FEBRUARY 2020 Volume 55

Banking e-bulletin

Contents

Top RBI Speeches...... 03

Top Banking News...... 09

Top Banking Development...... 65

Top Banking Appointments...... 67

top Expert Report...... 69

Top RBI Circulars...... 70

The Associated Chambers of Commerce and Industry of India Department of Banking & Financial Services ASSOCHAM Corporate Office: 5, Sardar Patel Marg, Chanakyapuri, New Delhi-110 021 Tel: 011-46550568 (Hunting Line) | Fax: 011-23017008, 23017009 | Web: www.assocham.org

Dr. Rajesh Singh Kushagra Joshi M: +91-9871204880 M: +91-8447365357 E: [email protected] E: [email protected]

Top RBI Speeches

Banking Landscape in the 21st Century (Shri Shaktikanta Das, Governor, Reserve Bank of India - February 24, 2020 - at the Mint’s Annual Banking Conclave, 2020):-

t is indeed a matter of great pleasure for me to shift in banking on the back of a technological Ibe here today in the Annual Banking Conclave revolution that promises better customer of the Mint. I am told that this is the 13th edition experience, risk management and returns of Conclave in what has become a prestigious to shareholders2. Given this environment, it annual event attracting the best and brightest becomes extremely important to understand minds of the finance and banking industry. This what it entails for the banking sector and how Conclave provides an important platform to all we can prepare ourselves for the times ahead. stakeholders in India’s financial and banking Against this background, let me now begin with sector for assessing where we stand today and discussing trends in global banking and then preparing ourselves for where we want to reach I shall dwell on some recent trends in Indian tomorrow. banking, new dimensions of banking and way forward. Several issues facing the Indian banking sector have occupied the attention of policy Global Banking: Emerging Regulatory makers in the last few years. Being a regulator Trends: and supervisor of banks, the Reserve Bank The global financial crisis represents a stands committed to ensuring a sound and robust watershed for the banking sector. It exposed banking system in the country. Emergence of the inherent vulnerabilities of an otherwise new business models and new technology and formidable international financial system. The its application in banking and finance have crisis paved the way for an overhaul of the thrown up new opportunities. With the aim of regulatory framework, long lasting changes to taking a deeper look at India’s banking sector in the economic and financial environment, and the context of these new developments, the topic shifts in the competitive landscape of financial that I have chosen for my talk today is “Banking services industry. International standard setting Landscape in the 21st Century”. bodies like the Basel Committee on Banking Finance and banking have emerged as Supervision (BCBS) and the Financial Stability engines of global economic growth. It is Board (FSB) were prompt in addressing the argued, and in my opinion rightly so, that shortcomings of the pre-crisis regulatory technology has played a pivotal role in the framework. Consequently, many regulatory proliferation of financial services1. Cheques, norms including leverage, liquidity and capital wire transfers, ATMs and credit cards were adequacy were reviewed as part of the Basel-III important innovations of such nature. Fast reforms aimed at making the global financial forward to more recent times, it seems that we system more resilient. To address liquidity are already witnessing yet another paradigm risk, new instruments such as the Liquidity

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 3 Coverage Ratio (LCR) and the Net Stable Funding leverage ratio framework; Liquidity Coverage Ratio (NSFR) were introduced, supplemented Ratio(LCR); Net Stable Funding Ratio (NSFR); by large exposures framework capping large Domestic-Systemically Important Banks (D-SIBs) and risky exposures. Aimed at addressing requirements; and a Supervisory framework the “Too Big to Fail (TBTF)” problem, the FSB for measuring and controlling large exposures. phased in the Total Loss Absorbing Capacity On the resolution front, some progress has (TLAC) for the Global Systemically Important been made in terms of the notification issued Banks (G-SIBs) to rebuild their capital buffers. by the Central Government under section 227 Various jurisdictions also adopted other key of the IBC. We may, however, expect to have reforms initiated by the FSB, such as sound an integrated framework for resolution of resolution regimes for financial institutions and financial firms operating in India in the near effective supervision of compensation practices. future. The implementation of this reform is Regarding non-bank financial intermediation of particular importance for having a resilient (NBFI), the FSB has been conducting annual financial system in India. In terms of recent monitoring exercises since 2011. Broadly, it has progress, the Indian banking sector is slowly been observed that, several aspects of non-bank turning around on the back of improvements in financial intermediation which contributed to asset quality with enhanced resolutions through the financial crisis have considerably declined. the Insolvency and Bankruptcy Code (IBC). Given the initiatives taken by the international Despite the recent decline in impaired assets bodies, policy makers across jurisdictions have and a significant improvement in provisioning, been fortifying their regulatory frameworks. profitability of the banking sector remains These policies are expected to pay back in fragile. Capital position of banks has, however, the medium to long run by enhancing the improved on account of recapitalization of soundness and resilience of the global banking public sector banks by the Government and system. More recently, with the global growth capital raising efforts by private sector banks. slowdown that began in 2018, credit growth, Nevertheless, the sector continues to encounter being procyclical, has decelerated across major challenges from events like those around the economies. This, in turn, has adversely affected telecom sector. Consequently, the overhang bank profitability. Despite distinct improvement of non-performing assets (NPAs) remains in asset quality, structural weaknesses like relatively high which is weighing on credit continued overreliance on investment in growth. Also, in view of subdued profitability government securities in the Euro area and and deleveraging by certain corporates, risk- wholesale funding in many advanced economies averse banks have shifted their focus away remain. Nevertheless, capital position of banks from large infrastructure and industrial loans has improved consistently in major advanced towards retail loans. This diversification and emerging market economies on the back of strategy, while helpful as a risk mitigation tool, various regulatory reforms introduced after the has its own limitations. Further, sector specific global financial crisis. pockets of stress need policy attention. At the same time, proper due diligence and risk pricing Indian Scenario: in lending is of prime importance so that the At the Reserve Bank of India, we have health of the banking sector is not compromised largely complied with Basel standards in terms while ensuring adequate flow of credit to of countercyclical capital buffer (CCCB); capital productive sectors of the economy. The banking requirements for central counter-parties (CCPs); stability indicator, as reported in RBI’s Financial

4 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 Stability Report of December 20193, shows an bring about rapid transformation of the improvement. Timely mitigation measures like financial sector landscape. It may, of course, faster resolution, better recovery, etc., need bring many potential benefits. Using big to be continued to bring down the gross non- data, BigTechs can assess the riskiness of performing assets (GNPA) ratios of all scheduled borrowers, reducing the need for collateral4. commercial banks (SCBs). While lower rate of Hence, their low-cost structure business can credit growth limits the size of the denominator easily be scaled up to provide basic financial for measuring GNPA, risks arising out of global services to the unbanked population. These and domestic economic conditions and geo- developments pose a challenge to banks as political developments persist. well as banking regulators. Banks have to imbibe these new technology and business New Dimensions of Banking:- practices to remain competitive. Banking • Emerging Structure of Banking: While regulators, on the other hand, have to focus global banking system is still in the process on achieving a balance between promoting of addressing the gaps exposed by global innovation and applying a measured/ financial crisis, new issues have surfaced and proportional supervisory and regulatory challenged the very core of the traditional framework. All these mean that the future banking business. Globally, banks are facing of banking will not be a continuation of increasing competition from non-traditional the past. We would see a very different players, which are taking advantage of digital banking sector, in terms of structure and innovation. Banking structures across the business model, in the coming years. So, globe are adapting to these new impulses. what would be a possible scenario in India? Numerous FinTech startups have formed, Distinct segments of banking institutions spanning the banking and financial services may emerge in the coming years. The first industry. They have entered the payments segment may consist of large Indian banks and remittance space in the sphere of peer-to- with domestic and international presence. peer lending, crowd-funding, trade finance, This process will be augmented by the insurance, account aggregation and wealth merger of Public Sector Banks (PSBs). The management. Through collaboration with second segment is likely to comprise several FinTech players, several banks are applying mid-sized banking institutions including a hybrid model where mobile services niche banks with economy-wide presence. interact with banking services. Banks are The third segment may encompass smaller not only facing competition from Fintech private sector banks, small finance banks, companies but also from large technology regional rural banks and co-operative companies (BigTechs) which are entering banks, which may specifically cater to the into financial services industry in a big way. credit requirements of small borrowers in Building on the advantages of the reinforcing the unorganised sector in rural/local areas. nature of their data-network activities, some The fourth segment may consist of digital BigTechs are venturing into payments, players who may act as service providers money management, insurance and lending directly to customers or through banks by activities. At present, financial services are acting as their agents or associates. The only a small part of their business globally. reoriented banking system will of course But given their size and reach, their entry be characterised by a continuum of banks. into financial services has the potential to The banking space would also include both

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 5 traditional players with strong customer • Digital Disruptions: Besides structural base and new technology led players. In the changes, digital disruptions will continue context of the emerging scenario, a properly to transform the banking sector. Initiatives worked out consolidation of public sector undertaken by the Government, the Reserve banks can generate synergies in allocation Bank and the industry have led to a radical of workforce and branches as well as shift towards ubiquitous digitization, which streamlining of operations to meet the future has provided an impetus to adoption of challenges. The focus has to be on ushering technology. There is a unique confluence of in significant improvements in efficiency several positives like demographic dividend, and rationalisation of scarce capital to JAM trinity, etc., that would further support meet the capital adequacy requirements. rapid digitisation of financial services in Investments in technology and skill building India. With inroads into their traditional has to be stepped up. Bigger and agile businesses, banks are expanding into banks may be able to reposition themselves newer areas such as insurance, asset with better branding exercises, backed by management, brokerage and other services. improved technology, skills and business It is heartening to note that the mindset of models. Ultimately, the strength of a banking banks is changing and they no longer view system depends on the strength of its FinTech firms as disruptive. This change corporate governance that fosters a robust in approach has provided the financial and ethics-driven compliance culture. In this services sector a sense of security. There is context, the Reserve Bank has been issuing evidence that Fintech companies are acting instructions on corporate governance. For as enablers in the banking ecosystem. Banks example, the compensation guidelines for are relying on a number of strategies to whole time directors, CEOs and material risk embrace technological innovation; ranging takers of banks have also been substantially from investing in FinTech companies and modified. Large-scale divergences and frauds founding their own FinTech subsidiaries, to observed across banks raises questions on collaborating with Fintech companies. Banks the role and effective utilisation of internal and non-banks are partnering to offer the control systems within banks to identify combination of trust and innovation to the areas of emerging risks. The RBI has issued Indian consumer. This “best of both worlds” the revised guidelines on the concurrent approach has resulted in tremendous growth audit system in banks, drawing from the in the number of digital payments, which is recommendations of the Expert Committee expected to continue. These strategies can under Shri Y.H. Malegam. The guidelines are effectively ensure that banks retain market aimed at strengthening the internal control share, as customers increasingly value more functions enjoining greater responsibility efficient and cost-effective services. In the on the audit committees of the Boards while light of these developments, conventional providing them greater leeway. Besides, banking is making way for next-generation RBI would also issue draft guidelines on banking with a focus on digitisation and corporate governance in banks, as indicated modernisation. The need for brick and mortar in our annual report and reiterated in the branches is being reviewed continuously as report on trends and progress of banking in digitisation has literally brought banking India 2018-19 published in August 2019 and to one’s fingertips, obviating the need to December 2019 respectively. physically visit a bank branch for most of the

6 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 banking services. The movement towards • Strengthening Regulation & Supervision: digital payments has also been facilitated In the context of ever expanding dimensions by introduction of fast payment systems, of the banking sector in the 21st century, we such as Immediate Payment Service (IMPS) need to be aware of the extensive regulatory and Unified Payment Interface (UPI), which and supervisory reforms essential for provide immediate credit to beneficiaries ensuring stability and inclusiveness of the and are available round the clock. The banking sector. It has been RBI’s endeavor extent of digital penetration can be gauged to constantly improve the efficacy of its from the fact that, each day on an average, supervisory and regulatory functions, the payment systems in India process more so that the resilience of the regulated than 10 crore transactions of nearly INR 6 financial entities can be enhanced. A lakh crore. Today, digital payments account number of steps have been taken in the for around 97 per cent of daily payment recent past in this regard. In particular, system transactions in terms of volume. This we have reorganised the supervisory and has been made possible with an accelerated the regulatory departments of the Reserve growth of over 50 per cent in the volume Bank with the aim to improve coordination of digital payment transactions in the last and allocate resources more optimally. five years. The Reserve Bank has recently From a supervisory perspective, this will started operating its retail payment system, augment the identification of systemic viz., National Electronic Funds Transfer and idiosyncratic risks which will help us (NEFT) on a 24x7 basis. This is a game build synergy between off-site and on-site changer and places India among very few supervision teams. We are also following a countries which provide this facility. The calibrated supervisory approach to bring Bank for International Settlements (BIS), in in required modularity and scalability, a recently published paper, has indicated to better focus on risky practices and that the UPI framework of India can become institutions and to deploy an appropriate an international model to facilitate quick range of tools and technology to achieve and seamless payments not only within our supervisory objectives. We are focusing countries but even across countries. There is on a sharper and more forward-looking considerable interest at International fora to off-site surveillance framework as an aid understand and learn from our experience to our on-site supervision. A Sup-tech in furthering digital payments and we are initiative is being implemented as a part very glad to share and collaborate. The of the integrated compliance management National Payments Corporation of India and tracking system. This will facilitate (NPCI) has also decided to set up a subsidiary transparent and efficient monitoring of all to focus on taking the UPI model to other pending compliances of supervised entities countries which will help enhance global through a web-based interface, automate outreach of India’s payment systems. With a the inspection planning process and cyber view to encourage competition and further incident reporting, and ensure seamless innovation in the retail payments space, collection of data. Thematic studies will we have also placed on our website a draft be undertaken across banks and other framework of a pan-India New Umbrella financial sector entities. New elements of Entity (NUE) for retail payment systems for supervision will also be introduced from public comments. time to time. The proposed Research and

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 7 Policy Division and Risk Specialists Division Solution (CBS), although efforts are still will assist in this process. Appropriately required to standardize the solutions recognising the systemic importance of and have robust set of internal controls non-banking financial companies (NBFCs) implemented in the CBS for improved and their inter-linkages with the financial outcomes. The CAMELS (Capital, Asset system, the Reserve Bank has taken Quality, Management, Earnings, Liquidity necessary steps to ameliorate the concerns and Systems and Control) supervisory relating to their asset quality and liquidity. rating methodology for UCBs has also been The amendment to the Reserve Bank of comprehensively revised. We have also India Act 1934, effective August 1, 2019, has taken steps to bring UCBs under the CRILC further empowered the Reserve Bank to reporting framework and issued draft constructively intervene in the operations guidelines on exposure norms to mitigate of NBFCs. The asset-liability management credit concentration risk and enhancement (ALM) position and other relevant aspects in Priority Sector lending targets to further of top 50 NBFCs are being closely monitored, financial inclusion. To improve governance, which covers all NBFCs with asset size above we have issued guidelines on constitution of ₹5000 crores. The ALM of top 51-100 NBFCs Board of Management (BOM) for UCBs with is also being examined by the respective deposit size of Rs. 100 crores and above regional offices of the Reserve Bank. In while making it voluntary for adoption by addition to the four pillars of supervision other smaller UCBs. Further, in order to viz. on-site inspection, off-site surveillance, have appropriate regulatory powers for market intelligence and reports of Statutory RBI in respect of co-operative banks, almost Auditors (SAs), a fifth pillar of supervision in on par with those over banking companies, the form of periodic interaction with all the certain amendments in the Banking stakeholders – including statutory auditors, Regulation Act, 1949 have been proposed. credit rating agencies, credit information Way Forward: companies, mutual funds and banks having large exposures to NBFCs – has been The changing landscape of the banking instituted to have a clearer understanding industry will unfold in the backdrop of a of the emerging risks and developments strong regulatory and supervisory regime in the sector so that critical information is with increased intensity and tech-enabled available, whenever required. As regards supervision of banks. The challenge before the co-operative banking segment, we have banks is to make the best use of technology and developed a robust stress-testing framework innovation to bring down intermediation costs for urban cooperative banks (UCBs). It also while protecting their bottom lines. Further, acts as an early warning system for co- Artificial Intelligence (AI), Machine Learning operative banks with the purpose of timely (ML) and Big Data are becoming central to identification of weak banks for appropriate financial services innovation. They can also help action. This is a shift from reactive to pro- in fraud detection and in identifying better ways active supervisory approach, intended to of monitoring use of funds by borrowers, track ensure surveillance of vulnerabilities in suspicious transactions, etc. by processing large UCBs on an ongoing basis. Moreover, as on datasets. One of the challenges for policy makers, December 31, 2019, more than 90 per cent especially in countries like India, is to ensure of these banks are now on Core Banking that new innovations in banking sector serve

8 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 the customer by reducing the cost of financial strive hard to remain relevant in the changed services and enhancing the range and access economic environment by reworking their to products in a manner that is safe. Advanced business strategies, designing products with the analytics and real-time monitoring of emerging customer in mind and focusing on improving cybersecurity risks will be critical in detecting the efficiency of their services. The possibilities potential threats and enabling pre-emptive are enormous. We should be seized of the issues action. As the Indian banking sector is propelled and act in time. forward to a higher orbit, banks would have to

Top Banking News

• Economic Survey 2020, PSBs Need A PSBs have been dragged down by bad loans Techtonic Shift: over the past few years and they compare State-run banks hobbled by soaring bad poorly with their private sector peers in loans and poor performance can look terms of returns to investors. Because of forward to have a new life with the help of this, their market valuations are also lower fintechs to fight back and use tools like GPS leading to losses to the government and to conduct better due diligence on borrowers wasting of taxpayer money. Public banks to play a meaningful role in India’s march accounted for 85% of bank frauds, while towards a $5-trillion economy, the Economic their gross non-performing assets exceeded Survey said. With data and analytics taking Rs 7.4 lakh crore in FY19; an amount which the center stage in almost all industries, exceeds government’s entire infrastructure state-run banks can pool all their data into expenditure in the fiscal. Similarly, just by one entity like in the case of GST Network, plugging PSBs’ loan losses, which came at to improve their analytical capabilities Rs 66,000 crore in FY19, the government that could provide them an edge over their “could nearly double the nation’s budgetary private peers, it said. Data sciences, machine allocation for education,” it said. Estimates learning and artificial intelligence could show that every rupee of taxpayer money help the banks, which have more than invested in PSBs in 2019 lost its value by 23 70% market share, to make a difference paise, while for the private sector it created to the economy, it said. “PSBs have many value. While banks are getting merged to important ingredients in place to cater to create bigger ones, the collaboration on this new demand,” said the survey. “They data could be a game changer. “PSBs will be have local market insights and relationships able to enhance efficiency by fulfilling their based on operating histories spanning many role of delegated monitors if all the PSBs decades. Their geographic footprint is vast. can pool their data into one entity,” it said. PSBs, however, need significant investments “Private information held by their corporate in capabilities to exploit the coming datarich borrowers leads to contracting problems, environment in India. Analytics based on because it is costly to assess solvency of a market data are quite capable of providing borrower or to monitor her actions after accurate predictions of corporate distress.” lending has taken place.” The survey

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 9 proposes that these banks stick GPS devices bank came under the RBI’s lens. Bengaluru on pledged assets to track the location of South MP Tejasvi Surya (BJP) called her assets. a few times, about three weeks ago, after the news surfaced that the Reserve Bank of India (RBI) had imposed restrictions on Sri Guru Raghavendra Cooperative Bank in Bengaluru. Thousands of depositors have their savings and deposits in this bank with eight branches. After speaking to the Finance Minister, the MP later put out a note asking depositors not to panic, conveying the Finance Minister’s words of assurance that she will protect the interests of depositors. In line with this assurance, Sitharaman, in her Budget speech, said the Centre planned amendments to the Banking Regulation Act for “for increasing professionalism, enabling access to capital and improving governance and oversight for sound banking through the RBI.” The RBI has imposed restrictions on the Sri Guru Raghavendra Bank’s management, disallowing it from collecting deposits, fresh lending and making investments without its approval. There have, of course, been quite a few cases of poor governance and frauds at cooperative banks in other states which must have weighed on the Finance Source: https://economictimes.indiatimes.com/ Ministry to plan necessary fixes to the sector. industry/banking/finance/banking/ economic- Sitharaman represents Karnataka in the survey-2020-psbs-need-a-techtonic-shift/ Rajya Sabha. articleshow/73825303.cms Source: https://economictimes.indiatimes.com/ Dated: Feb 01, 2020 industry/banking/finance/banking/fixing-co-op-banks- fm-got-a-few-frantic-calls-from-bengaluru-last-month/ • Fixing Co-Op Banks, FM Got A Few articleshow/73839222.cms Frantic Calls From Bengaluru Last Dated: Feb 01, 2020 Month: • Clean, Reliable, Robust Financial Finance Minister Nirmala Sitharaman Sector Key To Achieve USD 5 Trillion turning her attention to the cooperative Economy: banking sector may have provided some relief to thousands of depositors in her Finance Minister Nirmala Sitharaman on home state of Karnataka, in specific, as Saturday said a clean, reliable and robust she received quite a few frantic calls from financial sector is required for achieving Bengaluru last month after a cooperative the ambitious target of USD 5 trillion

