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☕🍔 *21.01.2025* - *Today's Banking / Financial News at a Glance* 🙏
🍒 Central Bank of India Q3FY25 net profit up 34% at ₹959 crore : Central Bank of India (CBoI) clocked a 34 per cent year-on-year (y-o-y) increase in third quarter standalone net profit at ₹959 crore against ₹718 crore in the year ago quarter, supported by growth in net interest income and sharp decline in bad loan provisions. The public sector bank’s net interest income (difference between interest earned and interest expended) in the reporting quarter rose about 12 per cent y-o-y at ₹3,540 crore (₹3,152 crore in the year-ago period). Other income, including fee-based income, treasury income and recovery in written-off account, declined about 8 per cent y-o-y to ₹1,229 crore (₹1,330 crore). Overall provisions declined 17 per cent y-o-y to ₹1,004 crore (₹1,213 crore). Within this, provisions for bad loans saw a sharp 57 per cent decline to ₹310 crore (₹714 crore). - Business Line.
🍒 IOB reports robust Q3 performance with higher profits & improved asset quality : Indian Overseas Bank (IOB) has reported consistent performance for the December 2024 quarter, demonstrating a double-digit increase in net profit and net interest income, lower slippages, and reduced gross and net non-performing assets (NPAs). Also, the Chennai-headquartered public sector lender has reduced its cost of deposits while improving its yield on advances during the period. Ajay Kumar Srivastava, IOB’s Managing Director and CEO, announced that the bank has initiated the process for a Qualified Institutional Placement (QIP) to raise about ₹2,000 crore. Following the QIP, the government’s stake in the bank is expected to decrease by 2-2.5 per cent from the current level of over 96 plus per cent. - Business Line.
🍒 KVB reports 20% rise in Q3 net profit at ₹496 crore : Karur Vysya Bank has reported a 20 percent rise in net profit at ₹496 crore for the third quarter of this fiscal, compared to ₹412 crore in the same period last year. The growth was driven by higher interest income and non-interest income. Net interest income increased by 7.79 per cent to ₹1,079 crore compared to ₹1,001 crore in the corresponding quarter last year. Net interest margin stood at 4.03 per cent, down from 4.32 per cent in the same quarter last year. The cost of deposits rose by 41 basis points to 5.66 per cent compared to 5.25 per cent in the previous year. The yield on advances remained unchanged at 10.16 per cent. - Business Line.
🍒 IDBI Bank reports 31 per cent increase in Q3FY25 standalone net profit at ₹1,908 cr : IDBI Bank reported a 31 per cent increase in third quarter standalone net profit at ₹1,908 crore against ₹1,458 crore in the year ago quarter on the back of healthy growth in net interest income and decline in overall provisions. Net interest income (difference between interest earned and interest expended) in the reporting quarter was up about 23 per cent year-on-year (y-o-y) at ₹4,228 crore (₹3,435 crore in the year ago period). Other income, including fee-based income, treasury income and recovery in written-off account, declined 23 per cent y-o-y to ₹749 crore (₹973 crore). Overall provisions declined 48 per cent y-o-y to ₹166 crore (₹320 crore). Within this, provisions for depreciation on investment and bad debts written-off were sharply lower at ₹44 crore (₹295 crore) and ₹126 crore (₹429 crore), respectively. - Business Line.
🍒 RBI eases settlement norms for ARCs, resolutions could quicken : The Reserve Bank of India (RBI) has allowed asset reconstruction companies (ARCs) to settle dues with borrowers after examining all possible ways to recover their dues, doing away with the earlier direction that needed ARCs to exhaust all measures for recovery before entering into a settlement with borrowers. In updated settlement guidelines, ARCs have been asked to frame a board-approved policy for settlement of dues by borrowers which should cover cut-off date for one-time settlement eligibility, permissible sacrifice for various categories of exposures while arriving at the settlement amount and methodology for arriving at the realisable value of the security. - economic times.
