out with guidelines on the sector, a senior official said. “Following up on the consultation paper we did last year, we are shortly going to come up with guidelines on peer-to-peer lending,” RBI’s executive director Sudarshan Sen said at an industry event here. The consultation paper on P—2—P lending was released by RBI in April last year, but the final guidelines are yet to come. Sen said a notification from the government is the missing part, which is preventing the RBI from releasing the final guidelines. “First, we need the government to notify P—2—P platforms as an entity to be regulated by RBI. That requires a gazette notification. Once that happens, we come out with regulation,” he said. Sen added that legislative change for the same has already come in and it is only a gazette notification that is required. A June 29 report quoting top Finance Ministry sources had said RBI would come out with the final guidelines in two-three weeks. “We have given our comments to the RBI. The guidelines should be out soon. The norms will be out before July-end,” the official had said. He also said the Finance Ministry has recommended that these platforms be registered as non-banking financial institutions.
RBI not comfortable with non-fiat cryptocurrencies: Sen (BL 14.09.17)
The Reserve Bank is uncomfortable with “non-fiat” cryptocurrencies such as Bitcoin, its executive director Sudarshan Sen said. “As regards non-fiat cryptocurrencies, I think we are not comfortable,” Sen said addressing the India Fintech Day conference here. Elaborating on what is a non-fiat cryptocurrency, Sen said, “Bitcoins for example. That’s a private cryptocurrency.” The fiat cryptocurrency is a digital currency which will be issued by the RBI in place of the physical one at present, he said, adding that the central bank is studying this aspect at present. “Right now, we have a group of people who are looking at fiat cryptocurrencies. Something that is an alternative to the Indian rupee, so to speak. We are looking at that closely,” Sen said. The RBI has been repeatedly cautioning everyone about the usage of cryptocurrencies, flagging a slew of concerns. According to some media reports, there has been a growing number of investors in such currencies over the last few years, especially with the huge spurt in the value of a few of them since the Donald Trump administration came in the US. “Any user, holder, investor or trader dealing with virtual currencies is doing it at their own risk,” the RBI had cautioned on its website in February this year. The RBI has been repeatedly flagging concerns on virtual currencies such as Bitcoins, stating that they pose potential financial, legal, customer protection and security-related risks.
Over 30 Cr families got bank accounts in financial inclusion drive: Jaitley (BL 14.09.17)
Finance Minister Arun Jaitley said the government brought the issue of financial inclusion to the front and helped 30 Cr families open bank accounts through the Jan Dhan scheme. “About 42% of households were unbanked before the Jan Dhan Yojana,” he noted at a Conclave on Financial Inclusion, which was organised by the United Nations. The Minister noted that the number of zero-balance accounts has reduced from 77% to 20%. “Even these would become operational as the Direct Benefit Transfer scheme expands,” he said. Espousing the benefits of demonetisation, he said it has helped increase the tax base and has led to greater formalisation of the economy while reducing the quantum of cash in the economy.
SIP inflows touch Rs 5,206-cr milestone in August (BS 14.09.17)
Mutual fund (MF) investments through the systematic investment plan (SIP) route touched a new high of Rs 5,206 Cr in August. A record 700,000 new SIP accounts were also opened during the month, taking the total tally of such accounts to around 16 million. According to industry experts, the impressive figure indicates that flows into MFs would sustain at record levels. Nearly half of the new accounts prefer the SIP mode over the traditional lump-sum or one-time investment option. During the start of FY18, the number of SIP accounts stood at 13.5 million. Sundeep Sikka, CEO of Reliance Nippon Mutual Fund, says, “Investor flows through the SIP route have been growing, which is a positive sign for the industry. High portion of SIPs is more important than just a growth in assets. We expect much better growth in SIP figures." SIP is considered as a vital constituent in the growth of MF industry. The money flowed in through this mode is more consistent and sticky than that through lump-sum investments. In the previous fiscal year, the sector witnessed an overall inflow of Rs 43,921 Cr through the SIP route. During the five months of this fiscal year, such flows have reached Rs 23,750 Cr, more than half of the last fiscal year.
Credit offtake to remain muted for now: HDFC Securities chief (BL 14.09.17)
It will take some more time for credit offtake to pick up, Dhiraj Relli, MD & CEO, HDFC Securities, said. While the retail credit portfolio will continue to grow, lending to the corporate sector will be low as no new investments are taking place, particularly in the private sector. According to Relli, lending to agriculture, personal loan, housing and other mortgage loan has been growing at a healthy double digit ratio and will continue to grow moving forward. “However, lending on corporate side will remain low till investments start picking up which will happen only once capacity utilisation starts improving from the current levels,” Relli said. As on July 2017, personal loans have grown by 15%, housing loan by 10.5%, vehicle loans by 9.6% and agriculture loans by seven% on a year-on-year basis, he said. On the other hand, credit to industry witnessed de-growth of 0.3% on a year-on-year basis. While textiles grew by 0.8%, there was a negative growth in metal, gems and jewellery and infrastructure sectors. Talking about the impact on bank’s margins, he said, banks, which are heavily dependent on corporate lending, might see some impact of the poor credit offtake. However, this could be partially offset by a reduction in cost brought about by an inching down of savings bank and term deposit rates.
