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<ul><li>Nirmala Sitharaman increased the guarantee that the government offers depositors as banks fail – from ₹1 lakh to ₹5 lakh. </li><li>This is the first time in 59 years that the government moved to increase <keyword id="1127487" type="ORGANIZATION" weightage="20" keywordseo="Deposit-Insurance">deposit insurance</keyword>, after 1961. </li><li>The Deposit Insurance and Credit Guarantee Corporation received<a href="https://www.businessinsider.in/business/news/deposit-insurance-corporation-sees-rs-14100-cr-claims-amid-pmc-crisis/articleshow/73016977.cms"> total claims of</a> ₹14,100 crore. </li></ul>After <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/the-collapse-of-pmc-exposes-the-fault-lines-in-the-financial-system-/articleshow/71402139.cms">the PMC bank crisis </a>resulted in deaths and suicides of depositors, a lot of customers have been on the edge. The Finance Minister Nirmala Sitharaman today increased the guarantee that the government offers depositors as banks fail – from ₹1 lakh to ₹5 lakh. “A robust mechanism is in place to monitor the health of all banks and the money of depositors are safe,” Sitharaman said in her Budget speech. This is the first time in 59 years that the government moved to increase deposit insurance, after 1961. The five-fold increase is much higher than the market expectations of doubling deposit insurance offered by the government. A deposit insurance scheme is the government’s way of compensating small depositors. The rest of the money will have to be forfeited by the depositors in case a bank shutters down like in the case of PMC Bank, leaving thousands of customers in dire straits. "Bank depositors get a shot in the arm with the upward revision in deposit insurance cover. While this could mean some expenditure for the Bank, this would certainly give comfort to retail savers," said R K Gurumurthy, head of treasury at Lakhsmi Vilas Bank. Last month, the Deposit Insurance and Credit Guarantee Corporation received<a href="https://www.businessinsider.in/business/news/deposit-insurance-corporation-sees-rs-14100-cr-claims-amid-pmc-crisis/articleshow/73016977.cms"> total claims of</a> ₹14,100 crore after the PMC bank scam. Bank frauds had remained dormant for decades: RBI After the scam, millions of customers across all co-operative banks have been worried as panic spread. This was compounded by the fact that the Reserve Bank also sounded an alarm in its financial stability report on the number<a href="https://www.businessinsider.in/policy/economy/news/rbi-financial-stability-report-finds-billions-lost-in-bank-fraud-this-year/articleshow/72998905.cms"> of bank frauds</a>. In the first six months of FY20, as many as ₹2.6 lakh crore worth bank frauds were unearthed by the banking regulator. The report also said that some of these schemes have remained hidden from 2000-01 which was the time that the first dotcom bust occurred. All this and the fall of large financial institutions like IL&amp;FS and DHFL, exposed the many loopholes in the banking system. However, the government chose to expand its own guarantee of these troubled banks instead of taking penal action on the management of these institutions.

India Budget 2020: Bank scam victims are assured of ₹5 lakh instead of ₹1 lakh

Mumbai, Dec 27 () The RBI-appointed administrator of scam-hit Punjab and Maharashtra Co-operative Bank has floated a request for proposal to appoint a consultant for valuation of two aircraft and a yacht owned by HDIL group firms.
These assets belong to HDIL group firms owned by Rakesh Wadhawan and his son Sarang, the prime accused in the Rs 6,500-crore scam at the cooperative lender.
In November, a local court had allowed the cooperative bank's administrator, J B Bhoria, to sell two aircraft- Dassault Falcon 200 (VT-HDL) and Challenger 300 (VT-PIL)- and one yacht (Ferreti 881 HT).
 "The RBI-appointed administrator to PMC Bank intends to monetise a yacht and two aircraft through a transparent process. For the purpose, the administrator plans to appoint a valuer/consultant and invites proposals from interested parties," the administrator said in a public notice.
 Earlier this month, the administrator had invited bids from advisors/process coordinator to sell these three assets.
 The Enforcement Directorate (ED), which is probing the scam along with the Mumbai Police's Economic Offences Wing (EOW), has attached the movable properties of the Wadhawans.
 These properties comprise 15 luxury cars, a seven- seater speedboat, besides two aircraft and a yacht belonging to HDIL and its promoters.
 The ED had earlier told the court that it did not have any objection to disposal of two airplanes and a yacht by the PMC Bank administrator.
RBI Governor Shaktikanta Das had recently said the cooperative bank, with the help of professional valuers, is assessing the realisable value of assets mortgaged by borrowers as well the assets of the bank which have been seized by the EOW and ED.
 Das had said the forensic audit report of the bank is likely to be finalised by the end of this month. The cooperative bank has been under the RBI's restriction since September 23, 2019, after the regulator found financial irregularities including under reporting of loans and non performing assets of real estate developer HDIL.
 In September, had reported that the cooperative lender's actual exposure to the bankrupt HDIL is over Rs 6,500 crore -- which is 73 per cent of its entire assets of Rs 8,880 crore.
 In November, the RBI had informed the Bombay High Court that PMC Bank had used special codes to hide hundreds of dummy loan accounts of HDIL and of the 1,800 PMC Bank employees, only about 25 could access these loan accounts.
 The regulator had said these few employees used an access code to hide and restrict the visibility of these dummy accounts of the realty developer. HV ANU