10 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 economy. Presenting the Budget for 2020- as a majority of the deposits would never 21, Sitharaman said robust mechanism is in reach that stage. “At any point in time, on place to monitor health of all commercial a conservative estimate, 85 per cent of the banks and asserted that depositors’ money banks will never fail” said Satish Marathe, is absolutely safe. She noted that Rs 3.50 lakh founder of Sahakar Bharati, an industry crore capital has been infused in public sector body for the co-operative sector, which had banks in past years, while acknowledging made a representation to the government to that there is a need for greater private raise the limit to Rs 5 lakh from prevailing capital in banks. Sitharaman further said the Rs one lakh.” So, accordingly, claims are not government plans amendment to facilitate going to come through and hence there is no separation of government pension trust from case for increasing the premium”. Currently Pension Fund Regulatory and Development the premium is priced at Rs 10 per Rs 10,000 Authority (PFRDA). She also said the of deposit covered from April. 92 per cent of government’s balance holding in IDBI bank the total deposit accounts which is about 28 will be sold to private retail investors. per cent of all deposits in terms of value as of Source: https://economictimes.indiatimes.com/ March, 2019, are fully protected according industry/banking/finance/banking/clean-reliable- to the latest data provided in DICGS annual robust-financial-sector-key-to-achieve-usd-5-trillion- report. The Corporation insures all bank economy-fm/articleshow/73836288.cms deposits, such as savings, fixed, current as well as recurring deposits. The demand Dated: Feb 01, 2020 for raising the deposit insurance cover • Depositors Get Higher Protection limit has been there for a very long time, Cover After 27 Years: with the latest instance that the issue had Depositors may heave a sigh of relief as come up was at the time of the Financial the government has raised the deposit Resolution and Deposit Insurance Bill, insurance limit five-fold to Rs 5 lakhs after which the government had introduced in its twenty seven years. Demand for raising the previous term in 2017 and then withdrew deposit insurance limit gained momentum the following year. after a run on a large sized multi-state co- Source: https://economictimes.indiatimes.com/ operative bank after it came under an RBI industry/banking/finance/banking/the-biggest- administrator for financial irregularities announcement-so-far-deposit-insurance-raised-five- pertaining to loans to real estate firm times-to-rs-5-lakh/articleshow/73834745.cms HDIL. “ The Deposit Insurance and Credit Dated: Feb 01, 2020 Guarantee Corporation (DICGC) has been • Single Investment Clearance Window permitted to increase Deposit Insurance to be set up for Promoting Entrepre- Coverage for a depositor, which is now ` neurship: one lakh to ` five lakh per depositor” said finance minister Nirmala Sitharaman in her The government will create a single Budget speech to the Parliament, assuring investment cell to expedite grant of licenses that the house that the deposits with the and promote entrepreneurship. Finance country’s commercial banks are safe . The minister Nirmala Sitharaman has also rise in the limit may not make a case for a announced 5 new smart cities for promoting higher insurance premium by the banks, entrepreneurship. The smart cities will be

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 11 created through a PPP model with states. • Fixing Co-Op Banks, FM Got A Few The move will merge all licenses required to Frantic Calls From Bengaluru Last set up business in India into a single hub and Month: expedite the ease of doing business. India’s Finance Minister Nirmala Sitharaman turning ranking has jumped from 142 in 2014 to 63 her attention to the cooperative banking in 2019 on the World Bank’s ‘Doing Business’ sector may have provided some relief to survey. thousands of depositors in her home state of Source: https://economictimes.indiatimes.com/ Karnataka, in specific, as she received quite a industry/banking/finance/banking/budget-2020- few frantic calls from Bengaluru last month single-investment-clearance-window-to-be-set-up-for- after a cooperative bank came under the RBI’s promoting-entrepreneurship/ articleshow/73833382. lens. Bengaluru South MP Tejasvi Surya (BJP) cms called her a few times, about three weeks Dated: Feb 01, 2020 ago, after the news surfaced that the Reserve Bank of India (RBI) had imposed restrictions • Clean, Reliable, Robust Financial on Sri Guru Raghavendra Cooperative Bank Sector Key To Achieve USD 5 Trillion in Bengaluru. Thousands of depositors have Economy: their savings and deposits in this bank with Finance Minister Nirmala Sitharaman eight branches. After speaking to the Finance on Saturday said a clean, reliable and Minister, the MP later put out a note asking robust financial sector is required for depositors not to panic, conveying the achieving the ambitious target of USD 5 Finance Minister’s words of assurance that trillion economy. Presenting the Budget she will protect the interests of depositors. for 2020-21, Sitharaman said robust In line with this assurance, Sitharaman, in mechanism is in place to monitor health her Budget speech, said the Centre planned of all commercial banks and asserted that amendments to the Banking Regulation Act depositors’ money is absolutely safe. She for “for increasing professionalism, enabling noted that Rs 3.50 lakh crore capital has access to capital and improving governance been infused in public sector banks in past and oversight for sound banking through the years, while acknowledging that there is a RBI.” The RBI has imposed restrictions on the need for greater private capital in banks. Sri Guru Raghavendra Bank’s management, Sitharaman further said the government disallowing it from collecting deposits, fresh plans amendment to facilitate separation lending and making investments without its of government pension trust from Pension approval. There have, of course, been quite Fund Regulatory and Development a few cases of poor governance and frauds Authority (PFRDA). She also said the atcooperativebanks in other states which government’s balance holding in IDBI bank must have weighed on the Finance Ministry to will be sold to private retail investors. plan necessary fixes to the sector. Sitharaman Source: https://economictimes.indiatimes.com/ represents Karnataka in the Rajya Sabha. industry/banking/finance/banking/clean-reliable- Source: https://economictimes.indiatimes.com/ robust-financial-sector-key-to-achieve-usd-5-trillion- industry/banking/finance/banking/fixing-co-op-banks- economy-fm/articleshow/73836288.cms fm-got-a-few-frantic-calls-from-bengaluru-last-month/ Dated: Feb 01, 2020 articleshow/73839222.cms Dated: Feb 01, 2020

12 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 • PMC Impact? Your Deposits Get 5 deposits would never reach that stage. “At Times More Cover: any point in time, on a conservative estimate, 85% of the banks will never fail,” said Satish The government raised the insurance cover Marathe, founder of Sahakar Bharati, an for bank depositors five-fold, providing industry body for the cooperative sector. The comfort to millions of citizens who still keep insurance premium is priced at Rs 10 per Rs their nest egg with the banking system. The 10,000 of deposit, which covers 92% of the move will also help calm depositors who accounts and about 28% of all deposits in have been disturbed by recent incidents terms of value. of collapsing financial institutions. The increase that comes after nearly 27 years is Source: https://economictimes.indiatimes. estimated to cover nearly 98% of the total com/industry/banking/finance/banking/pmc- number of depositors in the Indian banking impact-your-deposits-get-5-times-more-cover/ system, which includes co-operative articleshow/73861529.cms banks. “The Deposit Insurance and Credit Dated: Feb 02, 2020 Guarantee Corporation has been permitted • Private Banks To Gain Most From to increase deposit insurance coverage for Budget’s Rs 5 Lakh Cover: a depositor, which is now Rs 1 lakh, to Rs 5 lakh per depositor,” said finance minister Private sector banks will be the biggest in her budget speech. “I wish to inform this gainers of the government’s decision to hike august house that the robust mechanism is in deposit insurance cover to Rs 5 lakh from place to monitor the health of all scheduled Rs 1 lakh in the Union Budget. However, commercial banks and that depositors’ the higher insurance costs, estimated at Rs money is safe.” FM’s move comes after the 28,400 crore, will be borne by the entire recent blow-up of Punjab and Maharashtra banking system. According to Credit Suisse, Co-operative Bank that led to lakhs of people the estimated increase in deposit insurance losing their money and leading to a run on premium would be around Rs 28,400 crore many smaller banks. The rise in the limit ($4 billion) for the system, which is likely to may not make a case for a higher insurance be passed on to banks’ customers. Nearly all premium by banks, as a majority of the of the claims paid by the Deposit Insurance and Credit Guarantee Corporation (DICGC), the RBI arm which insurers deposits, has been in respect of co-operative banks. While private lenders have failed in the past, they were merged with stronger banks, by using moral suasion in some cases. Although co-operative banks have been failing frequently, the deposit cover is unlikely to give them enough leverage to expand their base as most of them are regional. On the other hand, private banks now have a pan- India reach and have often risked a run on the bank following rumours. Meanwhile, public sector banks, including those that

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 13 have posted losses for 10 successive quarters of the claims paid by the Deposit Insurance and reported a high percentage of NPAs, and Credit Guarantee Corporation (DICGC), have never seen a flight of deposits. Even the RBI arm which insurers deposits, has when the RBI placed half of the nationalized been in respect of co-operative banks. While banks under prompt corrective action (PCA) private lenders have failed in the past, they framework, depositors never pulled out were merged with stronger banks, by using funds as they were convinced of government moral suasion in some cases. Although support. The DICGC received total premium co-operative banks have been failing income of Rs 12,043 crore from banks in frequently, the deposit cover is unlikely to 2018-19. The deposit insurance fund stood at give them enough leverage to expand their Rs 93,750 crore in FY19. It insured deposits of base as most of them are regional. On the Rs 33.7 lakh crore out of total of Rs 120 lakh other hand, private banks now have a pan- crore from 2,098 banks. Despite the cover India reach and have often risked a run on increasing fivefold, the premium will not go the bank following rumours. Meanwhile, up proportionately because the number of public sector banks, including those that Rs 5-lakh deposits are small relative to the have posted losses for 10 successive quarters total depositor base. According to ICRA SVP and reported a high percentage of NPAs, and group head (financial sector ratings) have never seen a flight of deposits. Even Karthik Srinivasan, the awareness of deposit when the RBI placed half of the nationalised insurance would not be high. He said the banks under prompt corrective action (PCA) fact that the increase in deposit insurance framework, depositors never pulled out cover to Rs 5 lakh was announced in the funds as they were convinced of government Budget would increase awareness and bank support. The DICGC received total premium deposits would be seen as safer. income of Rs 12,043 crore from banks in Source: https://economictimes.indiatimes.com/ 2018-19. The deposit insurance fund stood at industry/banking/finance/banking/private-banks- Rs 93,750 crore in FY19. It insured deposits of to-gain-most-from-budgets-rs-five-lakh-cover/ Rs 33.7 lakh crore out of total of Rs 120 lakh articleshow/73892182.cms crore from 2,098 banks. Despite the cover increasing fivefold, the premium will not go Dated: Feb 03, 2020 up proportionately because the number of • Private Banks To Gain Most From Rs 5-lakh deposits are small relative to the Budget’s Rs 5 Lakh Cover: total depositor base. According to ICRA SVP Private sector banks will be the biggest and group head (financial sector ratings) gainers of the government’s decision to hike Karthik Srinivasan, the awareness of deposit deposit insurance cover to Rs 5 lakh from insurance would not be high. He said the Rs 1 lakh in the Union Budget. However, fact that the increase in deposit insurance the higher insurance costs, estimated at Rs cover to Rs 5 lakh was announced in the 28,400 crore, will be borne by the entire Budget would increase awareness and bank banking system. According to Credit Suisse, deposits would be seen as safer. the estimated increase in deposit insurance Source: https://economictimes.indiatimes.com/ premium would be around Rs 28,400 crore industry/banking/finance/banking/private-banks- ($4 billion) for the system, which is likely to to-gain-most-from-budgets-rs-five-lakh-cover/ be passed on to banks’ customers. Nearly all articleshow/73892182.cms Dated: Feb 03, 2020

14 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 • PNB Seeks IRDAI Forbearance For move aimed at making state-owned lenders Paring Stake In Canara HSBC OBC Life: global sized banks. United Bank of India and Oriental Bank of Commerce will be merged State-owned Punjab National Bank is seeking with Punjab National Bank; Syndicate Bank IRDAI forbearance on cutting down stake in will be merged with Canara Bank; Allahabad Canara HSBC OBC Life Insurance, which will Bank will be amalgamated with Indian come to the lender’s fold after its merger Bank; and Andhra Bank and Corporation with Oriental Bank of Commerce (OBC), Bank will be consolidated with Union Bank sources said. OBC currently holds 23 per cent of India. Keeping proposed merger in mind, stake in Canara HSBC OBC Life Insurance. Insurance Regulatory and Development Besides, another public sector lender Authority of India (IRDAI) last month said Canara Bank has 51 per cent stake and HSBC group health insurance policies of customers Insurance (Asia Pacific) Holdings Limited of the public sector banks slated to be as foreign partner owns 26 per cent. As per merged with other PSBs will continue to be the extant guidelines, one promoter cannot serviced by insurer companies till the end hold more than 10 per cent stake in two of the policy period. “Upon merger of these insurance ventures, sources said. After the PSBs, the underlying group health insurance merger of OBC, expected in April, PNB will policies of the customers of the merged automatically get 23 per cent stake in Canara banks shall continue to be serviced by the HSBC OBC Life Insurance also. Already, PNB respective insurance companies which is a promoter of PNB Metlife Insurance with issued the policies till the end of the policy highest stake of 30 per cent. Founded in 2001, period,” the insurance regulator had said in a PNB Metlife’s other shareholders include circular. The insurance companies will make US-based Metlife with 26 per cent, Elpro (21 suitable arrangements with the acquiring per cent) and M Pallonji & Company (18 per banks in this regard, it added. IRDAI said cent). The sources said PNB has requested the guidelines have been issued in order to the regulator to provide additional time protect the interests of the group insurance for cutting down or offloading its stake in policyholders of the merged banks. the life insurance firm that will come to its fold by merger of another lender. In Source: https://economictimes.indiatimes.com/ another case, the merger proposal involving industry/banking/finance/banking/pnb-seeks-irdai- Union Bank of India, Andhra Bank and forbearance-for-paring-stake-in-canara-hsbc-obc-life/ Corporation Bank, Andhra Bank holds 30 articleshow/73903626.cms per cent stake in IndiaFirst Life Insurance Dated: Feb 03, 2020 whereas Union Bank holds 23 per cent stake • Tax Outgo Of Merged State-Run Banks, in Star Union Dai-ichi Life Insurance. In this General Insurers To See Substantial case again the merged entity led-by Union Fall: Bank of India will have more than 10 per cent stake in two life insurance companies. The Union budget has allowed carry forward In the biggest consolidation exercise in the of losses and depreciation for state-run banking space, the government in August banks and general insurance companies 2019 had announced four major mergers that are being merged, a move that would of public sector banks, bringing down substantially reduce tax outgo of recently their total number to 12 from 27 in 2017, a merged state banks. Banks are allowed to

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 15 carry forward depreciation and net loss and United Bank of India were merged in their books for up to eight years, and with Punjab National Bank. Now, PNB had use them to offset their future profits and posted losses of Rs 9,975 crore for 2018-19 pay lower tax. However, as per the current while UBI had losses of Rs 2,316 crore. OBC regulations, in the event of a merger they had closed the year with marginal profits. In cannot take either depreciation or loss on another pairing Syndicate Bank was merged the books of the merged entity, experts with Canara Bank, with the latter posting said. Such carry forwards are allowed for Rs 2,588crore losses for FY19. Andhra Bank firms governed under the Companies Act, and Corporation Bank were merged with but not for banks that are regulated under Union Bank of India. Corporation Bank had the Banking Regulation Act, they said. The reported losses of Rs 6,332 crore for FY19 new budget proposal will change that. while Andhra Bank reported losses of Rs “Loss carry overs need to be enabled with 2,786 crore. Allahabad Bank was merged the appropriate provisions in the context with Indian Bank that recorded Rs 8,333 of mergers, and this proposal He said the crore losses for the last fiscal. Depreciation move to allow loss carry overs was “very claimed by several banks on certain capital much expected”. “Absent this, the mergers expenditure allows them to report net losses. would not have harnessed the full fiscal Source: https://economictimes.indiatimes.com/ benefits,” Gupta said. While this is mainly an industry/banking/finance/banking/tax-outgo-of- accounting entry, not allowing carry forward merged-state-run-banks-general-insurers-to-see- in mergers could pose huge tax burden for substantial-fall/articleshow/73921169 .cms PSU banks and insurance companies as many Dated: Feb 04, 2020 of the entities being merged have substantial depreciation and losses in their books. For • Budget Takes Some Heat Off RBI On instance, if Bank A, which makes a profit of Growth, Inflation Back In Spotlight: Rs 100 crore, is merged with Bank B that has a net loss of ?50 crore, then as per existing It is back to inflation targeting for the Reserve regulations the merged entity needs to pay Bank of India’s (RBI’s) rate-setting committee, tax on Rs 100 crore profit. However, once when its six members meet to vote on policy the new provision comes into effect, the new rates this week. Analysts expect a pause in merged entity will have to pay tax only on Rs rate cuts from the central bank, and they 50 crore of profit as the loss of Bank B would would be right, considering that the Union be absorbed. The amendment will come budget did precious little to move the needle into effect from assessment year 2020-21. In anywhere for monetary policy. The last August last year, the finance ministry had reading on headline retail inflation for the announced merger of 10 public sector banks central bank was an unflattering 7.35% for many with substantial losses into four. “Most December. The mandate for RBI is to keep banks which were under the Reserve Bank’s the headline number within the 2-6% band prompt corrective action framework had and the central bank has ostensibly targeted accumulated losses,” CEO of a public sector the mid-point of 4% so far. With inflation entity said on condition of anonymity. “This breaching the upper bound, monetary policy move will help create substantial tax savings is hard pressed to not ignore it. The Union for merged banks, which can be pumped into budget is a key input for monetary policy as the economy.”Oriental Bank of Commerce the government’s finances have a bearing

16 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 on growth, inflation and, more importantly, government continues to corner household interest rates. The revised estimates for the savings, banks won’t be able to cut deposit current year from the budget indicate that rates and, hence, lending rates. the government has refrained from heavy Source: https://www.livemint.com/market/mark-to- spending. The slippage in fiscal deficit of 0.5% market/budget-takes-some-heat-off-rbi-on-growth- of gross domestic product (GDP) is largely inflation-back-in-spotlight-11580757135634.html due to lower tax revenue growth, rather Dated: Feb 04, 2020 than an increase in spending. The increase in spending for FY21, too, is at a modest 13%, • Bank Frauds Declining Sharply with an indication of bringing down the fiscal Annually: deficit to 3.5% of GDP. Ergo, some analysts have termed it a contractionary budget. Bank frauds have sharply come down on Even so, the government has allocated an annual basis to Rs 5,244 crore in the first resources to boost the rural sector, reiterated three quarters of this fiscal on account of its commitment to spend on infrastructure improved detection and reporting, Minister and also offered to leave more cash in the of State for Finance Anurag Thakur said hands of the people through lower income- in Rajya Sabha on Tuesday. Bank frauds tax rates. The disappointing factor is that reduced significantly from Rs 38,548 crore in all these measures have riders, which the the 2016-17 fiscal to Rs 16,084 crore in 2017- market didn’t like. Radhika Rao, senior vice 18 fiscal. Frauds rose slightly to Rs 18,893 president and economist at DBS Bank India crore in 2018-19 but started declining again Ltd, said this takes at least some of the heat to Rs 5,244 crore in the first three quarters off the monetary policy on growth. “With of 2019-20 fiscal, he said during Question fiscal policy taking a growth-supportive Hour. “Bank frauds, which stood at 0.58 per role, on the back of monetary policy being cent during 2009-14, have come down to 0.16 ahead of the curve last year, the calibrated percent in the last two and half years. In the policy mix should bode well for growth,” first six months of this year, frauds were only she wrote in a note. Rao expected RBI to 0.04 per cent. This has happened because remain on an extended pause but keep the our government has taken right steps stance accommodative. A commitment to towards fraud reporting and detection,” fiscal prudence, a realistic assumption about Thakur said in the Upper House. A declining future growth and steps to attract more trend in bank frauds is observed in respect foreign capital to the bond market are all of public sector banks (PSBs) as well with the helpful measures from the budget for the amount involved by year of occurrence of central bank. But it is not as linear as that. fraud reducing sharply, he said. It reduced Bond yields may have eased after the budget, from Rs 35,578 crore in 2,043 cases in 2016- but the over-reliance on small savings by 17 to Rs 12,234 crore in 1,949 cases in 2017- the government risks keeping interest rates 18, increasing slightly to Rs 15,575 crore in from falling. The borrowing from national 1,250 cases in 2018-19, and declining again to small savings fund was revised to ₹2.4 Rs 3,781 crore in 436 cases in the first three trillion in the budget for the current fiscal quarters of 2019-20 fiscal, he added. To check year. That is nearly double the previous frauds, the minister said, “We came out with estimate. For FY21, too, the government is a framework for improved detection and keeping a similar borrowing target. As the monitoring. We also reviewed the quality

