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 22.07.2020: Today's Banking / Financial News at a Glance

 Axis Bank Q1 net profit down 19% : Private sector lender Axis Bank reported an 18.8 per cent decline in its net profit to ₹1,112.17 crore in the first quarter of the fiscal as against ₹1,370.08 crore a year ago. “Adjusted for accounting policy changes and Net interest income reserves created during the quarter, NII, operating profit and PAT for the quarter would have been ₹7,100 crore, ₹6,151 crore and ₹1,626 crore respectively, growing by 22 per cent, 4 per cent and 19per cent year on year, respectively,” it said in a statement on Tuesday.Net interest income in the first quarter this fiscal grew 20 per cent year-on-year to ₹6,985 crore; net interest margin was 3.4 per cent. Gross NPA and Net NPA declined to 4.72 per cent and 1.23 per cent as on June 30, 2020 from 5.25 per cent and 2.04 per cent a year ago. Provisions stood at ₹4,416.42 crore for the first quarter this fiscal as against ₹3.814.58 crore a year ago. The bank made incremental provisions aggregating ₹733 crore in the first quarter this fiscal towards Covid-19. - Business Line

 Banks sanction ₹1.27 tn worth loans to MSMEs under credit guarantee scheme : The finance ministry on Tuesday said, as of 20 July, banks have sanctioned loans worth about ₹1,27,582 crore under the ₹3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector impacted by the economic slowdown triggered by coronavirus However, disbursements from public sector banks and private banks against this stood at ₹77,613 crore under the 100 per cent ECLGS for micro, small and medium enterprises (MSMEs).The scheme is the biggest fiscal component of the ₹20-lakh crore Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman in May.The latest numbers on ECLGS, as released by the finance ministry, comprise disbursements by all 12 public sector banks (PSBs), 22 private sector banks and 21 non-banking financial companies (NBFCs), which were shared by Sitharaman's office on Twitter on Tuesday. "Under the 100% ECLGS, the loan amounts sanctioned by Public Sector Banks increased to ₹70,894.59 crore, of which ₹45,797.29 crore has been disbursed as of July 20," the FM's office said in a tweet while sharing bank-wise and state-wise details. - Live Mint

 Covid-19 boosts Jan Dhan; close to 2 crore new accounts opened in 3 months : Notwithstanding the general disruption caused by the lockdown and fears over the spread of Covid-19, a significant number of new accounts have been opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY) in the last three months. An analysis of government data shows that the total number of PMJDY accounts has gone up from 38 crore as on April 2020 to 39.82 crore as on July 8, with a total balance of ₹1,31,576 crore.Significantly, out of the 40 crore Jan Dhan beneficiaries, 22 crore are women.The growth has been driven by the benefits announed as part of the Pradhan Mantri Garib Kalyan Yojana, where ₹500 wasdeposited by the Centre into the accounts of women.“It has now been clealy established that Jan Dhan accounts have become the main channels of benefit disbursement. With unabated spurt in Covid-19 cases, more and more accounts are being opened at the branches in many rural areas,” an Executive Director with a public sector bank told BusinessLine. - Business Line

 SBI puts up Rs 366 crore loans for sale to ARCs in tough year for recoveries : SBI puts up Rs 366 crore loans for sale to ARCs in tough year for recoveries : State Bank of India (SBI) on Monday sought buyers for its loans to two companies aggregating an outstanding of Rs 365.54 crore. Both accounts are being offered to asset reconstruction companies (ARCs) and other financial institutions on a full-cash basis. The reserve price for Kolkata-based MSP Sponge Iron has been set at Rs 126 crore, implying an up to 56% haircut on the Rs 285-crore exposure. The Rs 80-crore loan to Chandigarh-based Venus Remedies is being offered at a reserve price of Rs 56.37 crore, which means there could be a 30% haircut on this exposure. FY21 is likely to be a tough year for recoveries in the banking system as several borrowers have chosen to avail the repayment moratorium for varying periods. Earlier this year, the government also announced the suspension of fresh insolvency proceedings against stressed companies for a year, further restricting banks’ avenues for making recoveries. As a result, they are taking the asset sale route wherever possible. - financial express