India represents single-largest cash displacement opportunity, says Visa Group Country Manager (BL 14.09.17)
Global payments technology firm Visa is betting big on innovations such as QR technology and contactless cards to drive digital payments in India. The company also believes that the recent implementation of GST will drive adoption of digital payments among small- and medium-sized merchants. TR Ramachandran, Group Country Manager, India and South Asia, Visa, said: “India represents perhaps the single-largest cash displacement opportunity. There has been a significant increase in digital payments penetration post-demonetisation. It’s fair to say that post-demonetisation, India has perhaps leapfrogged 3-4 years and achieved what otherwise could have been achieved only by 2020.” He said that post-demonetisation, the company is seeing a shift towards digital payments even in non-discretionary categories such as fuel, groceries and bill payments at small restaurants, even in tier II and tier III geographies. Over the past two years, the company has been introducing several innovations and working with partners to get consumers and merchants to shift to digital payments. For instance, Visa pioneered the QR technology as a low-cost payments solution in the country and subsequently, worked with other stakeholders to introduce BharatQR. Ramachandran said: “The low-cost QR solution has the potential to rap shift consumers and merchants from cash to digital payments rapidly. Currently, just about 2.5 million merchants have adopted this. Given the size of the country, we have not even scratched the surface.”
SBI Life’s IPO for Rs. 8,400 Cr to open on Sept 20 (BL 14.09.17)
SBI Life Insurance, a unit of India’s largest lender, State Bank of India, on Wednesday announced the country’s first billion-dollar IPO since 2010. SBI Life Insurance is seeking to raise Rs. 8,400 Cr ($1.3 billion) from the sale of 8% stake of SBI and 4% stake held by BNP Paribas Cardif (BNPPC). SBI currently holds 70.10% in SBI Life while 26% is held by BNPPC. The balance 4% stake is owned by KKR and Temasek. The issue will open on September 20 and close on September 22. The price band has been set at Rs. 685-700 an equity share with a minimum bid of 21 equity shares. SBI Life will become the second life insurer to go public after the listing of ICICI Prudential Life Insurance last year.
NIIT to train employees in banking, insurance sectors (BL 14.09.17)
NIIT Ltd will soon provide training programmes to employees for financial services and insurance sectors, said its CEO Sapnesh Lalla, without giving a time frame for the launch. With India’s middle income rising, financial services and insurance are two under-penetrated sectors so far but have enormous potential to grow in next 5-10 years. Family income is growing, and people need to secure their assets and wealth. This trend will in turn lead to demand for financial services and insurance products, and the two sectors will recruit employees in large numbers, he told newspersons. NIIT has already established as a strong player in providing training for employees in the banking sector. In the last five years, the company had trained nearly 50,000 in areas such as sales and customer relationship for banking sector. This model will be replicated for financial services and insurance sectors, he said. In the banking sector, NIIT has ICICI as an anchor client, and many other banks as clients. Similarly, it will have anchor clients in both financial services and insurance sectors, he said.
LIC cuts stake in public sector banks (FE 14.09.17)
Life Insurance Corporation (LIC), the largest investor in state-owned lenders, has pared its exposure to these banks. In fact, in the last one year, the average holding in 20 PSBs has come down to 11.9% from 12.7%. Over the last two years, LIC has reduced its stake in most of public sector banks (PSBs) with Bank of Baroda seeing the biggest reduction of nearly 5 percentage points (ppts) since June 2015. This was followed by United Bank of India where the insurer reduced its exposure by another 4.82 ppts. While the bad loan ratio of Bank of Baroda increased to 11.4% in June 2017 from 4.13% in June 2015, United Bank of India saw its NPA ratio increasing from 9.6% to 17.2% during the period. The holding in Corporation Bank – the highest ownership among the PSBs -declined by 3.63 ppt to 18.9%. LIC has also reduced its ownership in Bank of India by 2 ppts and 1.9 ppts in Indian Overseas Bank during the same time frame. The holding in SBI comes off by one percentage points to 10.4%. In the last two years, the gross non-performing assets of 20 public sector banks rose over two fold to 7.3 lakh Cr at the end of June 2017, data compiled from Capitaline showed. The NPA ratio – bad loans as a percentage of total advances – increased to 13% in June 2017 from 5.5% in June 2015. However, LIC has more than doubled its holding in IDBI bank. As of August 14, LIC owns 14.2% of the paid up equity. While the holding in Vijaya Bank increased to 12.9% from 7.2% in last two years, the holding has increased in OBC and Andhra Bank by more than 4 ppts.
REI Agro goes in for liquidation (BS 14.09.17)
REI Agro, a firm that claims to have 22% share in the world’s basmati rice market, has gone in for liquidation after the National Company Law Tribunal (NCLT) ordered it to do so. The company, which sells Rain Drops basmati rice, said in a BSE filing that insolvency professional Anil Goel is the official liquidator of the company. It said the board and key managers have lost their powers and all employees have been discharged of their duties. REI Agro’s insolvency case had been admitted by the Kolkata bench of the NCLT in March. The NCLT can order liquidation if a firm fails to bring to the table a resolution plan within six months of admission of the case. The company ended FY16 with losses of Rs 1,076.13 Cr. Its standalone turnover for that year was Rs 521.79 Cr. According to the annual report, it owed 22 banks an amount of Rs 4,745.24 cr. It has also not provided interest on loans availed from banks and financial institutions.
Hindalco Ind to pre-pay Rs. 1,100-cr high-cost debt this month (BL 14.09.17)
Hindalco Industries, part of the Aditya Birla Group, is looking to save Rs. 800 Cr this fiscal by pre-paying high-cost debt. Kumar Mangalam Birla, Chairman, Hindalco Industries, said the company has so far pre-paid Rs. 7,815 Cr and will pay another Rs. 1,100 Cr this month to cut debt further. The move will reduce finance cost by Rs. 800 Cr this fiscal and efforts will be taken to bring down debt further next fiscal, he added. The broad theme going ahead will be to deleverage balance sheet and focus on downstream products, Birla said. The company is also studying the export market for alumina with capacity utilisation ramping at the Utkal Alumina Refinery, he said. In India, he said aluminium demand is expected to improve as the government has taken several measures, including stepping up public sector outlays for infrastructure, focus on ease of doing business and speeding up of green clearances.
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