PMC Bank crisis: Administrator to seek valuation of HDIL's aircraft, yacht

<ul><li> The market is expecting RBI to cut its interest rates yet again by 25 basis points. </li><li>The RBI is expected to continue its accommodative stance. </li><li>RBI could also revise GDP growth projections to the lower end, for the fiscal. </li></ul>India’s central bank might continue with its efforts to stimulate the slowing economy, just like the finance ministry. The market is expecting the RBI to cut interest rates yet again, after last monetary policy’s unexpected 35 basis point cut. “Based on the benign inflationary trends and lingering growth concerns, we expect RBI to cut the policy repo rate by 25 bps in the October MPC meet. The RBI will continue to maintain its stance at accommodative as the risks to inflation are limited,” said a report by CARE ratings. This is widely expected as the factors that influenced last 4 rate cuts have remained the same—inflation has remained low which means an increase in interest rates will not make food and essential items costlier for public. For the year, consumer price index or CPI inflation would be at 4%. The RBI also has to address the slowing economic rate. Moreover, the first quarter earnings of most companies have been tepid, not to mention the mounting problems of slowing auto sales, resulting in halted production and job cuts. “Given the significantly lower GDP growth for Q1 of 2019, RBI could revise the GDP growth lower for the fiscal. CARE Ratings expects GDP growth to be in the range of 6.4-6.5% for the fiscal,” the report said. <keyword id="7830347" type="UNKNOWN" weightage="20" keywordseo="banking-sector-crisis">Banking sector crisis</keyword> Yet, growth is not the only worry RBI has. The ongoing <a href="https://www.businessinsider.in/pmc-bank-news-and-updates-in-pictures-after-rbi-sets-deposit-withdrawal-limit/articleshow/71279746.cms">crisis at PMC bank</a> which disallowed depositors to withdraw money has caused widespread fears on the stability of the banking sector. Not only are most depositors worried, there are rumours that multiple banks will fall into a similar crisis mode. However, the RBI and Finance Ministry both have been making statements that the system is stable,<a href="https://economictimes.indiatimes.com/news/economy/finance/amid-pmc-crisis-rbi-says-indian-banking-system-stable/articleshow/71394695.cms"> constantly assuring</a> panicked customers. At this monetary policy, the RBI governor Shaktikanta Das will have to do more than allay fears, he will have to address the concerns of crores of depositors who are worried that their money is in the wrong hands.

RBI will have to do more than cut repo rate like address PMC and other crises

<ul><li>Union Information and Broadcasting Minister <keyword id="119642" type="PERSON" weightage="20" keywordseo="Prakash-Javadekar">Prakash Javadekar</keyword> announced today on June 24 that all urban cooperative banks and multi-state cooperative banks will be brought under the supervision of <keyword id="102024" type="COMPANY" weightage="20" keywordseo="The-Reserve-Bank-of-India">the Reserve Bank of India</keyword> (RBI).</li><li>This means that the central bank's powers will apply to cooperative banks as they apply to scheduled banks.</li><li>"Depositors' money amounting to ₹4.84 lakh crore in the cooperatives banks will stay safe," said Javadekar.</li></ul>The Union Cabinet has decided to bring all cooperative banks under the supervision of the Reserve Bank of India (RBI) through an ordinance. This includes urban cooperative banks and multi-state cooperative banks as announced by Union Information and Broadcasting Minister Prakash Javadekar during a virtual press meet earlier today, June 24. This means RBI's powers will apply to the cooperative banks as they apply to scheduled banks. There are about 1,482 crore urban cooperative banks and 58 multi-state co-operative banks with a depositors base of about 8.6 crore across India. "Depositors' money amounting to ₹4.84 lakh crore in the cooperatives banks will stay safe," said Javadekar citing that this will be the 'new normal'. He said an ordinance in this regard will be promulgated — put into force by official proclamation. These banks will come under the supervision of RBI with immediate effect from date of President’s approval on the ordinance. The decision comes in the wake of lakhs of depositors facing problems after a scam hit the multi-state Punjab and Maharashtra Cooperative (PMC) Bank. In February, earlier this year, the Union Cabinet approved amendments to the Banking Regulation Act to bring 1,540 cooperative banks under the Reserve Bank of India (RBI) regulation to strengthen cooperative banks to avoid another PMC Bank-like crisis. (with PTI inputs) SEE ALSO: <a href="https://www.businessinsider.in/business/news/rbi-revises-exposure-limits-for-urban-cooperative-banks-to-single-group-borrowers/articleshow/74617194.cms" style="">RBI revises exposure limits for urban cooperative banks to single, group borrowers</a> <a href="https://www.businessinsider.in/business/news/rbi-bans-banks-cooperatives-from-paying-dividends/articleshow/75198513.cms" style="">RBI bans banks, cooperatives from paying dividends</a> <a href="https://www.businessinsider.in/business/news/nabard-disburses-rs-20500-crore-to-coop-banks-rrbs/articleshow/75809910.cms" style="">Nabard disburses Rs 20,500 crore to coop banks, RRBs</a>