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 17 of assets, cleaned up the bank balance, and the category Digital Transaction, while recapitalized banks.” To a supplementary making available data on fraud as reported query by Congress member Motilal Vora if the by Scheduled Commercial Banks (SCBs) and government has arrested anyone involved select Financial Institutions (FIs) for amount in fraud, the minister said, “The member has involving Rs 1 lakh and above, he added. shown right concern. But frauds took place Source: https://economictimes.indiatimes. in cases of loan that were sanctioned during com/industry/banking/finance/banking/ that time (2009-14).” “Loans were taken at bank-frauds-declining-sharply-annually-govt/ that time and frauds were of that time. When articleshow/73935591.cms our government came to power, we brought Dated: Feb 04, 2020 the Fugitive Economic Offenders Act for attaching assets of offenders who ran away • Maharashtra Co-Op Bank pitches for and stayed abroad,” he said. The government branch merger of PMC Bank: also came out with the Insolvency and Bankruptcy Code (IBC) through which about Maharashtra State Co-operative (MSC) Bank Rs 4 lakh crore has been recovered so far, has written to Union Finance Minister he added. Responding to another member Nirmala Sitharaman seeking merger of Narendra Jadhav (Nominated)’s query why branches of PMC Bank, in case of a takeover the government has not created a separate of the troubled lender, a top official said on agency for monitoring banking frauds, the Tuesday. Any progress on such a scheme minister said, “We need to note the year can only happen once the exact extent of of occurence and we started reporting the fraud and the liabilities arising are now. We have made many changes in the ascertained through a forensic audit, MSC banking sector and reforms will continue Bank Chairman VidyadharAnaskar made it in future.” To Shiv Sena member Anil clear. For the branch merger as opposed to Desai’s query whether reports of National bank merger idea, he explained that MSC Financial Services Authority match with Bank is an apex bank for cooperatives and declining trend of frauds shared by the Punjab and Maharashtra Cooperative Bank’s government, the minister reiterated the multi-state presence makes it difficult to government has taken various steps to bring execute such a deal. “We have written to in more accountability and transparency the Finance Minister, suggesting a branch in the system. “At the same time, we look merger and not a bank merger,” Anaskar at various reports of regulators and other told reporters here. He said under the authorities also,” he said. He also mentioned proposed scheme, apex banks in Gujarat and that regulator RBI in its Financial Stability other states where PMC has a presence will Report of December 2019 has observed that take over its branches to make it easier for the systematic and comprehensive checking, the transaction to go through. It can be noted including of legacy stock of non-performing that over Rs 11,000 crore in depositor money assets (NPAs) of PSBs for frauds under the has been stuck after the RBI decided to put framework has helped unearth frauds PMC Bank under instructions in September perpetrated over a number of years. With last year, and appointed an administrator regard to frauds with banks on account of on it after discovering mismanagement. The digital transactions, the RBI has informed bank has been found to have given over that it does not collect data on frauds under Rs 6,700 crore loans to a single company

18 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 - realty player HDIL - through allegedly entire portfolio will be considered as a loss. fraudulent means and also hid the stress Both the proposals involve a support from from the Reserve Bank of India by creating the Deposit Insurance and Credit Guarantee to separate books of accounts. The police has Corporation, wherein the deposit holders in pegged the extent of fraud at PMC Bank at RS both the troubled banks will be paid upfront 4,700 crore, while other agencies, including and the bank will subsequently pay-off the the Enforcement Directorate, are also DICGC. Over a third of the depositors’ stuck investigating the matter. A few months ago, money is released upfront by the DICGC as NCP leader and Maharashtra minister Jayant liquidity support to make a merger possible Patil had publicly suggested the idea of and then repaid back by the bank once asset merging PMC Bank with MSC Bank. Anaskar recoveries start, he said. Anaskar exuded said before any progress on the matter, it is confidence that the RBI will give it a go-ahead essential to ascertain the extent of the fraud on both the mergers in about four months’ at the lender which can only be done after time, despite its own record of having stuck the RBI’s forensic audit in the matter. He, with a mismanagement three years ago. He however, also said the RBI may not be averse said MSC Bank has a total capital adequacy to a branch merger that the bank is suggesting of over 16 per cent, including core buffers at and such a transaction will not require any over 14 per cent, and will be able to take care changes in laws. In support of his argument, of a merger like this. At present, the bank is Anaskar reminisced over six years ago, returning excess capital to the district banks there was a similar proposal for a branch which are its members, Anaskar said. Rupee merger of the troubled Rupee Cooperative has five lakh depositors, while City has over bank and the RBI was amenable to the idea. 80,000 depositors. Meanwhile, the MSC Bank also announced Source: https://economictimes.indiatimes.com/ that it has sent two separate proposals to the industry/banking/finance/banking/ maharashtra-co- RBI for merging Rupee and City Cooperative op-bank-pitches-for-branch-merger-of-pmc-bank/ Bank with itself, which will require it to articleshow/73935653.cms allocate over Rs 1,300 crore of capital. Dated: Feb 04, 2020 Both the proposals have been presented jointly with the target banks and after • Nearly 6,900 Cases Of Online Banking ratification by the cooperatives department Frauds Registered In 2017-18: of Maharashtra government. It will have to Nearly 6,900 cases of online banking frauds allocate Rs 980 crore for the Rupee merger, were registered in the country in 2017-18, while the City bank scheme will require it the Lok Sabha was informed on Tuesday. to allocate nearly Rs 300 crore. The genesis Union Minister of State for Home G Kishan of both the proposals is the bank’s desire to Reddy said with the rapid increase in use de-risk beyond the sugar industry by serving of cyber space, the number of cybercrimes the retail segment, Anaskar said, adding that is also increasing. “As per data maintained merging the two urban cooperatives banks by the National Crime Records Bureau, with itself will give it a retail heft both in 3,466 and 3,353 cases of online frauds were distribution and assets. The total assets of registered in 2017 and 2018, respectively,” both the banks are Rs 1,400 crore, which will he said replying to a written question. give MSC Bank a good foothold in the retail Reddy said in order to prevent online frauds category, he said, adding that to start with the and protect users, the Ministry of Home

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 19 Affairs has taken several steps, including has been named Bank of Baroda, the largest formation of an Inter-Ministerial Committee among the three. If the bank formed after on Phone Fraud (IMCPF). It has members amalgamation is not given a separate name, of stakeholder organisations such as the people would feel that OBC and UBI merged Ministry of Electronics and Information into PNB, Jain said. Jain said the process of Technology (MeitY), Department of Financial amalgamation might begin soon and hoped Services, Department of Telecommunication, for the new name of the merged entity to Reserve Bank of India and law enforcement be included in the notification merging the agencies. three banks. He said OBC has 2,400 branches, Source: https://economictimes.indiatimes.com/ 2,600 automated teller machines and 22,000 industry/banking/finance/banking/nearly-6900-cases- employees and added that the bank is already of-online-banking-frauds-registered-in-2017-18-govt/ organising customer outreach, especially for articleshow/73937005.cms the requirements of the small businesses and corporate segments, considering that Dated: Feb 04, 2020 there is a heavy demand for loans in the last • Oriental Bank of Commerce requests quarter. The pace of business growth at OBC FinMin to give new name for merged is at 11 per cent currently, which is higher entity: CEO: than the industry average of 6-7 per cent, he Oriental Bank of Commerce has requested said. Currently, the bank’s overall business the finance ministry to give a new name stands at Rs 4.02 lakh crore and it is targeting for the entity that will be created after it to take it up to Rs 4.25 lakh crore by March 31. merges with Punjab National Bank (PNB) Source: https://economictimes.indiatimes.com/ and Union Bank of India (UBI), a top official industry/banking/finance/banking/oriental-bank-of- said on Tuesday. “This is an amalgamation commerce-requests-finmin-to-give-new-name-for- of equals,” the bank’s Chief Executive Officer merged-entity-ceo/articleshow/ 73941725.cms and Managing Director Mukesh Kumar Dated: Feb 04, 2020 Jain told PTI in an interview here. “We • Yes Bank Ropes In Anshu Jain, Former have requested Finance Minister Nirmala Chief Of Deutsche Bank, To Raise Sitharaman that the name of the new bank Funds: to be created after amalgamation is either different from the three banks or it should Yes Bank, the fourth largest private bank of reflect the old identity of the three banks, so the India, is doing all it takes to raise capital. that a sense of equal participation appeared In its continuous efforts to raise funds, Yes in the name,” he added. On August 30 last Bank has given a mandate to Anshu Jain to year, Sitharaman had announced the merger raise the funds for the bank, sources close to of OBC, PNB and UBI as part of a streamlining the development told ETBFSI. Anshu Jain is a process where the government decreases former co-CEO of Deutsche Bank , currently the number of banks it runs to a dozen. the president of Cantor Fitzgerald, an Mergers of two more sets of banks were also investment bank and brokerage firm. This announced as part of the process. The only development has come after Yes Bank has precedent for such a process is the three- received approval from the board to raise way merger of Bank of Baroda, Vijaya Bank $2 billion. Cantor Fitzgerald is a New York- and Dena Bank, where the merged entity based 85-year-old global financial services

20 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 firm having its 32 offices across USA, Europe, amendment to Banking Regulation Act to Middle East and Asia Pacific. Prior to joining strengthen cooperative banks and avoid PMC Cantor, Jain was heading the German giant Bank like crisis. There are 1,540 cooperative Deutsche Bank as a co-CEO for three years. banks with depositor base of 8.60 crore He was the highest-paid CEO at the bank having total savings of about Rs 5 lakh crore. and resigned in 2015, after being associated The proposed law seeks to enforce banking with the bank for a total of 20 years. Yes regulation guidelines of the RBI in cooperative Bank is going through a tough time due to banks, while administrative issues will rise in NPAs, and bank need capital to make still be guided by Registrar of Cooperative, high provisioning against bad loans. Also, Information and Broadcasting Minister the bank needs to be compliant with RBIs Prakash Javadekar said while briefing media norms to maintain the capital adequacy about the Cabinet decisions. Observing that ratio. Yes Bank has been struggling to raise the changes will help strengthen financial funds and share prices are down by 13% in stability, he said qualifications would be set last one month. Recently India Ratings have for appointing CEO of cooperative banks downgraded the ratings of Yes, Bank. India and the RBI permission would be sought Ratings said that it will be challenging for before appointment as followed in case of Yes Bank to raise sizeable capital. The rating commercial banks. Audit would be as per agency said raising sizeable capital in the the RBI guidelines and the central bank can near-term. Earlier, the Board of the Yes bank also supersede the board if any cooperative rejected the offer of Erwin Singh Braich to bank is under stress, he said. Cooperative invest $500 mn in the bank. Born in India, bank will be given time to comply with Jain did his schooling from Jaipur and Delhi the RBI guidelines in phased manner, he and worked as a derivative analyst at UBS. added. The cabinet approval is in line with After that he joined Merrill Lynch in New the Budget announcement made by Finance York and also had stints with a few other Minister Nirmala Sitharaman on Saturday. financial institutions. Cantor Fitzgerald also “To strengthen the Cooperative Banks, made headlines due to a 9/11 attack that amendments to the Banking Regulation Act happened in New York City. Cantor lost many are proposed for increasing professionalism, of its employees in the plane crash. But the enabling access to capital and improving firm rose from the ashes and reached new governance and oversight for sound banking heights after Jain’s arrival. through the RBI,” she had said in the Budget Source: https://economictimes.indiatimes.com/ 2020-21. The decision assumes significance industry/banking/finance/banking/yes-bank-ropes-in- in the wake of a scam in the Punjab and anshu-jain-former-chief-of-deutsche-bank-to-raise- Maharashtra Cooperative (PMC) Bank funds/articleshow/73953909 .cms affecting lakhs of customers who are facing difficulties in withdrawing their money Dated: Feb 05, 2020 due to restrictions imposed by the Reserve • Cabinet Clears Amendment To Banking Bank of India. Javadekar further said this Laws To Strengthen Cooperative is the second important measure taken Banks: by the government to protect the interest In order to protect interest of depositors, of depositors within a week. Sitharaman the Union Cabinet on Wednesday approved proposed in the Budget to raise the insurance cover on saving deposits five times to Rs 5

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 21 lakh. “I wish to inform this august House that prime between 791-900. Higher scores are robust mechanism is in place to monitor the indicative of lower risk. Looking at year- health of all Scheduled Commercial Banks over-year growth in originations in 2019, and that depositors’ money is safe. “Further, credit cards grew 150%, consumer durables the Deposit Insurance and Credit Guarantee 113%, and personal loans 95%. Personal Corporation (DICGC) has been permitted to loans and credit cards are often used to increase Deposit Insurance Coverage for a finance living expenses and make smaller- depositor, which is now Rs 1 lakh to Rs 5 lakh ticket purchases. “In the personal loans space per depositor,” she said in Budget 2020-21. especially, the prevalence of non-banking At present, bank depositors get an insurance financial companies (NBFCs) and the rapid cover of Rs 1 lakh on their amount by the growth of FinTech lenders has accelerated Deposit Insurance and credit Guarantee the availability and ease of application for Corporation if a bank fails. However, this particular credit product” the report deposits maintained with different banks said. But lenders are conservative. Only 6 are not clubbed. per cent of the Gen-Z are credit active in Source: https://economictimes.indiatimes.com/ India compared to 66 per cent in USA and 63 industry/banking/finance/banking/cabinet-clears- per cent in Canada. “In emerging markets, amendment-to-banking-laws-to-strengthen- lenders may be more conservative with cooperative-banks/articleshow/73961713.cms extending traditional credit products to Gen Z, as those consumers may not yet have Dated: Feb 05, 2020 the credit histories and track records those lenders use to assess and manage risk,” said • 49% Of Gen-Z Borrowers Below Prime: Abhay Kelkar, vice president of research Almost half the generation-Z- born after and consulting for TransUnion CIBIL. “We 1995- borrowers, are below prime in terms have seen that the use of expanded data of their credit worthiness according to a sets and advanced analytic techniques can study by credit bureau Transunion Cibil. But help lenders better understand the risk lenders to are conservative while extending profiles of these younger borrowers and credit products to this group of borrowers. identify ways to engage them in a mutually Of the 49 per cent of the gen-Z borrowers profitable manner” Although India had the who are below prime, while 27 per cent of smallest percentage of credit active Gen Z them are near prime, 22 per cent of them consumers of all the countries studied, even are in the sub-prime category, the study among older Indian generations, credit noted. Moreover the loans arm or to meet participation is relatively low, as just 10% consumption demand rather than buying of the total adult population is credit active, an asset. “For Indian Gen Z consumers, the report said. originations (the rate at which new accounts Source: https://economictimes.indiatimes.com/industry/ are being opened) are growing fastest in banking/finance/banking/49-of-gen-z-borrowers-below- the consumption lending categories” the prime-report/articleshow/73965502.cms report said. According to Transuinion Cibil Dated: Feb 05, 2020 ranking. subprime borrwers are assigned a score between 300 and 680, near prime between 681-730, prime between 731-770, prime plus between 771-790, and super

22 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 • RBI Asks PNB To Harmonies Provisions 10 system while the other two banks are on For Bad Loans With OBC & UBI: stage 7 which will have to be integrated, Rao said. There are also 500 branches which The Reserve Bank of India (RBI) has asked are overlapping and which will have to be Punjab National Bank (PNB) to harmonies adjusted especially in Punjab, Haryana and its provisions for bad loans with those of Uttar Pradesh. PNB reported a loss of Rs 492 Oriental Bank of Commerce (OBC) and crore in the quarter ended December 2019 United Bank of India (UBI) the banks that it is compared to a Rs 246 crore profit a year acquiring before the process of merger gets earlier mainly because provisioning for bad started. In a letter in December the central loans increased. Provisions for bad loans bank asked the Delhi based lender to provide increased to Rs 4,445 crore from Rs 2,566 for common loans on a worse case basis, CEO crore a year-ago. Mallikarjuna Rao said. “RBI has written to us seeking harmonization of loans of all the Source: https://economictimes.indiatimes.com/ three banks. For us the impact is just Rs 800 industry/banking/finance/banking/rbi-asks-pnb-to- crore but we are yet to take into account the harmonise-provisions-for-bad-loans-with-obc-ubi/ impact for the other two banks. The RBI has articleshow/74009823.cms asked us to take into account the worst-case Dated: Feb 07, 2020 scenario for these loans which means if a • DBS Bank, Indostar In Talks To Invest loan is classified as substandard by one bank In Lakshmi Vilas Bank: it has to be classified in the same way for the other two,” Rao said. In late August finance Singapore’s DBS Bank and non-bank lender minister Nirmala Sitharaman announced Indostar Capital, which recently raised the amalgamation of 10 public sector banks money from Brookfield private equity, are into four big banks. As part of this plan PNB being billed as potential suitors of the funds- is supposed to acquire OBC and UBI which starved Lakshmi Vilas Bank (LVB) that had would create the country’s second largest failed to secure the regulator’s nod last year bank both in terms of business and branch for a merger with a home-grown financier. network. Rao said the pre amalgamation Three people familiar with the talks process is ongoing at the bank and as many involving the beleaguered lender said that as 34 committees have been formed which the interested parties have met the Reserve are headed by different general managers Bank of India (RBI), which must bless the from all three banks. PNB has also hired deal to ensure financial viability of the consultancy firm EY (Ernst & Young) to cash-strapped bank. LVB is the only private- help in the amalgamation process. “We are sector lender facing operational curbs from waiting for the government notification the banking regulator. “The talks are at an after which the share swap ratio will have exploratory stage and there could be other to be put in the public domain. There are interested investors as well. Some of them some legal issues which will also be have have met the RBI recently because this bank to be completed after the notification is needs capital urgently, and blessings from issued,” Rao said. Capgemini has been hired the central bank are necessary to secure to integrate the three bank’s IT operations any transaction. A deal may take some more while Deloitte has been engaged to calculate time,” said an industry executive aware the share swap ratio. PNB is on Financle stage of the discussions. Both DBS and Indostar

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 23 declined to comment. LVB’s interim CEO S stake leading to a possible entry of a private Sundar described the talks as ‘rumours’. The equity investors. In an interaction with the bank’s capital adequacy ratio at the end of media after presenting key parameters of September 2019 was 5.56%, lower than the the life insurer as of January 31 chairman minimum required 8%. The bank is placed MR Kumar also touched upon the insurance under the RBI’s prompt corrective action behemoth’s plans for its stake in the debt (PCA) framework. Inclusion within the PCA laden IDBI Bank. “The Reserve Bank of India means LVB has to cut lending, not open has given us a timeline of 12 years to bring branches and skip dividends. It needs at our stakes down in IDBI Bank. However, we least ?1,000 crore immediately to meet the don’t want to wait this long since we will be minimum capital requirements. “There are listing before that,” Kumar said. Loss making many investors that want a banking play IDBI Bank has been picked as the first public in India and LVB, because of its established sector lender in which the government will business, is a good option but ultimately the divest its stake, finance minister Nirmala call is with the RBI. The central bank is also Sitharaman announced in her budget speech mindful of the fact that the bank is running last week. LIC owns 51% in the lender after out of capital and a strong investor is needed. acquiring shares from the government in We may see some action before the end of the January last year. The government still fiscal,” said a second person familiar with the owns 47% stake which it plans to divest negotiations. In October, RBI had rejected in the secondary market. Kumar said that Indiabulls Housing Finance’s takeover bid once the government divests its stake in the of the bank, which has since been seeking bank it will make it easier for LIC to find another investor. “DBS is a stronger suitor better valuations. “We are also waiting for than Indostar because it is capital rich, has government to divest its stake in IDBI. This banking experience and is serious about we expect will bring private equity players expanding operations in India. Indostar has into the bank which will help us get more approached the bank with proposals earlier on the script. Currently we don’t have any and it remains to be seen if there is any float amount,” Kumar said. IDBI is also substance this time,” said the third person among the five public sector banks under cited above. RBI restrictions under the so called prompt Source: https://economictimes.indiatimes.com/ corrective action (PCA) framework with a industry/banking/finance/banking/dbs-bank- loss of Rs 3,459 crore in the quarter ended indostar-in-talks-to-invest-in-lakshmi-vilas-bank/ September as it increased provisions for articleshow/74001322.cms NPAs. Gross NPAs were at 29.43%. Kumar expressed hope that the bank will be out Dated: Feb 07, 2020 of PCA soon. “Once the bank is put out of • LIC Looks To Offload IDBI Stake Ahead PCA, there will be a positive impact on Of RBI Timeline: profitability. We expect the RBI to bring the bank out of PCA at the end of this quarter Life Insurance Corp (LIC) is looking to sell because it below the threshold limits on all down its 51% stake in IDBI Bank well ahead parameters except profitability,” he said. of the RBI mandated 12 year time line as it LIC has collected Rs 500 crore through new believes that the valuation of the lender business premiums collected through the could rise with the government’s sale of bank this fiscal. “Our objective was Rs.2000

24 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 crore, but we will finish the year with action through the Sarfaesi route, he said. around Rs.1000 crore which would still be “It is important that NBFCs are provided the the biggest sales through bank insurance necessary support from the other relevant in LIC history,” Kumar said. LIC follows the sections of the administrative machinery,” October to September financial year. Chakravarti said. NBFC have in the past Source: https://economictimes.indiatimes.com/industry/ shown preference to either arrive at a banking/finance/banking/lic-looks-to-offload-idbi-stake- settlement with the defaulting borrowers ahead-of-rbi-timeline/articleshow/74010445.cms or take the National Company Law Tribunal (NCLT) route for loan recovery. Another Dated: Feb 08, 2020 problem is the loan limit under the provision • Not Many NBFCs May Use SARFAESI is still too steep. Kailash Baheti, chief financial Act To Recover Loan: officer at Magma Fincorp, said more than Not many non-bank lenders are expected to 80% cases in the firm’s NBFC book are below use the SARFAESI Act provisions to recover Rs 50 lakh bracket. “Hence, the government debt despite the Union budget making this could have considered a lower threshold of, route accessible to more such lenders due to say, Rs 5 lakh,” he said. “However, we assume time-consuming administrative hurdles as that this is a process as the government may well as high loan ticket limit, industry insiders not like flooding of cases to SARFAESI without said. The budget has proposed to ease the adequate support infrastructure. We hope eligibility criteria for non-banking financial that the limit shall be progressively reduced.” companies (NBFCs) for debt recovery under Baheti, however, said recovery procedure the Securitization and Reconstruction of under SARFAESI takes just about one year Financial Assets and Enforcement of Security while a civil suit for recovery takes three to Interest (SARFAESI) Act 2002 to asset size of five years. Hemant Kanoria, chairman of Rs 100 crore, down from Rs 500 crore, and SREI Infrastructure Finance, said the budget loan size of at least Rs 50 lakh against existing provision will allow more number of NBFCs Rs 1 crore. The Act allows lenders to auction to take this route for asset recovery. “But, yes, properties of defaulters to recover their there remains scope for further liberalizing dues. “The reason for not too many NBFCs the eligibility criteria for NBFCs,” he said. currently opting for the SARFAESI route lies Anita Baid, senior manager at Vinod Kothari in the administrative roadblocks in bringing Consultants, said the option to use Sarfaesi such cases to a successful, time-bound is only where there is a security interest. closure,” said YS Chakravarti, managing “Using the Sarfaesi option also predicates a director at Shriram City Union Finance. Many substantial time to recovery, as there is a 90 NBFCs were unable to dispose of immovable days’ time for a debt to turn non-performing; property of defaulter borrowers fast enough there is a mandatory 60 days’ notice before any even after filing the case under Sarfaesi and repossession action; and there is a mandatory receiving a favourable outcome because it 30 days’ time before sale,” she said. typically takes long time to get permission Source: https://economictimes.indiatimes.com/ from the revenue department to auction or industry/banking/finance/banking/not-many- otherwise sell the collateral, Chakravarti nbfcs-may-use-sarfaesi-act-to-recover-loan/ claimed. The delay in recovering dues acts articleshow/74012648.cms as a major deterrent to NBFCs contemplating Dated: Feb 07, 2020

