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Mumbai, Feb 1 () Hours after Finance Minister Nirmala Sitharaman announced plans to sell the government's remaining stake in IDBI Bank, its officers' association said any move to change the services conditions of the employees of the LIC-controlled lender will be opposed.
 Despite being a private sector bank, since LIC took the majority stake in January last year, IDBI Bank employees still enjoy service benefits on par with the rest of public sector banks (PSBs).
 Presenting the Union Budget for 2020-21, the minister said the government will be exiting IDBI Bank by selling its stake to retail and institutional investors through a market offering.
 The government currently holds 47.11 per cent stake in IDBI Bank, while LIC owns 51 per cent.
 The news sent the IDBI Bank stock gaining as much as 17.55 per cent to Rs 39.85 in intra-day trade. It closed the day 10.03 per cent higher at Rs 37.30 on the BSE.
 "As long as our service contract conditions are not changed we do not have any issues with the government move. We will seek a written assurance on this," IDBI Bank Officers Association General Secretary Vithal Koteswara Rao told .
 IDBI Bank was set up as a Development Financial Institution in 1964. Later, it was transformed into a Bank in 2004.
 Though the Reserve Bank re-categorised it as a private sector bank, the Department of Financial Services still lists it as a state-owned bank.
 "We want these service contracts to remain unchanged," Rao said.
 The union said it will also request the government to allow them to switch to other nationalised banks.
 In January 2019, LIC was asked to acquire 51 per cent controlling stake in IDBI bank.
 In the September quarter of 2019-20, IDBI Bank, which is under prompt corrective action (PCA) since May 2017, had received Rs 4,743 crore from LIC, and Rs 4,557 crore from the government.
 The bank had reported a net loss of Rs 3,459 crore in the said quarter, marginally better than Rs 3,602 crore in the year-ago period.
 Last month, the bank met the Reserve Bank to seek lifting of the lending restrictions. HV BEN RUJ

IDBI Bank union wants govt assurance on PSB-type job benefits

Mumbai, May 5 () State-owned banks' non-performing loans are likely to rise by 2-4 percentage points, which will put up to USD 15 billion recapitalisation pressure on the government in FY21, a foreign brokerage firm said on Tuesday.The consolidated fiscal deficit target is likely to overrun by 2 percentage points due to stimulus spends, lower tax receipts and dip in divestments, and will have to look for different ways of raising resources for recapitalisation, analysts at Bank of America said.The government can issue recapitalisation bonds, or the RBI's huge reserves of over USD 127 can also be dipped into to help the state-owned bank's recapitalisation needs, it said.There is a near-unanimity among analysts that the ongoing COVID-19 pandemic will lead to an increase in bank's gross non performing assets with some reports pegging the stock to double as well.The brokerage said the increase in non-performing assets by 2-4 percentage points will need a government recapitalisation requirement by USD 7-15 billion.It said the recap bonds is a tried and tested instrument which has helped the banks in the past."The government will infuse capital into PSU banks and fund it by issuing recapitalisation bonds to them. PSU banks will invest the capital received in recapitalisation bonds," Bank of America said.Asserting that such a move does not entail a moral hazard, it elaborated saying PSU banks can heal their broken balance sheets and meet adequate capital requirements through the bonds and once growth recovers, the government can gradually convert these recap bonds into normal G-secs and sell them to the market.The interest cost on the bonds will impact the Center's fiscal deficit, although that will also be partly moderated by profit transfers from PSU banks holding recap bonds, it said.Recapitalisation bonds enter the fiscal deficit in the year of their maturity and it is because of this this that the bonds were issued without any fixed maturity in the past instances, it added.Apart from the bonds, the RBI's revaluation reserves of USD 127 billion can also be deployed, it suggested, adding that such a move will be neutral from a fiscal deficit perspective. AA BALBAL

PSB NPAs likely to rise 2-4 pc points; may push govt to recapitalise via RBI reserves, bonds: Report

