Best printers for Home

Best Mixer Grinder

Best wired Earphones

Best 43 Inch TV in India

Best Wi Fi Routers

Best Home Theatre in India

Smart Watch under 5000

Best Laptops for Education

Best Laptop for Students

It looks like <keyword id="15561167" type="General" weightage="20" keywordseo="sunshine-days-for-the-Indian-banking-sector" source="Orion">sunshine days for the Indian banking sector</keyword> after having struggled with a seemingly <keyword id="15561168" type="General" weightage="20" keywordseo="never-ending-gloom-of-rising-non-performing-assets" source="Orion">never-ending gloom of rising non-performing assets</keyword> (NPAs) and the Covid-19 pandemic, which hit their profits hard. The September quarter results of <keyword id="6355548" type="General" weightage="20" keywordseo="public-sector-banks" source="Orion">public sector banks</keyword> (PSBs) seem to have brought cheer for the Indian banking sector with all the major 12 PSBs recording net profits worth Rs 25,685 crore during the period under review. On September 7, Finance Minister Nirmala Sitharaman had lauded all the 12 PSBs for their outstanding fiscal performance. In a series of tweets, she said that "the continuous efforts of our government for reducing the NPAs and further strengthening the health of PSBs are now showing tangible results. All 12 PSBs declared net profit of Rs 25,685 cr in Q2FY23". She said that the combined net profits of public sector banks recorded a year-on-year growth of 50 per cent. Similarly, in the first half of the current fiscal, the 12 state-owned banks recorded total profits of Rs 40,991 crore, which were 31.6 per cent higher year-on-year. Country's largest lender State Bank of India (SBI) reported a 74 per cent jump in profit to Rs 13,265 crore, while Canara Bank reported an 89 per cent jump in profit to Rs 2,525 crore. UCO Bank reported a huge 145 per cent jump in profit to Rs 504 crore, while the Bank of Baroda reported 58.70 per cent profit of Rs 3,312.42 crore in the September quarter of 2022-23. Experts have said that the financial performance of PSBs is expected to improve in the current fiscal of 2022-23 over the previous financial year, as NPAs are coming down and leverage of corporates too has been cut. They informed that NPAs of banks were brought out especially after the asset quality review measure was introduced by the government in 2015. While rising NPAs seem to be under control as of now, the Indian banking system had faced a serious threat from these in 2011, when they started rising and had reached a climax in 2017-18, when they reached 11.18 per cent. Though now the NPAs have come down, experts say that it is a cyclical thing as they keep rising and falling. To help PSBs tide over the NPA problem, the government had infused Rs 3 lakh crore in these banks, which went a long way in stabilising them financially. On the basis of this stability, state-owned banks are now able to issue bonds and raise funds from outside, which is gradually making them more financially independent, industry experts said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/psb-stocks-on-52-week-high-riding-on-record-profits-double-digit-loan-growth/articleshow/95621602.cms" style="">PSB stocks on 52-week high riding on record profits, double-digit loan growth</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/rupee-slips-6-paise-to-close-at-81-70-against-us-dollar/articleshow/95604868.cms" style="">Rupee slips 6 paise to close at 81.70 against US dollar</a>

