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☕🍔  04.01.2024 : Today's Banking / Financial News at a Glance

🍒      SBI garners $1 billion from overseas to cater to ESG financing market : State Bank of India (SBI) on Wednesday said it has raised USD 1 billion or (about Rs 8,300 crore) to cater to the domestic ESG financing market. The bank has concluded the issuance of USD 1 billion (USD 750 million and green shoe of USD 250 million) through Syndicated Social Loan, SBI said in a regulatory filing. The loan book was closed on January 2, 2024, it said. Last year too, the country's largest lender had raised USD 1 billion syndicated social loan. - moneycontrol.

🍒      BoI hikes rates for big deposits, DCB offers rewards on UPI spends : Banks are luring customers for deposits with higher interest rates and offers for boosting digital transactions through UPI. State-run Bank Of India has introduced a 'super special fixed deposit' at an interest rate of 7.5% for deposits between ₹2 core and ₹50 crore, while DCB Bank has launched a savings account that offers cashback for digital transactions. The super special fixed deposit at the Bank Of India is for a limited period and gives 7.5% for 175 days, according to a release. - economic times.

🍒      Bank of India launches 175-day fixed deposit at 7.5% interest for high-value deposits : Bank of India (BoI) has introduced a 175-day tenor fixed deposit at an interest of 7.50 per cent per annum for deposits of ₹2 crore & above to less than Rs.50 crore, amid liquidity tightness in the banking system and credit growth outstripping deposit growth. This comes on the heels of the State Bank of India (SBI) and Bank of Baroda (BoB) increasing their deposit rates. The public sector bank, in a statement, said the “Super Special Fixed Deposit”, which has been introduced with effect from January 1, 2024, is a high-yielding avenue for HNIs (high net worth individuals) and Corporates to deploy their surplus funds for the short term. - Business Line.

🍒      Canara Bank to open cyber security wing, stepping up AI adoption to predict online frauds & loan defaults : Public sector banking behemoth Canara Bank will open a separate cyber-security wing from April 1 as the bank steps up its investment in cyber security initiatives to prevent customers from falling into the trap of online fraudsters. The wing will be headed by a general manager and monitor digital transactions on a real time basis and trigger alerts if a fraudster is trying to break into a customer’s account. “Cyber security will demand a lot of investments in future, and we want to stay ahead in this,” MD & CEO K Satyanarayana Raju told ET. Raju’s team is implementing a three-year roadmap the bank prepared last year on technology initiatives to stay ahead of the curve. - economic times

🍒      HDFC Bank joins ‘cash segment trading via block mechanism’ in secondary market : HDFC Bank said it acted as a sponsor and destination bank for “Trading supported by Blocked Amount in Secondary Market,” which kicked off on Monday on the Indian Stock Exchanges. SEBI and Stock Exchanges have permitted Trading in the Cash segment through a block mechanism, on an optional basis, for the Secondary Market from January 1, 2024. This is on the lines of ASBA (application supported by blocked amount) for primary markets where investor’s funds continue to remain in their savings account with the required funds being blocked instead of the investor having to upfront transfer the amount to the broker’s account for placing the trades. “The bank has been able to support this new initiative of SEBI through integration of its systems with that of Exchanges & respective Clearing Corporations. - Business Line

🍒      UPI ends 2023 with record transactions worth ₹18-lakh crore, up 42% y-o-y  : Unified Payments Interface (UPI) ended 2023 at a high, recording over 1,200 crore transactions worth more than ₹18-lakh crore in December, a peak for both the transaction count and value.  Over 11,765 UPI transactions worth ₹182.2-lakh crore were processed in 2023, up 59 per cent in terms of volume and 45 per cent in terms of value compared with 2022, as per data by the National Payments Corporation of India (NPCI). Transactions worth ₹18.23-lakh crore were processed during December, significantly higher than the previous high of ₹17.40-lakh crore in November. In percentage terms, the value of transactions was 4.8 per cent higher on the month and 42 per cent on year. The number of transactions on the UPI network breached the 1,200 crore mark to 1,202 crore transactions, higher by 6.9 per cent on month and 54 per cent on year.. - Business Line.