 Banks oppose Finance Ministry move to decriminalise cheque-bounce offence : Banks have added their voice to the increasing chorus of stakeholders opposing the Finance Ministry’s proposal to decriminalise the offence of cheque return under Section 138 of the Negotiable Instruments (NI) Act, 1881. Banks, under the aegis of the Indian Banks’ Association, have represented to the Finance Ministry that this provision in the NI Act should continue. Bankers say they resort to legal action under Section 138 (relating to dishonour of cheque) only in cases where borrowers wilfully default on loans. The fear of criminal action, including imprisonment for up to two years or fine, which may be twice the amount of the cheque, or both, acts as a deterrent to such borrowers. While banks can launch recovery action under ‘The Recovery of Debts Due to Banks and Financial Institutions Act, and 1993’, and ‘The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002’, bankers feel they need to have the Section 138 option also to proceed against recalcitrant borrowers. - Business Line

 Rahul Bajaj steps down as Chairman of Bajaj Finance : Noted industrialist Rahul Bajaj will step down as Non-Executive Chairman of Bajaj Finance on July 31, after being at the helm of the company for over three decades. He will be succeeded by Sanjiv Bajaj, currently Vice Chairman, the Bajaj Finance said in a regulatory filing on Tuesday. “Rahul Bajaj, Non-Executive Chairman of the company, having been at the helm of the company since its inception in 1987 and the group for over five decades, as part of succession planning, has decided to demit the office as chairman of the board with effect from close of business hours on July 31, 2020,” the company said. Rahul Bajaj, however, will continue to serve the company as a non-executive non-independent director. The company's board “has approved the appointment of Sanjiv Bajaj as Non-Executive Chairman of the company with effect from August 1, 2020, in place of Rahul Bajaj, the filing said. - economic times

 Karur Vysya Bank appoints Ramesh Babu Boddu as MD & CEO : Karur Vysya Bank on Tuesday announced that it has appointed Ramesh Babu Boddu as Managing Director and Chief Executive Officer. In a regulatory filing Karur Vysya Bank said its board of directors in a meeting held on July 20, have co-opted Ramesh Babu Boddu as an additional director and appointed him as the MD and CEO of the bank for a period of three years. Boddu's three-year tenure is effective from the date of taking charge, on the terms and conditions approved by Reserve Bank of India, the filing said. In January this year, Karur Vysya Bank had said that Managing Director and CEO P R Seshadri has resigned citing personal reasons. In June, the bank had reported a 39.5 percent jump in net profit at Rs 83.70 crore for the quarter ended March 2020 on higher income from other sources. It had posted a net profit of Rs 60.02 crore during the corresponding period of 2018-19. Income during the quarter under review rose to Rs 1,803.15 crore from Rs 1,746.04 crore in last quarter of 2018-19. Shares of Karur Vysya Bank were trading at Rs 31.70 apiece on the BSE, up 0.79 percent over its previous close. - moneycontrol.com

 PMLA court refuses bail to Yes Bank founder Rana Kapoor in multi-crore fraud case : A PMLA court here on Tuesday rejected the bail plea of Yes Bank founder Rana Kapoor, arrested by the Enforcement Directorate in connection with an alleged multi-crore fraud at the bank. Kapoor had sought bail on merits of the case. His lawyers submitted that the investigation in the case was completed, hence there was no reason to keep keep him in jail. Also, most of the evidence was documentary in nature and cannot be tampered by the accused, they added.However, special judge P P Rajvaidya rejected Kapoor's plea.The banker, currently in judicial custody, was arrested in March under provisions of the Prevention of Money Laundering Act (PMLA). The Enforcement Directorate (ED) is primarily investigating Kapoor, his wife and three daughters over Rs 600 crore received by a firm allegedly controlled by them from an entity linked to the scam-hit Dewan Housing Finance Limited (DHFL). - economic times

 Shorter business hours suggested for bank branches in West Bengal :  West Bengal government has told the state level bankers committee (SLBC) to curtail business hours of bank branches and restrict number of employees on duty as a measure to check the spread of coronavirus, responding to the cry of bank employees who raised alarm on the spurt of Covid positive cases among their fraternity. The government has also announced that all Saturdays will be public holidays for bank branches in the state till the second week of August.In general, bank branches remain closed on the second and fourth Saturdays across the country. These steps have been taken "attaching paramount importance to prevent spread of the virus among the bank employees while on duty," the government said in a notice. - economic times