Crunching Numbers: 12 PSBs end Sept quarter notching up ₹25K+ cr net profit

<ul><li>Number of bad loans alone was close to $149 billion last year.</li><li> <keyword id="571991" type="ORGANIZATION" weightage="20" keywordseo="Nirav-Modi">Nirav Modi</keyword> and his uncle Mehul Choksi allegedly defrauded Punjab National Bank of over <a href="http://www.thehindu.com/business/Industry/all-you-need-to-know-about-nirav-modi-and-the-177-billion-pnb-fraud/article22753973.ece" data-type="tilCustomLink">₹1.77 billion</a>. </li><li>According to proxy advisory firm Institutional Investor Advisory Services (IiAS), in 2016-17 alone the Indian banking sector reported 12,553 frauds aggregating to Rs 181.7 billion. </li></ul> India’s already troubled banking sector is being demolished by the surging number of bad loans and/or bank frauds that are coming to light. Though this is not at all a new phenomenon, the Nirav Modi case has opened up a Pandora’s box full of dodgy transactions -- that typically involves cases where the borrower intentionally tries to deceive the lending bank and does not repay the loan -- that run in millions and even billions. As a result of which, the CBI is on an overdrive to nab these offenders. According to data from the Reserve Bank of India (RBI), accessed through a right-to-information request by a <a href="https://in.reuters.com/article/india-banks-fraud/exclusive-unpublished-data-shows-indias-fraud-problems-extend-far-beyond-pnb-idINKCN1G00SJ">Reuters</a> reporter, in the five financial years leading up to 31 March 2017 showed that state-run banks reported 8,670 “loan fraud” cases totalling ₹612.6 billion. And the number of bad loans alone was close to a whopping <a href="https://www.ndtv.com/india-news/unpublished-data-shows-indias-fraud-problems-extend-far-beyond-pnb-1813569" data-type="tilCustomLink">$149 billion</a> last year. According to proxy advisory firm Institutional Investor Advisory Services (IiAS), in 2016-17 alone the <a href="https://www.firstpost.com/business/frauds-cost-rs-18170-cr-in-12553-cases-to-banking-sector-in-fy17-advisory-firm-report-4411267.html">Indian banking sector reported 12,553 frauds aggregating to Rs 181.7 billion</a>. Here’s are of the biggest frauds that came to light in the past financial year. Kanishk Gold Pvt Ltd./consortium of 14 banks led by <keyword id="6354731" type="UNKNOWN" weightage="20" keywordseo="state-bank-of-india">State Bank of India</keyword> (SBI): Kanishk Gold Pvt Ltd. has been <a href="https://timesofindia.indiatimes.com/business/india-business/jewellery-chain-kanishk-gold-defrauds-14-banks-to-tune-of-rs-824-15-crore/articleshow/63394221.cms" data-type="tilCustomLink">accused</a> by a consortium of 14 banks led by SBI of defaulting on a loan of ₹8241.5 million. While the principal loan amount is about ₹8241.5 million, adding the interest due would indicate a loss of more than ₹10 billion. In a letter dated 25 January 2018 to the CBI, SBI charged Kanishk with "manipulating records, shutting shop overnight." Nirav Modi / <keyword id="6476298" type="UNKNOWN" weightage="20" keywordseo="Punjab-National-Bank">Punjab National Bank:</keyword> The all-too-famous case in which companies owned by billionaire jeweller Nirav Modi and his uncle Mehul Choksi allegedly defrauded India's second-biggest state-run bank of over <a href="http://www.thehindu.com/business/Industry/all-you-need-to-know-about-nirav-modi-and-the-177-billion-pnb-fraud/article22753973.ece" data-type="tilCustomLink">₹1.77 billion</a>, making it India's biggest detected loan fraud. Apparently, two junior officers at a single branch had illegally issued fraudulent “letters of undertaking” (a guarantee that a bank is obliged to repay the loan if the actual borrower fails) without any collateral to the accused. When the accused failed to pay up, the bank employees involved issued more LoUs on behalf of PNB, asking other banks to give out fresh loans to the firms. The Central Bureau of Investigation (CBI) registered the case on 31 January 2018. Vikram Kothari / consortium of 7 banks led by Bank of India: The CBI arrested <keyword id="5888255" type="COMPANY" weightage="20" keywordseo="Rotomac">Rotomac</keyword> owner Vikram Kothari and his family in the alleged “willful” loan default to the tune of ₹ 36950 million on 22 Feb 2018. As alleged, the case relates to bank loans <a href="https://thewire.in/banking/banking-sector-hit-second-scam-rs-3695-cr-rotomac-promoters-probed" data-type="tilCustomLink">worth ₹ 29190 million</a> from 2008 onwards taken by Mr Kothari’s companies from a consortium led by Bank of India and comprising Bank of Baroda, Indian Overseas Bank, Union Bank of India, Allahabad Bank, Bank of Maharashtra and Oriental Bank of Commerce. This amount inflated to ₹ 36950 million after including accrued interest, because of repeated defaults on payment. Dwarka Das Seth International Pvt Ltd / Oriental Bank of Commerce: On 24 February 2018, the CBI registered a case against Delhi-based diamond exporter, Dwarka Das Seth International Pvt Ltd, for an alleged <keyword id="77600" type="PERSON" weightage="20" keywordseo="bank-fraud">bank fraud</keyword> to the tune of <a href="https://economictimes.indiatimes.com/news/politics-and-nation/cbi-approaches-interpol-to-locate-promoter-of-dwarka-das-seth-jewellers/articleshow/63129931.cms" data-type="tilCustomLink">₹3898.5 million</a>. The company was supposedly using letters of credit (LoCs) to pay off other creditors against the purchase of gold and other precious stone and transfer gold and funds outside the country using fictitious transactions. The company was also engaging in business transactions with non-existent entities, it said. Totem Infrastructure Ltd / consortium of eight banks led by Union Bank of India: CBI arrested the promoters of Totem Infrastructure Ltd — Tottempudi Salalith and Tottempudi Kavita — on 23 March 2018 in connection with an alleged <a href="https://timesofindia.indiatimes.com/business/india-business/cbi-arrests-promoters-of-totem-infra-in-rs-1394-crore-fraud-case/articleshow/63433753.cms" data-type="tilCustomLink">₹13940 million</a> fraud perpetrated against a consortium of eight banks. They were also accused of using the funds that were loaned to them for purposes other than what they were meant for. Aircel promoter C Sivasankaran and more / IDBI Bank: The CBI on Thursday (26 April 2018) registered a case against 15 former and serving senior IDBI Bank officials along with 24 others including former Aircel promoter C Sivasankaran, the heads of two public sector banks — Melwyn Rego of Syndicate Bank and Kishor Kharat of Indian Bank — and former CMD of IDBI Bank M S Raghavanand in an alleged <a href="http://www.thehindu.com/business/Industry/idbi-bank-fraud-case-cbi-books-indian-bank-and-syndicate-bank-chiefs-aircel-founder/article23684141.ece" data-type="tilCustomLink">₹6-billion</a> bank fraud case. The CBI claims loans worth ₹3220 million and ₹5230 million were given to Sivasankaran’s two offshore companies – Axcel Sunshine Limited (British Virgin Islands) and Finland-based Win Wind Oy respectively – which turned non-performing assets.