RBI to supervise cooperative banks — they will adhere to the same rules as other scheduled banks in India

<ul><li>The Yes Bank crisis could have a cascading effect on the stock markets. </li><li>Businesses with deposit accounts at Yes Bank may not be able to make payments on loans taken from other financial institutions. </li><li>Mutual funds have a total exposure of ₹2,848 crore, and most are already side-pocketing the risk. </li></ul>As the Yes Bank crisis continues to unfold, not everyone is on board with the Reserve Bank of India’s (RBI) scheme to restructure the troubled bank. Mutual funds stand to lose millions and the moratorium limiting withdrawals to ₹50,000 could spell trouble for companies who are using the bank’s services. “With large-sized withdrawals disallowed, a number of companies availing of facilities from Yes Bank could face disruption in their operations, which may constrain their ability to service financial obligations on time,” said global rating firm CRISIL in a statement. As the fourth largest private sector bank in the country, Yes Bank has an asset book of more than ₹3.45 crore and deposits exceeding ₹2 lakh crore. CRISIL believes that the moratorium has “material implications” for companies using Yes Bank for loans, deposits, bonds and other instruments. How Yes Bank crisis could affect other banks The fall out from funds being stuck at the troubled bank could result in companies defaulting on their loans from other financial institutions since their payments are linked to deposit accounts at Yes Bank. It may further aggravate liquidity issues for the already cash-starved non-banking lenders, according to a report by <a href="https://www.businessinsider.in/business/news/yes-bank-reconstruction-may-further-aggravate-liquidity-issues-for-nbfcs-report/articleshow/74579814.cms">Fitch Ratings.</a> “There could also be a marginal uptick in delinquencies in retail loans of banks and non-banks,” said CRISIL. Companies using Yes Bank’s letters of credit and bank guarantees to leverage their businesses may also have to rethink their plans. “There are also some securitisation transactions of other originators where Yes Bank is a counterparty - either as the bank where credit enhancement in the form of fixed deposits is being maintained, or as the collection and paying agent for the transaction,” said CRISIL. NSE Clearing (NCL) and India Clearing Corporation (ICCL), the biggest clearing firms in the country, have told members that any existing benefit toward bank guarantees and fixed deposit receipts issued by Yes Bank were to be squared off by Wednesday, March 11. “The RBI decision has a cascading effect on trading members and their clients at large since they may not be able to cover their positions from their own funds,” Association of National Exchanges (ANMI) president Vijay Bhushan told <a href="https://economictimes.indiatimes.com/markets/stocks/news/yes-bank-fds-bank-guarantees-no-longer-valid-traders-have-to-arrange-funds-by-wednesday/articleshow/74545067.cms">ET.</a> Bonding over bonds Nearly 32 mutual funds are exposed to Yes Bank’s debt with a total exposure of ₹2,848 crore. Many of them are AT 1 (Additional 1) bonds, set to be written off completely. Mutual funds owned by Nippon, Kotak, and Franklin <a href="https://economictimes.indiatimes.com/markets/stocks/news/yes-banks-at1-bond-write-down-these-mfs-pension-funds-stand-to-lose-most/articleshow/74555609.cms">have the most to lose</a>. After news broke of RBI superseding Yes Bank’s board, rating agency ICRA downgraded Yes Bank’s debt instruments to a “D” — below investment grade. <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td colspan="2" style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Mutual fund owners with the most to lose from RBI’s scheme to restructure Yes Bank: </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Mutual fund </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Loss </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nippon Mutual Fund </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹2,500 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Franklin Mutual Fund </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹590 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Barclays Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹246 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Kotak Mutual Fund </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹130 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Reliance Industries </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹100 crore </td></tr></tbody></table> Nippon India Mutual Fund, which has the largest exposure, was the first to side-pocket the risk. The move prevents distressed assets, like Yes Bank, from damaging returns generated from better-performing assets. PGIM India Mutual Fund, UTI Mutual Fund, Franklin Templeton Mutual Fund and Baroda Mutual Fund <a href="https://www.bloombergquint.com/business/yes-bank-news-two-more-mutual-funds-side-pocket-exposures-to-yes-bank-bonds">soon followed suit</a>. Axis Trustee Services, on the other hand, filed a petition to delay any action until its bond investors have had the time to review its impact. It asks the court to give enough time for bond investors to review the proposed plan. <div type="twitter" handle="LiveLawIndia" handlename="Live Law" image="http://pbs.twimg.com/profile_images/897707258334916608/nMQWwGlo_normal.jpg" favoritecount="11" retweetcount="6" status="Axis Trustee Services Ltd, a debenture trustee of #Yes_Bank , on Monday petitioned the Bombay High Court against th… https://t.co/pE53lzxTwl" createdat="1583913099000" id="1237647359091195905"></div>