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 25 • PSU Banks May See Higher Profits, crore capital into PSU banks. A few among Must Tap Market: them will be encouraged to move capital market for fundraising purposes”, she said The PSU banks may see enhanced profits in her Budget Speech. Finance Secretary with write-back of some of the loans Rajeev Kumar had earlier said banks have provisions in their balance sheets on to tap the market and government would account of the IBC resolutions and they start gradually lowering its stake from must now tap the market themselves the state lenders. In some of the state run instead of looking for recapitalization, banks, government stake nearly touches Chief Economic Advisor Krishnamurthy 100 per cent. Recently Punjab National Subramanian has said. “The Budget’s Bank got board approval to raise Rs 1,000 decision not to recapitalize the PSU banks is crore from market through bonds. The IDBI a good move and signals that all the banks Bank also proposes to raise Rs 1,500 crore are adequately capitalized at this point. The from bonds to fund growth. Among all four judgement on Essar Steel provides greater anchor banks, the Punjab National Bank clarity on the IBC. State Bank of India profits was given Rs 16,091 crore, Union Bank were boosted by Essar Steel IBC resolution. of India Rs 11,768 crore, Canara Bank Rs Some of those accounts which have been 6,571 crore and Indian Bank Rs 2,534 crore. fully written down by banks, when they Merging entities, like the Allahabad Bank, get resolved, there will be a write-back on was provided Rs 2,153 crore, while the account of the resolutions. And this will United Bank of India got 1,666 crore and enhance their profitability and also have Andhra Bank Rs 200 crore. Besides, the Bank an impact on their growth capital. That’s of Baroda got a capital infusion of Rs 7,000 one aspect the government clearly believes crore, Indian Overseas Bank Rs 4,360 crore, that these banks are adequately capitalized. UCO Bank Rs 2142 crore, Punjab & Sind “So having all the while supported the Bank 787 crore and Central Bank of India Rs banks when they needed support, now 3,353 crore. State Bank of India has already government wants them to stand on their initiated the process of diluting stake in its own, enhance the governance and tap subsidiary SBI Cards and Payment Services into the market,” Subramanian told IANS. Ltd., and UTI Asset Management Co. Ltd. State Bank of India reported a 41 per cent via planned initial public offerings. It is year-on-year (y-o-y) rise in its net profit looking to sell 50 lakh shares representing during the December quarter to Rs 5,583 1.01 per cent stake in the National Stock crore, which was driven by healthy income Exchange. Life Insurance Corporation of from retail loans and an Rs 11,000-crore India-controlled IDBI Bank too received recovery from Essar Steel, following its additional capital of Rs 4,557 crore through sale to ArcelorMittal. Finance Minister the first supplementary demand for grants Nirmala Sitharaman said in the Budget approved by the Parliament last month. that government so far has infused Rs 3.5 crore capital into public sector banks (PSBs) Source: https://economictimes.indiatimes.com/ to help them maintain regulatory capital industry/banking/finance/banking/psu-banks-may-see- requirements and finance growth plans. In higher-profits-must-tap-market-cea-krishnamurthy- the last Budget, the government had infused subramanian/articleshow/ 74039562.cms Rs 70,000 crore. “We have infused Rs 3.5 Dated: Feb 09, 2020

26 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 • Govt May Notify Merger Of 10 PSBs To the government for a name to capture the 4 Lenders This Week: bank’s national identity after merger. In future, it’s the brand which makes the people The government is likely to notify the move,” Pradhan said. ET reported earlier merger of 10 public sector banks to create that Indian Bank was likely to retain its name four big lenders later this week, as they have after the merger with Allahabad Bank given completed the groundwork for the same, its pan-India appeal. The government may two people familiar with the development follow the same logic for the Union Bank of said. After it is notified, the respective bank India-led merger. boards will meet to give their customary final approval and fix the all-important swap ratio for the mergers. “We are expecting the government to notify the merger this week,” United Bank of India managing director Ashok Kumar Pradhan said. The banks will need to follow regulatory formalities to protect the interest of minority shareholders. “Valuation of each of the merging banks has been done on the basis of half-yearly results of the current fiscal year as well as on the future guidance,” one person familiar with the matter said. Each bank had its own valuers and harmonization of valuation for the merging partners has also been done. The government announced the mega merger on August 30 last year. Punjab National Bank, Oriental Bank of Commerce and United Bank of India will be amalgamated to create the country’s second-largest lender in terms of business size and branch network. PNB is the anchor bank for this merger. Likewise, Source: https://economictimes.indiatimes.com/ Union Bank of India is anchoring the merger industry/banking/finance/banking/govt-may- of itself with Andhra Bank and Corporation notify-merger-of-10-psbs-to-4-lenders-this-week/ Bank. In other two-way mergers, Canara articleshow/74048415.cms Bank and Syndicate Bank will become one, Dated: Feb 10, 2020 while Indian bank and Allahabad bank will • UAE Banks Headed For India To be clubbed. All the mergers are likely to Recover Rs 50,000 Crore: come into effect from April this year. The non-anchor lenders in the mega merger At least 9 banks from the UAE are in the exercise had requested the government for process of initiating legal action against new names and logos, unlike in the Bank Indian defaulters to recover around Rs of Baroda-Dena Bank-Vijaya Bank exercise, 50,000 crore, after New Delhi made the wherein the logos of all three lenders have rulings of Emirati courts in civil cases been retained. “Our bank has also requested enforceable here. While most of the cases

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 27 involve corporate loans taken by Dubai or with IBC cases. Emails sent to Emirates NBD, Abu Dhabi-based subsidiaries of Indian Abu Dhabi Commercial Bank, Doha Bank, companies, action is also being planned Mashreq Bank, National Bank of Oman and against individuals, two people with direct National Bank of Bahrain did not elicit any knowledge of the matter said. These banks response till press time Friday. “The banks include UAE-based Emirates NBD, Mashreq could first issue notices and see the response Bank and Abu Dhabi Commercial Bank. of the defaulter,” said a senior lawyer A few other lenders such as Doha Bank, advising one of the banks in a Rs 300 crore National Bank of Oman and National Bank corporate loan default. “The banks could also of Bahrain, that have exposure to Indian approach the NCLT or even invoke personal entities or citizens through their branches in guarantees,” he said. Besides, they could Dubai or Abu Dhabi, also have either already look at filing criminal cases in India against moved courts in the UAE or are in the process the individuals involved. In its notification, of doing so in the coming weeks, the people the Ministry of Law and Justice said the said. “Most of the cases are of corporate UAE would be a reciprocating territory loans and that is also the priority for the under section 44A of Civil Procedure banks as the amounts involved are huge. But Code. The section essentially says that any some banks also have retail loan exposure decree passed by the superior courts of any to India,” said one of the people. Most of the “reciprocating territory” may be executed loans were taken in the past 10 to 15 years. in India, as if it has been passed by Indian The Indian government on January 17 issued courts. Similarly, the UAE will allow the a notification allowing the decrees of certain rulings of Indian courts in civil cases. The UAE courts in civil cases to be enforceable in government notification allows the ruling India. This means a UAE bank, if it has a court of two UAE-based federal courts and five order in its favour against a defaulter who other courts to be enforceable in India. “This has fled to India or no more has operations notification ends confusion as to whether in the Emirates, can seek to enforce it here UAE is a reciprocating territory or not. like any local lender to recover the money. Earlier, the bilateral agreement between the “Earlier UAE-based banks had no recourse to two nations to provide for the recognition of enforce judgements directly to recover their foreign judgements was not acceptable by corporate or retail loans given to Indians Indian courts for want of a notification,” said in the UAE, but now they can take action Ateev Mathur, a partner at law firm SNG & in India. So, now UAE banks can initiate Partners. According to people in the know, execution proceedings in India after they while corporate loans form a large chunk of take a decree from a UAE court and may also UAE’s exposure, even retail loans are quite explore initiating proceedings under the IBC substantial. “The average ticket size of retail (India’s Insolvency and Bankruptcy Code),” loans is around Rs 2 crore. Many Indians had said Ajay Monga, a partner at law firm SNG taken loans and it seems with sole purpose & Partners. According to the people in the of not returning it,” said one of the people. know, these banks have approached Indian Many individuals had given personal law firms to assist them in completing the guarantees to UAE banks before taking the legal process here, such as serving notices on loans. These personal guarantees could be the defaulters or approaching the National invoked & criminal cases filed against the Company Law Tribunal (NCLT), which deals individuals, said legal experts.

28 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 these bullets to be shot but they are and it’s not a sectoral problem, it’s an entity level problem,” said Dipak Gupta, joint MD, Kotak Mahindra Bank. “The approach is I must move cautiously. Once you see the road ahead is clear, then you can move fast.” Following a three-way merger, Bank of Baroda’s slippages rose sharply to Rs 10,387 crore for the December quarter after it absorbed Dena Bank and Vijaya Bank. Another state- run lender, Punjab National Bank, also reported elevated fresh bad loans at Rs 7,400 crore but said that lumpy corporate stress Source: https://economictimes.indiatimes.com/ formation is largely behind it. Banking sector industry/banking/finance/banking/uae-banks- experts feel that while the stress formation headed-for-india-to-recover-rs-50000-crore/ is visible, fresh additions in bad loans have articleshow/74019520.cms been factored in. “This quarter, banks Dated: Feb 10, 2020 have reported lumpy slippages, especially from the corporate sector, but the silver • Banks Get No Respite As Q3 Slippages lining is that these are largely from known Rise: accounts like DHFL, CCD, Cox & Kings etc., Indian banks, which reported healthy growth so the assumption is that slippages could numbers in recent quarters, continue to be peak soon,” said Rajiv Mehta, analyst, Yes plagued by high slippages, especially from Securities. A recent India Ratings report said the corporate loan book. Top banks, including the proportion of stressed corporate assets State Bank of India, Axis Bank, Bank of declined to 17.9% of total bank credit at end- Baroda, Punjab National Bank and Bank of September 2019 versus 19.3% in the same India all reported a sharp rise in slippages period last year. This fall was primarily on in the December quarter, signaling that account of write-offs of about 1.8% of total trouble is still brewing on the asset quality bank credit, improvements in credit profiles front. State Bank of India saw its slippages of accounts amounting to 0.4% of total new bad loans almost double sequentially to bank credit and the base effect on account Rs 16,525 crore. It had reported slippages of of 8.8% annual credit growth. But despite Rs 8,800 crore in the September quarter. Its data indicating that asset quality issues have slippage ratio rose to 2.94% from 0.87% on an annual basis. Likewise, Axis Bank recognized slippages of Rs 6,214 crore in the December quarter, compared with Rs 4,983 crore in the second quarter and Rs 3,746 crore in year- earlier quarter. Kotak Mahindra Bank put new additions in bad loans at Rs 1,062 crore in the third quarter. “Progressively, every quarter you see new bullets and these are in the realm of unknown. You don’t expect

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 29 moderated, fresh additions have continued. • Bad Loans of Public Sector Banks Fall “These have been partially offset by the to Rs 7.27 Lakh Crore at end of Sept impact of additions of about 2.4% to stressed 2019: assets from both corporates and non-banking Finance Minister Nirmala Sitharaman on financial companies,” the report noted. Monday said public sector banks’ (PSBs) “While we believe the majority of stressed bad loans came down to Rs 7.27 lakh crore corporates have undergone rapid credit at the end of September 2019, on host of migration in the last few years, the aversion measures taken by the government to of bankers to take on additional risk could improve financial health of the banks in the result in more slippages than estimated.” country. “The government has instituted Source: https://economictimes.indiatimes.com/ comprehensive reforms in PSBs to improve, industry/banking/finance/banking/banks-get-no- governance, underwriting, monitoring and respite-as-q3-slippages-rise/articleshow/74053792.cms recovery, and has leveraged technology

Dated: Feb 10, 2020 in all aspects of banking, resulting in reduction in their NPAs,” Sitharaman said • Bank Unions Call For Three-Day in written reply to a question in the Lok Nationwide Strike From March 11: Sabha. She said bad loans of PSBs stood at Rs 7.27 lakh crore at the end of September After the two-day strike on January 31 2019, down from Rs 8.96 lakh crore at the and February 1 by the Bank Unions, Bank end of March 2018. “Record recovery of Rs Employees Federation of India (BEFI) and 2.03 lakh crore over the one-and-half year the All India Bank Employees’ Association period ending September 2019, 12 out of (AIBEA) informed that a three-day 18 PSBs reporting profit in the first half of nationwide bank strike will be observed the current financial year, and the highest from March 11 to 13. The strike has been provision coverage ratio in seven-and- called after talks over wage revision failed half years,” she said. She said the Banking to initiate with the Indian Banks’ Association Trend Report published by the Reserve (IBA). This would be the third bank strike Bank of India (RBI) in December observed this month, after the first one was observed that the health of the banking sector along with Bharat Bandh on January 8. The hinges on a turnaround in macroeconomic strike has been timed ahead of the second conditions. “The government has taken Saturday of March, when banks observe significant steps towards speeding up the a holiday, this could affect work for five insolvency resolution process under the consecutive days including Sunday. Unions Insolvency and Bankruptcy Code (IBC) want wage revision settlement at 20% hike and easing of credit, particularly for the on pay slip components with adequate stressed real estate and non-banking loading thereof while IBA said it is ready financial companies (NBFCs) sectors, and for upto 19% hike including performance that the impact of critical measures taken linked incentive. to boost investment present green shoots Source: https://economictimes.indiatimes.com/ for growth in the second half of 2019-20 industry/banking/finance/banking/bank-unions-call- and 2020-21.” Further, the RBI’s Financial for-a-three-day-nationwide-strike-from-march-11/ Stability Report stated that the capital articleshow/74063818.cms adequacy ratio of scheduled commercial Dated: Feb 10, 2020

30 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 banks has improved significantly from before initiation of investigation by the 14.3 per cent in March 2019 to 15.1 Central Bureau of Investigation. Besides, per cent in September 2019 following the government has taken steps to facilitate recapitalisation of state-owned banks. and incentivise lending through successive PSBs’ provision coverage ratio has risen to cuts in lending rates, linking of loans for 61.5 per cent from 60.5 per cent over the micro, small and medium enterprises same period implying increased resilience (MSMEs) to an external benchmark rate, of the banking sector, and their net non- and relief to banks’ cash reserve ratio performing assets ratio has declined requirement, among others. “With regard reflecting increased provisioning, she said. to governance norms for banks, it is When asked about the bank’s confidence in stated that the government has recently extending loans, she said sporadic credit introduced comprehensive reforms in default events and incidents of frauds have PSBs, taking into account global best contributed to reluctance in lending by practices, for empowering bank boards, banks. She, however, added that a number strengthening the board committee of steps have been taken to address these system, improving the effectiveness of and other matters concerning lending by non-official directors and building a banks. She said the measures initiated leadership pipeline,” the minister said. include maintenance of overall positive She also said that specific reforms include liquidity through open market operations empowerment of boards to recruit chief by the RBI, liquidity support through risk officers from the market at market- various means to the NBFC sector in linked compensation, mandate to boards which there have been instances of credit to provide non-official directors necessary defaults, and enabling of financial support training, and to undertake annual peer for stalled housing and real estate projects. evaluation of their performance. “Mechanism for resolution of stress in Source: https://economictimes.indiatimes.com/ NBFCs has been created by empowering industry/banking/finance/banking/bad-loans-of-public- RBI to take action in this regard through sector-banks-fall-to-rs-7-27-lakh-crore-at-end-of-sept- amendments...and bringing NBFCs with 2019-nirmala-sitharaman/articleshow/74063961.cms an asset size of Rs 500 crore and above Dated: Feb 10, 2020 within the ambit of resolution under IBC,” Sitharaman said. To address concerns • Bank and Tilden Park Capital due to frauds contributing to reluctance Management Seek RBI’s Blessings: in lending, she said the Prevention of Corruption Act has been amended to US fund house Tilden Park Capital prohibit conduct of inquiry or investigation Management has sounded out the Reserve of offences relatable to decision taken by Bank of India (RBI) for buying a sizeable public servant in discharge of functions, stake in Lakshmi Vilas Bank (LVB), an old without previous approval of the authority private sector lender which is scouting for competent to remove him. The Advisory investors to shore up capital. An official Board for Banking and Financial Frauds of the New York-headquartered asset has been set up for distinguishing between manager and senior members of LVB commercial failure and criminal action management recently met RBI to explore cases of suspected frauds over Rs 50 crore, the possibility. Tilden was introduced to

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 31 LVB by Cantor Fitzgerald, the New York- source. ET’s email queries to Tilden went based financial services firm where former unanswered till the time of going to press Deutsche Bank co-CEO Anshu Jain is part while LVB CEO S Sundar could not be of the top leadership team. In any ‘control reached. A DBS spokesperson said: “As a transaction’, where the investor plans to matter of policy, we do not comment on acquire a substantial even if not a majority such matters.” The LVB stock has declined interest, the regulator as well as the investee 69% to Rs 18 in the past one year. During the bank have to do a detailed check of the period, entities belonging to Capri Group led background and credentials of the investor. by Rajesh Sharma have bought more than In such cases, RBI may even consult the 4.6% of LVB shares from the open market. regulator of the overseas investor’s home Last year, Capri had expressed interest to country. Any investment of 5% or more infuse capital in the bank, but this was not in a private bank requires prior approval pursued by the board which had initiated of RBI. There is regulatory precedence of talks with Indiabulls. allowing a strategic investor to acquire a large stake in a private bank with the condition that it has to dilute holding to 15% over a period of time following a lock- in term. According to regulatory circles, after RBI disallowed the merger of LVB with Indiabulls Housing Finance, the bank wants to make sure that the regulator approves the investor. It is understood that talks with Tilden are at a preliminary stage and key issues such as pricing or fund infusion Source: https://economictimes.indiatimes.com/ have not been discussed. LVB is operating industry/banking/finance/banking/us-fund-house- under regulatory restrictions laid down eyes-big-stake-lakshmi-vilas-bank-and-tilden- in RBI’s prompt corrective action (PCA) park-capital-management-seek-rbis-blessings/ framework. The bank, with an asset size of articleshow/74072973.cms Rs 31,500 crore, will need at least Rs 1,000- Dated: Feb 11, 2020 1,500 crore of immediate fund infusion with its capital adequacy level at 5.56% at • Think Tank Urges SC To Stop Trial Of the end of September against the minimum WhatsApp Pay: 8% required under regulations. It suffered a loss of Rs 357 crore after providing Rs 312 The Centre for Accountability and Systemic crore for bad loans in the quarter ended Change (CASC), a think tank that had filed a September. DBS of Singapore, which is public interest litigation before the Supreme keen to expand its presence in India, has Court last year against WhatsApp Pay, also shown interest in the Indian bank. has sought an immediate rollback of the “LVB’s 560-odd branches is an attraction for messaging app’s pilot project. In an interim the Singapore bank. DBS, which functions application filed on Monday, CASC has urged as a subsidiary of the Singapore parent, the apex court to stop WhatsApp’s trial with 1 is believed to have approached Indian million users, direct the Reserve Bank of India authorities on the matter,” said an industry (RBI) to put on record the permission granted