Here are the biggest bank frauds that happened in India the previous financial year

<ul><li>The government has reportedly asked the RBI to draw up a list of banks that can be merged as well as a possible timeframe for their consolidation. </li><li>The move is a response to the deteriorating asset quality of smaller, weaker banks and follows the successful absorption of five associate banks by the SBI last year. </li><li>Currently, government-owned banks account for 90% of bad loans despite owning less than 70% of the banking system’s assets.</li></ul>In its annual report yesterday, the Reserve <keyword id="6355303" type="DOMAIN" weightage="20" keywordseo="bank-of-india">Bank of India</keyword> (RBI) cautioned that the bad loan crisis could continue in the coming years. The central bank expects the <keyword id="919276" type="PERSON" weightage="20" keywordseo="non-performing-loan">non-performing loan</keyword> ratio, which is currently 12.1% of all loans, to rise this fiscal year. This is mostly owing to unfavourable economic conditions such as sluggish credit growth and a less-than-expected pickup in industrial activity. Amid talk of <a href="https://www.businessinsider.in/india-wants-to-establish-a-mega-asset-manager-to-tackle-its-bad-loan-problem/articleshow/64838159.cms">an asset management company </a>and the launch of Project Sashakt, the Indian government is also focused on what it thinks is a tried-and-tested solution to mitigate the crisis and improve governance: bank mergers. The Indian government has reportedly asked the RBI to draw up a list of banks that can be merged as well as a possible timeframe for the consolidation. All 21 public-sector banks will be under consideration. Currently, government-owned banks account for 90% of bad loans despite owning less than 70% of the banking system’s assets. In June 2018, reports emerged that the government was mulling a merger between <a href="https://www.livemint.com/Industry/PFZf4q3BtZ7quULf3tj88N/Govt-weighs-merger-of-Bank-of-Baroda-IDBI-Bank-Oriental-Ba.html">four heavy lossmakers</a> - Oriental Bank, Central Bank, Bank of Baroda and <keyword id="6357560" type="DOMAIN" weightage="20" keywordseo="idbi-bank">IDBI Bank</keyword>. The state-owned insurer, LIC, was eventually “instructed” to take a majority stake in the latter. The case of SBI The enthusiasm for bank mergers follows the successful absorption <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/five-associate-banks-to-merge-with-sbi-from-april-1/articleshow/57314900.cms">of five associate banks</a> by the <keyword id="6354731" type="DOMAIN" weightage="20" keywordseo="state-bank-of-india">State Bank of India</keyword> in April 2017. The impetus behind the merger was to reduce the costs of the smaller banks and shore up their balance sheets. Just like the SBI merger, the government wants larger banks to acquire smaller banks that aren’t well-capitalised and are hurting from a pile-up in bad debts. The merged entity subsequently benefits from a larger capital base and a buffer against risk and liquidity issues. It also becomes better-equipped to take on private sector banks, which is important because public-sector banks have continually been losing market share to their private counterparts. The RBI currently has 11 public-sector banks under its prompt-corrective action framework, which imposes credit extension limits and restructuring requirements. Additionally, a lower number of government-owned banks will also reduce the resources needed for regulatory oversight.

