Financial Snippets


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SNIPPETS- 14/10/2017

1. BAD LOANS CONTINUE TO HAUNT BANKS: The bad loan scenario for Indian Banking sector is increasing day by day. The bad loans of all Banks put together hit a record Rs 9.5 lakh crore ($ 145.55 Billion) at the end of June 2017. A review of RBI data obtained through right-to-information request shows that banks’ total stressed loans (including Non-Performing Asset and restructured loans) rose by 4.5% in six months. This has eaten banks’ profits and choked off new lending, especially to smaller firms.

2. AFTER MINIMUM BALANCE, SBI CUTS ACCOUNT CLOSURE CHARGES: After slashing the monthly average minimum balance requirement charges for its savings bank account holders, SBI has now revised the account closure charges. Earlier the bank used to charge Rs. 500/- + GST of 18% for closure of regular savings bank account. This will be “NIL” from 1st October 2017.

3. INDIA MAY DELAY IMPLEMENTATION OF BASEL-III NORMS: As per SBI report, India could slightly delay the implementation of global risk norms BASEL-III as the banking sector is already under stress due to demonetization, GST and bad loans. An extended timeline to meet the capital needs under the norms would provide the much needed breather to banks to lend more.

4. CASH FLOW WILL DECIDE SBI LOANS TO SMALL ENTREPRISES NOW: The nation’s biggest bank, SBI is starting a new era of credit appraisal for funding small scale companies. SBI now will assess the borrower’s bank statements instead of the balance sheet. The bank will now evaluate a company’s ability to repay the loan based on their cash flow and for this the bank will draw analysis from their bank statement for one year and collaborate with their balance sheet. The practice of lending based on borrower’s bank statement is already being followed by NBFCs and some private banks. Basically the evaluation of bank statement will focus on the financial discipline and earning capacity of the borrower.

5. RBI INITIATES “PROMPT CORRECTIVE ACTION (PCA)” ON ORIENTAL BANK OF COMMERCE: The Reserve Bank of India has imposed Prompt Corrective Action (PCA) on Oriental Bank of Commerce (OBC) in view of high Non-Performing Assets. The bank has suffered huge losses due to sharp rise in bad loans. OBC will now face restrictions in terms of opening of branches, hiring staff and lending to sub-investment companies.

6. SOON PAY FROM ONE E-WALLET TO ANOTHER: The RBI has decided to allow payments from one E-Wallet to another by facilitating inter-operability within six months. RBI however, has incorporated a rider that the facility will be allowed only for KYC compliant users.

7. NPA-LADEN BANKS LOOKING TO AVOID BANKRUPTCY COURTS: Banks are planning to seek regulatory exemption from taking the second lot of 30 defaulters to bankruptcy courts as such a step tends to erode value of assets. As per RBI directions, these 30 companies with loans amounting to Rs 1.25 lakh crore are set to be referred to bankruptcy courts by December 31st if a resolution is not found. At a meeting last week top bankers decided they would tell RBI that they would provide for 50% of the value of the loan amount but will not try the defaulters under the Insolvency and Bankruptcy Code (IBC) as it would lead to the potential bidders (acquirers)putting in low bids, putting the banks in to heavy losses.

SNIPPETS- 7/10/2017

1. GST GETS SIMPLER FOR SMALL BUSINESSES AND EXPORTS: The government has modified the GST rules to make life simpler for small businesses and exporters by reducing the compliance procedure from the current monthly returns to quarterly returns. Those SMEs ( Small & Medium Enterprises) whose turnover is less than 1.5 crore per anum will now file GST returns on quarterly basis. The government also has reduced the GST rates on 27 products. The 100% export units have also been given certain concessions.

2. L&T INFOTECH BAGS A BIG GOVERNMENT CONTRACT TO HELP PIN DOWN TAX EVADERS: The government which is putting lot of efforts to plug in the loopholes and shore up tax collections in the country, has decided to use the best by using data analytics. The Central Board of Direct Taxes has awarded a hefty contract to L&T InfoTech Ltd in this regard. This is an ambitious initiative to use social media analytics to identify tax non-compliance/evaders. L&T InfoTech says it is a high volume digital deal which involves creating a “sematic web” where web pages are structured and tagged in such a way that can be directly read by the computer.

3. HOME AND PERSONAL LOAN INTEREST RATES CAN SOON BE BASED ON MARKET RATES: Very soon the interest rates on Housing and Personal loans will be linked to external benchmark rates arrived at by market trading, rather than leaving it to the discretion of each banks as is being done now. The RBI committee also suggested a ban on bank charging a conversion fee whenever the bank resets the interest rate.

4. GST HAS CRASHED PRIVATE MONEY LENDERS’ INTEREST RATES: The interest rates charged by money lenders to its borrowers were always high in spite of policy decisions by the government. But now due to the demonetization and GST effect, these interest rates are collapsing because there is hardly any demand left for this informal funding. Because of GST implementation, borrowing in the informal money market is no longer lucrative.

5. RBI TO ISSUE GUIDELINES TO BANKS ON FACILITIES FOR SENIOR CITIZENS AND DIFFERENTLY ABLED CUSTOMERS: The Reserve Bank of India will soon issue necessary instructions to all banks to offer better facilities for senior citizen and differently abled persons. RBI said that some banks are discouraging senior citizen and differently abled customers to take benefit of better banking services hence it would soon issue detailed guidelines.

6. BANKS’ CONSOLIDATION MAY LEAD TO 10-15 BANKS: As per a senior Finance Ministry adviser, a planned consolidation in India’s state run banking sector may lead to 10 to 15 lenders. Currently there are 21 banks. The government may even cut its stake in state-run banks to 52%.