🍒 At ₹3.39 lakh crore, Mudra loans’ disbursal reaches all-time high in Q3FY 25 : The disbursal of small business loans under Pradhan Mantri Mudra Yojana (PMMY) reached an all-time high at ₹3.39 lakh crore in the third quarter of the current financial year that ended December 2024. “The performance of Mudra loans in the third quarter of FY surpassed its own record performance registered in the corresponding quarter of previous financial year,’‘ a senior Mudra official told businessline. In the third quarter of last fiscal, disbursal of Mudra loans increased 16 per cent and reached ₹3 lakh crore mark, as per official data. A substantial part of growth came in the third quarter, the official said adding that in the first half of FY25, PMMY loans had actually showed a dip for the first time after Covid-19 at ₹1,86,284 crore as of September 24, compared to ₹1,91,863 crore in the same period last year.- Business Line.
🍒 Airtel, Bajaj Finance partner to offer financial services : Bharti Airtel (Airtel) on Monday said that it has partnered with Bajaj Finance, the country’s largest private-sector Non-Banking Financial Company (NBFC), to create one of India’s largest digital platforms for financial services and transform last mile delivery. The one-of-a-kind partnership brings together Airtel’s highly engaged customer base of 375 million, 12 lakh+ strong distribution network, and Bajaj Finance’s diversified suite of 27 product lines, and distribution heft of 5,000+ branches and 70,000 field agents, the company said.- Business Line.
🍒 India's growing middle class to drive insurance industry's growth in FY24, says Moody's : ndia’s insurance industry is poised for sustained growth in financial year 2024-25, driven by the country’s robust economic expansion and increasing demand for health insurance, according to a new report by credit ratings agency Moody’s. The report says that insurers in India are expected to benefit from a rise in premiums, fuelled by higher incomes, greater risk awareness, and anticipated price increases resulting from government reforms in the state-owned insurance sector. Moody's forecasts that India's economy will grow at 7% in FY 2024, down slightly from 8.2% the previous year, with GDP per capita rising 11% year-on-year to $10,233 in FY 2023. - economic times.
🍒 Settlement with borrowers only after exhausting all options: RBI to Asset Reconstruction Companies : The Reserve Bank on Monday asked Asset Reconstruction Companies (ARCs) to go for settlement with borrowers only after exhausting all possible ways to recover dues. The central bank has revised the 'Master Direction - Reserve Bank of India (Asset Reconstruction Companies) Directions, 2024 dated April 24, 2024'. Every ARC should frame a board-approved policy for the settlement of dues payable by the borrowers. The policy should, inter alia, cover aspects like a cut-off date for one-time settlement eligibility, permissible sacrifice for various categories of exposures while arriving at the settlement amount and the methodology for arriving at the realisable value of the security, said the revised guidelines on settlement of dues of borrowers by ARCs.- economic times.
🍒 Rising funding costs may hit NBFC margins : Liquidity pressures and high cost of funds are likely to pressure margins of non banking finance companies (NBFCs) during the third quarter ended December 2024. Micro finance companies and NBFCs having a high percentage of unsecured loans may also be impacted due to payment delays by borrowers during the quarter, analysts said. Shweta Daptardar, analyst at Elara Securities said she expects NBFC net interest margins (NIMs) to drop 13 basis points year on year. One basis point is 0.01 percentage point. "There is an increased focus on liability diversification amid rising costs. The third quarter is expected to pressurise NIM, and credit costs are likely to see a spike. Companies are bolstering provisions and operational efficiency to sustain profitability, though a dip in return on assets is expected this quarter," Daptardar said. - economic times.
🍒 Digital Edge DC in talks to raise ₹2,400 cr for Mumbai project : Domestic and foreign lenders are in stiff competition with each other to provide ₹2,400-crore debt to Digital Edge DC, a National Investment and Infrastructure Fund (NIIF)-backed entity to fund part of its data centre project in Navi Mumbai, indicating higher preference among lenders to fund secured assets. The discussions are at a primary stage and a decision will be made by the end of this month, according to people familiar with the matter. Among domestic lenders, State Bank of India (SBI), Axis Bank, Yes Bank and government-backed National Bank for Financing Infrastructure and Development have given separate offers to charge all costs of around 9.2% for a term of 15 years. Foreign lenders, including DBS, MUFG, SMBC and Credit Agricole, have collectively offered a tad higher all-in cost of 9.9% for seven years. - economic times.