The Indian government wants to merge more public-sector banks

It will be a long and arduous weekend for bank customers of Indian public sector banks. Four banking unions have called for a strike, protesting the merger of ten banks announced by Nirmala Sitharaman on 30 August 2019. Other inconveniences aside, public sector banks will remain closed for two days on 26 and 27 September 2019. This strike is followed by 28 September 2019, which is the fourth Saturday of the month — a banking holiday. After the weekend, the banks will also be shut next Monday as it is the half-yearly closing day as the quarter ends. Overall, this means that public sector banks will be closed for five days straight. After a one day respite on 1 October 2019, banks will be shut again on 2 October 2019 for Mahatma Gandhi Jayanthi — another holiday. The continuous shutdown will affect cheque clearances, cash deposits and withdrawals, demand draft clearances and other transactions. This long pause in public banking services will also affect online transactions like RTGS and NEFT. However, IMPS transactions will continue providing respite to scores of customers. The country’s largest bank, State Bank of India (SBI) admitted that the strike might affect operations. “While the bank has made all arrangements to ensure normal functioning in its branches and offices, it is likely that work in our bank may be impacted to some extent by the strike,” SBI said in a statement on Bombay Stock Exchange. All India Bank Officers Confederation (AIBOC), All India Bank Officers Association (AIBOA), Indian National Bank Officers Congress (INBOC) and National Organization of Bank Officers (NOBO) have given a call for the strike.

Customers must brace for a very long weekend ahead at India's government banks

New Delhi, Mar 8 () Allaying concerns over banking sector health in the wake of Yes Bank fiasco, Chief Economic Adviser Krishnamurthy Subramanian on Sunday said Indian banks are well capitalised and there is no reason to worry.He further said that it is a wrong method to assess a lender's health based on the ratio of deposit to m-cap (market capitalisation)."What I want to emphatically state that the m-cap ratio is a totally incorrect metric for assessing the safety of the banks. No banking sector expert or banking regulator uses this measure," Subramanian said while addressing a select mediapersons at his office here.After what all unfolded about the crisis-hit Yes Bank recently, top government functionaries including Finance Minister Sitharaman, RBI Governor Shaktikanta Das and the chief economic advisor have been trying to assuage panicked investors.The CEA said that no banking sector experts or regulators use deposit/m-cap ratio as a measure to gauge resilience of banks rather it is the capital to risk weighted assets ratio (CRAR) and other such metrics that can rightly gauge the health of banks."What banking sector experts and regulators use is what is called the CRAR. It is important to keep this in mind that the international norms for CRAR is 8 per cent and Indian banks on an average have a CRAR of 14.3 per cent. "So, 8 per cent is the mandated minimum norm and our banks on the average have 14.3 per cent (CRAR). Now 14.3 per cent versus 8 per cent almost translates into 80 per cent greater capital than the international norms," he said.He further said that the Reserve Bank of India (RBI) mandates the Indian banks to keep CRAR at 9 per cent. "Even compared to that our banks have 60 per cent more capital. So this is something that is very important."Giving reasons as to why the deposit/m-cap ratio is an incorrect measure to assess the health of the banks, he said the m-cap ratio is essentially the ratio of the deposits that a bank has to its market capitalisation."Now if you compare for instance any bank lets say a private sector bank with the State Bank of India, State Bank of India would have an order of magnitude of higher m-cap ratio. "But the State Bank of India is as safe as the any other bank in the world. In fact it is the only Indian bank to be the part of the top 100 banks internationally."So this ratio does not really capture the safety of a bank because it is actually affected by the market capitalisation. "As you all know the stock price of a bank can change minute to minute, as a result the m-cap ratio will also change minute to minute but the solvency cannot change minute to minute," Subramanian said.He also emphasised that the Indian banks on an average have a CRAR of 14.3 per cent, which is way more higher -- about 80 per cent greater than the global measures."So our banks on an average are very-very well capitalised, so there is absolutely no reason to worry. Also, the government has increased the limit for deposits that are insured to up to Rs 5 lakh, which covers a large majority of the deposits."Together with the fact that our banks are well capitalised and the fact that the deposits are well taken care of, there is absolutely no reason for anyone to worry," he said. A day after imposing a 30-day moratorium on Yes Bank and capping withdrawal limit at Rs 50,000, the RBI on Friday evening had issued a draft reconstruction scheme for the private sector lender. As per the RBI's draft reconstruction scheme, State Bank of India will pick up 49 per cent stake in the crisis-ridden Yes Bank under a government-approved bailout plan. KPM MKJ