 According to Axis, the proposal to write off the value of over ₹8,000 AT-1 bonds is unjustified and goes against global best practices. It argues that the scheme put forth by the RBI gives preference to Yes Bank promoters despite their shady record and mismanagement of resources — which landed the bank in hot water, to begin with. The possibility of the moratorium being cut short The proposed restructuring of Yes Bank includes recapitalisation of ₹20,000 crore with equity contribution and bulk deposits of around ₹30,000 crore by multiple-state owned banks. “If equity commitments are in place and CD funds flow in, the moratorium may be lifted by the end of the week,” RBI administrator of Yes Bank told reporters on March 10. CRISIL believes that the challenges in the face of the Yes Bank crisis are likely to be temporary, since they are a direct result of a crunch in liquidity and cash flow. Nonetheless, the temporary crunch will result in systemic risk until the moratorium is resolved — like the cost of borrowing and capital-raising becoming tougher for other banks Sources told <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/under-the-scanner-rbi-to-check-if-yes-bank-auditor-bsr-had-raised-red-flags/articleshow/74568396.cms">ET</a> that RBI is checking with Yes Bank’s auditor — BSR &amp;Co, which is a part of KPMG India — whether or not the proposal for SBI to buy a stake in Yes Bank will have any “material impact” on the existing accounts with the bank. Another one bites the dust The repeated incidents of large — supposedly ‘too big to fail’ — companies are becoming increasingly rampant. Last September, the Mumbai-based Punjab and Maharashtra Cooperation (PMC) Bank faced a similar crisis. It was placed under an RBI administrator for six months after under-reporting of loans going bad. However, banks aren’t the only ones going down. The collapse of Jet Airways and Cox &amp; Kings left many investors — and travelers — stranded. Even stockholders in IL&amp;FS and DHFL saw their money disappear overnight due to mismanagement, fraud and corruption within the companies. More than just getting Yes Bank on its feet, the central government and the RBI will have to address the trust deficit that now plagues the market. See also: <a href="https://www.businessinsider.in/finance/news/indias-largest-bank-stock-sees-the-sharpest-fall-in-over-7-years-investors-want-to-say-no-to-yes-bank/articleshow/74504449.cms">India's largest bank stock sees the sharpest fall in over 7 years — investors want to say 'no' to Yes Bank</a> <a href="https://www.businessinsider.in/finance/news/finance-minister-assures-employment-and-salary-at-yes-bank-at-least-for-one-year/articleshow/74514015.cms">Finance Minister assures employment and salary at Yes Bank at least for one year</a> <a href="https://www.businessinsider.in/finance/news/yes-bank-share-price-falls-10-after-rbi-limits-withdrawals/articleshow/74504094.cms">Yes Bank share price nose dives 72% after RBI limits withdrawals</a>

Yes Bank crisis and its domino effect on bonds, mutual funds and other corporate defaults

Mumbai, Dec 29 () The Deposit Insurance and Credit Guarantee Corporation has received a total claim of about Rs 14,100 crore in case of defaulting co-operative banks amid massive scam at the now-crippled Punjab &amp; Maharashtra Cooperative Bank, according to the RBI.
 However, the regulator, the Financial Stability Report said, was quick to add that all the claims may not materialise at the same time and some may even revive.
 The extent of devolvement on the Deposit Insurance and Credit Guarantee Corporation (DICGC) in the event of all the banks "under direction" or weak banks going into liquidation or ordered to be wound up, would be Rs 14,098 crore as of September-end, said the RBI's Financial Stability Report released recently.
 Cooperative banks have been under stress for long and the ongoing PMC Bank crisis, which involves a scam of Rs 6,500 crore that is 73 per cent of its total assets of around Rs 9,000 crore, is related to a single entity, the bankrupt HDIL, which has been gaming the bank since 2008.
 The scam came out in September after an insider whistleblower approached the Reserve Bank of India (RBI) forcing it to supersede the bank's management and put it under an administrator.
 "It needs to be noted that banks which are under direction/weak will go under liquidation over a period, not together at a particular point of time. Weak banks may also witness a revival," the RBI said in the report.
 Since January this year, nearly 30 cooperative banks have been placed under RBI administrators.
 The break-up of the claim with DICGC shows Rs 3,414 crore in the case of state cooperative banks and district central cooperative banks, and Rs 10,684 crore in the case of urban cooperative banks, including PMC Bank, according to the RBI.
 DICGC came into limelight since the RBI imposed deposit withdrawal restrictions on PMC Bank which has deposits of around Rs 11,800 crore.
 As a percentage of the deposit insurance fund, these deposits are about 13.9 per cent, the RBI said. BEN HRS