 Car loan probe: HDFC Bank terminates half a dozen employees for violating the code of conduct : Private lender HDFC Bank terminated at least six senior and mid-level executives after an internal probe revealed that they violated the code of conduct and governance standards by indulging in practices seen as corrupt, three people familiar with the matter said. This termination pertains to practices at the auto loans department where some staff allegedly forced customers to buy the GPS devices bundling it with the car loan. It was found that some customers were not even aware of purchasing such a product till the loan documents were checked. These errant employees started forcefully bundling these products with car loans to meet sales targets and potentially track borrowers in the event of a default. HDFC Bank has a tie-up with Trackpoint GPS to sell these devices. - Economic Times

 Plea to release Rs 5 lakh to PMC bank depositors; Delhi HC seeks Centre, RBI stand : The Delhi High Court Tuesday asked the Centre and the RBI to respond to a plea seeking release of up to Rs 5 lakh to depositors of the scam-hit Punjab and Maharashtra Cooperative (PMC) Bank Ltd to help them address health issues during the prevalent COVID-19 pandemic. A bench of Chief Justice D N Patel and Justice Prateek Jalan issued notice to the Finance Ministry, Reserve Bank of India and PMC Bank seeking their stand on the application moved by consumer rights activist Bejon Kumar Misra.The court asked them to file replies before the next date of hearing on August 19.Misra, in the application filed through advocate Shashank Deo Sudhi, has said the court on an earlier date of hearing had asked the depositors to make a representation to the Centre, the RBI or PMC Bank regarding their financial difficulties and seeking withdrawal of money. The application has said that despite making such a representation, no action has been taken till date to help the depositors withdraw money as per their requirement from the PMC Bank. - Economic Times

 HDFC Life Insurance Q1 net profit up 6% : Private sector HDFC Life Insurance reported a six per cent increase in net profit at ₹451.09 crore in the first quarter of FY21 when compared with ₹424.62 crore a year ago. For the quarter ended June 30, net premium income declined 11.3 per cent to ₹5,721.84 crore against ₹6,451.16 crore a year ago.Total premium fell by 10 per cent to ₹5,863 crore in the April to June 2020 quarter when compared to ₹6,536 crore a year ago.The value of new business declined by 43 per cent to ₹291 crore in the quarter under review.It reported a 13th month persistency of 87 per cent and 61st month persistency of 53 per cent as on June 31, from 88 per cent and 54 per cent, respectively, a year ago. The insurer’s solvency ratio stood at 190 per cent at the end of the first quarter this fiscal. - Business Line

 Covid-19: L&T Group chairman, directors take voluntary salary cut of up to 53% : Amid Covid-19 pandemic, key officials of engineering and construction conglomerate Larsen & Toubro (L&T) have taken voluntary pay cut of up to 53 per cent, including a 24.19 per cent salary cut by its group chairman A M Naik, according to the company’s annual report. Naik drew a total remuneration of ₹6.18 crore for 2019-20 as against ₹8.15 crore in 2018-19, according to the annual report of the infrastructure giant.L&T Chief Executive Officer & Managing Director S N Subrahmanyan took home ₹27.17 crore for 2019-20, showing a pay cut of 43.91 per cent.“Reduction in managerial remuneration is mainly due to cost reduction measures voluntarily adopted by Executive Directors in the current pandemic scenario and reduced perquisite value,” the report said.On the other hand the average percentage increase made in the salaries of employees other than the managerial personnel for the year 2019-20 was 4.70 per cent.“Considering the impact of Covid-19 on the business, the Executive Directors have taken a voluntary reduction of 50 per cent on the entitled commission,” the report said. - BusinessLine

 LIC-UBI announce corporate agency pact : Life Insurance Corporation of India (LIC) and Union Bank of India, after its amalgamation with Corporation Bank and Andhra Bank, have announced a corporate agency agreement to distribute LIC policies. “Union Bank of India can act as a financial supermarket by offering a basket of products to its account holders, whereby they can select products according to their choice,” said K Kadiresan, Zonal Manager, LIC of India, in a statement.The bank will market LIC products of term insurance, pension, plan, children plan, ULIPs, and endowment schemes. “It is a very good opportunity for the bank to serve the needy customers, which will benefit by taking LIC products as those policies are having a sovereign guarantee. With an array of different products and superior customer service, the tie-up with LIC of India will be a successful association,” said MH Padmanabhan, Field General Manager, Union Bank of India. - Business Line