7. RBI ISSUES GUIDELINES FOR PEER-TO-OEER (P2P) LENDING PLATFORM: The RBI has issued directions for Peer-to-Peer (P2P) lending platform. These directions will be known as “ The Non-Banking Financial Company--Peer to Peer Lending Platform (Reserve Bank) Directions” . As per the directions the P2P lending platform should have a minimum of Rs 2 crore capital and they cannot take any loan exposure for themselves. The P2P platforms have to become full-fledged members of Credit Information Companies (CIC) and have to share all loan disbursal information.

SNIPPETS- 30/09/2017

1. LENDING RATE CUTS IS THE KEY TO ECONOMIC RECOVERY: Lending rate cuts are the only way to economic recovery as it would perk up demand and push investments. This is as per one economic survey report. The report said that structural reforms take longer time of 5-10 years to reflect in growth rate. Lending rate cuts would push demand, put idle factories to work and spark off investment.

2. SBI SAYS FINE FROM MINIMUM BALANCE DEFAULTS TO AMOUNT TO Rs 2,000 CRORE: SBI expects to realise over Rs 2,000 crore from Savings Bank account holders as penalty for not maintaining minimum balance in their account. Till June quarter end the Bank has recovered Rs 235 crore. The sum thus collected will be used to partly cover the costs incurred on linking of accounts with Aadhaar which is a very costly affair. Other than this, the cost of maintaining ATMs and business correspondents is also very high.

3. BANKING SECTOR’S CREDIT DEMAND TO GET BOOST FROM GOVERNMENT PROJECTS: State bank of India Chairperson Ms Arundhati Bhattacharya said that the banking industry is poised for a recovery in the credit demand as it stands to gain from the number of projects announced by the government. We just saw the declaration of bullet trains and various other corridors which are expected to come up soon and these projects will give a boost to the credit and investment cycle.

4. NPA RESOLUTION- BANK UNIONS ARE SCEPTICAL OF BANKRUPTCY CODE : Bank unions have claimed the bankruptcy process initiated by various lenders for NPA resolution will not help in bringing the money back. The Union press release said the bankruptcy process is not going to yield desired results in terms of NPA recovery as the recovery process is going to be very slow and there is no guarantee of banks getting back the entire dues. Banks will incur further loss on account of these accounts.

5. CARD PAYMENTS DRIVE MAY LAND BANKS WITH Rs.3,800 CRORE ANNUAL HOLE: As per a SBI research report, The government’s digital payments push, mainly online card payments through PoS machines may bleed the banks by a whopping Rs 3,800 crore annually. The number of PoS terminals post –demonetization has increased from 13.8 lakh in March 2016 to 28.4 lakh as of July 2017.There is a huge cost involved in maintaining these PoS machines and the net loss would be a whopping Rs 3,800 crore annually. (This is all banks put together).

6. ALLAHABAD BANK TO INTRODUCE 2-TIER SAVINGS BANK INTEREST RATE FROM OCTOBER 1st: Following in the footsteps of some of the PSU banks which have already reduced the interest rate on Savings bank deposit, Allahabad Bank is going to introduce 2-tier savings interest rate from October 1st. It will be 3.5% interest for accounts having less than Rs.40 lakhs balance and 4% for accounts having balance of Rs.40 lakh and above.

7. NO COUNTING MACHINES BUT SOPHISTICATED CURRENCY VERIFICATION UNITS BEING USED FOR SCRAPPED NOTES: The Reserve Bank of India is not using counting machines for tallying the scrapped demonetized notes but it is using sophisticated Currency verification and Processing Machines (CVPS) for checking the numerical accuracy and geniuses of currency notes in all its offices.

SNIPPETS- 23/09/2017

1. PEER-TO-PEER LENDING TO BE TREATED AS NBFCs: After a year or more of due diligence and analysis, RBI has notified that peer-to-peer (P2P) lending platforms need to be regulated and treated on par with Non-Banking Financial Companies (NBFCs).While final guidelines are awaited, the P2P lenders have welcomed this move as they feel these regulations would help bring credibility and trust in to the business. This will also bring in a lot of legal clarity as the P2P lenders will have the rights to take legal action against the defaulters.

2. YES BANK TRIMS ITS STAFF STTRENGTH BY NEARLY 2,500: Yes Bank Ltd has gone in for “Rationalisation” of workforce as it has reduced its workforce by nearly 2,500. Yes Bank report said that digital transformation has created certain redundancies which require rationalisation of the workforce.

3. PRIVATE BANKS’ SHARE IN CREDIT WILL TOUCH 40% BY 2020: As per a report from credit rating agency ICRA, Indian Banking is going through a transition, with both Private and public sector banks ( PSBs) facing different challenges. PSBs are plagued with poor asset quality issues, leading to higher credit costs and losses. Due to this fact the share of private sector banks in banking sector advances will reach a level of around 40% by 2020. As of March 2017 private sector banks’ share in total advances was 27.5%.

4. CHEQUE BOOKS, IFS CODES OF 6 MERGED SUBSIDIARY BANKS WILL BE INVALID FROM SEPTEMBER 30th : State Bank of India has notified its customers that cheque books and IFS codes of six of its merged subsidiary banks would be invalid from September 30th and has asked them to submit new applications for fresh cheque books.

5. AIRTEL PAYMENT BANK ROLLS OUT UPI-ENABLED DIGITAL PAYMENTS: Airtel Payments Bank has become the first payments bank in India to integrate Unified Payments Interface (UPI) on its digital platform. This will enable Airtel Payments Bank customer to make secure digital payments to online/offline merchants and making instant money transfers to any bank account in India. They will also be able to link their accounts on BHIM app and make UPI payments.