Indian banks well capitalised, no reason to worry: CEA

(Eds: Adding more info) New Delhi, Mar 31 () The biggest ever consolidation exercise in the public sector banking space is slated to take shape on Wednesday when six PSU lender will be merged into four in a bid to make them globally competitive.The exercise assumes significance as it is taking place at a time when the entire country is under the grip of COVID-19 outbreak. It has triggered 21-day lockdown to contain the spread of the deadly virus.Experts said merger at this point of time will not be very smooth and seamless. However, heads of the anchor banks are exuding confidence."We don't foresee any problem it is going as per the plan. We have reviewed in the light of this situation also. Certain modification in implementation. We have done so that there is not any disruption for employees and customers. We are ensuring zero disruption," Union Bank of India Managing Director Rajkiran Rai G told .The four anchor banks -- PNB, Canara Bank, Union Bank and Indian Bank -- are postponing some part of the implementation and processes due to the lockdown."For merging banks, we have not changed some of the process like loan process etc, which we proposed to do earlier. However, because of the prevailing situation we will be continuing old system till the situation comes under control," he said.With the merger, the bank looking at more than Rs 2,500 crore of synergy benefits in the next three years, he added.As per the mega consolidation plan, Oriental Bank of Commerce and United Bank of India will merge into Punjab National Bank (PNB); Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into Indian Bank.Following the consolidation, there will be seven large public sector banks (PSBs), and five smaller ones.There were as many as 27 PSBs in 2017. The total number of public sector banks in the country will come down from 18 to 12 beginning next financial year.Speaking on preparedness, Indian Bank MD Padmaja Chunduru said harmonisation of products -- both on the loan and deposit sides -- has been completed and the same products will be offered to all customers.She also said all the deposit and loan products, including access to Indian Bank's emergency credit lines launched in the wake of Covid-19 would be made available to the customers of Allahabad Bank."We have focused all our resources on the important things that matter for day one -- treasury integration has happened and IT integration to the extent of product harmonization and rolling out of the same products has happened," she said.She expects the entire IT integration to be completed by December 2020.Following this merger, PNB will become second largest after the State Bank of India (SBI), Canara Bank fourth, Union Bank of India fifth and Indian Bank seventh biggest public sector lender.Commenting on the consolidation, Canara Bank MD L V Prabhakar said, "We are delighted that following the amalgamation as a single legal entity, we will become a powerful banking institution that is globally competitive and efficient working towards providing differentiated customer experience excellence across all our products and services".The combined entity will be large but with an unchanged approach to grass-root banking, customer delight, and satisfaction, Prabhakar said.The merger will result in the creation of seven large PSBs with scale and national reach, with each amalgamated entity having business of over Rs 8 lakh crore and it would help create banks with scale comparable to global banks and capable of competing effectively in India and globally.In addition, consolidation would also provide impetus to merged entities by increasing their ability to support larger ticket-size lending and have competitive operations by virtue of greater financial capacity.Last year, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with the public sector bank.These were State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad effective April 2017. DP HV RS BAL

Mega-merger of PSU banks to be effective from Wednesday; 6 banks cease to exist

New Delhi, Apr 1 () The biggest-ever consolidation exercise in the public sector banking space effected on Wednesday will mark a new dawn for the Indian banking sector, the Finance Ministry said on Wednesday. Six public sector banks (PSBs) namely Oriental Bank of Commerce, United Bank of India, Syndicate Bank, Andhra Bank, Corporation Bank and Allahabad Bank lost their individual identity as they were merged into four bigger lenders with the objective to make them globally competitive. "PSBs' amalgamation today will mark a new dawn for #IndianBanking. Bigger &amp; stronger PSBs to to offer faster loan processing, banking @ home, need-driven credit &amp; specialized products for customers," the Department of Financial Services, which comes under the Ministry of Finance, said in a tweet. The exercise assumed significance as it took place at a time when the entire country is under the grip of the COVID-19 outbreak, which has triggered a 21-day nation-wide lockdown. Earlier in the day, Punjab National Bank said all nation-wide branches of United Bank of India and Oriental Bank of Commerce has started functioning as PNB branches. The merger has created the second largest nationalised bank of the country - both in terms of business and branch network after the State Bank of India (SBI). The amalgamated bank will have a wider geographical reach through 11,000 plus branches, more than 13,000 ATMs, one lakh employees and a business mix of over Rs 18 lakh crore. "The bigger geographical footprint will help us serve our customers more effectively and efficiently," said PNB managing director S S Mallikarjuna Rao said. Experts were of the opinion that merger at this point of time will not be very smooth and seamless. However, heads of the anchor banks exuded confidence. "We don't foresee any problem it is going as per the plan. We have reviewed in the light of this situation also. Certain modification in implementation we have done so that there is no disruption for employees and customers. We are ensuring zero disruption," Union Bank of India Managing Director Rajkiran Rai G told . The four anchor banks -- PNB, Canara Bank, Union Bank and Indian Bank -- are postponing some part of the implementation and processes due to the lockdown. "For merging banks, we have not changed some of the process like loan process etc, which we proposed to do earlier. However, because of the prevailing situation, we will be continuing old system till the situation comes under control," he said. With the merger, the bank looking at more than Rs 2,500 crore of synergy benefits in the next three years, he added. As per the mega consolidation plan announced in August last year, Oriental Bank of Commerce and United Bank of India is merged into Punjab National Bank (PNB); Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into Indian Bank. Following the consolidation, there will be now seven large public sector banks (PSBs), and five smaller ones. There were as many as 27 PSBs in 2017. The total number of public sector banks in the country has come down to 12. The merger has resulted in the creation of seven large PSBs with scale and national reach, with each amalgamated entity having business of over Rs 8 lakh crore. These banks now have scale comparable to global banks and capable of competing effectively in India and globally. In addition, the consolidation is expected to provide impetus to the merged entities by increasing their ability to support larger ticket-size lending and have competitive operations by virtue of greater financial capacity. Last year, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with the public sector bank. These were State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad effective April 2017. DP MKJMKJ