32 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 for the trial and disclose all communication • Crisis-Hit Cooperative Bank Looks To between WhatsApp, the National Payments Raise Rs 300 Crore In Fresh Capital: Corporation of India (NPCI) and itself. The Sri Guru Raghavendra Sahakara WhatsApp Pay is designed to run on the Bank, the beleaguered cooperative bank Unified Payments Interface developed by in Bengaluru that is under the RBI’s watch, NPCI. UPI allows users to pay others or do has sought the regulator’s approval to business transactions through their bank raise about Rs 300 crore in fresh capital to accounts. WhatsApp Pay has been running a achieve a speedy turnaround. The bank’s pilot with 1 million users for nearly two years. management has proposed a slew of It has yet to receive permission to do a full measures to the RBI as part of a roadmap to rollout with all its 400 million Indian users shore up its finances, while offering to keep because it has not yet completed storing all the fresh capital in separate suspense and data within the country’s borders. CASC said escrow accounts until they are converted that, according to RBI’s affidavit to Supreme into shares. The bank is waiting for the Court in November, WhatsApp had not yet regulator’s directions, sources privy to the fully complied with the rules. “It is submitted developments told ET. The bank with eight that 1 million Indians cannot be reduced to branches, founded in Basavanagudi in the guinea pigs. Their sensitive personal data, city two decades ago, has not been carrying including financial data cannot be stored out regular banking transactions for the outside India in contravention to the RBI past one month. The RBI has imposed a set Circular,” the application stated. WhatsApp of restrictions on the bank since January and RBI did not respond to emails until press 10 after its inspection team found slippages time on Monday. This latest plea by CASC in its loan book and increase in non- comes after reports emerged last week that performing assets (NPAs). The restrictions NPCI had allowed WhatsApp to increase the include refraining from accepting fresh size of the pilot project to 10 million customers. deposits, sanctioning or renewing new “It is submitted that in any case, there cannot loans and making any investments without be any blanket permission for trials, and same the regulator’s approval. Customers can should be restricted by duration, number withdraw only up to Rs 35,000 from their of banks involved and monetary limits. accounts. The restrictions will be in force WhatsApp on many occasions has claimed for a period of six months or until further compliance with RBI data localization review. The bank’s president K Ramakrishna norms, even though RBI’s affidavit clearly declined to comment on the grounds that the proves that it is not the case,” the application communication between the bank and the stated. According to CASC’s lawsuit last year, RBI was confidential. An email query to the WhatsApp should not be granted permission RBI remained unanswered as of press time. for a full-fledged rollout of its payment service The management, sources said, is in talks until the Facebook-owned instant messaging with some large depositors requesting them platform completes localizing the data and to participate in its capital-raising efforts. appoints a grievance officer in India. If the RBI approves its plans, the bank will Source: https://economictimes.indiatimes.com/industry/ keep a part of their deposits in a separate banking/finance/banking/think-tank-urges-sc-to-stop- suspense account, and pay interest until it trial-of-whatsapp-pay/articleshow/74073973.cms is converted into shares, said sources. The Dated: Feb 11, 2020

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 33 bank’s management is also approaching currency has dropped more than 3%, while hundreds of other citizens requesting them many of its Asian peers have been much to become shareholders by investing about better off. The rupee becomes one of the Rs 1 crore each. It has told the RBI that these worst performers among Asian currencies if funds will be kept in an escrow account until we take a six-month trend. This is because they are converted into loans on the RBI’s of a single participant in the market—the approval. It is also pursuing plans to sell NPA Reserve Bank of India (RBI). The central accounts to willing financial institutions, bank has been incessantly buying dollars, along with the collateral, to overcome short- soaking up whatever foreign inflow entered term capital issues. The bank is staring Indian shores. It has swallowed $15.5 billion at non-performing assets of about Rs 375 from the spot forex market between July and crore from around 65 major borrowers, the November, and currency dealers believe amount it is now struggling to recoup. The it hasn’t stopped yet. RBI even intervened RBI, sources added, has permitted the bank to in the forward dollar market, purchasing file police complaints against the defaulters. contracts that allow it to buy greenbacks at a Apart from approaching the police, the future date. The accompanying chart shows bank will also invoke provisions of the law the extent of central bank intervention. (Sarfaesi Act) to sell off the collateral pledged Ironically, RBI has made it easy for dollars by the borrowers to recover the dues. The to come into the country. In the pursuit of bank has filed a police complaint against its inclusion in global bond indices, the central past CEO M Vasudeva Maiya accusing him of bank has invited foreign investors to take a sanctioning loans, in several cases without larger bite of Indian bonds. But while RBI is following due procedure. opening up and welcoming foreign inflows, Source: https://economictimes.indiatimes.com/ it is also doing everything it can to prevent industry/banking/finance/banking/crisis-hit- the rupee from appreciating. The central cooperative-bank-looks-to-raise-rs-300-crore-in-fresh- bank has its reasons for its death grip on the capital/articleshow/74075817.cms exchange rate. India’s economic growth is Dated: Feb 11, 2020 estimated to fall to a multi-decade low on a nominal basis in FY20. A country’s exchange • For The Rupee, RBI Intervention Is A rate derives strength from its economic Bigger Force Than Coronavirus: growth and therefore, the rupee’s weakness India’s exchange rate may be showing is warranted. Since dollar inflows seldom signs of getting infected by the coronavirus follow only the growth factor, RBI seems it outbreak, but in reality, the illness it suffers fit to absorb them, as a slowing economy from is called intervention. The rupee has has little capacity to do so. Dollars when weakened around 0.2% since the outbreak of left alone tend to chase fewer assets, which the epidemic in China last month. Its Asian in its worst form creates a bubble. Another peers have performed much worse, with the reason for RBI to keep a grip on the rupee is Singapore dollar, the Malaysian ringgit and competitiveness. The real effective exchange even the Thai baht losing more than 2%. rate, based on a trade-weighted index of 36 The Chinese yuan has been the worst hit, currencies, shows the rupee is overvalued since the country is the vortex of the crisis. by a stark 17% as of December, although If we take a longer-term trend, the picture economists say the overvaluation is mild changes. Since July last year, the Indian once the Chinese yuan is taken out of the mix.

34 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 “The RBI’s view seems to be that the rupee’s movement in the benchmark. While the fair value is somewhere in the region of 71- Reserve Bank of India’s ₹1 trillion credit 72 per dollar. The rupee has to be relatively window and exemptions from setting aside weak for a competitive advantage vis-à-vis money as Cash Reserve Ratio (CRR) will lower trading partners and leaving it to the forces the cost of funds for banks, it won’t reduce of the market is not appropriate,” said an interest rates for loans that are linked to the economist, asking not to be named. The repo rate, according to chief executives of rupee ended at 71.29 to a dollar on Tuesday. Union Bank of India and Punjab National Bank (PNB). The lower cost of funds will allow banks to only pass on the benefits to borrowers whose interest rates are based on MCLR, they told reporters on the sidelines of separate press conferences to announce their December quarter earnings last week. “In case of MCLR, the cost of deposits will change and for external benchmark, the repo has to change. See, the risk premium for external benchmark does not change easily,” said Rajkiran Rai G., chief executive of Union Bank of India. The repo rate loans Source: https://www.livemint.com/market/mark-to- have two components to it, a benchmark market/for-the-rupee-rbi-intervention-is-a-bigger- and a spread. Rai explained that under force-than-coronavirus-11581446545069.html RBI’s norms, the spread cannot be changed frequently and since the repo rate has not Dated: Feb 12. 2020 changed since October, a change in lending rate is not possible. “The CRR benefit will • RBI’s CRR Step Won’t Make Your Loan not have much impact on the interest rates Cheaper: and it will be more on the MCLR side, not on The central bank’s recent measures to lower the external benchmark side. Actually, most interest rates for consumers and small of the housing and small business loans are businesses are unlikely to benefit them happening on the external benchmark rate; and instead deliver some collateral gains so, the CRR reduction is not going to have to corporate borrowers, whose interest an impact on those loans unless the repo rates are still set on the marginal cost of rate changes,” said Rai. In its 4 September the bank’s funds. This is because from 1 notification, RBI said banks are free to decide October, all retail and small business loans the spread over the external benchmark, have moved to the new external benchmark- however, credit risk premium may based lending rate it’s the repo rate for undergo a change only when a borrower’s almost all banks from the earlier Marginal credit assessment undergoes a substantial Cost of funds-based Lending Rate (MCLR) change. It also said that other components framework. While MCLR is based on a of spread, including operating cost, could bank’s incremental cost of funds, loans that be altered once in three years. According are linked to external benchmarks such as to S.S. Mallikarjuna Rao, chief executive of the repo rate change only when there is a Punjab National Bank, the lender will not

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 35 be able to pass on benefits to retail loans of MD and CEO of public sector banks as those are already linked to the repo rate. (PSBs) for compliance in dealing with large However, Rao said the bank can think of value frauds committed by bank officials. using another benchmark in the months Considering the complexities involved in ahead, like the treasury bills or government the commercial decisions of managers in securities for pricing its loans. Although RBI public sector firms, the Central Vigilance provided banks the option to choose from Commission set up the Advisory Board for a host of external rates, almost all banks Banking and Financial Frauds (ABBFF) for chose the repo rate and the liquid nature of a mandatory first level examination on other benchmarks might have made PNB suspected frauds in excess of Rs 50 crore, think of adding another rate to the kitty. involving public servants of GM rank and RBI regulations do not permit banks to use above, before investigations begin. In order multiple benchmarks for a single category of to boost staff morale and reduce scope for loans. The central bank’s efforts were aimed harassment, Finance Minister Nirmala at reviving wilting credit growth owing Sitharaman had also directed PSB heads to to a mix of lack of demand and corporate clear long-pending vigilance cases against deleveraging in a sluggish economy. Non- their officials for alleged malpractices. The food credit declined to 7.14% in the fortnight banks should form a panel headed by a ended 17 January compared to 7.51% in the general manager (GM) and it should either previous fortnight. take decision to pursue the case with a Source: https://www.livemint.com/money/personal- timeline or close the file of long-pending finance/rbi-s-crr-step-won-t-make-your-loan- vigilance cases, she had instructed. Talking cheaper-11581534054349.html about the current levels of non-performing assets (NPAs), Basu said banks should have Dated: Feb 13, 2020 been cautious in some cases. “There are two • SBI MD Arijit Basu Bats For Greater aspects to the reasons as to why this (non- Oversight On Banks, Sans Overreach performing assets) happened. One of them By Probe Agencies: is rooted in the economy of the country...the other cause was the fact that when this was There is a need for greater oversight on being done, there were certain accounts in banks, but overreach by probe agencies certain cases where the banks should also must be avoided, SBI Managing Director have been much more cautious,” he said. Arijit Basu said on Thursday. “...when you The gross non-performing asset ratio of are working with public money you need commercial banks is seen rising to 9.9 per to be overseen and you have to have a cent by September 2020 from 9.3 per cent as Central Vigilance Commission or a Central on September 2019, according to the baseline Bureau of Investigation, but there should scenario in a macro-stress test conducted by not be overreach. I think the government the Reserve Bank of India. Basu also said the also in the recent past has taken a lot of worst is behind the banking sector in terms measures to assure the bankers,” Basu said. of NPAs. “In a major way, the Insolvency With a view to protect prudent decision and Bankruptcy Code has really helped us making of bankers, the government last see that the ecosystem gets cleaned up. The month took a slew of decisions, including legacy accounts, which were there, most of doing away with personal responsibilities them have been addressed,” Basu said at

36 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 the Times Now Summit. He further said the crore were reported in Canara Bank, UCO retail credit growth of SBI is seen at around Bank, Syndicate Bank, Corporation Bank, 18 per cent. Bank of Maharashtra, Central Bank of India, Source: https://economictimes.indiatimes.com/ Andhra Bank, United Bank of India, Indian industry/banking/finance/banking/sbi-md-arijit-basu- Bank and Punjab and Sind Bank, it added. bats-for-greater-oversight-on-banks-sans-overreach- The RBI has not given specific details of the by-probe-agencies/articleshow/74121624.cms nature of banking fraud cases and the losses suffered by banks or their customers due to Dated: Feb 13, 2020 these frauds. • PSBs Hit By Fraud Cases Of Rs 1.17 Source: https://economictimes.indiatimes.com/ Lakh Crore In April-December: industry/banking/finance/banking/psbs-hit-by-fraud-

A total of 8,926 cases of fraud involving Rs cases-of-rs-1-17-lakh-crore-in-april-december-rti/ 1.17 lakh crore hit 18 public sector banks articleshow/74121562.cms during the first three quarters (April- Dated: Feb 13, 2020 December) of the current fiscal, a reply to an RTI query has revealed. The country’s • SBI MD Shri Arijit Basu Bats For largest lender State Bank of India (SBI) Greater Oversight On Banks, Sans was the biggest hit by frauds, RTI activist Overreach By Probe Agencies: Chandrasekhar Gaur told on Thursday There is a need for greater oversight on quoting an official of the RBI who furnished banks, but overreach by probe agencies replies to the RTI application. SBI reported must be avoided, SBI Managing Director 4,769 cases of banking frauds worth Rs Arijit Basu said on Thursday.”...when you 30,300 crore during the nine-month period are working with public money you need ended December 2019. This is about 26 per to be overseen and you have to have a cent of the Rs 1,17,463.73 crore, which is the Central Vigilance Commission or a Central total amount of reported cases of banking Bureau of Investigation, but there should frauds in PSBs during this period, he said. In not be overreach. I think the government Punjab National Bank, 294 cases of banking also in the recent past has taken a lot of fraud were reported during this period, with measures to assure the bankers,” Basu said. Rs 14,928.62 crore involved in it. During the With a view to protect prudent decision period, 250 cases involving a total amount of making of bankers, the government last Rs 11,166.19 crore were reported in Bank of month took a slew of decisions, including Baroda. A total of 860 cases of fraud worth Rs doing away with personal responsibilities 6,781.57 crore were reported in Allahabad of MD and CEO of public sector banks Bank during this period, while 161 cases (PSBs) for compliance in dealing with large of fraud worth Rs 6,626.12 crore in Bank of value frauds committed by bank officials. India, it said. As many as 292 cases of fraud Considering the complexities involved in worth Rs 5,604.55 crore detected in Union the commercial decisions of managers in Bank of India, 151 cases worth Rs 5,556.64 public sector firms, the Central Vigilance crore in Indian Overseas Bank and 282 cases Commission set up the Advisory Board for worth Rs 4,899.27 crore in Oriental Bank Banking and Financial Frauds (ABBFF) for of Commerce were reported. Besides, 1,867 a mandatory first level examination on cases involving total amount of Rs 31,600.76 suspected frauds in excess of Rs 50 crore,

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 37 involving public servants of GM rank and • Indian Banks’ Loans Rise Over 7% In above, before investigations begin. In order Two Weeks To January 31: to boost staff morale and reduce scope for Indian banks’ loans rose 7.1% in the two harassment, Finance Minister Nirmala weeks to Jan. 31 from a year earlier, while Sitharaman had also directed PSB heads to deposits increased 9.9%, the Reserve Bank of clear long-pending vigilance cases against India’s (RBI) weekly statistical supplement their officials for alleged malpractices. The showed on Friday. Outstanding loans rose banks should form a panel headed by a 989.26 billion rupees ($13.86 billion) to general manager (GM) and it should either 101.03 trillion rupees in the fortnight to Jan. take decision to pursue the case with a 31. Non-food credit rose 1.02 trillion rupees timeline or close the file of long-pending to 100.24 trillion rupees, while food credit fell vigilance cases, she had instructed. Talking 32.02 billion rupees to 788.99 billion rupees. about the current levels of non-performing Bank deposits rose 1.98 trillion rupees to assets (NPAs), Basu said banks should have 133.24 trillion rupees. been cautious in some cases. “There are two Source: https://economictimes.indiatimes.com/ aspects to the reasons as to why this (non- industry/banking/finance/banking/indian-banks- performing assets) happened. One of them loans-rise-over-7-in-two-weeks-to-january-31-rbi/ is rooted in the economy of the country...the articleshow/74136923.cms other cause was the fact that when this was being done, there were certain accounts in Dated: Feb 14, 2020 certain cases where the banks should also • SBI Not Approached By Any Telco To have been much more cautious,” he said. Finance AGR Dues, Says Chairman: The gross non-performing asset ratio of commercial banks is seen rising to 9.9 per It is incumbent on the telcos to find money cent by September 2020 from 9.3 per cent as and will be safe to presume that they would on September 2019, according to the baseline have made some arrangements for it by now, scenario in a macro-stress test conducted by SBI chairman Rajnish Kumar said on Friday. the Reserve Bank of India. Basu also said the He also said that the bank will be passing worst is behind the banking sector in terms on all the benefits of the cash reserve ratio of NPAs. “In a major way, the Insolvency (CRR) reliefs on small ticket loans to the and Bankruptcy Code has really helped us borrowers and a decision on the same will see that the ecosystem gets cleaned up. The be done before April 1. The comments on legacy accounts, which were there, most of telecom companies come on a day when them have been addressed,” Basu said at the Supreme Court made it clear that they the Times Now Summit.He further said the will have to cough up the Rs 1.47 lakh crore retail credit growth of SBI is seen at around in adjusted gross revenue (AGR) dues and 18 per cent. also questioned why contempt proceedings should not be initiated against those who Source: https://economictimes.indiatimes.com/ are coming in way of implementing its industry/banking/finance/banking/sbi-md-arijit-basu- order. “It is now for the telecom companies bats-for-greater-oversight-on-banks-sans-overreach- to decide how will they find the money or by-probe-agencies/articleshow/ 74121624.cms what course of action they will take,” Kumar Dated: Feb 13, 2020 told reporters on the sidelines of the annual NTLF here. “They (telcos) would have made

38 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 their arrangements is what I presume,” offering, Kumar said. Taking potshots at Kumar said, adding that it has not been new-age digital players, Kumar said a bank’s approached by any of the telecom company. valuation goes up when it reports profits, The payments to be made by the companies while it is losses that drive the valuations for include Rs 53,000 crore by Vodafone Idea, Rs new age entities. 35,500 crore by Bharti Airtel and Rs 14,000 Source: https://economictimes.indiatimes.com/ crore by the now defunct Tata Teleservices. industry/banking/finance/banking/sbi-not-approached- Kumar said the bank has a Rs 29,000 crore by-any-telco-to-finance-agr-dues-says-chairman/ exposure to the telecom sector and another articleshow/74137423.cms up to Rs 14,000 crore in non-fund based Dated: Feb 14, 2020 exposure which will devolve only if there is a non-payment of dues. Its gross non- • With AGR Ruling, Banks Fear Surge In performing assets include Rs 9,000 crore Bad Loans: from the telecom sector, he said, adding that it has been provided for in full and the Bankers fear a possible collapse of Vodafone bank has decided not to set aside money Idea will increase bad loans and spark a against standard assets there. On the CRR rerun of the crisis that gripped the banking benefit pass through, he said the next review sector a few years ago. Bank stocks slumped of the external benchmark-linked rates is on Friday after the Supreme Court refused scheduled to take place in April 1, but an to give relief to telecom companies on announcement will be made before that as adjusted gross revenues (AGR) dues, putting well. The bank, at present, is calculating what at risk the nearly .Rs 30,000 crore loans to exactly will be the benefit of the RBI’s move Vodafone Idea, which has repeatedly been announced on February 6 and the quantum saying that its survival will be under threat of the benefit to the end customer will be if the government does not give any relief soon arrived at. Meanwhile, on the troubles on payment of past dues. Vodafone Idea of Yes Bank, Kumar said SBI also had to needs to pay. Rs 53,000 crore to the telecom contend with “mess” because of its corporate department (DoT) on AGR dues and there lending like the private sector lender, but are fears that the company may not be able could absorb the impact because of its size to pay the full amount. On Friday, Vodafone while the smaller sized Yes Bank suffered. Idea shares plunged 23% to Rs 3.44. Bankers The impact on both the banks was “more say the Vodafone Idea account is a standard or less the same”, he said. He claimed SBI one as of now and the telco is paying its is the biggest e-commerce player at present dues, but lenders, including State Bank of through its digital banking offering ‘Yono’ if India, have a large exposure through loans one were to exclude pure-play players in the and guarantees. These guarantees could segment. The bank has done over Rs 14,000 come into play if the government invokes crore of personal loans through the app and them. Brokerage house Macquarie estimates the interest and fees earned through it will Vodafone Idea debt at Rs 1.26 lakh crore, help it recover the Rs 800 crore investment in of which Rs 90,700 crore is in the form of the app, he said. It is on boarding an average deferred payment liabilities and guarantees of 70,000 users per day on Yono and will be towards spectrum charges payable over hitting the 20 million mark soon, even before 16 years. Banks which are struggling with it celebrates the second anniversary of the non-performing assets (NPAs) of Reliance

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 39 Communications and Aircel — two other the telecom sector and not provided for telcos which are at different stages of loans which are being repaid on time such resolution at bankruptcy courts — may now as the Vodafone Idea account, Kumar said. have to think of alternatives if Vodafone Idea IDFC First Bank made a 50% provision for is unable to pay. “I think now they (telcos) its RRs 1,622 crore exposure to this account. have to talk to the government and if it is an “The bank has a legacy exposure of Rs 3,244 order from the honourable Supreme Court, crore to this identified telecom company, of then they will have to comply. We have to which Rs 2,000 crore is in the form of non- talk to them to understand what their plans convertible debentures and Rs 1,244 crore is are and they would have plans, because this in the form of non-funded exposure (bank is something they might have expected also. guarantees) for spectrum,” the bank said So after this order, we will ask them what in its third quarter financial statement on are their plans to comply with the order, and February 4. “There has been no payment whatever is the situation we are capable of default so far from this telecom company. handling it,” SBI chairman Rajnish Kumar However, considering the financial stress in told reporters on the sidelines of an event the telecom companies related to payments in Bengaluru. SBI’s funded exposure to due to the government, the bank has taken telecom companies is at Rs 29,000 crore, provisioning of 50% of total exposure but its largest exposure is to Vodafone Idea towards this identified telecom company with Rs 11,200 crore. Private sector banks which is in financial stress,” it added. ICICI led by IndusInd Bank (Rs 5,000 crore) and Bank has also added Vodafone Idea to the ICICI Bank (Rs 1,700 crore) are the other below-investment grade, or BB, book but major lenders to the beleaguered firm. without any provisions. Telecom makes Among public sector banks, Punjab National about 1.8% of ICICI Bank’s loans. “This is now Bank has — at Rs 1,000 crore — the second an issue. It could become a bigger problem highest exposure to the telco. SBI has only going forward especially if the company provided for Rs 9,000 crore of NPAs from goes belly up and is dragged to the NCLT.