6. INDIAN BANKS NEED $ 65 BILLION CAPITAL TO MEET BASEL-III NORMS BY MARCH 2019: As per a report from Fitch Ratings, Indian Banks will need an additional capital of $ 65 billion (approximately Rs 4,16,000 crores) to meet global Basel-III banking norms by March 2019. Whereas the government has budgeted an $ 11 billion (Rs 70,000 crores) capital infusion into state-run lenders till March 2019, the state-run banks have limited options to raise the required capital.

7. CENTRE CLEARS BILL TO INCREASE TAX FREE GRATUITY LIMIT TO Rs 20 LAKH: The Centre has approved an amendment Bill that increases the limit of tax free gratuity up to Rs 20 lakh for employees belonging to public as well as private sector. Once this bill is passed, all employees that are not covered under the Central Civil Service (Pension) Rules will be able to avail the tax free gratuity of up to Rs.20 lakh.

SNIPPETS- 16/09/2017

1. CREDIT GROWTH OF BANKS SLOWED DOWN TO 8.1% IN 2016-17: As per Bradstreet Report, the credit growth of all banks slowed down to 8.1% in 2016-17, down from 10.9% in the previous year. Aggregate deposits improved to 15.9% in the same period compared to 9.3% in the previous year. The deposit growth can be attributed to the massive inflow of funds in to the banking system after demonetization. Nevertheless the banks’ rising NPAs (Non- Performing Assets) is a big headache for the PSU Banks.

2. IT MAY TAKE ATMs 3 MONTHS TO DISPENSE Rs.200/- NOTES: While RBI has already launched Rs. 200 currency notes in the system a week ago, it may take up to 3 months for ATMs to dispense the new currency as it will involve huge exercise of recalibration. The banks have not yet got the supply of Rs. 200 currency but some banks have asked the ATM companies to begin testing the new note for the recalibration. It is yet to be seen whether all the 2.2 lakh ATM machines across the country would be recalibrated for dispensing the new note.

3. SBI CARDS TO START CONTACTLESS PAYMENTS SOON: SBI Cards has doubled its base in three years to over 50 lakhs cards. SBI Cards is updating its mobile application and all its customers could soon make payments merely by tapping their smartphone on a swipe machine. Some card holders are already using this cardless payment facility on the Samsung Pay Platform. The bank plans to launch its own proprietary application which enables virtualisation of the card and any smartphone subscriber can pay by just tapping his mobile phone if he is a SBI card holder.

4. NBFCs’ SHARE IN LOANS REACH AN ALL TIME HIGH: Non-Banking Finance Companies (NBFCs) are on a roll as their share in retails lending in India has reached an all-time high of 36% at the end of March 2017. They continue to grow faster than both private and public sector banks. NBFCs have shown a growth of 17% over the previous year as against a growth of 15% as reported by private sector banks and 2.5% decline in retail loans by PSU banks.

5. GOVERNMENT MUST PUMP IN MORE CAPITAL IN TO PSU BANKS FOR EFFECTIVE NPA RESOLUTION: Fitch Ratings has said that weak capital position of PSU banks have a major negative influence on Indian Banks viability reports and these banks will come under more pressure if the problem is not addressed. The report says the government has to pump in additional capital in to PSU banks to make them tackle the NPA menace effectively and raise their loan growth.

6. HDFC BANK’S “EVA” BECOMES INDIA’S SMARTEST CHATBOT : HDFC Bank, in collaboration with Bangaluru based company Senseforth has launched “EVA”( Electronic Virtual Assistant) in March this year on its website. Since then EVA has interacted with over 5,30,000 unique users, holding 1.2 million conversations and has addressed 2.7 million customer queries to become India’s largest banking “Chatbot”.

7. BANKS WITHOUT AADHAAR ENROLLMENT CENTRES TO FACE FINE FROM OCTOBER: The UIDAI has given banks one month time to open Aadhaar enrolment centres in a stipulated 10% of branches and if this is not implemented, a fine of Rs. 20,000 per uncovered branch will be imposed after September 30 th .

8. SBI TOO LAUNCHES ITS OWN AI-POWERED “CHATBOT” : State Bank of India too has launched its own chatbot to handle customer queries and guide them through range of retail products and services. The chatbot is named “ SBI Intelligent Assistant” (SIA) and is currently undergoing beta testing.

SNIPPETS- 09/09/2017

1. GOVERNMENT EXPLORING MORE WAYS TO MAKE INDIA A DIGITAL ECONOMY: Central Government, with the help from consulting agency Price waterhouse Coopers (PWC) has identified many ways to increase the people’s proactivity to digital payments. The government is trying to digitise payments at government hospitals, canteens, unreserved railway ticket counters, fertilizer subsidy payments and school fees. The government’s immediate goal is to reach 25 billion transactions for the current fiscal.

2. PSU BANK HEADS PUT SOME CONDITIONS FOR MERGERS TO HAPPEN: Top brass of prominent state-run banks like PNB, Canara Bank and Bank of Baroda which are positioned as acquiring banks, have set certain pre-conditions to acquire smaller banks. Some of the key terms set by these acquiring banks are that the target bank be a profit making one and the current management is given at least a three year term after the merger to ensure smooth transition. Besides this, the acquiring banks have also demanded capital from the government even if the target bank is well-capitalised.

3. RBI INCLUDES HDFC BANK LTD IN “TOO BIG TO FAIL” LENDERS LIST: Private sector lender HDFC Bank Ltd has been declared a Domestic-Systematically Important Bank ( D- SIB). With this, the bank has joined State Bank of India and ICICI Bank Ltd, which have been tagged as D-SIB or “Too-Big- to Fail” banks. Such classification means the collapse of these banks could lead to cascading effect on the entire economy of the country. Such banks are also mandated to maintain a higher share of risk-weighted assets as tier-I equity.