Mega bank merger marks new dawn for Indian banking space: FinMin

New Delhi, Apr 2 () Moody's Investors Service on Thursday changed the outlook for Indian banking system to negative from stable, as it expects deterioration in banks' asset quality due to disruption in economic activity from the coronavirus outbreak. It said Banks' asset quality will deteriorate across the corporate, small and medium enterprises and retail segments, leading to pressure on profitability and capital. "We have changed the outlook for the Indian banking system to negative from stable. Disruptions to economic activity from the coronavirus outbreak will exacerbate a slowdown in India's economic growth," Moody's said. Stating that asset quality will deteriorate, Moody's said a sharp decline in economic activity and a rise in unemployment will lead to a deterioration of household and corporate finances, which in turn will result in increases in delinquencies. "Growing solvency stress among non-bank financial institutions will increase risks to banks' asset quality because banks have large exposures to the sector," it added. It expects deteriorating profitability and loan growth to hurt capitalisation. "Increases in loan loss charges and declines in revenue will hurt banks' profitability, which will lead to a deterioration of capitalization. If the government makes more capital infusions into PSBs, as it has in the past few years, it will mitigate capital pressure for them," it added. It said while funding and liquidity at public sector banks (PSBs) will be stable, growing risk aversion in the system following a default by a private sector bank (Yes Bank) will increase funding and liquidity pressure on small private sector lenders. "Disruptions from the coronavirus outbreak will exacerbate India's economic slowdown. A deterioration of global economic conditions and a 21-day lockdown imposed by the Indian government in an effort to slow the spread of coronavirus will weigh on domestic demand and private investment," Moody's added. Moody's rates 16 commercial banks in India, which together account for around 75 per cent of deposits in the system. JD DRRDRR

COVID-19 impact: Moody's changes outlook on Indian banks to negative

New Delhi, Jul 1 () Indian banks may continue to face heightened asset quality and earning pressure for at least two years, as disruption to business activity and supply chains and shrinking personal incomes damage banks' balance sheets, according to a report by Fitch Ratings. The reported performance of Indian banks for the financial year ended March 2020 does not adequately reflect the incipient stress caused by the pandemic, the rating agency said in the report titled 'Indian banks vulnerable to pandemic related stress'. "Bank balance sheets are yet to feel the impact of India's strict lockdown measures that were implemented by the government from March 25. Moreover, a meaningful short-term recovery looks unlikely, as the acceleration of new COVID-19 cases threatens the gradual reopening of the economy," it said. The impaired loan ratios of Indian banks fell during 2019-20 in line with our expectations to 8.5 per cent in 2019-20 from 9.3 per cent in 2018-19, driven by fewer fresh impaired loans and continued write-offs. Several state-owned banks also returned to profitability due to easing credit costs, but the banking sector's return on assets was low. "Fitch expects heightened asset quality and earning pressure for at least the next two years, as disruption to business activity and supply chains, as well as shrinking personal incomes, damage banks' balance sheets," it said. Public sector banks (PSBs) were more vulnerable than private sector banks coming into the crisis, with weaker loss-absorption buffers, and appear to be shouldering a disproportionate share of the burden in bailing out affected sectors, it added. Indian banks are likely to require at least USD 15 billion in fresh capital to meet a 10 per cent weighted-average common equity tier-1 ratio under a moderate stress scenario, Fitch said. The amount would rise to about USD 58 billion in a high-stress situation where the domestic economy fails to recover from the coronavirus pandemic-related disruption. PSBs will require the bulk of the recapitalisation, as the risk of capital erosion at the state-owned banks is significantly higher than their privately-owned peers. "We expect the majority of the injection to come through in FY22, as bad loan recognition has been pushed back by a 180-day regulatory moratorium. However, a clearer picture should start to emerge from December 2020, unless the central bank agrees to a one-time loan restructuring, which would affect the timely recognition and resolution of bad loans," Fitch said. A well-functioning banking sector is supportive of achieving sustained economic growth of 6-7 per cent, but without timely and adequate recapitalisation, banks will continue to display heightened risk aversion, adding to India's economic uncertainty, it added. Fitch expect the economy to contract by 5 per cent in the current financial year, followed by a recovery in 2021-22, but with considerable downside risk to its forecast. JD HRS