 Why don't PSBs invoke personal guarantees of promoters: SC on bad loans : The Supreme Court has asked the Ministry of Finance to look into a plea that claimed a loss of hundreds of crore every day, as the public sector banks are not invoking personal guarantees of big corporates who have defaulted on loans. A bench comprising Justice R. F. Nariman and Navin Sinha asked the petitioners, Saurabh Jain and Rahul Sharma, who filed the PIL, to move the Finance Ministry with a representation within two weeks. The top court observed that the issue is important and the ministry should respond after the petitioner has made the representation before it. The matter had come up for hearing on Monday."We are of the view that at page 115 of the Writ Petition it has been made clear that the Ministry of Finance itself has, by a Circular, directed personal guarantees issued by promoters/managerial personnel to be invoked. According to the petitioners, despite this Circular, Public Sector Undertakings continue not to invoke such guarantees resulting in huge loss not only to the public exchequer but also to the common man", said the bench in its order. Senior advocate Manan Mishra and advocate Durga Dutt, represented the petitioners. - Business Standard

 Jet Airways gets 2 offers from suitors as bid deadline ends : Two little known suitors have come forward with a proposal to acquire the grounded Jet Airways, people familiar with the matter told CNBC-TV18 on the condition of anonymity. In the fourth round of bidding, and what could be the last attempt at saving the airline, the two consortiums of investors have placed bids with the resolution professional of the bankrupt airline. The first bid has come from a consortium comprising of Abu Dhabi based Imperial Capital Investments LLC (ICIL), Haryana-based Flight Simulation Technique Centre Pvt Ltd (FSTCPL) and Mumbai-based Big Charter Pvt Ltd (BCPL). The second bid that came in before the deadline ended at 6 pm on Tuesday was from a consortium of UK-based financial advisory firm Kalrock Capital Partners, along with an individual by the name of Murari Lal Jalan who is a resident of Dubai. As many as 12 suitors had come forward in the fourth round of bidding for the airline and submitted Expressions of Interest, but only 4 of them made the eligibility cut, CNBC-TV18 had earlier reported. The four final shortlisted suits who were invited to submit bids included the two consortiums led by Kalrock Capital and ICIL mentioned earlier. The other two, who did not submit bids as the deadline ended included a Canadian entrepreneur by the name of Sivakumar Rasiah, and Kolkatta based Alpha Airways, as per people in the know. - cnbctv18

 Rural demand push may offset limping growth in metro cities : Latest disaggregated data released by the Reserve Bank of India (RBI) shows rural credit growth, mimicking the economic conditions, has staved off the slowing economic environment to a great extent. Experts believe that in the short-term rural demand will lead to the rescue of the overall economy, although it urban growth is essential in the longer run. Outstanding rural credit grew by 10.87% year-on-year (y-o-y) in rural areas to ₹7.26 trillion in FY20. The growth in rural credit was 15.2% in FY19, the data showed.In contrast, urban and semi-urban areas have seen tepid credit growth. The steepest decline in growth rate recorded between FY20 and FY19 was in metropolitan areas at 790 bps, from 12.83% in FY19 to 4.92% in FY20. This segment has 65% of all bank loans and has been affected the most by the slowing economy in 2019-20. “There has been a case of reverse migration that has happened from urban to rural areas. Naturally, when the population moves, there will be higher growth in consumption in rural areas, at least for the basic items," said Sameer Narang, chief economist, Bank of Baroda. - Live Mint

 FCC, NPCI to host world’s largest virtual fintech event : The Fintech Convergence Council (FCC), the fintech committee of Internet and Mobile Association of India, in collaboration with the National Payments Corporation of India (NPCI) and Payments Council of India, will be hosting a virtual fintech event on Wednesday. Called Global Fintech Fest, the event will bring together fintech and BFSI ecosystems from across the globe on a single platform. The two-day event themed ‘Fintech: With and Beyond Covid’ will be held on July 22-23 with over over 100 speakers. It will have more than 10,000 participants from 50 countries. BusinessLine is one of the media partners for this event. -  Business Line

 Eleven MFs see drop in new investor additions last fiscal : The mutual fund industry has added over 68 lakh folios in the financial year ended March with Axis MF, ICICI Prudential MF and Mirae Asset MF topping the table. While Axis MF added 21.21 lakh folios, ICICI Prudential MF and Mirae MF gained 16.77 lakh and 11.73 lakh new folios, according to AMFI data. SBI MF and DSP MF captured the fourth and fifth positions with 7.35 lakh and 3.35 lakh new folios, respectively. - Business Line