4. CAIT SUGGESTS TAX REBATES TO CONSUMERS & TRADERS TO PROMOTE DIGITAL /CASHLESS MOVEMENT: The Confederation of All India Traders (CAIT) has suggested several measures to the government to achieve the goals of cashless economy and reaching 2500 crore digital transactions this fiscal. The confederation says that certain tax rebates to consumers for some types of digital payments and similar rebates to be extended to the traders as well.

5. ITR FILING DATE EXTENDED TO OCTOBER 31 ST : The Ministry of Finance has announced that the “Due-Date” for filing Income tax Returns and various reports of audit prescribed under the IT Act, 1961 has been extended from September 30 th to October 31 st 2017.

6. FINTECH-BANK COLLABORATION YEILDS SMARTER OUTCOMES: RBI Deputy Governor Mr. B P Kanungo has said that Fintech companies need to collaborate with Banks for providing better service to the customers. This kind of collaboration will lead to smart solutions for better customer satisfaction.

7. RBI DEPUTY GOVERNOR SUGGESTS SELLING OFF PSU BANK LAGGARDS: The Deputy Governor of RBI Mr. Viral Acharya in one of his speech has suggested that the state run banks which are not doing well and are in “Intensive care unit”, be sold off to private sector banks as the time may be running out for state-run banks to clean-up and recapitalise. We feel that such a statement from the highest authority at this juncture is not justified, considering the fact that some of the Bank heads of acquiring banks have put some conditions to the government for mergers to happen. And selling off sick state- run banks to private sector will not solve the NPA menace that is eating up the economy.

SNIPPETS- 02/09/2017

1. GDP GROWTH SLOWS TO 3-YEAR LOW: India’s GDP growth has slumped to a three year low in the June’17 quarter. GDP slowed down to 5.7% in April- June quarter from 6.1% in the preceding quarter. This is mainly because of the slowdown of manufacturing sector as the production was the lowest. The manufacturers were busy to get rid of old stocks rather than producing new ahead of July 1st rollout of GST. Along with manufacturing, slowdown in construction and mining sectors too pulled down the GDP. Experts fear full year growth to be below 7%.

2. FAKE NOTES MAY BE MORE THAN DOUBLE OF ESTIMATES: The amount of fake (counterfeit) notes in the system is more than double of what the Reserve Bank of India had estimated. The likely quantum of fake notes in the system is estimated to be as high as Rs. 23,235 crores. Immediately after the note ban, RBI conducted a survey of 1,000 currency chests across the country and the survey has revealed 7.1 pieces per million for Rs. 500 notes and 19.1 pieces per million for Rs. 1,000 notes. Going by the number of Rs. 500 and Rs. 1,000 notes in circulation as of March 2016, the amount of fake currency in the system could be a staggering Rs. 23,235 crores. Considering the amount involved, the government, RBI and the banks have to decide how to share the liability. And given the estimates of fake notes, there could be severe impact on banks’ balance sheet.

3. PSB MERGERS WILL RAISE BANK RATINGS: As per Moody’s Investors Service report, merging India’s public sector banks will improve their rating because it will provide efficiencies of scale and enhance quality of corporate governance. However, infusion of funds by the government will be a key factor for these banks as many of the banks have weak capital adequacy.

4. BUYERS’ INTEREST WILL BE PROTECTED IN THE STALLED PROJECTS THROUGH “RERA”: The government has assured home buyers that their interest will be protected in the stalled projects through newly implemented Real Estate Regulation Act (RERA). It says buyers’ interest is the government’s top priority.

5. BANKS UNDER RBI’S “PROMPT CORRECTIVE ACTION”(PCA) FACE PROBLEMS: Banks which have been placed under restrictions through PCA by RBI to improve their financials are feeling the heat, as their deposit growth have fallen below industry level. Their customers under panic are withdrawing deposits or closing their accounts with such banks.

6. BOOST FOR THE GOVERNMENT—GST REVENUE HITS Rs 93,000 CRORE MARK: The government has collected Rs 92,283 crores from GST and this is just 64% of the tax payers who have filed the returns for July 2017. So the final amount will be even more.

7. NATIONALISED BANKS EXEMPTED FROM CCI APPTROVAL FOR MERGERS: Mergers and acquisitions beyond a certain threshold compulsorily require clearance from Competition Commission of India (CCI). Now paving the way for fast-tracking consolidation amongst the PSU banks, the government has exempted mergers of nationalised banks from seeking permission/approval from CCI.

SNIPPETS- 19/08/2017

1. 9,000 WILFUL DEFAULTERS OWE Rs 92,000 CRORE TO PSBs’: Public Sector banks have reported 20% jump in the outstanding loans by wilful defaults. Nearly 9,000 wilful defaulters collectively owe an amount of Rs 92,000 crore to these banks as on 31/03/2017. There has been an increase of 10% in the number of loan defaulters over the year.

2. BAD LOAN RECOVERIES BY BANKS: It was a mixed bag for bad loan recoveries by public sector banks in the June quarter of the present financial year. While SBI has reported higher recovery, banks like Punjab National Bank, Canara Bank and Union Bank of India have shown a dip in recoveries. Whereas most of the Private sector banks have shown healthy growth in recoveries of bad loans. Axis Bank’s recoveries and up gradation has doubled in quarter one of the present financial year.

3. KARUR VAISYA BANK IS THE FIRST PRIVATE SECTOR BANK TO START AADHAAR ENROLMENT CENTRE: Following the directives given by UIDAI last MONTH, Karur Vaisya Bank has unveiled its first Aadhaar enrolment centre in one of its branch, thus becoming the first private sector bank to start a Aadhaar enrolment centre. The bank official said that once the required documents are submitted, the enrolment or any updation can be completed within 15 minutes.