Deposit Insurance Corporation sees Rs 14,100-cr claims amid PMC crisis

New Delhi, Mar 6 () Be it an epidemic scare or a financial distress, the Twitterati know how to make a day as the microblogging site got flooded with memes on the Yes Bank crisis amid fears that depositors may lose their hard-earned money. The Reserve Bank of India (RBI), in consultation with the government, on Thursday put the cash-strapped private sector lender under moratorium for a period of 30 days, restricting the overall withdrawal limit of Rs 50,000. Reacting to the developments, a Twitter user @Abhishekmissh posted, "Given the way our banks are toppling, I think the promise made was to make India a 3-trillion economy. Three trillion paise that is. #yesbankcrisis." A 'reporter-FM joke', shared by @dilippanawar with #yesBankcrisis, read: "Reporter: FM, #YesBank has gone bad. FM: I don't care my account is in ICICI." Another user @i_theindian wrote: "History repeats itself. #DeMonetisation #yesbankcrisis", posting a picture of people sitting in a line with closed shutters in the background. Kshitiz2420, whose bio reads 'I make jokes when I m uncomfortable', posted "Yes Bank right now" with a movie actor playing role of a soldier, calling from a fixed-line saying, "Halat Bohat Kharab hai (the situation is very tight now)." A post by account 'Doctor Nirav Modi @niiravmodi' read, "I am a Hindu, last year, the government shut PMC Bank 10 days before Diwali where my account was, I lost all my savings, I couldn't celebrate Diwali. Then I opened my bank account at #YesBank and just 5 days before Holi, I lost my rupees again. Modi ji, just tell me why only Hindus?#yesbankcrisis." Dr AbhyudayOm (@craziestlazy) wrote "worthless cheque" with an animated picture of a cheque written Yes Bank cheque of Rs 5 crore. Host of other users posted memes ranging from a picture of smiling former prime minister Manmohan Singh telling himself "History will be kinder to me" #yesbankcrisis. User Sreevathsav S Naik @sreevathsav posted a screenshot of former Yes Bank co-founder Rana Kapoor of what he once famously said, "Diamonds are forever. My promoter shares of @YESBANK are invaluable to me." Shares of Yes Bank dipped Rs 84.93 per cent to an intra-day low of Rs 5.55, its 52-week low. The shares came under massive selling pressure on Friday, plunging 56 per cent at close to Rs 16.20 apiece on the BSE. The RBI in a latest development said the country's largest lender state-owned State Bank of India (SBI) has expressed willingness to invest in the cash-strapped Yes Bank. On the other hand, the bank's customers were also seemed distressed on the microblogging site, sending messages to the bank saying they were facing net banking issues, wanted to close their account and the likes. This apart, long queues of customers could be seen at various bank branches and ATMs to take out money. The bank has been responding to the customer queries both online and offline, assuring them that there deposits are safe. Even as Finance Minister Nirmala Sitharaman has assured that the bank will not be allowed to go bust, RBI Governor Shaktikanta Das said Yes Bank resolution efforts are aimed at maintaining "stability and resilience" in the Indian financial sector and the difficulties will be overcome "very swiftly". KPM HRS

As customers press SOS button, Twitterati busy flooding memes on crisis-hit Yes Bank