🍒 New "cooling-off facility" could soon mitigate mule menace as govt, RBI seek to stay a step ahead of fraudsters : In an ongoing effort to combat online fraud, the government and the Reserve Bank of India (RBI) are exploring the option of implementing a "cooling off facility" designed to temporarily block funds deposited into bank accounts, ToI reported on January 20. This initiative aims to curb the routing of funds through multiple mule accounts, which are notoriously difficult to trace and recover. Such a facility already exists in certain countries, and Indian authorities are assessing the potential effectiveness of freezing fund transfers while ensuring that customers do not face undue inconvenience, the report (Sidhartha and Mayur Shetty) said. - economic times.
🍒 The segment where most of the personal loan defaults are occurring : Recent data from the September quarter of FY25 indicates that small-ticket personal loans, specifically those under Rs 10,000, are experiencing higher delinquency rates compared to larger loan amounts, ToI reported on January 20. The peak of these defaults was observed among borrowers who secured loans between December 2023 and June 2024, the report said. This segment of fresh loan originations has been primarily dominated by non-banking financial companies (NBFCs), which have extended credit to new borrowers outside the top 100 cities. - economic times.
🍒 Reserves adequate to absorb depreciation impact and RBI dollar sales : While the rupee has depreciated at a modest pace compared to many of India’s trading partners, the armoury of forex reserves is a lot more comfortable than 2013. There is still more room for the value of the rupee to ease further. RBI's reserves adequacy ratio - an average of IMF measures under four forex regimes, now stands at 236 percent, down from 266 percent in September 2024 when the foreign exchange reserves had peaked to $705 billion. But it is still significantly higher than 176 percent seen during the taper Tantrum in August 2013, shows a study by Nomura. - economic times.
🍒 Former RBI deputy guv Jain to chair panel to evaluate bank licence applications : The Reserve Bank of India has announced the composition of a new external committee under former deputy governor MK Jain for evaluating applications for universal banks and small finance banks. Applications for universal banks and small finance banks will be initially screened by the central bank to ensure prima facie eligibility of the applicants. The standing external advisory committee evaluates the applications thereafter. This is the second external committee for such a purpose. The first one, set up in March 2021, was headed by former deputy governor Shyama Gopinath.- economic times.
🍒 RBI likely to use long-term buy-sell currency swaps for effective liquidity management: SBI Research : State Bank of India’s economic research department expects the Reserve Bank of India (RBI) to announce longer-term (2-3 years) buy-sell currency swaps to shore up reserves and release liquidity even as it recommended replacing the Weighted Average Call Rate (WACR) with Secured Overnight Rupee Rate (SORR) to better indicate liquidity tightness in the system. The ERD’s teams observed that in a smart move, the RBI has started to sell (Dollars) in Spot and NDF (non-deliverable forwards) and then doing short-term buy-sell swaps to replace the maturing forward sale position and also to counter the durable liquidity drain from spot intervention.- Business Line.
🍒 Higher reliance on short-term liabilities by banks can have its own repercussions if market conditions deteriorate, cautions RBI Dy Guv Rao : Banks must take cognizance of the fact that higher reliance on short-term liabilities can have its own repercussions if market conditions deteriorate, cautioned RBI Deputy Governor M Rajeshwar Rao. He also called upon them to have contingency funding plans (CFPs). Rao said there has been a recent shift, with share of CASA (current account, savings account) deposits declining and that of term deposits (which formed 82 per cent of incremental deposits mobilised in H1FY25), especially in higher interest rate buckets, increasing. This has implications for bank net interest margins (NIMs) and profitability.- Business Line.