<ul><li>At 7:50 am, the SGX Nifty was trading 0.30% lower, pointing towards a cautious start for Nifty50. </li><li>Here’s a list of <keyword id="73648" type="PERSON" weightage="20" keywordseo="Stocks-to-watch">stocks to watch</keyword> for in trade today. </li><li><a href="https://www.businessinsider.in/">Check out the latest news and updates on Business Insider</a>. </li></ul>Indian stock market is likely to open on a tepid note, tracking subdued cues from Asian peers. At 7:50 am, the SGX Nifty was trading 0.30% lower, pointing towards a cautious start for Nifty50. Hong Kong’s Hang Seng Index was also trading 157.91 points lower at the same time. Here’s a list of stocks to watch for in trade on September 21: IRCTC Indian Railway Catering and Tourism Corporation (IRCTC) that operates Indian Railways will run 20 pairs of clone trains from September 21 due to the huge demand for travel on specific routes. Most of these trains <a href="https://www.livemint.com/news/india/railways-to-run-40-clone-trains-from-tomorrow-details-on-routes-stoppages-timings-11600604037741.html">will run between Bihar, West Bengal</a>, Uttar Pradesh, Delhi and Andhra Pradesh. The share price of IRCTC closed 3% higher on September 18. RITES The board of state-owned RITES has approved buyback of shares amounting up to ₹257 crore. In a filing to the stock exchange, the company said that it would buy shares at a price of ₹265 apiece. The share price of RITES closed 1.11% higher on Friday. State Bank of India, Bank of India, Central Bank of India and other public sector banks State Bank of India, Bank of India, Central Bank of India and other public sector banks (PSB) will be in focus during the trade today. According to a reply to an RTI query, the government-owned banks reported frauds worth over ₹19,964 crore during the quarter ended June 30. The share price of SBI, Bank of India and Central Bank of India closed over 2% lower on the last trading day. Punjab National Bank On Friday, state-owned Punjab National Bank said the financial regulator of Kazakhstan had revoked the licence of its subsidiary, JSC Tengri Bank, on account of failure to observe prudential standards and other mandatory norms. PNB holds 41.64% in JSC Tengri Bank. The share price of Punjab National Bank closed 2% lower on September 18. Future Enterprises Kishore Biyani owned Future Enterprises (FEL) told stock-exchanges that it has defaulted on debt repayment towards the commercial paper. FEL said that it is unable to service its obligations in respect of the payment of commercial paper after its maturity and the gross principal amount on which the default has occurred on September14, is ₹90 crore. FEL is responsible for developing, owning, and leasing retail infrastructure for the Future Group. And, this may move other <keyword id="9853524" type="UNKNOWN" weightage="20" keywordseo="future-group-stocks">Future Group stocks</keyword> as well such as — Future Retail, Future Lifestyle Fashions and others. Computer Age Management Services and Chemcon Speciality Chemicals Computer Age Management Services and Chemcon Speciality Chemicals IPO will be open for subscription from today onwards for investors. Route Mobile Route Mobile’s ₹600 crore IPO will debut on bourses today. The grey market is pointing towards a bumper listing with a premium of up to 60% over the issue price.

Top stocks to watch— Future Group, IRCTC, RITES, SBI, Bank of India, PNB and more

The <a href="http://www.businessinsider.in/searchresult.cms?query=banking+sector+in+India&amp;sortorder=effectivedate">banking sector</a> hit a new low after India’s third state-run bank, <a href="http://www.businessinsider.in/searchresult.cms?query=punjab+national+bank&amp;sortorder=effectivedate">Punjab National Bank</a> (PSB), posted biggest net loss in India's banking history at Rs 5,367 crore. 
 
Not only PSB, <a href="http://www.businessinsider.in/searchresult.cms?query=bank+of+baroda&amp;sortorder=effectivedate">Bank of Baroda</a> too posted a quarterly loss of Rs 3,230 crore, while <keyword id="6368628" type="CITY" weightage="20" keywordseo="Syndicate-Bank">Syndicate Bank</keyword> reported losses of Rs 2,158 crore. 
 
Now, total losses of nine out of 18 state-run banks that have posted their March earnings till May 17 stand at Rs 14,808 crore. 
 
"For PSU banks, the private banks, NBFCs are taking their market share away so I am not sure what value they have or what value I should given them anymore. They are just really like 'zombie banks'," Andrew Holland, CEO, Ambit Investment Advisors, told ET. 
 "I think this will to continue to be a problem because there are too many problems within the <keyword id="34507" type="UNKNOWN" weightage="20" keywordseo="banking-sector">banking sector</keyword> which are not going away," he cautioned. 
 
The <a href="http://www.businessinsider.in/searchresult.cms?query=PSU&amp;sortorder=effectivedate">PSU</a> banking sector has been the biggest drag on the market so far this month with the Nifty PSU Bank index slumping 6 per cent in the past five days. 
 