Indian banks to face asset quality, earning pressure for at least 2 years: Report

Mumbai, Mar 31 () State-run Indian Bank, which is merging Allahabad Bank with itself from April 1, on Tuesday assured customers of both lenders that they will not face any disruption in services. Harmonisation of products, both on the loan and deposit sides, has been completed and the same products will be offered to all customers, Indian Bank Managing Director and CEO Padmaja Chunduru said. Following the merger, Indian Bank will become the seventh largest public sector lender. The merger is part of the government's mega consolidation plan to amalgamate 10 state-run banks to create four global-sized lenders, beginning next financial year. "Tomorrow is day one and the initial processes are complete. The main thing is about the customer service and there won't be any disruption for customers of both the banks," Chunduru told in an interview. She said all the deposit and loan products, including access to Indian Bank's emergency credit lines launched in the wake of Covid-19, would be made available to the customers of Allahabad Bank. Chunduru said amalgamation consists of integration of products and processes, information technology and human resources. "We have focused all our resources on the important things that matter for day one -- treasury integration has happened and IT integration, to the extent of product harmonization and rolling out of the same products, has happened," she said. She expects the entire IT integration to be completed by December 2020. Integration of HR is an ongoing process and will take another three to four months, she explained. The combined entity will have 6,060 branches, a network of 2,870 ATMs and banking correspondent network of 9,000. She said none of the branches will be closed and about 150 to 200 branches have been identified that would either be merged or shifted in terms of location. "As a combined entity, Indian Bank's balance sheet is much stronger. We can offer higher amount of loans to the corporate segment, and will be able to invest in the required skill sets, whether it is credit management or recovery or risk management, to bring in more differentiated products and more value added services and also on the digital front," she said. Post-merger, the bank will not require capital on an immediate basis, she added. Chunduru further said the merged entity will retain Allahabad Bank's stakes in two firms -- a general insurance firm and an asset reconstruction company. "Indian Bank is going to inherit both the subsidiaries. After tomorrow, we will have a look at the whole thing and then see how to take it forward," she said. Allahabad Bank holds 28.52 per cent in Universal Sompo General Insurance Company. Other investors include Indian Overseas Bank, Karnataka Bank, Dabur Investment and Japanese insurance major Sompo Japan Nipponkoa Insurance Inc. It also holds 27.04 per cent equity stake in asset management company ASREC (India) Ltd, along with other banks/ institutions. There are three other mergers of public sector banks under the government's mega consolidation plan. Punjab National Bank will take over Oriental Bank of Commerce and United Bank of India to form the nation's second-largest lender; Syndicate Bank will merge with Canara Bank; and Andhra Bank and Corporation Bank will get amalgamated into Union Bank of India. Following the consolidation, there will be seven large public sector banks, and five smaller ones. There were as many as 27 state-run banks in 2017 when SBI took over five of its associates and Bharatiya Mahila Bank. In 2019, Vijaya Bank and Dena Bank got merged with Bank of Baroda, making it the third largest state-run bank. HV SHW ABMABM

Customers won't face any disruption post Allahabad Bank merger: Indian Bank

In the <a href="http://www.businessinsider.in/searchresult.cms?query=world+economy">world economy</a>, the importance of the <keyword id="175647" type="UNKNOWN" weightage="100" keywordseo="service-sector">service sector</keyword> cannot be overstated. The share of services in the <keyword id="72243" type="ORGANIZATION" weightage="100" keywordseo="World-economy">world economy</keyword> stands at 66% in 2013. The sector also accounted for 45.1% of the jobs in the world economy in 2013 according to estimates by the <a href="http://www.businessinsider.in/searchresult.cms?query=International+Labour+Organization">International Labour Organization</a> (ILO). Over the years from 2001 to 2013, the percentage share of service sectors’ contribution to <a href="http://www.businessinsider.in/searchresult.cms?query=GDP">GDP</a> has marginally declined from 68.8% in 2001 to 66% in 2013. It comes as a bit of a surprise as the share of employment has increased from 39.1% to 45.1% over the same period. 
 
Similarly, the importance of the service sector can also be gauged from the fact that service sector accounted for 19.8% of the world exports in 2013. It has mildly increased from 19.4% in 2001. Also, the sector is important from the point of view of Foreign Direct Investments, which is the largest source of cross-border flows in the world economy. 
 