4. UNUSUAL DEPOSITS WORTH Rs 1.7 LAKH CRORE DURING DEMONETIZATION: Unusual cash deposits totalling to Rs 1.6 to 1.7 lakh crore were made during the demonetization period says a research paper posted by RBI. This will be dealt firmly by the tax department.

5. DIGITAL WALLET COMPANIES WAIT FOR RBI NORMS: The Digital wallet industry is eagerly waiting for the latest release of fresh guidelines by RBI for the Prepaid Payment Instruments (PPIs). While the Central Bank is expected to open up fresh applications for PPI licences, the industry is also keeping an eye open for Know-Your-Customer (KYC) norms and cyber insurance for wallets. The top executives of the wallet industry have met the regulator and have voiced their suggestions and are now waiting for the final move from RBI.

6. RBI PLANS TO EXTEND CYBER AUDIT TO ALL THE BANKS: The Reserve Bank of India is planning to conduct cyber-audit of all the banks in the country instead of just a few bigger banks as it did in the past, a policy shift in the wake of an increase in cyber-attacks. RBI had created a cyber-cell under the department of banking supervision and used to conduct a separate IT audit for three banks, which was increased to 30 banks last year and this year RBI is covering all the banks for separate cyber-security and IT audit.

7. RBI ASKS BANKS TO ENABLE ACCOUNT NUMBER PORTABILIYTY AT THE EARLIEST: RBI Deputy Governor Mr. S S Mundra has asked banks to enable account number portability among banks at the earliest which will be a far reaching step towards enhancing competition and improving customer service. By enabling number portability a scenario will emerge wherein the unsatisfied customers would be able to walk out of the bank silently and thus banks will be compelled to provide better customer services.

SNIPPETS- 12/08/2017

1. AADHAAR MAY BECOME MANDATORY FOR FINANCIAL MARKET: Aadhaar number may soon become mandatory for buying shares and mutual funds. The government and SEBI are planning to link Aadhaar to financial market transactions which will help the government to plug taxes and curb black money. The government has already mandated that Aadhaar be linked to PAN, Bank Account and Mobile phone numbers.

2. GOVERNMENT TO INITIATE BANK MERGERS AFTER QUARTER-1 RESULTS: The Finance Ministry is expected to initiate the process of consolidation of public sector banks once the first quarter financial results of the current fiscal have been announced. There are factors like regional balance, geographical reach, financial burden and smooth human resource transition that are to be considered before taking the final decision. This is going to be a complex exercise for the Finance Ministry.

3. OVER 11.44 LAKH PAN CARDS DEACTIVATED: As per the rules it is “ One Person One PAN” which is the guiding principle for allotment of PAN. More than 11.44 lakh Permanent Account Numbers (PAN) have been deleted or de-activated in cases where multiple PANs were allotted to one person.

4. RBI INSTRUCTS BANKS TO ENSURE SAFETY OF CUSTOMERS’ LOCKERS: The Reserve Bank of India has asked banks to ensure customers’ lockers remain safe and there is no negligence that could render banks liable to claims by locker holders. The banks have been advised by RBI that it would be the responsibility of the banks to ensure safety of lockers and there is no negligence in the matter of safeguarding the lockers.

5. MERGER OF SMALL BANKS MAY HURT MSME SECTOR: Merger of smaller banks into big will hurt credit sourcing for MSMEs (Micro,Small & Medium Enterprises). The large banks will be reluctant to lend to these MSMEs as they are less keen on small sized loans. Their services will be less personalised and there will be more fees attached. This is as per the report from financial services firm- Resurgent India. MSME sector, which provides bulk of employment, accounts for 45% of India’s manufacturing, and nearly 8% of the country’s GDP.

6. RBI TELLS BANKS TO GO FOR PERIODIC VULNERABILITY TEST FOR CYBER SECURITY: Cyber security preparedness is a continuous process and the RBI has asked banks to periodically conduct vulnerability test. This is the result of the recent cyber-attacks and as India is gearing up for cashless economy, the cyber security plays an important role.

7. MONEY FLOW INTO FINANCIAL MARKETS INCREASED, POST DEMONETIZATION: Post demonetization, there has been visible channelizing of money towards financial assets like mutual funds, capital market and insurance. This was observed and stated by Mr. Viral Acharya, Deputy Governor of RBI. Mr. Acharya in his observations said that something has changed as black money transactions are not easy now and the money is flowing towards financial market, which is a positive sign.

8. AHEAD OF FESTIVE SEASON, ICICI BANK INTRODUCES INSTANT CREDIT CARD: Considering the demand due to the forthcoming festive season, ICICI Bank has introduced an instant credit card which can be availed online by its customers and start shopping on e-commerce sites even before the card is delivered to him/her.

SNIPPETS- 05/08/2017

1. SBI CUTS INTEREST RATE ON SAVINGS BANK DEPOSITS: State Bank of India has introduced a two-tier interest rate structure on savings bank deposits with effect from July 2017. A savings bank account with a balance of over Rs 1.00 crore will earn an interest of 4% per annum where as the ones with less than 1 crore balance will earn interest of 3.5% per annum. SBI in a press release has said that the decline in inflation rate and high real interest rates are the prime factors for the said revision.

2. RBI SLAPS 1 CRORE PENALTY ON UNION BANK OF INDIA FOR "KYC" NON COMPLIANCE: The Reserve Bank of India has imposed a penalty of Rs 1 crore on Union Bank of India for non-compliance with the directions on Know Your Customer (KYC) norms. RBI said it had received a complaint regarding huge cash withdrawals in in certain accounts and after verifying the documents regarding the complaint, the penalty has been imposed.

3. GOVERNMENT WANTS TO LINK AADHAAR WITH DRIVING LICENCE: The Centre is pushing for making Aadhaar mandatory for securing a driving licence and vehicle registrations. This will arrest the bogus licence menace and reduce instances of car thefts. It will create a national database and make inter-state transfer of vehicles easier and less time consuming.