Meanwhile, State Bank of India’s result is yet to be declared.

9 Indian banks have reported cumulative net loss of Rs 14,000 crore

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

Chartered Accountant and Editor of Tamil political magazine 'Thuglak' S. Gurumurthy said he was pressurised to take up the board position in the <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (<keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword>). Gurumurthy told this in an email to the All India Bank Employees Association (AIBEA) General Secretary C.H. <keyword id="215998" type="General" weightage="50" keywordseo="venkatachalam" source="Orion">Venkatachalam</keyword> and also dared the latter to share the mail with the <keyword id="6357801" type="General" weightage="50" keywordseo="union" source="Orion">Union</keyword> members. As a post script in his email, Gurumurthy told Venkatachalam: "You all think that me being in the <keyword id="370514" type="General" weightage="80" keywordseo="rbi-board" source="Orion">RBI Board</keyword> is a big thing. I was pressurised to take up that position as there were not many to put a counter view in the RBI Board." "I did not need it nor did I seek it. For decades I had never taken any position in or from the government. Nor will I ever." "Me, in the RBI Board, was criticised by the Financial media in the West, and I am happy you a communist share their views now," Gurumurthy added. Continuing further. Gurumurthy said he had never allowed anyone in any public fora to state that he is on the RBI Board in the introductory remarks. "You have expressed grave concern about me being on the RBI Board. You may not know that if I am not on the RBI Board it makes very little difference to me," Gurumurthy said. Gurumurthy wrote to Venkatachalam in response to the latter's message in social media condemning him for his comments at Thuglak magazine's annual function about the public sector bankers. Speaking at the Thuglak magazine's annual function, Gurumurthy had said the public sector banks are losing talented officials to the private sector owing to poor pay and lack of freedom. "Only scums and filth are remaining with public sector banks and with them, the country has to compete globally in the financial sector," he had said. Gurumurthy also said that till the government has majority stakes in its banks, it is not possible to encourage talented staff. Reacting to that Venkatachalam said: "We strongly condemn his uncalled for comments and demand his immediate apology. He is unfit to be on the Board of RBI and the government should remove him from this important post." Gurumurthy in his email to Venkatachalam said: "I would not have written if I had not known you and you had not invited me for the AIBEA workshop. Your post has started a campaign against me." Stating that many campaigns were made against him earlier Gurumurthy said: "I have never bothered about the campaigns against me by any, as I don't belong to any party, nor seek or need anyone's courtesy, by the grace of the Divine I believe in. So this is not to answer any campaign." "I have always opposed and will continue to oppose privatisation as I believe with all faults majority bank assets in India have to be in state hands. The Indian economy will be ruined if the major part of the financial sector falls into private hands with the expansion and contraction of the <keyword id="6355302" type="General" weightage="50" keywordseo="rupee" source="Orion">Rupee</keyword> dependent on the Dollar," Gurumurthy said. "I resisted within RBI all efforts to pressure the government to privatise when the previous RBI governors were in command," he added. As regards his speech at the Thuglak magazine's function Gurumurthy said the UPA government's policies of letting huge FII investments into the stock market led to indigestible money in the system. To lend that money the government brought down the customs tariffs to zero for capital goods to attract the industrialists to borrow from banks. Gurumurthy said the government persuaded the industry to go for huge expansions in the hope that India would turn into a high growth export driven economy. According to Gurumurthy, the huge recession that followed 2008-09 made the investments of several lakhs of crore junk and the monies lent, NPA (non performing asset) and which was also later accepted by former Governor of RBI Raghuram Rajan. "That is where the woes of the PSBs (public sector bank) started. Not a single political party, including the BJP and CPI-M or the bank unions spoke the truth about the source of the NPA trouble. The guilty finance ministry officials who ran telbanking were mixed up with both the UPA and NDA governments, to suppress the truth," Gurumurthy said. Continuing further he said, the NPA issue, action against it by the Central Bureau of Investigation (CBI), Central Vigilance Commission (CVC), the prudential norms completely shook the bank officers. "This gave a huge opportunity to the private banks and funds which had a heyday because the best loan accounts shifted to them. They began giving high salaries and attracting capable PSB officers," Gurumurthy said. As a result, several capable officials left the PSBs and he had termed the remaining officials as 'kazhisadai' meaning leftovers or those who could not pass through the filter, remained inside. "It is a fact and I stand by it," Gurumurthy said. Referring to the decline in share of PSB loans in the total banking sector loans Gurumurthy said: "At this rate the PSBs need not be privatised. They will get so marginalised that they will handle only the government and municipal accounts and all corporate accounts will be taken over by private banks. That we are not having and not generating and training the needed talent in the PSBs to handle 60 per cent of national savings that gets into the PSB is indisputable. It is a matter of concern for all -- government included," he said. "If you are a responsible trade unionist you will be concerned, talk about this and not play petty politics. I wrote this because you had invited me to talk to AIBEA and you know our views converge on PSBs in many ways," Gurumurthy told Venkatachalam and also asked whether he has the guts to circulate his mail to AIBEA members. "I will not make this public unless you do it. If you do it, have the courage to publish it in full," Gurumurthy said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/politics/india/news/rising-dengue-cases-in-uttar-pradesh-put-health-officials-on-high-alert/articleshow/91611067.cms">Rising dengue cases in Uttar Pradesh put health officials on high alert</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/international/news/four-in-ten-american-users-thought-that-facebook-should-have-blocked-trump-sooner-reveal-leaked-internal-documents/articleshow/91610652.cms">Four in ten American users thought that Facebook should have blocked Trump sooner, reveal leaked internal documents</a>