Four months after giving an in-principle nod to <keyword id="6010758" type="General" weightage="20" keywordseo="centrum-financial" source="Orion">Centrum Financial</keyword> Services and <keyword id="7349800" type="General" weightage="20" keywordseo="bharatpe" source="Orion">BharatPe</keyword> to establish a <keyword id="6382595" type="General" weightage="20" keywordseo="small-finance-bANK" source="Orion">small finance bank</keyword>, the <keyword id="30067" type="General" weightage="20" keywordseo="RBI" source="Orion">RBI</keyword> on Tuesday granted a licence to the consortium that had expressed interest to take over the crisis-impacted Punjab and Maharashtra Cooperative (PMC) Bank. In June, the Reserve Bank had given the in-principle approval for the SFB licence to the consortium against its interest to take over the PMC Bank, a city-based cooperative lender under restrictions for more than two years after a massive over Rs 7,000-crore fraud at the lender. In a joint statement, <keyword id="59288" type="General" weightage="20" keywordseo="centrum" source="Orion">Centrum</keyword> and BharatPe, which are uniting equally to build the SFB, said the RBI's final approval has been received earlier in the day, and this is the first time in six years that the central bank has given a banking licence. Earlier in the day, BharatPe announced that former SBI veteran Rajnish Kumar is joining its board as the chairman and will be playing the role of a mentor for the fintech's team on the path to forming an SFB. The new SFB has been incorporated as "Unity Small Finance Bank" and the business model is "one of collaboration and open architecture", uniting all its stakeholders to deliver a seamless digital experience, the statement said. However, details about how the amalgamation with Punjab and Maharashtra Cooperative (PMC) Bank will happen from an operational perspective were not known immediately. The statement said Centrum's MSME and microfinance businesses shall be merged into Unity Small Finance Bank. "We are delighted to receive the licence and excited to partner with BharatPe to create this new age bank, with a strong team. We aspire to be India's first Digital Bank," Centrum Group's chairman Jaspal Bindra said. "We will work tirelessly and smartly to capture this opportunity and build India's first truly Digital Bank ground up," Ashneer Grover, the co-Founder and managing director of BharatPe, said. While granting the in-principle nod on June 18, the RBI had said that the approval has been accorded in specific pursuance to the Centrum Financial Services' February 1 offer expressing interest to take over PMC Bank. SEE ALSO <a href="https://www.businessinsider.in/india/news/the-depth-of-indias-power-crisis-22-power-plants-shut-govt-says-coal-crisis-overblown/articleshow/86969860.cms" data-type="tilCustomLink">The depth of India's power crisis</a> <a href="https://www.businessinsider.in/stock-market/news/from-home-sales-and-jewellery-to-power-consumption-these-sectors-are-back-to-pre-pandemic-levels/articleshow/86976154.cms" data-type="tilCustomLink">From home sales and jewellery to power consumption, these are all the sectors that are back to pre-pandemic levels</a> <a href="https://www.businessinsider.in/careers/news/if-you-have-these-digital-skills-then-you-can-expect-a-double-digit-salary-hike-next-year/articleshow/86970342.cms" data-type="tilCustomLink">If you have these digital skills, then you can expect a double digit salary hike next year</a>

Three-year-old BharatPe and Centrum gets RBI nod to set up a small finance bank

New Delhi, Mar 9 () The government is not considering to bring other private sector lenders under scrutiny in the aftermath of Yes Bank crisis that has left lakhs of customers worried if their hard earned money is really safe in banks."There is no such plan," said an official source when asked if the Yes Bank crisis preceded by Punjab and Maharashtra Co-operative (PMC) bank debacle calls for scrutiny of other lenders also.The official said that there has been timely action on part of both the government as well as the Reserve Bank of India (RBI)."The bailout plan has also been announced, so this will be contained," said the official. However, analysts expect that the new generation private sector lenders alongside the cooperatives could face slow growth in their deposits as the banking business is based on trust and confidence.S&amp;P Global Ratings said if Yes Bank's resolution process is prolonged, there is a risk the broader banking environment may take a hit. "The uncertainty may engulf weak financial-sector entities, including non-bank finance companies or private-sector banks. Companies with marginal credit profiles, perceived governance issues, and aggressive risk appetites are particularly vulnerable. These could suffer from extended risk aversion, resulting in rising borrowing costs," S&amp;P Global Ratings said.Yes Bank being put under administration has further eroded the confidence in the financial sector in India. After IL&amp;FS, DHFL and PMC Bank, this is a bigger setback given its size and profile, said Tarun Bhatia, MD &amp; Head of South Asia in the Business Intelligence and Investigations practice of Kroll.Brokerage firm Anand Rathi said deposit growth for select banks may slow down. "The banking system is based on goodwill and trust. Given the recent events (including at PMC and Yes), new age private banks and smaller regional banks may see slower deposit growth, Anand Rathi said in a note on 'India Banks? Likely contagion effect of Yes Bank'.It said although the regulator and the government have in both cases stepped in to safeguard the interests of depositors, "we expect retail investors to park their deposits in PSBs and select larger private banks".At least in the short run, deposit growth in new-age private and smaller regional banks could therefore significantly slow down. This may push up their cost of funds, eating into their margins. Loan growth of private banks with higher C/D (cost to deposit) ratios could be slower, it added."The event raises serious issues around corporate governance in the bank but will now bring all other mid and small size banks under scanner too. The cost of capital will increase for the banks and there could be increase in asset side risks with growing concern on the quality of portfolio they hold," said Bhatia of Kroll -- a division of Duff &amp; Phelps -- on Yes Bank development.During the moratorium period, Yes Bank will not be able to grant or renew any loan or advance, make any investment, incur any liability or agree to disburse any payment.As per the RBI's draft reconstruction scheme, State Bank of India (SBI) will pick up 49 per cent stake in the crisis-ridden Yes Bank under a government-approved bailout plan by infusing capital of Rs 2,450 crore. Bank's financial health is not sound as it has failed to raise enough capital under the new leadership of Ravneet Singh Gill, who took charge as managing director and CEO from March 1, 2019. Troubles at new generation private sector started brewing up ever since the Reserve Bank denied extension to its co-founder Rana Kapoor -- who now is in the custody of the Enforcement Directorate for financial mismanagement and money laundering charges -- to continue as MD and CEO in September 2018 and had asked the lender to find a new successor. KPM MKJ