🍒      India Ratings revises PNB Housing Finance NCD ratings from AA to AA+ : PNB Housing Finance, a housing finance company, on Tuesday said that India Ratings and Research (Ind-Ra) has upgraded the rating of the company’s non-convertible debentures (NCDs) to ‘IND AA+’ from ‘IND AA’ with stable outlook. Further, Ind-Ra said that NCDs limit has been split into bank loans and NCDs and ‘IND AA+’ rating has been assigned to the bank loans. The rating rationale, published on January 2, 2024, mentions that the key drivers for the rating upgrade are granularisation of loan book with 96 per cent being retail and almost complete rundown of the corporate book, robust capital buffers post equity infusion of ₹2,500 through rights issue, improved asset quality, diversified resource profile with the ability to raise funds from banks and the capital markets, adequate liquidity and improvement in profitability. - Business Line.

🍒      Ujjivan Small Finance Bank's share of secured portfolio rises to 28.5% : Ujjivan Small Finance Bank said it is focusing on growing the secured portfolio with highest ever quarterly disbursement in affordable housing loan segment. The bank, which has a lineage of unsecured microfinance business, has seen its secured book inching up to 28.5% at the end of December against 27.5% a year back. A gradual pick-up in other secured businesses like loans to micro and small enterprises and micro mortgage loans also helped, the bank said Wednesday. - economic times

IndusInd Bank reports 20% growth in advances in Q3FY24 : Private sector bank IndusInd Bank reported a 20 percent growth in advances for the October-December quarter of financial year (FY) 2023-2024. The bank, in a business update shared on the exchanges on January 3, said that its advances grew to Rs 3.26 lakh crore from Rs 2.72 lakh crore last year.  Additionally, the lender also recorded a 13 percent growth in deposits for the October-December FY24 quarter. And at the end of the quarter, deposits stood at Rs 3.68 lakh crore from Rs 3.25 lakh crore last year. The current account and savings account (CASA) ratio of the bank dropped to 38.5 percent in the October-December FY24 quarter from 42 percent in the corresponding quarter last year.  On January 3, shares of the IndusInd Bank closed on the BSE at Rs 1,598 apiece, 1.42 percent up from the previous day. - moneycontrol.

🍒      Federal Bank seeks nominal fee on certain UPI transactions : Banks are investing heavily in technology to enable a seamless user experience on Unified Payments Interface (UPI) products, and the Centre must consider levying a nominal fee on certain UPI transactions so that lenders can have some direct income from these low-ticket transactions, Federal Bank executive director Shalini Warrier told FE. “We are grateful for the incentive provided by the government (through the Ministry of Electronics and Information Technology for UPI payments). Having said that, and particularly given the use of the UPI for person to merchant (P2M) transactions, the authorities may want to consider levy of a nominal charge,” she said. “Ecosystem members have been requesting for some direct income from UPI transactions. We are hoping that the government will review this and allow members to collect charges for at least certain categories of transactions.” - financial express

🍒      Kotak Mahindra Bank hires Anupam Kaura as new HR chief for organisational transformation : Days after its new chief executive Ashok Vaswani assumed the office, Kotak Mahindra Bank on Wednesday announced the appointment of Anupam Kaura as its chief human resources officer. Kaura, who joins the private sector lender from Crisil's London office, has been appointed to "spearhead organisational transformation", according to a statement. Over the last few months, the lender has hired a slew of professionals working overseas to helm responsibilities in areas such as technology and customer experience. Kaura specialises in driving change agendas and transformative initiatives in large organisations, the statement said. - economic times