An analysis of the service sector of various economies brings and interesting point to the forefront. The stage of the economy as also the per capita income levels determines the contribution to the GDP of an economy. High-income countries have the maximum contribution to the GDP by service sectors in their respective economies. India is a notable exception to the above-mentioned rule as it has roughly 58% contribution to the GDP coming from the service sector of the economy. It is exceptionally high and is even more than China, which is at least ten years ahead of India in the per capita income levels. 
 
The Indian service sector has been the growth driver for the Indian economy for the past 20 years. In 2014-15, 72.4% of the growth came from this sector. At a sub-national level too the service sector is the dominant sector. It has more than 40% share in GDP in all the states and Union territories (UT) barring the northeastern states of Sikkim and Arunachal Pradesh. Among the states and UT's Chandigarh and Delhi are UT's with more than 85% share of GDP coming from the service sector alone. 
 
There are a variety of services that come in the service sector ambit. The range of services is truly phenomenal. Service activities are a diverse bunch with services ranging from the very basic services like those offered by a barber to more complex ones like IT and some financial services. Under the NIC 2008 classification system of the economy, services have been classified into the following five broad areas. These include- (a) Trade, hotels, &amp; restaurants, (b) Transport, storage, &amp; communication (c) Financing, insurance, real estate, &amp; business services (d) Community, social, &amp; personal services and (e) Construction. 
 
Their relative share or contributions to the GDP and their respective growth rates over the years show an interesting trend. Financing, insurance, real estate, &amp; business are the biggest contributor in GDP followed by Trade, hotels, &amp; restaurants. Together they account for roughly 40% of the total gross value addition in the service sector. Exceptional growth is presently being witnessed in the trade and repairs sub-segment. 
 <keyword id="44528" type="ORGANIZATION" weightage="100" keywordseo="FDI">FDI</keyword> in services has been a critical component of the services growth in the past 15 years or so. The share of services in the cumulative FDI Inflows over the period from April 2000- November 2014 is 53.8%. The majority of flows came to the financial and non-financial service sector, followed by construction development. From a period of April 2000- November 2014, these sectors attracted 65 billion US dollars of FDI. These accounted for a little over 27% of cumulative <a href="http://www.businessinsider.in/searchresult.cms?query=FDI">FDI</a> inflows during the same period. 
 
According to economic survey 2014-15, India has shown 'reasonably good performance' in different services like telecom, aviation, tourism, railways, and shipping on various performance parameters. In the telecom sector, India has roughly 91 crore telephone connections. Similarly, aviation services were rendered to 10 crore domestic and international passengers in 2013-14. In the tourism space, India is expected to receive a total of 7.5 million international tourists, which is expected to bring in 19.7 billion USD of foreign exchange earnings. Indian Railways similarly carried 1051 million tonnes of freight traffic in 2013-14. The port traffic of 975 million tonnes 2013-14 shows an increase of 125 million tonnes over the previous year reflecting a deepening shipping sector. The growth in these sub-sectors over the years shows the deepening of the services' sector and the importance it has in the growth and development of the Indian economy. 
 
In the coming years, services will continue to dominate the growth story. Even if the manufacturing sector picks up service sector importance will not diminish. It is because manufacturing has a multiplier effect in the economy with one manufacturing job creating a multiple of service sector jobs. The service sector growth is here to stay. 
 
(The article is co-authored with Sankalp Sharma, Senior Researcher at the Institute for Competitiveness, India. Amit Kapoor is Chair, Institute for Competitiveness &amp; Editor of Thinkers. The views expressed are personal. Amit can be reached at <a href="mailto:amit.kapoor@competitiveness.in">amit.kapoor@competitiveness.in</a> and tweets @kautiliya) 
 
Image credit: Indiatimes

You Searched For "sunshine days for the Indian banking sector" and got 11 results

Crunching Numbers: 12 PSBs end Sept quarter notching up ₹25K+ cr net profit

IANS

Here are the biggest bank frauds that happened in India the previous financial year

Kavita Majumdar

The Indian government wants to merge more public-sector banks

Dilsher Dhillon

Customers must brace for a very long weekend ahead at India's government banks

Katya Naidu

Indian banks well capitalised, no reason to worry: CEA

PTI

Mega-merger of PSU banks to be effective from Wednesday; 6 banks cease to exist

PTI

Mega bank merger marks new dawn for Indian banking space: FinMin

PTI

COVID-19 impact: Moody's changes outlook on Indian banks to negative

PTI

Indian banks to face asset quality, earning pressure for at least 2 years: Report

PTI

Customers won't face any disruption post Allahabad Bank merger: Indian Bank

PTI

#IndependenceDaySpl: Performance of the Service Sector in the Indian Economy

Amit Kapoor

Popular Keywords

Buying Guides