Tamil magazine editor S. Gurumurthy 'pressurised' to take up RBI Board position

India's progress toward a $5 trillion economy will be fuelled by the small and medium businesses – the engines of innovation that lie at the crux of our economy. And to acknowledge these powerhouses, at Business Insider India, we are setting the stage for industry leaders and budding entrepreneurs to interact and share their learnings. Day 2 of the event includes a number of panel discussions, fireside chats, workshops, masterclasses, and keynotes. From two engaging fireside chats to panel discussions on tackling MSMEs challenges on finance and technology – let's quickly get to what to expect from day 2. We shine the spotlight on the Indian economy and how <keyword id="6358354" type="General" weightage="20" keywordseo="msme" source="Orion">MSME</keyword>s have served as its skeleton. The Federation of India Micro and Small and Medium Enterprises' Secretary-General, Anil Bhardwaj, will deliver the keynote address – emphasising on the need to improve exports and public procurement to assist the MSME industry. There is evidence that over the past several years, India has experienced an increase in the number of SMEs listed. Ajay Thakur, Bombay Stock Exchange's Head of SME and Startup will provide additional light on what needs to be done in order to alter entrepreneurs' perspectives and why it is important to list small businesses to uncover value and scale higher. [Register here: <a href="https://www.businessinsider.in/msme-exchange-2023">https://www.businessinsider.in/msme-exchange-2023</a>] India is known to be the third-largest ecosystem for startups, but access to funds at the appropriate time remains one of the many difficulties the sector has encountered. You don’t want to miss a deep, insightful fireside chat with Rajnish Kumar, if you have the question, "How can small businesses harness the correct financial instruments and make the most of their finances?" As the former chairman of SBI and chairman of BharatPe, he brings with him more than 40 years of expertise and knowledge. We will also get candid with T Koshy, CEO of ONDC, to obtain a better understanding of how ONDC can be the major game-changer for MSMEs. By linking you with more network partners who will complete your e-commerce solution, ONDC gives you the chance to expand your business through online sales. It is hailed as the next big technological revolution that will enable <keyword id="6359222" type="General" weightage="20" keywordseo="small-business" source="Orion">small business</keyword> owners to define their mission statement. Hear from the man leading this revolution on their mission statement. And this is just part of the action, there's more to come! You do not want to miss the fascinating panel discussion that starts at 6:00 p.m. Top industry experts including Kishor Kharat, Former MD &amp; CEO of Indian Bank and IDBI, Vipul Sharma, Founder and CEO, of Chqbook, and Jinand Shah, MD &amp; CEO of Online PSB Loans discuss innovative finance solutions for small businesses. Since we've just talked about money, it's time to discuss technology, another critical need for MSMEs. And the <keyword id="4106334" type="General" weightage="20" keywordseo="msme-exchange" source="Orion">MSME Exchange</keyword> 2023 has you covered there as well. Do you have queries very much like "Can MSMEs transform and expand more? ", or "Is digital transformation the solution to issues encountered by small businesses? Our panellists, Ketan Gaikwad, MD and CEO of RXIL, Sundeep Mohindru, Founder &amp; Director of M1xchange, and Avinash Godkhindi, MD and CEO of Zaggle, will share their knowledge on how technology is empowering MSMEs. The discussion will start at 6:30 p.m. and will be moderated by NASSCOM Vice President and Head of Membership Srikanth Srinivasan. Finance and technology may be the building elements of a firm, but what keeps it operating long-term is a strong foundation built on sustainability. In his final remarks, Sudarshan Chari, Executive Director and Head of Business Banking at DBS Bank India, will discuss how sustainability is a key tenet for startup companies. The big finale will feature a master class on growing your brand in India from micro to small to big from Spring Marketing Capital's founder and creative partner, Arun Iyer! Small businesses must adapt to the changing times and position themselves well for a digital-first era. You will learn about the foundational elements of marketing and how to create memorable client experiences with this masterclass. If you don’t want to miss out on any of this action, register now on this link: <a href="https://www.businessinsider.in/msme-exchange-2023">https://www.businessinsider.in/msme-exchange-2023</a>