🍒 Paytm Q3 net loss narrows to ₹209 crore y-o-y : Fintech major Paytm on Monday reported a consolidated net loss of ₹209 crore for the quarter ended December 31,2024. This was narrower than the net loss of ₹222 crore recorded in the same quarter a year ago. In September 2024 quarter, Paytm had recorded a net profit of ₹930 crore. For the nine months ended December 31,2024, One97 Communications Ltd, which owns brand Paytm, reported a net loss of ₹119 crore, much narrower than net loss of ₹872 crore recorded in same period in previous year. Meanwhile, Paytm’s consolidated Revenue from Operations for the quarter under review grew sequentially to ₹1,823 crore (₹1,660 crore in September 2024 quarter). However it was much lower than revenue from operations of ₹2,850 crore in December 2023 quarter. - Business Line.
🍒 L&T Finance Q3 PAT down 2% : Non-banking finance company (NBFC) L&T Finance on Monday reported 2 per cent year-on-year (y-o-y) fall in net profit for the quarter ended December at ₹626 crore. The NBFC’s overall loan book stood at ₹95,120 crore, of which retail book stood at ₹92,224 crore.Interest income rose 13 per cent y-o-y to ₹3,610 crore, while interest expense rose 16 per cent y-o-y to ₹1,569 crore.Net interest margin (NIM) fell sharply from 8.94 per cent in Q2FY25 8.50 per cent in Q3. Asset quality deteriorated, with gross stage-3 ratio or gross bad loans rising to 3.23 per cent in Q3FY25 from 3.19 per cent a quarter ago, and net stage-3 ratio rising 1 bps sequentially to 0.97 per cent. - Business Line.
🍒 SEBI plans to change liquid funds cut-off time : Capital market regulator SEBI has sought investor’s view on extending the cut-off time for redemption of liquid and overnight funds to 7 pm from 3 pm. The working group of industry including AMFI and members of the Mutual Funds Advisory Committee has recommended a change in cut-off timings to determine applicable NAV with respect to redemption of units in overnight fund schemes from existing 3 pm to 7 pm. The change was proposed to allow time to stock brokers and clearing members to un-pledge units of MF overnight schemes and place redemption request with MFs, after the close of market hours.- Business Line.
🍒 BCRC seeks RBI nod for five-day week, looks to attract skilled workforce : The Business Correspondent Resource Council (BCRC) has sought the Reserve Bank of India’s (RBI’s) approval to implement a five-day week.Making its case for a transition to a five-day week, BCRC said that since the inception of the Pradhan Mantri Jan-Dhan Yojana (PMJDY) and related financial inclusion programmes, the business correspondent (BC) sector has been operating seven days a week to meet the government’s vision of expanding banking services to underserved areas. According to the just-released Report on Trend and Progress of Banking in India 2023-24, in a decade of its existence, the number of beneficiaries under PMJDY has reached - business standard
🍒 Sensex jumps 454 pts to close at 77,073, Nifty ends above 23,300; Kotak Mahindra Bank, Bajaj Finance gain most : Stock Market Highlights 20 January 2025: Benchmark Sensex spurted by 454 points and Nifty closed above 23,300 on Monday following gains in banking, financial and power stocks amid firm global trends. The 30-share BSE Sensex jumped 454.11 points or 0.59 per cent to settle at 77,073.44 as its 17 components advanced and 13 declined. Intra-day, it surged 699.61 points or 0.91 per cent to 77,318.94. The NSE Nifty climbed 141.55 points or 0.61 per cent to 23,344.75 with 29 of its constituents ending higher. - Business Line.
🍒 Rupee rises 14 paise to 86.46 against US dollar in early trade : Rupee appreciated 14 paise to 86.46 against the US dollar in morning trade on Monday, tracking a positive trend in domestic equities and Asian currencies. Forex traders said factors like elevated Dollar Index level as well as surging crude oil prices pose significant headwinds for the USD/INR pair. At the interbank foreign exchange, the rupee opened at 86.48 and touched 86.46 against the greenback, registering a gain of 14 paise over its previous close. - Business Line.
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