🍒      RBL sells ₹800-crore stressed credit card loans to Kotak Bank : In a deal reflective of the mounting stress in unsecured loans, RBL Bank last week offloaded almost ₹800 crore of its credit card portfolio at a steep discount to another private sector lender, Kotak Mahindra Bank, said people with direct knowledge of the matter. Credit card repayment delays account for about one-fifth of the total gross non-performing assets (NPA) of RBL Bank, which is seeking to clean up its books after a change of guard at the private lender that lost more than 50% in its market capitalisation over the past five years. Of the RBL Bank's ₹2,441-crore gross NPA, credit card dues total ₹462 crore, as of September 30, 2023, according to the quarterly investor presentation. - economic times

🍒      Customers' complaints against credit information companies increasing: RBI : The Reserve Bank on Tuesday said there has been a rise in customer complaints against credit information companies (CICs). The central bank has also found "some concerns" on the conduct of CICs in its supervisory assessment, an official statement said without specifying the concerns. The statement, released after a meeting between Deputy Governor Swaminathan J and managing directors and chief executives of CICs earlier in the day, also mentioned the specific areas where CICs need to focus on. "He (Swaminathan) pointed out that, of late, there is a rise in customer complaints related to credit information and some concerns have emerged during Reserve Bank's supervisory assessment," the statement said. - economic times

🍒      RBI proposes new dividend payment rule for banks, lenders with lower NPAs may offer higher dividends : The Reserve Bank of India said that banks with net non-performing assets (NPA) ratio less than 6% and capital adequacy above the minimum regulatory thresholds for the past three financial years should be eligible to declare dividends. In a draft circular released Tuesday, the regulator proposed a revised the graded dividend payout policy with a higher ceiling on dividend payment to 50% from 40% earlier. The lower the net NPA ratios, the higher would be the dividend payout. Higher payout ratios would boost earnings of the government, which holds majority shares in public sector banks. The government owns over 90% in several of them. - economic times

🍒      RBI asks banks not to classify zero balance account as inoperative : The Reserve Bank of India (RBI) has asked banks not to classify zero balance accounts, which are opened for the beneficiaries of government schemes like direct benefit transfer (CBS), even if there is no activity in the account for two years.  he regulator said the central and state governments had been expressing difficulty in crediting cheques/direct benefit transfer/electronic benefit transfer/scholarship amounts in these accounts as they are also classified as inoperative due to non-operation for two years. “The banks will, based on the purpose of opening the account, segregate the aforementioned accounts in their CBS, so that the stipulation of ‘inoperative’ account is not applicable to these accounts due to their non-operation for a period of more than two years,” the RBI said on Monday. - Business Standard.

🍒      Banks' pass through of rate hikes fastest of past three cycles: RBI : Banks have passed on higher interest rates effected by the RBI the quickest in the last three rate increase cycles, data from the central bank shows. This is largely due to the regulator mandating the linking of lending rates to external benchmarks. “Monetary policy transmission to bank lending and deposit rates has been stronger in this cycle compared to previous cycles” the Reserve Bank of India said In its latest Financial Stability Report. Transmission to outstanding lending rates was 112 basis points (one basis point or bps is 0.01 percent) or 45% of the total tightening of 250 bps tightening between May 2022 and February 2023. But in the previous two tightening cycles of July 2013 to December 2014 and June 2018 to Jan 2019 the transmission to outstanding lending rates was negligible 

data show. - economic times

🍒      Declaration of dividends by banks: RBI reviews certain norms, eligibility criteria : The Reserve Bank of India (RBI) on Tuesday reviewed the norms, eligibility criteria and board oversights pertaining to the declaration of dividends by the banks. The guidelines have been reviewed in the light of implementation of Basel III standards, the revision of the prompt corrective action (PCA) framework, and the introduction of differentiated banks, the RBI said. The apex bank, as part of its latest release has asked the banks to consider divergence in classification and provisioning for Non-Performing Assets (NPAs), including its trend, as observed under supervisory findings of the Reserve Bank or National Bank for Agriculture while considering the proposal for declaration of dividends or remittance of profits. - economic times.