Govt has no plans to bring other pvt sector lenders under scrutiny post Yes Bank crisis: Source

New Delhi, Feb 5 () In order to protect interest of depositors, the Union Cabinet on Wednesday approved amendment to Banking Regulation Act to strengthen cooperative banks and avoid PMC Bank like crisis.There are 1,540 cooperative banks with depositor base of 8.60 crore having total savings of about Rs 5 lakh crore.The proposed law seeks to enforce banking regulation guidelines of the RBI in cooperative banks, while administrative issues will still be guided by Registrar of Cooperative, Information and Broadcasting Minister Prakash Javadekar said while briefing media about the Cabinet decisions.Observing that the changes will help strengthen financial stability, he said qualifications would be set for appointing CEO of cooperative banks and the RBI permission would be sought before appointment as followed in case of commercial banks.Audit would be as per the RBI guidelines and the central bank can also supersede the board if any cooperative bank is under stress, he said.Cooperative bank will be given time to comply with the RBI guidelines in phased manner, he added.The cabinet approval is in line with the Budget announcement made by Finance Minister Nirmala Sitharaman on Saturday."To strengthen the Cooperative Banks, amendments to the Banking Regulation Act are proposed for increasing professionalism, enabling access to capital and improving governance and oversight for sound banking through the RBI," she had said in the Budget 2020-21.The decision assumes significance in the wake of a scam in the Punjab and Maharashtra Cooperative (PMC) Bank affecting lakhs of customers who are facing difficulties in withdrawing their money due to restrictions imposed by the Reserve Bank of India.Javadekar further said this is the second important measure taken by the government to protect the interest of depositors within a week.Sitharaman proposed in the Budget to raise the insurance cover on saving deposits five times to Rs 5 lakh."I wish to inform this august House that robust mechanism is in place to monitor the health of all Scheduled Commercial Banks and that depositors' money is safe."Further, the Deposit Insurance and Credit Guarantee Corporation (DICGC) has been permitted to increase Deposit Insurance Coverage for a depositor, which is now Rs 1 lakh to Rs 5 lakh per depositor," she said in Budget 2020-21.At present, bank depositors get an insurance cover of Rs 1 lakh on their amount by the Deposit Insurance and credit Guarantee Corporation if a bank fails. However, deposits maintained with different banks are not clubbed. DP BAL