40 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 The bank guarantees if invoked will lead to down new rollouts both by banks and white a huge provision impact for banks,” a senior label ATM operators,” said the February 13 public sector bank executive said. Bankers letter addressed to a senior RBI executive. are hoping that the Supreme Court allows “In the meanwhile, RBI has been relentless companies to pay just the principal amount in demanding implementation of various immediately. “The principal amount will be compliance/control measures such as rollout between Rs 7,000 crore and Rs 10,000 crore. of EMVs, etc, which is further impacting It is the compounded interest of the 14 years sustainability of industry players.” A high- which is the problem. Hopefully telecom level committee set up by the RBI earlier companies will get more time to pay the in 2019 to recommend ways to increase whole amount if they pay the principal, that ATM penetration in the country had is the only hope,” said a senior private sector submitted its findings to the central bank in bank executive. December. The primary recommendation Source: https://economictimes.indiatimes.com/ of the six-member committee was to hike industry/banking/finance/banking/with-agr-ruling- the interchange fee, sources with direct banks-fear-surge-in-bad-loans/articleshow/ 74144032. knowledge of the matter told ET. For cms urban areas where the population is more than 1 million, the ATM committee has Dated: Feb 15, 2020 recommended an interchange fee of Rs • ATM Operators Seek Higher Fees On 17 on financial and Rs 7 on non-financial Withdrawals: transactions. It has also suggested capping India’s ATM operators’ association has free ATM withdrawals to three. For rural written to the Reserve Bank of India (RBI) and semi-urban areas where the population seeking a hike in the interchange fee paid is less than 1 million, the committee has by customers on cash withdrawals, saying recommended an interchange fee of Rs their businesses will “bleed.” This could 18 for financial and Rs 8 for non-financial significantly impact the rollout of new transactions, while free transactions could ATMs in a country already battling low be six. The RBI committee was headed by teller machine penetration. The contention Indian Banks’ Association chief VG Kannan of these operators is that the RBI’s increased and included NPCI chairman DilipAsbe, compliance standards on security and two senior CATMi representatives, SBI maintenance have increased the cost of chief general manager GK Nair and running the teller machines without a HDFC liabilities head G Sampath Kumar. corresponding increase in the revenues Meanwhile, sources told ET that deliberation these companies make through fees accrued. on the scope of implementation of these The current interchange fee has been set by recommendations is yet to get underway at RBI at Rs 15 per transaction with a cap of the central bank level even as the industry five free transactions per customer, which is widely expecting a positive follow up on the Confederation of ATM industry, or the committee report. CATMi, feels is not enough for sustenance of Source: https://economictimes.indiatimes.com/ daily operations. “The continued bleeding industry/banking/finance/banking/atm-operators-seek- is not only impacting the viability of ATM higher-fees-on-withdrawals/articleshow/74144096.cms businesses but has significantly slowed Dated: Feb 15, 2020

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 41 • YONO Largest Consumer Platform farm credit given by banks in rural areas, After E-Commerce Companies, Says adding that she expects to meet the SBI Chief: increased target of Rs 15 lakh crore for the next fiscal. The government in Budget 2020- SBI’s digital banking platform YONO is the 21 has raised the farm loan disbursal target largest consumer platform outside of the by 11 per cent to Rs 15 lakh crore for the ecommerce companies in India, according next fiscal and allocated Rs 1.6 lakh crore to to its chairman, Rajnish Kumar. “Today, implement various plans in agriculture and outside the ecommerce players, we are the allied sectors as it chases the goal of doubling largest ecommerce platform,” Kumar said farmers income by 2022. The government at the Nasscom Technology and Leadership has allocated Rs 75,000 crore for the PM- Conference in Mumbai on Friday. “I have KISAN scheme for the next fiscal, which is more than 100 partners and they are growing. same as the budget estimate for this fiscal Today, I do a huge number of redirections but higher than revised estimate of Rs 54,370 to Amazon, IRCTC, Flipkart. I track this crore. “Credit limit has been expanded. actively every day.” YONO, an acronym for I am sure it is based on local ground level “You only need one”, has launched shopping requirement...we expect the demand to festivals and offerings such as cardless cash grow and credit requirements to also meet withdrawal at SBI ATMs. “Everybody wants to up with it. I am actually closely monitoring be part of the journey and we have big plans banks and their extension of credit facility around it. Every day, we get about 70,000 new particularly to rural areas. So I think we’ll be registered users. In less than 24 months, I able to meet that,” she told reporters after am now close to 20 million registered users,” addressing the central board of RBI here. Kumar said, adding the bank is already seeing The farm credit target for the current fiscal returns on its Rs 800 crore investment in the has been set at Rs 13.5 lakh crore. Normally, platform. “We have built a balance sheet of farm loans attract an interest rate of 9 per about Rs 14,000 crore personal loans, which cent. But the government is providing 2 per is paying us back almost the entire cost of cent interest subsidy to ensure farmers get building the platform,” Kumar said. On how short-term farm loan of up to Rs 3 lakh at the bank is faring amid competition from an effective rate of 7 per cent per annum. digital payments companies, Kumar said, With regard to proposed mega consolidation “We have fared very well. My advantage is of public sector banks, the finance minister that they have to look for customers; I already said there was no discussion on the issue at have customers.” the RBI board meeting on Saturday. “I don’t Source: https://economictimes.indiatimes.com/ see any reason to go back or any reason industry/banking/finance/banking/yono-largest- which is particularly causing any delay for consumer-platform-after-e-commerce-companies-says- any notification...you will hear on it as it sbi-chief/articleshow/74144120 .cms when it comes,” she said. Last year in August, Dated: Feb 15, 2020 the government announced merger of 10 public sector banks into four. United Bank • Govt Closely Monitoring Agriculture of India and Oriental Bank of Commerce are Credit Given By Banks: to be merged with Punjab National Bank, Finance Minister Nirmala Sitharaman on making the proposed entity the second Saturday said the government is monitoring largest public sector bank (PSB) from April

42 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 1 this year. It was also decided to merge he expected the telcos to have identified “a Syndicate Bank with Canara Bank, and course of action” as the order was known for Allahabad Bank with Indian Bank. Similarly, some time. So far, SBI has provided only for Andhra Bank and Corporation Bank are to non-performing assets (NPAs) in its telecom be consolidated with Union Bank of India. loans. “We had NPAs of about Rs 9,000 crore In April 2019, Bank of Baroda, in the first and there is recovery expected there. On the three-way merger exercise, amalgamated standard assets, we did not feel the need to Vijaya Bank and Dena Bank with itself. SBI provide,” said Kumar. Besides the loans, SBI had merged five of its associate banks -- State has an additional Rs 14,000 crore of non- Bank of Patiala, State Bank of Bikaner and fund exposure, which includes guarantees Jaipur, State Bank of Mysore, State Bank of to the government, where the telcos have Travancore and State Bank of Hyderabad not defaulted. “It is now for the telecom as well as BharatiyaMahila Bank with itself companies to decide how to find the money effective April 2017. or what course of action they will take,” said Source: https://economictimes.indiatimes.com/ Kumar. Analysts had earlier expected that industry/banking/finance/banking/govt-closely- the government would provide relief to the monitoring-agriculture-credit-given-by-banks-fm/ telcos. The Centre is counting on Rs 90,000 articleshow/74147937.cms crore of spectrum dues from Vodafone, which in turn owes banks Rs 30,000 crore. Dated: Feb 15, 2020 Given that the promoter’s investment in • SBI Says It’s Prepared For The Worst: the company is Rs 15,000 crore there is a State Bank of India chairman Rajnish Kumar likelihood that Vodafone and Aditya Birla on Friday said the bank was prepared for group will walk away. In December last the worst following the Supreme Court order year, Aditya Birla Group chairman Kumar asking telecom companies to immediately Mangalam Birla had said that Vodafone Idea pay adjusted gross revenue (AGR) dues to may have to shut down if there is no relief the government. SBI has Rs 29,000-crore in the statutory dues. If Vodafone shuts shop, loan exposure to telecom, the largest among it is seen to benefit Reliance Jio and Airtel. Indian banks. Shares of SBI fell 8%, while “Bharti is relatively well placed considering other lenders with large exposure to telcos Rs 18,800-crore cash on books and its ability like Yes Bank and IndusInd Bank also to raise requisite capital. In the absence of dropped up to 5% on Friday. Analysts fear any government support, we see this market that the SC order could lead to a Vodafone heading towards a duopoly, which is likely Idea shutdown. “It may result in Rs 1.2-lakh- to boost Bharti’s market share,” said Sandip crore debt default, large-scale job losses Agarwal of Edelweiss Research. Last month, and subscriber churn,” said Motilal Oswal India Ratings had downgraded Vodafone in a report. Addressing reporters on the India from ‘IND BBB-’ from ‘IND BBB’ and sidelines of the Nasscom Software summit retained on rating watch with negative here, Kumar said: “Our exposure to them is implications. “The downgrade reflects the Rs 29,000 crore. After this order we will ask crystallisation of adjusted gross revenue them what their plans are to comply with related liabilities for Vodafone Idea after the the order and whatever is the situation, we Supreme Court’s adverse ruling on January are capable of handling it.” He added that 16, 2020, dismissing the review petition filed by telcos. The SC ruling provides clarity on the

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 43 liabilities that are payable by Vodafone Idea infrastructure projects, equipment, goods to the department of telecommunications, and services from India. which was earlier contingent upon the Source: https://economictimes.indiatimes. outcome of the review petition,” said com/industry/banking/finance/banking/govt- Priyanka Bansal, senior analyst with India to-infuse-rs-1300-cr-in-exim-bank-next-fiscal/ Ratings after the January 16 decision. articleshow/74159881.cms Source: https://economictimes.indiatimes. Dated: Feb 16, 2020 com/industry/banking/finance/banking/telco- distress-call-sbi-says-its-prepared-for-the-worst/ • Resolutions Via IBC See A Big Fall In articleshow/74145646.cms Third Quarter: Dated: Feb 15, 2020 Realization by financial creditors through the Insolvency and Bankruptcy Code (IBC) has • Govt To Infuse Rs 1,300 Cr In Exim fallen drastically in the fiscal third quarter, Bank Next Fiscal: resurfacing industry concerns over slowing The government has decided to pump Rs recoveries that are increasingly prompting 1,300 crore into state-owned Export-Import lenders seek out-of-court settlements. Bank of India (Exim Bank) to fund its Data from the Insolvency and Bankruptcy business growth. Last year, the government Board of India (IBBI) showed that financial doubled its authorised capital from Rs creditors realized just 12% of their claims 10,000 crore to Rs 20,000 crore. “The (Rs in the quarter-ended December, down from 1,300 crore) provision is for Exim Bank as 34% in the quarter-ended September. The equity support/ subscription to increase statistics are published each quarter. During the paid up capital of the bank to the level the quarter-ended December, a total of 30 of its authorized capital,” as per the Budget cases were resolved with realization ranging documents presented in Parliament earlier from just 5% on Rs 218 crore of claims for this month. This is Rs 350 crore higher than Ambey Iron to 90% on Rs 13 crore of claims. provision made by the government for the Two large cases, namely EMC where Rs current fiscal. The government earmarked Rs 6,150 crore of claims were admitted and 950 crore capital infusion for the bank. Exim Ushdev International where Rs 3,293 crore Bank is the principal export credit agency in of claims were admitted, yielded just 9% India and the infusion will give an impetus and 6%, respectively, pulling down the total to new initiatives such as supporting Indian for the quarter. Bankers say realizations textile industries, likely changes in the through the IBC are falling as the companies Concessional Finance Scheme, likelihood of under review are mostly service linked, new letters of credit in future in view of the with lower chances of recovery. “Some of country’s active foreign policy and strategic these companies don’t have the potential intent. Established in 1982, Exim Bank is because they are service companies or EPC the apex financial institution for financing, type companies. Manufacturing companies facilitating and promoting the country’s which are continuing as a going concern international trade. The bank primarily have a higher recovery potential but many of lends for exports from India, including them have already completed the process,” supporting overseas buyers and Indian said Pallav Mohapatra, CEO at Central Bank suppliers for export of developmental and of India. Bankers said falling recoveries

44 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 from the IBC and delays in resolution have LLP. However, the slow pace of resolution pushed them to seek solutions out of the continues to be a deterrent. Out of 1,961 courts. “It has been noted that if a promoter ongoing admitted cases, 635 cases have is involved in the company which is a going passed 270 days since admission, while concern and has some intellectual property another 247 cases have crossed 180 days (IP) to offer and is ready to put some skin since admission. in the game then we are better off in doing Source: https://economictimes.indiatimes.com/industry/ some one-time settlement or restructuring. banking/finance/banking/ resolutions-via-ibc-see-a-big- Realisation in these cases is lower through fall-in-third-quarter/articleshow/74166885.cms the NCLT route and banks will increasingly Dated: Feb 17, 2020 look to settle them out of court,” Mohapatra said. The high number of cases going into • Bank Of England Has Some Lessons liquidation is also a concern. Until December, For Reserve Bank Of India On How To 58% of all closed cases (780 out of 1,351) were Revive Growth: settled via liquidation. However, the data First it was the Federal Reserve. Then show that there is now finally some urgency the European Central Bank. Now, India’s in admitting cases. A total of 561 cases were monetary authority may look to the Bank admitted during the quarter, the second of England for ideas to revive growth, highest number since data are available and economists say. The Reserve Bank of India following the 565 admitted in the quarter could possibly draw inspiration from BOE’s ended September. “In the last two quarters, Funding for Lending Scheme to jump start there has been a sense of urgency in courts loan growth in the economy that’s set for taking up cases, particularly with regards to its weakest expansion in 11 years, said A financial creditors. Additional benches put Prasanna, chief economist at ICICI Securities up across the country have helped. This has Primary Dealership Ltd. in Mumbai. The resulted in a lot of backlog of admissions central bank has so far taken a leaf each from being cleared in the last two quarters,” said the Fed and the ECB’s books to manage bond KP Sreejith, managing partner, IndiaLaw yields using unconventional tools, as galloping inflation keeps it from cutting interest rates. In December, the RBI announced a Fed-style ‘Operation Twist’ buying long-dated bonds and selling the shorter tenor ones. This week, it will start long-term repo operations to inject $14 billion into the financial system, inspired by the ECB’s use of long-term loans to banks. Both measures are aimed at pulling down corporate borrowing costs that are benchmarked to the sovereign bond curve, analysts say. “It makes sense that the RBI is looking at tools that have been tested by other central banks,” said Rishi Mishra, an analyst at trading firm Futures First in Gurugram, near New Delhi. “As long as they apply it

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 45 correctly in the Indian context, it should Source: https://www.livemint.com/industry/banking/ yield results.” Under the FLS, Prasanna said, bank-of-england-has-some-lessons-for-reserve-bank-of- the BOE accepted eligible collateral from india-on-how-to-revive-growth-11581898702909.html banks and building societies at a haircut and Dated: Feb 17, 2020 swapped it for nine-month Treasury bills that could be rolled over for up to four years. • Visa Says OTP Not Needed For ‘Routine’ The operation lowered funding costs for Transactions: banks and increased net lending to the non- Global card network provider Visa aims financial sector, he said. The RBI’s five rate to phase out the two factor authentication cuts last year failed to spur credit demand, (2FA) process on routine card transactions mainly because banks grappling with bad during digital checkouts and replace the loans failed to fully pass on the reductions. scrutiny layer with a risk based prompt, The weighted average lending rate on new where transactions deemed unusual or rupee loans sanctioned by banks declined by risky by banks would be vetted through a 69 basis points while those on outstanding One Time Password (OTP) check. For this, rupee loans fell by 13 basis points during Visa plans to hold discussions with domestic February-December -- less than the 135 basis regulators, and its banking partners on how points of cuts by the RBI during that period. “It over time the 2FA norms can be relaxed and is because the banking and financial system brought in line with global best practices, plumbing is blocked in India, conventional a top company executive told ET. This has interest rate signals are not gaining any been highlighted in the California-based traction,” said ICICI’s Prasanna. “RBI’s actions network operator’s multi-prong security like Operation Twist and LTROs are intended roadmap for its Asia Pacific markets for to break this logjam.” Despite the glut, loan enhancing resilience of digital payments. growth is languishing near two-year lows, “We think 2FA is important but what we forcing the central bank to experiment with think is even better is using 2FA in a risk- more uncommon methods to boost credit based manner,” said Joe Cunningham, head while keeping borrowing costs low. That of risk, Asia Pacific, Visa. “The real growth is not an easy task because India’s huge of our industry is happening through the public debt overhang crowds out private ecommerce space. To give consumers a investment. Governor Shaktikanta Das wonderful experience some friction needs told reporters earlier this month that the to be removed.” Typically, transactions central bank has more tools than the regular through debit and credit cards on these repurchase rate at its disposal. That meant he platforms are authenticated through two would take more steps to ensure that policy security layer process known as the 2FA. The transmission is effective. That makes lessons first clearance happens once the consumer from the developed nations’ central banks reconciles card details for which the card all the more valuable for the RBI. “Some 15 CVV and expiry date is sought. The second years ago, one couldn’t think of this,” said step of authentication happens through a TaimurBaig, chief economist at DBS Bank in password based vetting typically through Singapore. “But as India is part of the G-20, an OTP, which Visa feels is not necessary we are seeing it increasingly adopt lessons for all transactions as most of them are from other central banks.” “routine.” The alternative proposed is a risk based monitoring of transactions through

46 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 a data vetting standard called EMV 3D worth Rs 3.1 crore were processed on the secure, which have been adopted in several NPCI operated platform to over 1.3 billion countries over the recent years, including transactions worth Rs 2.16 trillion in January Singapore and Australia. “If you take a 2020. “The ‘UPI Chalta Hai’ campaign is aimed risk-based approach, the vast majority of to guide users towards the right usage of UPI transactions will go through seamlessly and help create a habitual change, use of UPI as most are low risk and are typically low in their daily life,” NPCI said in a note shared value and from an IP address you know very with ET. “The campaign also focuses on safety well,” said Cunningham. “We should allow aspects while transacting on UPI enabled these transactions to flow more fluidly and apps.” In the process a microsite UPIChalega. encourage the adoption of digital payments com has also been setup where users can and ecommerce; only in cases where our access information about live banks and clients (banks) deem these transactions to be third-party apps on the interface as well as a prior risk then a prompt is required for an social feeds among other information on extra factor authentication.” safety and redressal mechanisms in case of Source: https://economictimes.indiatimes. frauds. “This is possibly the first time that com/industry/banking/finance/banking/visa- banking, payments and fintech players are says-otp-not-needed-for-routine-transactions/ coming together with NPCI to promote safe articleshow/74183533.cms usage of UPI via a massive multi-media campaign that aims to provoke interest as Dated: Feb 18, 2020 well as educate in an engaging manner,” said • India’s Media Space Set To Raise KarthiMarshan, chairman of the Financial Awareness With ‘UPI Chalega’ Literacy and Awareness Campaign Committee Campaign: and chief marketing officer, Kotak Mahindra Group. Meanwhile, Data Security Council India’s Unified Payments Interface (UPI) is all of India (DSCI) in partnership with Google set to get its ‘Mutual Fund Sahi Hai’ moment. India and MeitY early last year launched Awareness campaigns and adoption drives a multilingual awareness campaign called for popular payments interface is set to the Digital Payments Abhiyan to promote flood India’s media space as regulators and financial safety on internet. Leading industry government bodies such as the National players such as HDFC Bank, SBI, Visa, Paytm, Payments Corporation of India (NPCI), MeitY MasterCard and NABARD are part of the and Ministry of Home Affairs (MHA) will outreach programme which till January collaborate with industry players to bring has made 21 million unique impressions, about a behavioural change in how Indians a DSCI spokesperson said. “The campaign transact and make UPI a household name. is supported in seven different languages NPCI, in association with leading banks with collaborations from leading industry and payment companies, has hired global participants,” the spokesperson said. “We advertising agency Ogilvy and Mathers for plan on making 43 million impressions for a nationwide campaign to drive adoption of the by the end of February in abid to promote the popular fund transfer interface. The UPI, healthy internet behaviour and drastically which is a real time fund transfer interface, reduce cases of consumer frauds which will has significantly scaled since its launch help drive UPI adoption even further,” the in August 2016 when 92,000 transactions spokesperson said.