MSME Exchange 2023 goes live on Jan 18: Get insights from leading voices that matter

New Delhi, Jan 31 () Flagging "disproportionate dwarfism" of Indian banks as compared to the size of the economy, the Economic Survey on Friday called upon public sector banks to become efficient and support economic growth rather than "pullback lending", for India to achieve the goal of becoming a USD 5 trillion economy.
 The Economic Survey 2019-20 tabled in Parliament by Finance Minister Nirmala Sitharaman noted that despite nationalisation a significant portion of the poor remained unbanked till 2014.
 The survey also cautioned that "inefficient PSBs can severely handicap the country's ability to exploit the unique opportunities" it can utilise today.
 It suggested use of FinTech (financial technology) across all banking functions and employee stock ownership across all levels to enhance efficiencies in public sector banks, observing that with the cleaning up of the banking system and the necessary legal framework such as the Insolvency and Bankruptcy Code, the banking system must focus on scaling up efficiently to support the economy.
 The survey said bank employees should be given stakes through an employee stock ownership plan (ESOP) together with proportionate representation on boards proportionate to the blocks held by employees to incentivise them and align their interests with those of all shareholders.
 It also recommended that a GSTN type of entity should be set up to enable the use of big data, artificial intelligence and machine learning in credit decisions, especially those pertaining to large borrowers.
 The survey also called on PSBN (PSB Network) to use technology to screen and monitor borrowers comprehensively and at length.
 "As government is the owner of all the PSBs, government has the right to use the data that PSBs generate during their business. Therefore, the government as the promoter must set up this entity that will aggregate data from all PSBs to enable decision making using big data techniques," said the survey.
 Apart from utilising data from all PSBs, which would provide a significant information advantage, PSBN would utilise other government sources and service providers to develop AI-ML ratings models for corporate.
 The high operating costs of each PSB would decrease by helping them automate the end-to-end process of lending. PSBs would be able to make quicker decisions, process loan applications faster, and reduce turn-around-times, said the survey.
 The survey also said that if Indian banks were proportionately large in relation to the size of the Indian economy, India should have at least six banks in the global top 100 than just the current largest PSB State Bank of India, which is the 55th largest bank globally.
 Pointing out that in 2019, India completed the 50th anniversary of the bank nationalisation programme undertaken in 1969, the survey made a special mention of the accomplishments of the 389,956 officers, 295,380 clerks, and 121,647 sub-staff who work in public sector banks and said the time was apt to celebrate them.
 Observing that both rural bank deposit mobilisation and rural credit increased significantly after the 1969 nationalization, the survey however, said some caution is necessary in interpreting the above trends as being entirely caused by nationalisation.
 Quoting studies, it said the differential impact on poverty seen during 1977-1991 cannot be attributed to nationalisation.
 Besides the non performing assets (NPAs) leading to losses, frauds are another source of concern in PSBs, said the survey, highlighting the urgent need for a thriving banking sector and a vibrant banking system which can support and unleash a multiplier effect and permanently alter India's growth trajectory in a positive way.
 "A large economy needs an efficient banking sector to support its growth. As PSBs account for 70 per cent of the market share in Indian banking, the onus of supporting the Indian economy and fostering its economic development falls on them. Yet, on every performance parameter, public sector banks (PSBs) are inefficient compared to their peer groups," said the survey.
 The survey highlights that there is a "disproportionate dwarfism of the Indian banks when compared to the size of the Indian economy. A fit of the number of banks in the global top 100 and the size of the economy shows clearly that India is a significant outlier on the negative side. All the largest economies have proportionately large banks."
 It noted that majority ownership of the government and its writ on bank functioning also results in an implicit promise of the bailout of bank liabilities which is an implicit cost to the taxpayer.
 "The majority ownership by the government also subjects PSB officers to scrutiny of their decisions by the central vigilance commission and the comptroller auditor general. With no real restrictions on what can be investigated and under what circumstances, officers of state-run banks are wary of taking risks in lending or in renegotiating bad debt, due to fears of harassment under the veil of vigilance investigations," the survey said. RSN MKJ