4. NCLT CLEARS WAY FOR INSOLVENCY PROCEEDINGS AGAINST ESSAR STEEL: The Ahmedabad bench of National Company Law Tribunal (NCLT) has admitted an insolvency petition against Essar Steel India Ltd, paving the way for insolvency proceedings to commence against big ticket defaulters under the newly enacted Insolvency and Bankruptcy Code (IBC) 2016. State Bank of India and Standard Chartered Bank are the two banks who have filed independent petition to initiate insolvency proceedings against Essar Steel. Essar Steel has a total debt of Rs. 45,000 crore on its books.

5. AFTER ESSAR STEEL, BANKS NOW SET EYES ON VIDEOCON’S HUGE DEBT DEFAULT: A SBI- led consortium of lenders has ordered a forensic audit of Videocon Industries to find out whether the company defaulted because of adverse business conditions or financial mismanagement. KPMG, one of the Big Four Audit firms, will conduct the forensic audit. The move is preliminary to the start of debt restructuring after Videocon defaulted on loans worth Rs. 43,000 crores.

6. PSU BANKS NEED Rs. 1.9 LAKH CRORE CAPITAL BY MARCH 2019: As per a report by S&P Global Ratings, PSU banks will need at least Rs. 1.19 lakh crore additional capital by March 2019. Weak profitability and rising capital demands from Basel III implementation and substantial haircuts (settlements) on NPAs will continue to pressure these banks.

7. RBI RATE CUT IS UNLIKELY TO TRANSLATE INTO LOWER BORROWING COSTS FOR CUSTOMERS: The Reserve Bank of India’s decision to cut benchmark lending rate by 25 basis points is unlikely to translate into lower lending rates for the customers. SBI Chairperson Ms Arundhati Bhattacharya says that there is not much scope for lending rates to come down further, as the rates are low enough and the banks have already passed on the benefits to the customers.

8. RBI WIDENS BASEL-III COMPLIANT ASSET BASE OF BANKS: Ahead of the implementation of stringent capital requirements under the Basel-III regime from 2019, RBI has amended a number of previous regulations on the same, paving the way for banks to shore up their capital buffers and improve liquidity coverage ratio.

SNIPPETS- 29/07/2017

1. CORPORATE VENDORS UNDER I-T LENS: The Income Tax department has asked large corporate entities, including multinational firms to furnish details of employees not on the payrolls of the company who are being paid separately. This is to check whether they are filing tax returns after tax deductions at source (TDS). Many lawyers, chartered Accountants, Doctors, consultants and designers etc who are not on the payrolls of the company have not filed their I-T returns fearing they will have to disclose their full income.

2. BAD LOAN CRISIS—CRACKDOWN BY BANKS SENDS DEFAULTERSSCRAMBLING TO OFFER ONE TIME SETTLEMENT: The tough stance taken by the government and RBI to end the bad loan menace in the banking industry by instructing bankers to take extreme steps towards defaulters has caught many borrowers by surprise and they are scrambling to put together resolution plans to avoid harsher penalties including insolvency proceedings. This is a welcome change as seen by bankers as customers whose accounts are classified as Non-performing Assets are approaching bankers with proposals to resolve the issue in a time bound manner.

3. DIGITAL PAYMENTS—ONLY 7% INCREASE IN TRANSACTIONSTHROUGH DEBIT/CREDIT CARDS: Transactions through debit/credit cards rose merely by 7% post demonetization, as against a surge of over 23% in overall cashless transactions. Bankers say that there is lot of scope for further improvement in such transactions.

4. NO GST ON HOUSING SOCIETY RWA WITH Rs 5,000/- MONTHLY SUBSCRIPTION: Services provided by housing societies resident welfare associations ( RWA) will be required to pay GST on monthly subscription/contribution charged from its members if such payment is more than Rs.5,000 per member and the annual turnover of RWA is more than Rs. 20 lakh. However, the contribution of Rs. 5,000 is exclusive of any municipal taxes.

5. AADHAAR ENROLMENT FACILITY IN BANKS TO START SOON: The Unique Identification Authority of India ( UIDAI) has asked private as well as public sector banks to set Aadhaar enrolment facility in at least one out of 10 branches in the coming weeks. Suitable changes have been made recently in Aadhaar regulations to facilitate this. There are around 1,20,000 bank branches spread across the country and by this move 12,000 Aadhaar enrolment and updation centres will be set up.

6. 10 PUBLIC SECTOR BANKS HAVE SUBMITTED TURNAROUND PLANS: As many as 10 public sector banks have submitted their turnaround plans to the government. It is decided by the government that any future capital infusion to the banks shall be subject to achievement of select agreed upon milestones as per the turnaround plans submitted. Banks that will not be able to deliver on the agreed upon turnaround plan for a period of two years will be identified as banks eligible for alternative recourse.

7. AS COST OF EDUCATION RISES , UNPAID STUDENT LOAN SURGE: The cost of education in recent times has escalated but at the same time Non-performing assets (NPAs) within education loan book of the system as a whole has ballooned 21 % in the reporting year. Despite this increasing NPAs, banks continue to lend for higher education

SNIPPETS- 22/07/2017

1. FOR THE 12 BANKRUPTCY CASES BANKS WILL HAVE TO TAKE A HIT OF 18,000 CRORE: According to India Ratings Research report, Banks need to provide an additional Rs. 18,000 crore in Financial Year 2017-18 towards the 12 accounts identified by Reserve Bank of India for reference to the National Company law Tribunal ( NCLT) under the Insolvency & Bankruptcy code. Banks have been given 6 more months to finalise the resolution plans for other NPA accounts (around 500 more accounts). If no resolution plans emerge then banks will have to begin insolvency proceedings on these accounts as well, which in turn would mean huge provisions in Financial year 2018-19, which will impact badly on the profitability of banks.