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 47 Source: https://economictimes.indiatimes.com/industry/ respectively. However, in terms of capital banking/finance/banking/indias-media-space-set-to- adequacy, Central Bank of India remained raise-awareness-on-upi/articleshow/74200674.cms above RBI’s requirement of 11.5% with a CAR Dated: Feb 19, 2020 of 12.83%. The CAR for UCO Bank remained at 10.27% in the third quarter of FY20. • IDBI Bank, UCO Bank, Central Bank Source: https://www.livemint.com/news/india/ibdi- Seek RBI Nod To Exit PCA Framework: bank-uco-bank-central-bank-seek-rbi-nod-to-exit-pca- IDBI Bank, UCO Bank, and Central Bank of framework-report-11582166018336.html India have approached the Reserve Bank of Dated: Feb 20, 2020 India (RBI), seeking permission to exit the prompt corrective action (PCA) framework, • Efforts Of Banks Under PCA according to a report in the Financial Express Framework Are Being Monitored: on Thursday. “It’s possible that one bank Reserve Bank of India Governor may be brought out of PCA by the end of Shaktikanta Das has said four banks this month,” the report said, citing a source. under the Prompt Corrective Action (PCA) The three banks were placed under the PCA framework are taking efforts and they framework, which puts partial restrictions are being monitored. Currently, Indian on loan disbursements, after a massive asset Overseas Bank (IOB), Central Bank of India, quality deterioration, losses in the books UCO Bank and United Bank of India are and lower capital levels. The Life Insurance under this framework, which puts several Corporation of India-owned IDBI Bank has restrictions on them, including on lending, met all but one of the criteria for coming management compensation and directors’ out of PCA, the report said, adding that the fees. “We would like them to improve bank’s return on assets (ROA) was negative at their performance and come out of PCA as -7.63% for the quarter ended December 2019, quickly as possible. We are engaged with while the RBI’s PCA framework requires the the banks. We are monitoring it. They are ROA to be above 0.25%. But the bank’s net taking efforts. Banks are required to take non-performing assets (NPAs) remained at several actions to come out of the PCA, 5.25% in the December quarter below the 6% and that is being monitored,” Das told PTI threshold set by RBI, while capital adequacy in an interview. Recently, the government ratio moved to 12.56% after LIC pumped in announced capital infusion of Rs 11,521 over ₹30,000 crore into the bank to take a crore into these four banks, with IOB getting majority stake. The RBI threshold of capital the highest amount of Rs 4,360 crore. Central adequacy ratio is 11.5%. The bank’s Tier-1 Bank of India got Rs 3,353 crore, UCO Bank capital is also comfortable at 10.16%, which Rs 2,142 crore and United Bank of India Rs is above the RBI requirement of 8%. Asset 1,666 crore. Besides, LIC-controlled IDBI quality of UCO Bank and Central Bank of Bank too received additional capital of Rs India, however, remained weak during the 4,557 crore through the first supplementary December quarter. While Central Bank of demands for grants approved by Parliament India reported net NPAs at 9.26%, UCO Bank in December. Last year, the RBI removed posted net NPAs at 6.34% in the December five banks — Bank of India, Bank of quarter. Similarly, ROA for UCO Bank and Maharashtra, Oriental Bank of Commerce, Central Bank of India remained below RBI’s Allahabad Bank and Corporation Bank — requirement of 0.25% at -1.52% and 0.19%,

48 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 from the PCA framework in two phases Source: https://economictimes.indiatimes.com/ after capital support from the government industry/banking/finance/banking/efforts-of-banks- that resulted in improvement in their under-pca-framework-are-being-monitored-rbi- financial parameters. The capital infusion governor/articleshow/74261505.cms helped these lenders meet requisite capital Dated: Feb 22, 2020 thresholds and reduce their net NPA levels to below 6 per cent. Out of the 11 banks put • Mega Bank Consolidation, Meeting under the PCA framework last year, Dena April 1 Deadline Appears Challenging: Bank ceased to exist as a separate entity With the deadline of April 1 fast approaching after its merger with Bank of Baroda in for the mega merger of ten public sector April, while IDBI Bank has been acquired banks, there seems to be more odd in the by LIC. With regard to the proposed mega way of meeting the target date as a series merger of public sector banks announced of regulatory approvals and clearances are by the government, the governor said, still pending, bank officials said. Even after the RBI has advised the lenders to take Cabinet approval to the proposed mega special measures to ensure that the normal merger plan, officials said, fixation of share activities do not face any disruption. “The swap ratio, shareholders consent and other normal activity in terms of loan sanction in regulatory approvals are expected to take terms of recoveries and other activities are at least 30-45 days. It is believed that the affected because of the merger process. So, Prime Minister’s Office (PMO) has sought and we are monitoring that, we will monitor details from these lenders about their that,” he said. Last year in August, the financial projections for the next three government announced the consolidation to five years. Details in respect of NPAs, of ten public sector banks (PSBs) into four capital requirement, credit growth and cost mega state-owned lenders. As per the plan, savings on account of the mergers have United Bank of India and Oriental Bank been asked for, officials said. So, chances of Commerce would merge with Punjab of the merger becoming a reality beginning National Bank, making the proposed entity next fiscal year seems little unrealistic at the the second largest public sector bank moment, a senior public sector bank official (PSB). It was decided to merge Syndicate said. Besides, regulatory nods, the Scheme Bank with Canara Bank, while Allahabad of Amalgamation has to be laid before Bank with Indian Bank. Similarly, Andhra Parliament for 30 days for the perusal of Bank and Corporation Bank are to be the members. The second-half of the Budget consolidated with Union Bank of India. In session is scheduled to start on March 2. Last April 2019, Bank of Baroda in a first three- year in August, the government announced way merger exercise amalgamated Vijaya the consolidation of ten public sector banks Bank and Dena Bank with itself. The SBI (PSBs) into four mega state-owned lenders. had merged five of its associate banks - State As per the plan, United Bank of India and Bank of Patiala, State Bank of Bikaner and Oriental Bank of Commerce would merge Jaipur, State Bank of Mysore, State Bank of with Punjab National Bank, making the Travancore and State Bank of Hyderabad proposed entity the second largest public and also BharatiyaMahila Bank with itself sector bank. It was decided to merge effective April 2017. Syndicate Bank with Canara Bank, while Allahabad Bank with Indian Bank. Similarly,

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 49 Andhra Bank and Corporation Bank are to National Bank and Andhra Bank with Union be consolidated with Union Bank of India. Bank of India will have similar issues, the According to a senior banker, information official said. As regards IT platform, the technology integration of Vijaya Bank and official said, although the software system Dena Bank with Bank of Baroda is still in is same, versions are different. So the process even after 10 months of merger. technology upgradation will take a minimum In addition, the HR issues still continues to of nine months to two years, depending hamper business, causing inconvenience on the size of the banks. However, Finance to customers. Moreover, the mega merger Minister Nirmala Sitharaman earlier this would create greater disturbance in the month said that she saw no reason to go banking system and will affect the operation back on the government’s mega merger plan especially loan sanction as there will be for banks. “I don’t see any reason to go back chaos initially for few months, the official or any reason (which is) particularly causing added. Bank unions are also opposing the any delay in the notification. You will hear on move saying merger is not a solution to the it as and when a decision is made,” she had banking sector problem and slowdown in said. In December last year, RBI had opined economy. Rather than consolidation, there that the country could create some global is a need for expansion, All India Bank banking majors if the ongoing mergers of Employees’ Association (AIBEA) general state-owned banks achieve desired impacts secretary C H Venkatachalam said. The of creating stronger and well-capitalised past merger carried out by banks are yet lenders of global scale. “The merger of PSBs to show results and the proposed massive is likely to transform the face of our banking consolidation exercise will be catastrophic sector with the emergence of stronger, well- for the banking system at this point of time capitalised banks aided by cutting-edge when the economy is in a downturn, he technology and state-of-the-art payment stated. Terming the government decision systems. Our banks have the potential to on consolidation as illegal, All India Bank become global banking leaders,” the Reserve Officers’ Confederation general secretary Bank of India said in its annual report on Soumya Datta claimed that the decision was ‘trends & progress of banking 2018-19.’ taken in the absence of full board. There Source: https://economictimes.indiatimes.com/ was no representation from officers and industry/banking/finance/banking/mega-bank- staff in the board of any of these ten banks consolidation-meeting-april-1-deadline-appears- so decision is illegal, he further claimed. challenging/articleshow/74265244.cms According to a senior official of Oriental Dated: Feb 23, 2020 Bank of Commerce, the grouping of banks in the consolidation plans does not appear to be • SBI’s Risk Head Anil Kishora Is Top logical as it would lead to large scale closure Favourite For CEO Post At Troubled of branches than expansion of banking LVB: services. For example, the official said the merger of Syndicate Bank with Canara Bank State Bank of India’s chief risk officer Anil would lead to large scale closure of branches Kishora is the frontrunner to take over as as both are Karnataka-based and have CEO of the troubled Lakshmi Vilas Bank strong presence in South India. The merger (LVB) after the Reserve Bank of India cleared of Oriental Bank of Commerce with Punjab his name for the post earlier this month, four

50 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 people familiar with the matter said. Kishora, the Rs 290 crore provisions it had to make who has spent 38 years at SBI, retires from for NPAs in the quarter. Gross NPAs have the bank in May. It is unclear whether he increased to 23.27 per cent from 13.95 per will join the bank immediately or wait to cent a year ago. More importantly, the bank’s complete his full term at SBI.“The bank has capital adequacy ratio, a measure of the got a RBI clearance but it is yet to make a bank’s financial strength, has deteriorated formal offer to Kishora, who himself is in to 3.46 per cent in December 2019 from 5.56 two minds whether to take up this offer or per cent in September 2019 and 6.46 per cent not. These procedural issues could delay the in June 2019.It is the lowest among private appointment of the new CEO,” said one of the sector banks that have reported numbers so persons cited above. Kishora did not respond far and much lower than the minimum 8 per to calls and messages on his phone. LVB is cent required. headless since its then CEO Parthasarathi Source: https://economictimes.indiatimes.com/ Mukherjee quit abruptly in late August. industry/banking/finance/banking/sbis-risk-head-anil- Later, the bank’s planned merger with the kishora-is-top-favourite-for-ceo-post-at-troubled-lvb/ cash rich Indiabulls Housing Finance also articleshow/74276480.cms failed to pass the central bank’s muster. Dated: Feb 24, 2020 Currently, the bank’s CFO S Sundar, is in charge as interim CEO.“Kishora was among • US Firm Hughes Fears Closure Over three names sent to the RBI for approval and Unpaid Fees, Banking Services Across the central bank has approved his name. We India Could Be Hit: are hoping to complete this process by the US satellite broadband provider Hughes end of March or early April,” said a second Network Systems may have to shut its person aware of the developments in the Indian operations due to unpaid levies bank. Besides a CEO, the bank is also looking owed to the government, which could put to fill the position of an executive director thousands of banking services at risk, a that has been vacant since NS Venkatesh company letter seen by Reuters showed. quit to head Association of Mutual Funds in The Supreme Court late last year ordered India (AMFI) in October 2017.“Three names a number of telecom companies, including have been sent to RBI for the ED position. Hughes and larger firms like Vodafone, They are former Canara Bank chief general to pay billions of dollars owed to the manager SS Bhat, senior Kotak Mahindra government. Hughes’ India unit provides Bank executive Murali Krishna and former services to defence, education and banking State Bank of Mauritius executive Siby sectors in the country and told the telecom Sebastian. These names were sent in early ministry in a letter dated February 20 that December and we expect the RBI to come it faces bankruptcy as it can’t pay the Rs back to us by this month,” said the second 600 crore ($84 million) it owes. The closure person cited above. The search for top of the company could disrupt connectivity executives for the Chennai-based bank is at more than 70,000 banking locations on even as it is in desperate need for capital and many critical satellite networks in the due to a persistent rise in NPAs in the past Indian navy, army and railways, Hughes’ one year. Results released earlier this month India President Partho Banerjee said in the showed the bank made ?334 crore loss in the letter, which was seen by Reuters. “We are quarter ended December 2019 mainly due to

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 51 facing a huge demand ... which by no means Source: https://economictimes.indiatimes.com/ is serviceable by us and is in fact pushing industry/banking/finance/banking/us-firm-hughes- our company towards bankruptcy & fears-closure-over-unpaid-fees-banking-services- closure,” Banerjee wrote in the letter. “This across-india-could-be-hit/articleshow/ 74278045.cms is an SOS request,” he added. The company Dated: Feb 24, 2020 says the government’s telecoms department had made an incorrect calculation of the • Slowing Credit Offtake One Of The dues more than a decade ago which has Major Challenges For Banks: ballooned to $84 million with interest and Reserve Bank Governor Shaktikanta Das on penalties. Hughes, when approached by Monday said slowing credit growth is one of Reuters for comment, would not comment the major challenges that banks are facing on the substance of the letter but said in a currently. Loan growth in the system is statement it “remains committed to India” hovering around 7 per cent. “Slowing credit and would continue to provide services offtake is one of the challenges that banks to its customers. India’s telecoms ministry are facing,” Das said at the Mint annual did not respond to a request for comment. banking conclave here. He also asked banks Vodafone Idea, which owes $3.9 billion in to be prudent in lending and highlighted that dues, interest and penalties, has already the quality of appraisal is important. He said warned of a potential exit, putting at risk that the RBI proposes to take thematic studies 13,000 employees and billions of dollars in across financial institutions. “Top 50 NBFCs bank loans. India’s claim for unpaid dues are monitored very closely,” he pointed out. followed a dispute with companies over Speaking about NBFCs, he said that credit how adjusted gross revenue, a percentage flow to small NBFCs have improved over the of which companies need to pay to the last one year. “Flow of credit has stabilized government as fee, was calculated. While and is showing steady improvement,” Das the $84 million Hughes owes is significantly said. Credit flow to realty sector needs to smaller than the sums owed by larger peers, improve, he added. He mentioned that the a company document from December issue of governance in public and private showed it was still more than three times sector banks is of utmost importance and the its net worth in India. “This, if not resolved, management of banks have a critical role to will make the operation unviable thus play in improving the governance. He noted rendering many customers like banks, that the regulations are in compliance with other enterprises and critical government Basel III guidelines. networks without any connectivity,” the Source: https://economictimes.indiatimes.com/ company said in a separate December industry/banking/finance/banking/slowing-credit- letter to the government. Hughes, which is offtake-one-of-the-major-challenges-for-banks-rbi-guv/ part of U.S.-based satellite group Echostar articleshow/74286715.cms Corp, said in December 2018 it had been Dated: Feb 24, 2020 chosen to provide high-performance satellite broadband system for India’s naval • RBI’s New Moto ‘Cash Is King, But communications network. The company Digital Is Divine’: also provides communication services to With ‘cash is king, but digital is divine’ more than 30 public and private banks in moto, the Reserve Bank on Monday said its India, according to its website. endeavour will be to make digital payments

52 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 a divine experience for the users after lines. Digital payment methods have played being buoyed by over Rs 3.5 lakh crore a large role in helping them manage their reduction in the notes in circulation (NIC) personal finances leading to their being post demonetisation. In its assessment of financially included. “Speed, convenience the progress of digitisation from cash to and competition are shaping the future electronic, the RBI said while there is no of payments. Our endeavour is to make accurate measure of cash payments in the digital (payments) a divine experience to the country, the progress of various digital users - Cash is King, but Digital is Divine,” payments can be measured accurately. the study said. India’s growing use of retail Overall, the digital payments in the country digital payments, along with the radical have witnessed a growth (CAGR) of 61 per reconstruction of its cash economy, indicates cent and 19 per cent in terms of volume and a shift in its relationship with cash. This is value, respectively over the past five years, evidenced by the steep growth observed demonstrating a steep shift towards digital in the retail digital payments. Increasing payments. “Cash still rules but is increasingly acceptance and convenience of digital seen as a way to store value as an economic payments vis-a-vis cash is also reflected asset rather than to make payments,” it said. in decrease in average value per digital It further said NIC increased at an average payment transaction,” the RBI said. The rate of 14 per cent between October 2014 and government had demonetised the prevailing October 2016. Assuming the same growth high value denomination notes of Rs 500 rate, NIC would have been Rs 26,04,953 and Rs 1000 in November 2016 with an aim crore in October 2019. “NIC, however, was Rs to check blackmoney and move towards less 22,31,090 crore, indicating that digitaisation cash economy. and reduction in cash usage helped reduce Source: https://economictimes.indiatimes. NIC by over Rs 3.5 lakh crore,” the central com/industry/banking/finance/banking/rbis- bank said. Notes in circulation is currency in new-moto-cash-is-king-but-digital-is-divine/ circulation (CIC) minus coins in circulation. articleshow/74288195.cms The study further said that it is assumed that Dated: Feb 24, 2020 having high CIC relative to GDP indicates that cash is highly preferred as a payment • No Role In Management-Staff Disputes, instrument. Based on this assumption, India RBI To Gujarat: continues to have a strong bias for cash payments. Demonetisation and an active The Reserve Bank of India on Tuesday told growth in GDP brought down the cash in the Gujarat High Court that it has no role circulation as a percentage of GDP to 8.7 to play in disputes between concerned per cent in 2016-17,” it said. “This increased banks and their employees. The RBI was to 10.70 per cent in 2017-18 and to 11.2 responding to a PIL seeking the HC’s direction per cent in 2018-19 which, however, is less to the central bank to direct banks to take than the pre-demonetisation level of 12.1 action against their employees for joining per cent in 2015-16. The rate of increase is union-led strikes as it caused great financial lower indicating a perceptible shift away damage to the nation and adversely affected from cash,” it said. The RBI said a large consumers. The RBI told the division bench population of the country historically lacked of Chief Justice Vikram Nath and Justice AJ access to personal bank accounts and credit Shastri that it had no role to play in disputes

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 53 between banks and their staff, and the the lender for failing to reduce promoter issue was not policy-related where it can ownership below the mandated 40%. intervene. It further told court that each Bandhan Bank’s current promoter holding bank had its service rules and the RBI had at 61% is still above the regulatory ceiling. no control over the staff of these lenders. However, RBI has removed the restriction The matter was adjourned after the lawyer “considering the efforts made by the bank for the employees’ union said a meeting was to comply with the said licensing condition”, scheduled with banks to resolve the matter. the Kolkata-based bank said in a regulatory The PIL has been filed by seven industry filing to stock exchanges. The easing of curbs outfits, including Gujarat Traders Federation, has come within a month of RBI allowing and the chambers of commerce and industry Kotak Mahindra Bank’s founder Uday Kotak of Rajkot, Bhavnagar, Gondal, Sorath, and to own a higher 26% stake than the earlier Central Gujarat, as well as Ahmedabad regulatory stipulated of 15%. Bandhan Automobile Dealers Association. The PIL Financial Holdings Ltd is the holding sought the court’s direction to the RBI “to company and promoter of the Bandhan Bank. issue circular or directions to banks to take Its holding was diluted to 61% from 82% after strict action against employees who go on the acquisition of Gruh Finance last year. RBI frequent strikes”. The PIL contended that first came down heavily on Bandhan Bank bank consumers, trade and industry suffered on September 28, 2018, including a freeze on due to the tussle between government and its founder-cum managing director Chandra bank employees which led to such strikes. Shekhar Ghosh’s salary at the September “The employees of banks can achieve their 2018 level. The removal of the restriction demands of wage revision, etc. as per the has a condition attached: at least a quarter provisions of the law and not by declaring of the new banking outlets to be opened in strikes, which cause great financial damage a financial year must serve unbanked rural to the nation as a whole and the public centres. After the RBI bar on free branch at large,” they said. The petitioners were opening, the bank opened as many as 72 referring to the strikes called by bank branches with prior RBI’s approval. unionson January 31 and February 1, Source: https://economictimes.indiatimes.com/ followed by a three-day strike from March industry/banking/finance/banking/rbi-lifts- 11-13, and indefinite strike from April 1, ban-allows-bandhan-bank-to-open-branches/ mainly over their demand for wage revision. articleshow/74308171.cms Source: https://economictimes.indiatimes.com/ Dated: Feb 26, 2020 industry/banking/finance/banking/bank-strike-no- role-in-management-staff-disputes-rbi-to-gujarat/ • RBI’s Gradual Shift From Transparency articleshow/74302446.cms To Forbearance Towards Stressed Sectors: Dated: Feb 25, 2020 In November 2013, the then central bank • RBI Lifts Ban, Allows Bandhan Bank Governor Raghuram Rajan had warned To Open Branches: banks against dressing up loans, likening the The Reserve Bank of India Tuesday allowed practice with “putting lipstick on a pig” (that) Bandhan Bank to open branches without “will not make a princess.” His stance its prior approval, lifting a ban imposed on marked the beginning of the end of

54 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 forbearance. Rajan’s successor Urjit Patel, for their effective resolution. In 2008-09, too, continued with the tradition of nixing after the global financial crisis, the RBI proposals that kicked the can down the road. agreed to forbear on certain kinds of stressed But the new RBI regime under Shaktikanta loan restructuring, hoping that this was a Das has been different. It has already allowed temporary need pending stronger growth. banks to extend the MSME loan recast Unfortunately, for a variety of reasons, the scheme and allowed restructuring of loans stress has not been temporary, and growth to the real estate sector. “The RBI in these sectors has proved elusive. This announcement of forbearance towards regulatory forbearance was made available stressed sectors signifies a gradual shift to all types of loan restructuring except away from the regulator’s earlier efforts to commercial real estate exposures, capital enhance the quality and transparency of market exposures and personal and asset classification in the Indian banking consumer loans. Since 2008, RBI relaxed system,” said Saswata Guha, director, norms for restructured loans several times financial institutions, Fitch Ratings. “There is and allowed lower provisioning for select a risk that such regulatory forbearance will categories of loans. Its regulatory relaxations perpetuate moral hazard, as it follows prevented a rise of nearly Rs 90,000 crore in aggressive lending growth and risk-taking in NPAs. These relaxations include allowing certain sectors.” Indian banks have a poor unsecured loans to microfinance companies track record with restructuring. The RBI’s to be restructured in 2011, and allowing asset quality reviews in FY16 and FY18 found second restructuring of loans on a case-to- that a dominant share of loans restructured case basis. State electricity boards and the after FY12 degraded into non-performing aviation sector are two notable examples loans (NPLs), according to a Fitch analysis. wherein loans were restructured for a “You are encouraging bad behaviour by second time, but were not classified as non- supporting it and demoralising the ones with performing assets. But, in May 2013, the RBI good behaviour; this is akin to farm loan announced the decision to withdraw waiver that leads to bad credit behaviour,” forbearance on asset classification effective said Kuntal Sur, partner – financial risk & April 1, 2015. Shortly after this, the RBI began regulation, PwC. “This is nothing but kicking its Asset Quality Review (AQR) exercise to the can down the road, this should not be determine the “real” stock of the bad loan encouraged.” The concept of regulatory problem. After the RBI undertook the AQR forbearance arose when the RBI allowed that led to recognition as NPA of several project loans to retain their standard asset loans, which banks had then considered to classification on extension of their be standard assets, NPAs went up from 4.62% repayment schedule in May 1999. This was in 2014-15 to 7.79% in 2015-16, and were as extended to treatment of restructured high as 10.41% by December 2017. However, accounts in March 2001 under the Corporate in the wake of mounting NPAs, the RBI Debt Restructuring (CDR) mechanism, for allowed asset classification benefits for restructuring of debt without the need for an certain types of restructuring schemes. asset quality downgrade if the restructuring These included Strategic Debt Restructuring plan met certain conditions. For years, asset (SDR), Flexible Structuring of Project Loans quality forbearance was used more as a tool and the Scheme for Sustainable Structuring for avoiding recognition of defaults and less of Stressed Assets (S4A). A revival in GDP