Eco Survey flags 'disproportionate dwarfism' of Indian banks, calls upon PSBs to become efficient

<ul><li>The GDP growth rate for the first quarter of the 2019-20 came lower than expectations, at a mere 5%.</li><li>However, online searches for ‘<keyword id="121430" type="PERSON" weightage="20" keywordseo="recession-in-india">recession in India</keyword>’ had spiked many times over in the last couple of months.</li><li>Afraid of a severe slowdown, Indian consumers had cut back expenses, even on items of daily use, setting in motion a vicious cycle of slowdown in manufacturing, investments, and unemployment.</li><li>Economists hope the recent stimulus from both the government and the RBI, as well as good rains, will help in reviving both the economy and the sentiment.</li></ul> India’s growth in gross domestic product (GDP) between April and June 2019 was a mere 5%, the worst in over six years and way below estimates. The data was released on Friday (August 30) but people in India had already been fearing a recession much before the government admitted to a sharp slowdown. Google Trends show that online searches for ‘recession in India’ spiked in the last couple of months, many times over, showing that people had already started to feel the pinch. 
	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 The very first day of trading after the Finance Minister Nirmala Sitharaman announced the mega merger of ten public sector banks (PSB) into four, the stock markets went tumbling down on Tuesday September 3. Sensex shed 600 points whereas Nifty lost over 180 points. This fall was led by PSB stocks and most of their stocks were down by over 5%. This is one of the many measures taken to revive the economy. The economic wheel was brought to a grinding halt by demonetisation in November 2016, and the recovery was delayed by the disruptions caused by the introduction of Goods and Services Tax (GST) in mid-2017. As tax revenue fell, the Narendra Modi government <a href="https://www.indiatoday.in/business/story/bonds-indian-economy-government-spending-1580704-2019-08-14">reduced spending</a> to keep the fiscal deficit under check. Private investments had already <a href="https://www.thehindu.com/business/performance-of-corporate-firms-declines/article29231755.ece">gone into a shell</a>, and as the Modi government tightened its purse strings in the last year of its first term, economic activity spiraled down. 
 