🍒      RBI changes norms on redemption funds, buyback of CPs : The Reserve Bank of India (RBI) on January 3 made changes in the norms related to redemption funds and buyback of commercial papers (CPs). The central bank has issued directions on CPs and non-convertible debentures (NCDs) of original or initial maturity up to one year on January, which have been reviewed based on market feedback. As per the directions, issuers of CPs can make buyback only after seven days from the date of issue. Earlier, the buyback offer may not be made before 30 days from the date of issue, as per the Operational Guidelines for Commercial Paper issued by Fixed Income Money Market and Derivatives Association of India in 2020. -  moneyccontrol.

🍒      Kotak Institutional Equities foresees minimal impact from RBI’s updated dividend declaration framework : Kotak Institutional Equities (KIE) sees close to negligible impact on banks from the Reserve Bank of India’s proposed update on dividend declaration guidelines slated to come into effect from financial year 2024-25. “One of the reasons that the impact of the guideline is lower is because banks have been looking to grow their balance sheet ahead of their internal accruals. Hence, most banks are still in a capital consumption mode, which implies payout ratios are likely to be lower for nearly all banks. “Overall, we do not see any reason for banks to change their dividend payout policies based on the current guideline,” said a KIE note issued on Tuesday, a day after RBI came with draft guidelines on dividend declaration by banks. - Business Line.

🍒      Banks hike FD rates ahead of Q4 to support credit growth, protect NIMs : Most of the large PSU banks and some private sector banks have raised interests on their term deposits to support credit growth, which is traditionally accelerated in the last quarter of the financial year, and protect their margins. Over the last few weeks, lenders such as State Bank of India, Union Bank of India, Bank of India, Kotak Mahindra Bank and Punjab National Bank have hiked interest rates on domestic and/or NRI retail term deposits of less than ₹2 crore, by 10-75 bps, across various tenures. Bank of Baroda was the outlier, raising rates by up to 125 bps. The PSU bank said that rate hikes are largely focused on shorter-term maturity buckets, especially those less than 1 year, to benefit shorter maturity depositors and help the bank manage its deposit portfolio. - Business Line

🍒      RBI raises issue of rise in customer complaints on credit information with CIC Chiefs : Reserve Bank of India (RBI) Deputy Governor Swaminathan J on Tuesday expressed concern at the rise in customer complaints related to credit information at a meeting with the chiefs of credit information companies (CICs). Swaminathan also said some concerns have emerged during the Reserve Bank’s supervisory assessment. According to experts, most of the complaints against CICs relate to the non-updation of customer data pertaining to the regularisation of a missed loan installment. This leads to a lowering of a customer’s credit score, which has implications for taking fresh loans. There are four CICs in India: Credit Information Bureau (India) Limited, Equifax Credit Information Services Private Limited, Experian Credit Information Company of India Private Limited, and CRIF High Mark Credit Information Services Private Limited. - Business Line.

🍒      Gold-loan NBFCs maintain market share despite competition from banks: CRISIL : Gold-loan focussed non-banking financial companies (NBFCs) have maintained a reasonably resilient market share despite intense competition from banks, CRISIL Ratings said. Steady market share, support from strong capitalisation, sharp focus on risk management and healthy profitability has meant their credit profiles remain stable, according to a report by the credit rating agency. In FY24 (up to September 2023), the market share of gold loan NBFCs was 61 per cent (62 per cent in FY23), with banks accounting for the rest. In the first half of this fiscal, NBFCs matched banks by growing at 10-11 per cent (non-annualised). - Business Line.

🍒      Rupee rises 4 paise to close at 83.28 against US dollar : The rupee appreciated 4 paise to close at 83.28 (provisional) against the US dollar on Wednesday, supported by easing crude oil prices and foreign fund inflows. However, forex traders said the Indian currency remained under pressure amid a negative trend in domestic equities. At the interbank foreign exchange market, the rupee opened at 83.30 against the greenback. - Business Line.

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