2. BANKS TO FACE Rs. 2 LAKH CRORE HIT FROM TOP 50 STRESSED ACCOUNTS: As per CRISIL Ratings Agency estimation Banks may have to write off 60% of the value of bad loans from their 50 large stressed asset accounts or take a hit of Rs. 2.4 lakh crore. The 50 top stressed companies, which account for Rs. 4 lakh crore in stressed loans and account for nearly half of the total NPAs in the banking industry.

3. RBI NOT REVIEWING 90 DAY BAD LOANS CLASSIFICATION NORMS: The Finance Ministry has said the Reserve Bank of India is not examining any proposal to extend the 90-day period for classification of Non-Performing Assets. The prudential norms are one of the building blocks for financial soundness of Indian Banks and any deviation would render the banking system weaker. Further, any delay in recognition of deterioration in asset quality removes the pressure on banks to deal promptly with the problem.

4. RBI ALLOWS NBFCs TO OFFER NEW PENSION SCHEME: The Reserve Bank of India has allowed Non-Banking Finance Companies (NBFCs) to sell and market the new pension scheme (NPS). NBFCs with an asset size of Rs. 500 crore and above that have made a net profit in the preceding financial year will be permitted to sell NPS to their clients after registration with pension regulator.

5. RBI TO SET UP PUBLIC CREDIT REGISTRY TO IMPROVE CREDIT CULTURE: The Reserve Bank of India is planning to set up a high level Public Credit Registry (PCR) to help control loan defaults, improve credit culture and promote financial inclusion. RBI said such a registry is the need of the hour which will help the efficiency of financial market, improve ease of doing business and help control delinquencies.

6. IDFC-SHRIRAM GROUP AGREE TO MERGE: IDFC Ltd, a domestic infrastructure lender and Primal group financial services major Shriram Group have agreed to merge and thus create the largest retail- focussed bank in the country. A formal merger will take place in 12 months if all goes well as per the proposed plan. IDFC Ltd will be the holding company of the merged entity.

7. GST IMPACT—DISMANTLING OF CHECK POSTS SAVE 24-36 HOURS OF TRUCKING TIME: The Goods and Service Tax (GST) is saving fleet owners between 24 to 36 trucking hours after dismantling of check posts of VAT, Octroi and other local taxes. Besides this it also ended huge amount of corruption which was taking place at each of the check posts.

SNIPPETS- 15/07/2017

1. NEW ACCOUNTING STANDARDS MAY HIT BANKS’ LENDING TO INFRA/REALTY FIRMS: The adoption of new Indian Accounting Standards (IndAS) might compel banks to cut down on the quantum of loans they normally sanction to firms involved in Real estate and Infra Sectors. IndAS will result in a change in Debt-to Equity ratios of such firms as capital structures and financial instruments get reclassified. This will in turn increase the debts of the companies thus compelling banks’ to reassess the way they lend to these companies.

2. SBI URGES THE GOVERNMENT TO EASE PROVISIONING NORMS: State Bank of India has written to the finance Ministry raising concerns over stringent provisioning norms for companies under the Bankruptcy code, which will eat into its profit margins. Banks are reluctant to meet these norms and hence SBI has sought the ministry’s intervention on the matter.

3. AXIS BANK LAUNCHES “SUPER BIKE LOANS” : As the Higher Engine Displacement- High End models in bikes is catching the fancy of Indian consumer, AXIS Bank has introduced a special loan product – “ Super Bike Loan” which offers funding of 95% of the bike cost. This includes the cost of the bike and the accessories also. The rate of interest will be between 10 to 11% per annum. These bikes come with a price tag of Rs. 5 to Rs 50 Lakh. The segment had witnessed a sale of over 3,000 units last year.

4. SBI HAS STARTED TO OFFER GST-READY SOLUTIONS TO ITS CUSTOMERS: State Bank of India has announced its Goods & Services Tax ready solutions, including the introduction of online payment through internet banking and debit cards. SBI customers can deposit GST up to Rs.10,000/- in cash, cheque or draft from any of the SBI branches across the country.

5. GOOGLE COMPLETES UPI TESTING, AWAITS RBI NOD TO LAUNCH SERVICE: Technology giant Google has completed the testing of its Unified Payments Interface (UPI) payment service and is awaiting RBI’s approval. The National Payments Corporation of India ( NPCI), the umbrella organization for all retail payments system in India also said that Facebook and Whatsapp too were in discussion with it regarding rolling out their own UPI payment services. Very soon these three big technology giants will start their UPI operations.

6. DIRECT SELLING AGENTS UNDER WATCH IN HOME LOAN TRANSFER CASES: To check possible instances of mis-selling, the housing finance regulator- NHB is examining data on home loan transfers from one bank to the other and may issue guidelines for direct selling agents ( DSAs) in the interest of the borrowers. NHB wants to check whether the balance transfers are genuine transactions or the agents are playing a game on it. The ultimate goal of NHB is to bring in a very well trained set of Agents in the interest of the borrowers.

7. CURRENCY BAN IS NOT A GROUND FOR BANKING OMBURDSMAN TO HANDLE COMPLAINTS: The Reserve Bank of India has clarified that customer complaints regarding the problems like cash withdrawal and exchange of notes faced during demonetization period cannot be entertained under the Banking Ombudsman scheme. Banking Ombudsman Scheme 2006 specifies 27 grounds of complaints under which complaints can be lodged and complaints related to demonetization is not a ground of complaint specified under the scheme.