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 The report authored by Soumya Kanti Ghosh is pushing for more aggressive interest rate cuts by the RBI. “We believe it is incorrect for central bankers to suggest that they have this challenge under control - or that with their current toolkit they will be able to get it under control,” said SBI Ecowrap. This deep slowdown is a culmination of many areas, in addition to decline in consumer sentiment right from slowing auto sales to reduced air traffic growth to cut backs on items of daily use. Before taking a look ahead, let’s look at the three main areas where growth is slowing down. Consumption hits a standstill with job losses Weary Indians are cutting down on expenses like no other, and that has affected the economy. As many as 350,000 jobs were cut in the formal sector of automobiles. This massive number does not count in <a href="https://www.businessinsider.in/a-third-of-indias-textile-workers-30-million-lost-their-jobs-and-more-could-go/articleshow/70781257.cms">textiles, diamond workers and </a>others. Combined with the informal sector job loss, the consumption loss would translate to around ₹15,000 crore. The growth in consumption expenditure slumped to 3.1% in the three months ending June 2019-- the weakest in five years. More than half of India lives outside the cities, and the broad-based consumption slowdown reflects the deep distress in the rural parts. “Agriculture, forestry and fishing output grew by 2% improving slightly from de-growth (contraction) of 0.1%,” said a report by Edelweiss. Manufacturing shutters down With low consumption and almost no demand growth in sight, the quarter’s manufacturing growth was as low as 0.6%. This is in spite of high growth in electricity and utility expansion. Investment lowers with less to spend Indian companies are seeing less reasons to keep their plants running, there is much less to invest either. As a result, investments growth has slipped to just 3.7%. Companies are choosing to park their money in financial assets rather than betting on a slowing economy. “With low wage growth rate, household savings are also particularly down. Thus, households are not closing the savings-investments gap and this is bringing down overall investments,” said Edelweiss. Simply put, people are choosing to hold on to cash rather than invest anywhere <a href="https://www.businessinsider.in/gold-prices-on-a-rally-set-to-test-new-highs-of-1450-per-ounce/articleshow/69970217.cms">other than gold</a>. Will the Indian economy weaken further or enter a recession? An economy is defined to be in a recession if growth contracts for two straight quarters. That isn’t the case with India. However, many sectors within the Indian industry like automobiles and textiles-- two of the largest providers of jobs-- are already in recession. So there are reasons to worry but may be not for panic. The chickens have come home to roost. But the government has woken up to the emergency and is <a href="https://www.businessinsider.in/nirmala-sitharam-address-on-india-economic-stimulus-live-updates-and-highlights/articleshow/70804926.cms">shoring up money</a> to battle the slowdown. “Based on fiscal deficit numbers, in Pradhan Mantri Kisan Yojana (PMKY), the government will save ₹30,000 crore. If we add <a href="https://www.businessinsider.in/sensex-today-jumps-150-points-after-rbi-move-to-transfer-surplus/articleshow/70852202.cms">RBI surplus transfer</a>, the Government further would have adequate cushion for make up for revenue loss,” said a report by SBI Ecowrap. The more money the government spends in stimulating demand and investments in the economy either through sops for consumers or incentives for industries, the sooner the economy will revive. Aside from giving the government a part of its reserves, the RBI has already cut interest rates four times this year hoping to bring down lending rates, and Edelweiss believes that India’s GDP growth will start improving hereon as the effect of RBI’s measures start to trickle in. The rains will also have a role to play. “This number is likely to improve further the next quarter as a South-west monsoon season has been normal for this year,” the Edelweiss report said. Just like the pain of demonetisation and GST have lingered on for over two years, the government’s recent measures to boost economic growth may show effect with a lag.

Indians were fearing recession even before data showed that GDP growth hit a six-year low

New Delhi, Jan 5 () The government is unlikely to announce capital infusion for the public sector banks (PSBs) in the upcoming Budget and will rather encourage them to expedite recovery of bad loans and raise funds from the market.
Besides, sources said, banks may also look for divesting or selling their non-core business as part of fund raising exercise during 2020-21.
Finance Minister Nirmala Sitharaman is expected to present the second budget of the Modi 2.0 government on February 1.
According to sources, banks have robust pipeline of recovery from the resolution of both NCLT and non-NCLT cases during this calender year and also headroom for raising capital from the market.
 The provision coverage ratio of public sector banks is at a 7-year high of 76.6 per cent.
 In some of the non-performing assets, banks have done provisions up to 100 per cent, sources said, adding that recovery from those account will straightaway form part of the bottomline. 
 Share price of some of the banks are firming up which provide them opportunity to dilute government holding, sources said.
 Country's largest lender State Bank of India (SBI) has already initiated the process of diluting its stake in its subsidiaries SBI Cards and Payment Services Ltd and UTI Mutual Fund.
 It is looking to sell 50 lakh shares representing 1.01 per cent stake in the National Stock Exchange (NSE).
Similar exercise is being undertaken by other state-owned lenders as well in an effort to raise capital. 
In addition, the government has already front loaded Rs 68,855 crore, out of Rs 70,000 crore earmarked for capital infusion for the current fiscal, to take care of the mega-merger plan announced in August, 2019.
Among all four anchor banks -- Punjab National Bank was given Rs 16,091 crore, Union Bank of India Rs 11,768 crore, Canara Bank Rs 6,571 crore and Indian Bank Rs 2,534 crore.
 Merging entities like Allahabad Bank was provided Rs 2,153 crore, United Bank of India 1,666 crore and Andhra Bank Rs 200 crore.
 Besides, Bank of Baroda got a capital infusion of Rs 7,000 crore, Indian Overseas Bank Rs 4,360 crore, UCO Bank Rs 2142 crore, Punjab &amp; Sind Bank 787 crore and Central Bank of India Rs 3,353 crore.
 LIC-controlled IDBI Bank too received additional capital of Rs 4,557 crore through the first supplementary demands for grants approved by Parliament last month.
 With the deadline of March 31 to complete other regulatory requirements, the merged entity will come into existence beginning next fiscal.
 Alternative Mechanism of Government of India gave in principle approval for merger of United Bank of India and Oriental Bank of Commerce with Punjab National Bank, making the proposed entity the second largest public sector bank (PSB).
Syndicate Bank will be merged with Canara Bank, while Allahabad Bank will be amalgamated with Indian Bank.
Similarly, Andhra Bank and Corporation Bank will be consolidated with Union Bank of India. 
 The government remains committed to maintain financial health of public sector banks and it will provide capital in case if the need arises in the future, sources added. DP CS MKJ