 Securities Appellate Tribunal stays SEBI proceedings against DHFL : he Securities Appellate Tribunal (SAT) has asked SEBI to halt its recovery proceedings against Dewan Housing Finance (DHFL), which has moved the tribunal against the market regulator’s order. DHFL has currently got moratorium under the Insolvency and Bankruptcy Code (IBC). “The question that arises for consideration is whether the SEBI could initiate proceedings in spite of issuance of a moratorium under Section 14 of the IBC. This aspect requires consideration,” said SAT, directing SEBI to submit a reply on this issue within four weeks. Sonam Chandwani, Managing Partner at KS Legal & Associates, said: “Although the SAT’s direction barring SEBI from making recoveries during the pendency of an appeal is in consonance with general law of the land, it will invariably exacerbate the problem of mounting defaults.” - Busines Line

 Indel Money launches long-term gold loan : Indel Money, South India-based non-banking finance company (NBFC), has launched a long-term gold loan with two-year tenure to provide liquidity to individuals and small businesses. The NBFC had earlier launched a long-term gold loan with a one-year tenure in 2019, and this launch is encouraged by the response to the earlier scheme, the company said in a statement.The company claims that this is the first time a gold lender is offering a two-year loan. “Traditionally, the gold loan has always remained a short-term or bridge loan. Customers end up paying higher interests by re-pledging the gold after the short periods of 90 days or 120 days. Our long-term gold loan saves them from this hidden trap,” said Indel Money Executive Director and CEO Umesh Mohanan said. - Business Line

 Bank of Maharashtra, BOI, IOB share prices rally 5-14% on reports of banking industry overhaul : Share prices of PSU banks were up in the morning trade on July 21, a day after reports emerged that the government was looking to privatise more state-owned banks and reduce their numbers to five. Bank of Maharashta share price zoomed 14 percent followed by Central Bank of India that surged over 11 percent. Bank of India jumped more than 7 percent at 0925 hours. UCO Bank was up 9 percent while Indian Overseas Bank gained 5 percent. As part of the banking industry overhaul, the government would sell majority stakes in Bank of India, Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank, leading to effective privatisation of these state-owned lenders, reports quoted a government official as saying. - Moneycontrol.com

 IRDAI allows insurers to offer 'Corona Kavach' as group insurance policy : Amid a spurt in coronavirus cases in the country, regulator Irdai on Tuesday allowed health insurers to offer 'Corona Kavach' as a standard group insurance policy to help public, private sector companies and other business entities to provide insurance cover to their employees. As per insurance companies, the individual short-term Corona Kavach health indemnity policy has evoked good response after its launch on July 10. All 30 insurers have started offering the policy. The standard group policy is expected to be useful to various private and public establishments for covering the COVID-19 related medical needs of their employees, the Insurance Regulatory and Development Authority of India (Irdai) said in a circular. - Moneycontrol.com

 Gold hits new record high of Rs 49,440 per 10 gram, silver surge Rs 2,505 per kg : Gold prices gained Rs 223 to Rs 49,440 per 10 gram to hit a fresh high in the Mumbai bullion market on weakness in dollar versus the rupee. The yellow metal gained after European Union leaders agreed on a stimulus package to revive the economy, while US Congress will discuss a new aid package this week. The rate of a 10 gram 18, 22 and 24-carat gold in Mumbai was Rs 37,080, Rs 45,287 and Rs 49,440, respectively, plus 3 percent GST. Silver prices rose Rs 2,505 to Rs 54,850 per kg from its closing on July 20.

 Sensex surges 511 points to close at 37,930; Nifty tops 11,150 level : After hitting a high of 37,990.55, the 30-share BSE Sensex ended 511.34 points, or 1.37 per cent, higher at 37,930.33. Similarly, the NSE Nifty rose 162.25 points, or 1.29 per cent, to 11,162.25. PowerGrid was the top gainer in the Sensex pack, rallying over 6 per cent, followed by Maruti, HDFC, ICICI Bank, Kotak Bank, Axis Bank, Reliance and ONGCk. On the other hand, Bajaj Finance, Bajaj Finserv, Asian Paint, Sun Pharma and Bharti Airtel were the laggards.

 Rupee rises to 2-week high on hopes of Covid-19 vaccine : The rupee rose by 17 paise to close at a two-week high of 74.74 against the US dollar on Tuesday tracking positive domestic equities and hopes of a Covid-19 vaccine. At the interbank forex market, the domestic unit opened on a strong note at 74.79 against US dollar. During the session, it touched an intra-day high of 74.73 and a low of 74.87 against the US dollar. The local unit finally settled at 74.74, up 17 paise over its previous close.