SNIPPETS- 08/07/2017

1. CUSTOMERS SHOULD REPORT FRAUDULANT TRANSACTIONS WITHIN 3 DAYS TO AVOID LOSSES: The Reserve Bank of India had earlier capped the customer liability at Rs.25,000 if they reported the unauthorised transactions within 7 working days. Now further modifying this clause, RBI said that customers can’t be made liable at all if they notify the unauthorised transactions within 3 working days. These rules will be applicable for third party breach, where deficiency lies neither with the bank nor with the customer but lies elsewhere in the system.

2. RBI MAKES MOBILE PHONE MANDATORY FOR DOING ELECTRONIS BANKING TRANSACTIONS: The Reserve Bank of India has said that owning a mobile phone is mandatory for customers wishing to do electronic banking transactions and has instructed banks to make SMS alerts mandatory in such cases. It has instructed banks not to offer electronic banking facility to customers who do not provide mobile numbers to the bank.

3. OVER 90% INDIAN CUSTOMERS STILL PREFER BRANCH BANKING OVER ONLINE BANKING: While the government has been pushing for cashless transactions and asking the public to go online when it comes to banking, a new study has revealed that 94% of retail banking customers have visited the bank branches at least once in the past 12 months. Most banking relations still begin and continue at the branch. However, there is great potential for banks to move more into digital space.

4. IT IS NOT MANDATORY TO LINK YOUR BANK ACCOUNT WITH AADHAAR CARD: There is no notification from RBI to link a bank account with Aadhaar number. By collecting Aadhaar details from their customers the banks are trying to pre-empt the possibility of it becoming compulsory in future. Another reason why banks are linking Aadhaar with the bank accounts is to promote Aadhaar enabled transactions without the use of debit or credit cards.

5. CREDIT CARD BILL PAYMENT EXEMPT FROM CASH DEALING LIMIT: The Finance Act 2017 has banned cash transaction of Rs. 2 lakh or above with effect from April 1, 2017. However restrictions on cash dealings of Rs. 2 lakh or more will not apply to credit card bill payments, business correspondents appointed by banks and issuers of prepaid instruments. This has been clarified by the revenue department.

6. HOW “BHIM APP” IS TRYING TO CATCH UP WITH OTHER MOBILE WALLETS: The Bharat Interface for Money ( BHIM) has seen a great many downloads of around 19.16 million since its launch but only 5.1 million users are able to link their bank accounts with the App. In contrast other payment apps like Oxigen wallet currently has 30 million active users and Mobikwik has 55 million active users. Recently BHIM has come up with additional features like Aadhaar Pay, Referral bonus and cash back offers to make it more popular.

7. BANKING STAFF THREATENS STRIKE ON AUGUST 22 OVER MERGERS AND NPA ISSUES: Employees of PSU banks are going on one day strike on August 22nd against the government proposal to merge state-owned banks. Besides, they want the government and RBI to declare wilful default as a criminal offence and desist from writing off the corporate Non-Performing Assets (NPAs) or bad loans. They also have urged the government to look into the GST rates on bank service charges because of which the service charges have increased, which in turn has burdened the customers.

SNIPPETS- 01/07/2017

1. RBI STARTS THE PROCESS OF PRINTING Rs. 200 CURRENCY NOTES: Reserve Bank of India has started the process of printing new Rs.200 currency notes. This appears to be the last exercise under the re-monetization steps taken by the government and this step is taken to help ease consumer transactions. For day-to-day transaction purposes, the introduction of Rs.200 notes will add to the comfort of the public at large.

2. RBI SAYS- BANKS NOT RESPONSIBLE FOR THEFT FROM BANK LOCKERS: Banks are not liable to compensate its customers in case of theft or burglary in safe deposit lockers. This is revealed in an RTI response by RBI and 19 PSU banks. Some banks, in their locker hiring agreements, have made it clear that any item stored in the locker is at the customer’s own risk and he/she may insure the same in his/her own interest.

3. BANKS FACE 60% “HAIRCUT” ON TOP 12 BAD LOANS: Dragging defaulters to the National Company Law Tribunal ( NCLT) and initiating insolvency proceedings will take heavy toll on bank finances. According to CRISIL, banks will have to sacrifice nearly 60% of the value of the loans extended to 12 indebted companies which the banks have referred to the NCLT at the instance of RBI.

4. RBI PROVISIONING “DIKTAT” SHOCKS THE BANKS: The Reserve Bank of India shocked the banks this week by demanding a steep hike in provisioning requirements for loans being referred to the bankruptcy courts, a move likely to take a Rs. 50,000 crore toll on their earnings this fiscal. RBI has instructed banks to set aside 50% of the loan amount as likely losses for all cases referred to the insolvency process. RBI also said that provisioning should be 100% in those cases that do not get resolved in the initial mandatory period for restructuring and instead are forced into liquidation. But banks have been given time of three quarters to spread the provisioning requirements from June 2017 till March 2018.

5. RBI ASKS BANKS TO RESOLVE 55 DEFAULT CASES IN 6 MONTHS OR FACE IBC: The Reserve Bank of India has asked banks to resolve 55 high value cases of bad loans within 6 months or face the prospect of being directed to go in for the new insolvency resolution mechanism as a part of the strategy to tackle the bad loans scenario on a war footing basis.

6. FINANCIAL YEAR LIKELY TO BE CHANGED FROM 2018: The financial year in India could commence from January instead of April from the year 2018. The government appears set to make the historic transition to end the 150 year old tradition. Accordingly, the next budget could be presented by the centre in November this year.

7. AADHAAR-PAN LINKING MANDATORY FROM JULY 1st: Finance Ministry has made it mandatory to link Aadhaar with PAN Number. Individuals having PAN No. will have to link it to their existing Aadhaar Number from July 1st onwards. Every person who has been allotted PAN shall intimate his Aadhaar number to the tax department.