Govt unlikely to announce capital infusion for PSU banks in Budget

<div class="KonaFilter image-container display-table"><div><div class="image"></div></div></div>On Sunday Brazilians will take to the polls for the first round of their Presidential elections. At this point the outcome is basically a foregone conclusion, but this fact is giving few people - citizens, investors, observers - any comfort.
These are incredibly unhappy elections, taking place in the midst of a tragic three year economic reversal during which the country's stock market plunged 22%, <a href="http://www.bloomberg.com/news/2014-10-03/brazil-magic-lost-by-rousseff-as-300-billion-evaporates.html">according to Bloomberg.</a>
Inflation is high, corporate profit margins are thin, and massive Brazilian companies like steelmaker Vale and and quasi-state oil and gas company Petrobras are suffering from a wide range of ailments from mismanagement and corruption to weak demand from China.
In other words, whoever wins this contest will have a hard road ahead.
There are three candidates in Sunday's Presidential contest, but only truly two contenders. Aecio Neves, of the Social Democratic Party, is sure to lose. That means incumbent Dilma Rousseff, of the Workers Party (PT), and Marina Silva of the Brazilian Socialist Party (PSB), will square off on October 25th.
Silva was not meant to be a Presidential candidate. An environmentalist who grew up in extreme poverty, she was initially running along side candidate Eduardo Campos, who <a href="http://www.businessinsider.com/report-plane-carrying-brazil-presidential-candidate-eduardo-campo-crashed-2014-8">died in a tragic plane crash</a> in August. For a while Campos' passing sparked interest in Silva. She started pulling ahead in election polls, and it seemed like investors who were betting that a fresh political face would mean an economic turn around for the country - like hedge fund billionaire Michael Novogratz of Fortress Investment Group - seemed to be getting what they wished for.
But then it all stopped. In September Rousseff started inching ahead of Silva and now has a 7 point lead <a href="http://en.mercopress.com/2014/10/03/latest-poll-shows-dilma-winning-the-run-off-with-seven-point-margin?utm_source=twitter&amp;utm_medium=social&amp;utm_content=main&amp;utm_campaign=twitter">according to the most recent poll data. </a> 
As all this happened, Brazil's stock market the Bovespa, started to protest. It fell 14%.
<div class="KonaFilter image-container display-table"><div><div class="image"></div></div></div>
As Silva began to lose in the polls, Wall Street started to question the entire recovery narrative. Cantor Fitzgerald called it a <a href="http://www.businessinsider.com/brazils-sells-off-on-rousseff-poll-lead-2014-9#ixzz3F6yc0Dfvhttp://www.businessinsider.com/brazils-sells-off-on-rousseff-poll-lead-2014-9#ixzz3F6yc0Dfv">"farce" in a recent note.</a>
In part, they reasoned, because change was not really change.
"It does not take much sense of history to appreciate the irony that Ms. Silva is running a reform campaign against a leftist Workers Party candidate, who herself came in under a reform agenda president (Lula). Moreover, Ms. Silva was herself a Workers Party minister from 2003 to 2008 under Lula."
What's more, others argued, Silva's platform may be too ambitious for a country suffering from a recession. On the one hand she wants to maintain the expensive adn expansive social programs that have pulled Brazilians out of poverty and kept unemployment low.
On the other hand Silva also wants to implement reform, tightening monetary policy to stem inflation and simplifying the country's tax code.
"Reforms were stymied when growth was buoyant," wrote analysts from London-based Spiro Sovereign Strategy in a recent note. "They will prove doubly difficult to implement when the economy is contracting, the US Federal Reserve is preparing to raise interest rates and China's economy is slowing markedly."
Not a lot of good news here.

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