Cabinet clears amendment to banking laws to strengthen cooperative banks

<ul><li>The bank’s share price is up 54% since the lockdown started and still, it is at half the price compared to December-end.</li><li>JP Morgan has set a target price of ₹330 in the next one year, implying that the stock can still gain about 38% hereon.</li><li>As one of India’s largest microfinance institutions, its balance sheet will reflect the true state of affairs in rural areas.</li></ul>India’s Chief Economic Advisor Krishnamurthy Subramanian cited data in an interview to say that the reported stress in rural India has been exaggerated. However, the real impact of COVID-19 lockdown on rural India will be reflected in the earnings from <keyword id="2240511" type="PERSON" weightage="20" keywordseo="Bandhan-Bank">Bandhan Bank</keyword> — one of the country’s biggest microfinance institutions and a listed bank since March 2018 — to be announced tomorrow, May 12. So far, the share price reflects some optimism. It’s up over 54% since the lockdown starting March 25. However, it is still available at less than half the price compared to December-end. Most of its business is based in the rural outposts of India, which have been more affected by the economy shutting down than the coronavirus disease itself. <div type="image" title="snapshot-1589200754808" msid="75677122" hostid="261" caption="&amp;lt;p&amp;gt;Bandhan Bank&amp;#39;s share price since the lockdown was announced on March 25&amp;lt;/p&amp;gt;"></div> Most of Bandhan Bank’s microfinance loans aren’t consumption-based or to migrant workers, giving an edge over other banking institutions. “We continue to believe that Bandhan Bank is the most resilient franchise within microfinance — no consumption-based lending, no lending to migrant workers,” said Bernstein’s report from early April. This could be its undoing or the pillar on which it survives, according to analysts. Bandhan Bank has a survived many a crisis It also has experience overcoming the volatile, and unexpected, disturbances that usually occur in rural regions like droughts, floods and even political violence — and has survived most of it over the past two decades. “Based on past experience and limited disruption in the rural economy as of now, the normalcy in collections should return in three months after the moratorium,” said Emkay Research’s analysis. <div type="image" title="snapshot-1589259039416" msid="75688520" hostid="261" caption="&amp;lt;p&amp;gt;Bandhan Bank&amp;#39;s net profit over the last five quarters&amp;lt;/p&amp;gt;"></div> “Based on past experience… post cyclones, riots (Darjeeling) and demonetisation, the collection normalcy returned in three months and hopefully, should be the case this time around as well,” added Emkay. COVID-19 lockdown will hurt Bandhan Bank too, just not as much as others But that doesn’t mean that Bandhan Bank will be able to undercut the coronavirus impact altogether — it just has a higher likelihood of surviving it. “We believe Bandhan, with a 23% Tier-1 and strong CASA (low-cost) deposits, will survive this better than any competitor. We cut Bandhan's microfinance growth by 50% and increase credit costs by 100% to factor in the disruption,” said Bernstein. <div type="image" title="Bandhan Bank Gross NPA (3)" msid="75688686" hostid="261" caption="&amp;lt;p&amp;gt;Bandhan Bank&amp;#39;s gross NPAs over the last give quarters&amp;lt;/p&amp;gt;"></div> Nonetheless, the bank’s share price has largely been volatile since the lockdown was announced by Prime Minister Narendra Modi on March 25. Geojit Financial Services takes an opposing view stating, “Bandhan Bank, with high exposure to microcredit and personal loans, could see further pressure in case of job losses and pay cuts and also the limited ability of micro-borrowers to repay loans.” Though, so far, its stock looks like it hasn’t lost too much of its value. The recent controversies in the banking sector — with PMC Bank going under and Yes Bank needing the Reserve Bank of India to come to its rescue — have eroded investor confidence leaving recovery open to question. Even with Bandhan Bank’s healthy liquidity and asset diversification, asset quality stress will remain a key parameter to watch out for. An initial strike is inevitable, but analysts are divided on how long it will take the bank to recover. See also: <a href="https://www.businessinsider.in/business/news/richest-man-in-asia-mukesh-ambani-owned-reliance-jio-in-talks-to-raise-more-money/articleshow/75669385.cms">$8 billion and counting – Asia's richest man is reportedly in talks to raise more money for Reliance Jio</a> <a href="https://www.businessinsider.in/business/corporates/news/hiring-at-infosys-and-tech-mahindra-is-down-40-in-line-with-the-trend-in-top-five-it-firms-and-its-not-just-because-of-covid-19/articleshow/75669358.cms">Hiring at Infosys and Tech Mahindra is down at least 40% in line with the trend in top five IT firms⁠— and it's not just because of COVID-19</a> <a href="https://www.businessinsider.in/finance/news/sovereign-gold-bond-scheme-price-how-to-apply-rules-and-all-you-need-to-know-about-paper-gold/articleshow/75670320.cms">Sovereign Gold Bond Scheme ⁠— price, how to apply, rules and all you need to know about paper gold</a>

You Searched For "PMC Bank Crisis" and got 11 results

India Budget 2020: Bank scam victims are assured of ₹5 lakh instead of ₹1 lakh

Katya Naidu

PMC Bank crisis: Administrator to seek valuation of HDIL's aircraft, yacht

PTI

RBI will have to do more than cut repo rate like address PMC and other crises

Katya Naidu

RBI to supervise cooperative banks — they will adhere to the same rules as other scheduled banks in India

Prabhjote Gill

Yes Bank crisis and its domino effect on bonds, mutual funds and other corporate defaults

Prabhjote Gill

Deposit Insurance Corporation sees Rs 14,100-cr claims amid PMC crisis

PTI

As customers press SOS button, Twitterati busy flooding memes on crisis-hit Yes Bank

PTI

Three-year-old BharatPe and Centrum gets RBI nod to set up a small finance bank

Kritti Bhalla

Govt has no plans to bring other pvt sector lenders under scrutiny post Yes Bank crisis: Source

PTI

Cabinet clears amendment to banking laws to strengthen cooperative banks

PTI

Bandhan Bank shares have gained 54% since lockdown started⁠— but the numbers will reveal the real damage to rural India from COVID-19

Prabhjote Gill

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