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 55 growth rate is key to the Indian economy, RBI data shows that restructuring has been which has slowed to an 11-year-low of 4.5% often used by banks for ‘evergreening’ in the September quarter. Bank of America’s problem accounts, thereby just postponing India Activity Indicator slipped to 3.1% in the recognition of a problem. “Forbearance December from 4.5% in November. The may be a reasonable but risky regulatory Index of Industrial Production for December strategy when there is some hope that shrunk to 0.3% while retail inflation rose to growth will pick up soon and the system will 7.59% in January. “It is not surprising in the recover on its own,” Rajan had said in July current weak operating environment and is 2016. “Everyone – banker, promoter, in line with a recent trend to weaken asset investors, and government officials – often recognition standards,” said Guha of Fitch. use such a strategy because it kicks the “These extensions are only likely to defer problem down the road, hopefully for asset-quality pressures unless there is a someone else to deal with. The downside is sustained improvement in macroeconomic that when growth does not pick up, the bad conditions. Most of these sectors have had loan problem is bigger, and dealing with it is above-average lending growth in the last more difficult.” Central bankers on many few years, either directly or indirectly via occasions in the past have said that non-banks, and could be at risk were the restructuring schemes were required economy to slow. Moreover, these measures because India did not have an effective are unlikely to support sustainable credit bankruptcy law in place. In 2016, the growth until capitalisation improves Insolvency and Bankruptcy Code, 2016 (IBC), meaningfully across banks, in particular which is a comprehensive bankruptcy code, among state-owned banks, which account was enacted and notified. The Code envisages for nearly two thirds of the sector’s assets.” timely resolution of borrower defaults The MSME sector accounts for over 28% of through collective decision making by the GDP, more than 40% of exports, while creditors. But, the success of the law is yet to employing approximately 110 million be proven. “The general approach of bankers people. The outstanding banking sector to stress in large assets has been one of credit to MSMEs was Rs 15.11 lakh crore avoiding the de jure recognition of non- while its gross NPAs were 5.8% of the total performance of such accounts,” NS credit. Likewise, the real estate sector has Vishwanathan, RBI deputy governor, had been in trouble for quite some time and is said earlier. “This is why we have a history the primary reason behind the sustained of a large number of cases of failed nonbank lending crisis. “In extreme restructuring as the schemes were used for situations, the economic value of not taking avoiding a downgrade rather than resolving any action is too high,” says Sur. “If you look the asset. Prolonging the true asset quality at the government’s perspective, we are in a recognition suited both the bankers and slow growth phase; if you allow further borrowers.” As per the latest data from the defaults, the negative impact could bring Insolvency and Bankruptcy Board of India, down the growth further.” Some believe that 58% of all closed cases under bankruptcy to difficult times warrant some degree of date were via liquidation while only 14% of forbearance, some hand-holding to cases were resolved with an average haircut performing and otherwise viable units in of nearly 57% on admitted claims. “Good tiding over temporary difficulties. But even practices should be encouraged so that there

56 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 is incentive toward credit discipline. What is • Bank ATMs Start Dispensing More Of the guarantee if the economy goes from bad Rs 500 Notes Instead Of Rs 2,000: to worse, these loans will be repaid,” says Banks have started dispensing more of Sur. “Banks have taken excessive risk in the Rs 500 notes than Rs 2,000 denomination past which is why we are seeing notes, a move seen as gradual phasing encouragement of bad behavior.” While out of the high denomination currency many say that the RBI move is intended to note. The Reserve Bank of India (RBI) in improve monetary transmission, provide an RTI response last year had said that the credit support to fields that have multiplier central bank had stopped printing Rs 2,000 effects within the wider economy, the denomination currency notes. Although regulator should also bring in rules to there has been no dictate from the finance reward those with better credit discipline. ministry, banks on their own have decided The regulator is also aware of the risks that to fill their ATMs with smaller denomination the relaxations bring in, but places the onus notes for the convenience of customers, on banks to ensure that their books don’t sources said. Some banks have already have a hole. “Sector-specific pockets of stress started recaliberation of their ATMs and need policy attention,” Governor Das said at other banks will also follow the suit, sources a conference this week. “At the same time, said. State-owned Indian Bank has already proper due diligence and risk pricing in announced that its has decided to stop using lending are of prime importance so that the Rs 2,000 notes in their ATMs. When asked health of the banking sector is not if the finance ministry has asked banks compromised while ensuring adequate flow not to push Rs 2,000 notes through ATMs, of credit to productive sectors of the Union minister Nirmala Sitharaman said economy. Timely mitigation measures like the ministry has not issued any instruction faster resolution, better recovery, etc, need to banks in this regard. “As far as I know, to be continued to bring down gross non- no such instruction has been given,” the performing assets.’’ finance minister said on the sidelines of an event here. Getting change for a Rs 2,000 note has become an issue and due to that some banks have stopped using Rs 2,000 notes in their ATMs, sources said. According to the RBI’s RTI reply, 3,542.991 million notes of Rs 2,000 denomination were printed during 2016-17. However, 2017-18 saw a substantial reduction in printing and only 111.507 million notes were produced, which further reduced to 46.690 million notes in 2018-19. This indicates that while these Source: https://economictimes.indiatimes.com/ high denomination notes would continue industry/banking/finance/banking/rbis-gradual-shift- to be a legal tender but will be phased out from-transparency-to-forbearance-towards-stressed- eventually. The move is seen as an attempt to sectors/articleshow/74310581 .cms prevent hoarding of the high-value currency Dated: Feb 26, 2020 and thus, curb black money. The government

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 57 had in November 2016 demonetised Rs 1,000 Indian Bank. Similarly, Andhra Bank and and Rs 500 denominations notes. Replying to Corporation Bank are to be consolidated a question in Parliament, minister of state for with Union Bank of India. “There are no finance Anurag Singh Thakur in December uncertainty about bank merger ... I must said there is no proposal to withdraw Rs thank all the banks because through their 2,000 denomination notes. “This is the real boards they have taken that call. There is worry (about demonetisation) which has absolutely no uncertainty,” she said when surfaced now. I think that you should not asked if the government is reconsidering worry about it,” Thakur told the Rajya Sabha the proposed merger excercise. “We are while replying to a question whether the also conscious of extra load on them in government was planning to withdraw Rs terms of the kind of demands that I put on 2,000 notes in future. According to the reply, them. I have asked them to reach out to 400 notes in circulation (NIC) as on November districts, I have asked them to reach out 4, 2016, were Rs 17,74,187 crore which have to MSME, restructure their loan. So there now increased to Rs 22,35,648 crore as on is a lot of core banking work which they December 2, 2019. The NIC had grown at an are undertaking. I must be conscious of average growth rate of 14.51 per cent year that also. “So the merger and the decision on year wise since October 2014 till October taken by respective banks board are all 2016. At this rate, NIC would have increased well taken. We are going as per schedule on to Rs 25,40,253 crore as on December 2, 2019. that. There is no uncertainty on that. I am Source: https://economictimes.indiatimes.com/ on course. There need not be speculation,” industry/banking/finance/banking/bank-atms-start- she said after unveiling EASE 3.0, the Public dispensing-more-of-rs-500-notes-instead-of-rs-2000/ Sector Bank (PSB) Reforms Agenda 2020-21 articleshow/74324145.cms for smart, tech-enabled banking, and the PSB EASE Reforms Annual Report 2019-20. Dated: Feb 26, 2020 Many people voiced concern about meeting • No Uncertainty On Bank Merger; the deadline for want of many regulatory Going On As Per Schedule: approvals. However, the government may relax those approvals. Even after Cabinet With the April 1 deadline for mega merger of approval to the proposed mega merger plan, 10 state-run banks into four fast approaching, officials said, fixation of share swap ratio, Finance Minister Nirmala Sitharaman shareholders consent and other regulatory on Wednesday asserted that there is no approvals are expected to take at least 30-45 uncertainty about the consolidation process days. It is believed that the Prime Minister’s which is going on as per the schedule. Last Office (PMO) has sought details from these year in August, the government announced lenders about their financial projections for the consolidation of 10 public sector banks the next three to five years. Details in respect into four mega state-owned lenders effective of NPAs, capital requirement, credit growth April 1. United Bank of India and Oriental and cost savings on account of the mergers Bank of Commerce would be merged with have been asked for, officials said. So, chances Punjab National Bank, making the proposed of the merger becoming a reality beginning entity the second largest public sector bank. next fiscal year seems little unrealistic at It was decided to merge Syndicate Bank with the moment, a senior public sector bank Canara Bank, while Allahabad Bank with official said. Besides, regulatory nods, the

58 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 Scheme of Amalgamati has to be laid before Rs 2.04 lakh crore in the first nine months Parliament for 30 days for the perusal of of 2019-20 driven by newly setup dedicated the members. The second-half of the Budget stressed account management verticals in session is scheduled to start on March 2. PSBs that have recovered Rs 1.21 lakh crore EASE 3.0 seeks to enhance ease of banking in in the same period and the highest provision all customer experiences, using technology, coverage ratio of 77.5 per cent in nearly alternate data and analytics. Dial-a-loan for eight years. After unveiling EASE 3.0, the doorstep loan facilitation, Credit@click for Finance Minister along with MSME Minister end-to-end digitalised lending, on-the-spot Nitin Gadkari held meeting with the heads of EASE Banking Outlets at well-frequented public sector banks on the MSME sector. The places like malls and stations, palm banking, meeting reviewed loan restructuring, she digitalised branch experience, analytics- said, adding that banks have been instructed based instant credit offers, cash-flow-based to clear the pending cases by March 15. credit and tech-enabled agriculture lending As many as 5.28 lakh accounts have been are part of a wide array of tech-enabled ease benefited out of 5.53 lakh cases eligible enhancements that PSBs would effect during for restructuring and the remaining cases FY2020-21. PSB Reforms EASE Agenda is a would be cleared by March 15, she said. common reform agenda for PSBs aimed at Later addressing an awards function here, institutionalizing clean and smart banking. Gadkari said the meeting discussed four key It was launched in January 2018, and the issues including how lenders can support subsequent edition of the programme ? micro, small and medium enterprises and EASE 2.0 built on the foundation laid in EASE quick implementation of restructuring of 1.0 and furthered the progress on reforms. the debt scheme for units facing difficulties. Reform Action Points in EASE 2.0 aimed at He said the issue of quick disbursement of making the reforms journey irreversible, loans by banks to MSME units under various strengthening processes and systems, and government schemes was also taken up in driving outcomes. Public Sector Banks have the meeting. “I am confident that MSMEs will shown significant improvement in the Action certainly be facilitated through cooperation Points of the EASE Reforms Agenda since its by banks,” Gadkari said. introduction. Following the completion of Source: https://economictimes.indiatimes.com/ recognition of legacy stress as NPA, PSBs have industry/banking/finance/banking/no-uncertainty- returned to profitability with sound financial on-merger-going-on-as-per-schedule-fm-nirmala- health and institutionalised systems to sitharaman/articleshow/74324274 .cms prevent the recurrence of past weaknesses. Dated: Feb 27, 2020 The improved financial health of PSBs reflects in many parameters including Gross • India Post Payments Bank Crosses 2 Cr NPAs reduced from Rs 8.96 lakh crore (14.6 Customer Mark: per cent) in March-2018 to Rs 7.17 lakh crore (11.3 per cent) in December-2019 and a sharp India Post Payments Bank (IPPB) has decline in fraud occurrence from 0.65 per garnered over two crore customers in cent of advances during FY10-FY14 to 0.20 per less than two years of being operational. cent in FY18-FY20; due to fraud prevention According to a statement, IPPB had reached reforms and proactive checking of legacy the landmark of one crore customers in NPA. Besides, there was a record recovery of August last year - its first year of operations.

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 59 “The next 1 crore customers have been payments into various post office saving acquired and on-boarded in just five schemes and purchase of postal products, it months. On an average, IPPB has been added. opening or maintaining a run rate of 33 lakh Source: https://economictimes.indiatimes.com/ accounts per quarter,” a statement said. The industry/banking/finance/banking/india-post- success of IPPB’s business model underlines payments-bank-crosses-2-cr-customer-mark/ the government’s intent in creating an articleshow/74337548.cms interoperable banking infrastructure Dated: Feb 27, 2020 for the public good contributing toward changing the financial inclusion landscape • Bank Credit Growth Continues To Be in India, Communications Minister Ravi Tepid: Shankar Prasad was quoted as saying in the statement. “Since its launch, IPPB has Bank credit growth continues to be tepid as enabled more than 1.36 lakh post offices the slowdown continue to grip the economy. and 1.9 lakh dakiyas (postmen) to provide The latest numbers released by the Reserve a complete suite of banking services at the Bank of India show that loans grew by just doorstep of the customer providing access to 6.3 per cent year-on-year during the latest any Aadhaar linked bank account, leading to fortnight ended February 14. The fiscal year an increase in rural banking infrastructure is expected to end with a credit growth of by almost 2.5 times,” he added. With the 6-7 per cent, which will be the lowest in 58 launch of Aadhaar Enabled Payment System years. Total bank credit amounted to Rs 100.4 (AePS) Services in September 2019, IPPB lakh crore, up 6.3 per cent (year-on-year), has now become the single largest platform according to the latest figures released by the in the country for providing interoperable Reserve Bank of India. Incrementally credit banking services to the customers of any was contracting until September. Several bank, the statement said. With AePS services, government initiatives pushed the growth any person with a bank account linked rate in the positive zone subquently. But it to Aadhaar can perform basic banking has failed to see the double digit growth of the services such as cash withdrawals and past several years. A shift of large borrowers balance enquiry irrespective of the bank such as non-banking financial companies they hold their account with. To avail these (NBFCs) and housing finance companies services, a customer with an Aadhaar-linked (HFCs) to the banking system for their account can simply authenticate his or her funding requirements, had boosted bank identity with fingerprint scan and Aadhaar credit growth in FY2019. However, factors authentication to complete a transaction. The such as muted economic growth, lower statement noted that IPPB has implemented working capital requirements, as well as risk one of the largest-ever digital financial aversion among lenders, have compressed literacy programme by investing over one the incremental credit growth in FY2020, crore man-hours in training and certifying according to ratings firm Icra in a recent more than 250,000 postal assistants, postmen note. Icra has fore cast FY’20 growth at 6.5 to and GDS as banking service providers. The 7 per cent. Incremental net domestic credit bank has also digitised all the post office this fiscal up to December 2019 is just a fifth counters through a simple QR Code to accept of what it was a year ago according to ratings electronic payments and also enabled direct form Crisil. Lending to the retail segment

60 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 and non-banking financial companies the bank reduce its interest outgo. “We are (NBFCs) showed good growth, while credit exercising the call option to reduce the cost to corporates (ex-NBFC) and micro, small, of funding. The market interest rate has and medium enterprises (MSME) declined. come down given the availability of ample Crisil has estimated that credit growth may liquidity in the system. The long-term repo touch 6 per cent this fiscal. But it adds that the also has a softening impact on interest prolonged slowdown in bank lending may rates,” said Uco Bank managing director AK be bottoming out this fiscal, with gross credit Goel. The upper tier 2 bonds do not qualify offtake set to rise 8-9% on-year in fiscal 2021, a as Basell III capital and, therefore, there is good 200-300 basis points (bps) over the likely no advantage of holding them now. The growth of ~6% this fiscal, it said in a research 15-year bonds were issued on March 25, note released earlier this week. As for this 2010 at 8.90% rate. If the bank were not to fiscal, some growth momentum is expected exercise the call option, it would have to pay in the fourth quarter, after a subdued three investors 50 basis points higher interest rate quarters – due to traditional fiscal year ending as per the terms of the bonds. The call option growth, it said. A gradual pick-up in economic date is fixed for March 25. The upper tier 2 activity, continuing demand for retail loans, instruments have a minimum maturity of 15 and strong growth in lending by private years and RBI allows calling back the bonds sector banks should drive the uptick. Recent only after 10-years. Uco had raised Rs 1,000 policy moves announced in the Union Budget, crore worth of Basel III compliant bonds and by the Reserve Bank of India (RBI) are in this fiscal. The bank expects its net non- also expected to provide spur. RBI’s move to performing assets ratio to fall below 6% at exempt banks from cash reserve ratio (CRR) the end of March from 6.34% three months requirement for incremental credit to certain ago, which would allow the lender to exit sectors for up to five years, will also support the ambit of the PCA curbs. It was put under lending, Crisil said. PCA in 2017. Uco reported a net loss of Rs 960 Source: https://economictimes.indiatimes.com/ crore for the December quarter, marginally industry/banking/finance/banking/bank-credit-growth- less than its net loss in the year-ago period, continues-to-be-tepid/articleshow/74341138.cms but its operating profit, which is calculated before provisions and contingencies, trebled Dated: Feb 27, 2020 to Rs 1,211 crore against Rs 381 crore in the • UCO Bank Calls Back Bonds To Reduce year-ago period. Cost Of Funds: Source: https://economictimes.indiatimes.com/ State-owned UCO Bank is looking to reduce industry/banking/finance/banking/uco-bank-to- its cost of funding and boost profitability focus-on-boosting-profitability-aims-to-exit-rbis-pca- as it aims to exit Reserve Bank of India’s framework/articleshow/74341811.cms crippling prompt corrective action (PCA) Dated: Feb 27, 2020 programme after March. The lender has • Low Transaction Charges Don’t Pro- decided to exercise the call option on upper mote Digital Payments: tier 2 bonds worth Rs 500 crore to help ease the operational curbs imposed by The opportunity to grow digital payments in the regulator. Another Rs 800 crore worth India is enormous, with just about 10% of the of lower tier 2 bonds are coming up for total merchant community in the network, but maturity on March 8. These should help tinkering with fees associated with electronic

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 61 transactions could slow the adoption rather merchants accept card payments in India, than promoting it, said Mastercard CEO Ajay which is way more than what it used to be Banga. There is no empirical evidence that four years ago when just 1 million merchants either a low merchant discount rate (MDR) or accepted cards. But the scope is huge. There the absence of it promotes digital transactions. are nearly 65 million merchants in India.” On the contrary, any such move takes away Banga also praised the banking regulator for the incentive for intermediaries, who are proactively pushing digital payments and vital for acquiring customers, Banga said in being receptive to suggestions. “I think the a telephonic interview. He was speaking to RBI (Reserve Bank of India) has been very fair ET two days after the announcement that he and transparent. I don’t have a lot of advice would be elevated to the position of executive for them, it is one of the best regulators in the chairman. MDR is the fee charged by banks world,” he said. “We have been telling them and payments companies from merchants (the RBI) our views on data predictability. We or shop owners for providing them payment are also talking to them to enable payment settlement infrastructure, or point-of-sale directory from your bank account using our (PoS) machines. “Wherever in the world facility called ‘pay-by-account’. They are open MDR has been reduced to the levels where to discussing how to enable that. The RBI is it makes it uneconomical for the acquirer or very constructive,” Banga said. issuer to participate in the natural business Source: https://economictimes.indiatimes.com/ of electronic payments, you tend to lose the industry/banking/finance/banking/low-transaction- momentum. It’s a balancing act,” he said. The charges-dont-promote-digital-payments-mastercard- government has been tinkering with the fee ceo-ajay-banga/articleshow/ 74364928.cms paid for electronic transactions using debit Dated: Feb 28, 2020 cards. Recently, it scrapped MDR charges on payments made using the RuPay card, which • After RBI’s Ruling On Troubled is issued by the National Payments Corp Builders Dues, Rs 20k-Crore Realty of India. Low MDR charges take away the Loans In For A Rejig: incentive that is essential for companies that get customers on board. These companies Real estate loans worth Rs 20,000 crore may then do not find it meaningful to remain in come up for restructuring after new Reserve business, Banga pointed out. “We need to find Bank of India rules that allowed banks and a way to ensure economic sustenance for this housing finance companies to defer the model,” he said. “My view is that commercial classification of troubled builder loans as bad sustainability in these decisions is very for one year giving the industry more time to important. There are a lot of studies to show restructure its loans. This measure, coupled that this is the right way to think about it.” with the set-up of Rs 25,000 crore real estate Banga said there is an immense opportunity alternative investment fund, should help to promote digital payments in India with ease the asset quality pain at least in the near just about 5 million of the total 65 million term. “We have received several requests merchants currently in the network, he said. from real estate developers to restructure “Don’t know the right number (cash to digital) their loans, we should expect to standardise for India, but I do expect digital payments in a bulk of these loans in cases where the India to grow substantially than (in) the past projects have been delayed for reasons 10 years,” Banga said. “About 5-6 million beyond the control of promoters,” said a

62 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 banker involved in couple of restructuring projects is stuck, the RBI regulation along proposals. Data analysed by Propstack with a recent NCLAT decision on treating real estate and financial data intelligence one special purpose vehicle as a separate provider estimates that moratorium period company is set to help the sector. Banks can for Rs 41,884 cr of loan sanctions were coming now look to restructure the loan when a real to an end in 2020. Data also showed that loan estate company fails on the payment, and sanctions worth Rs 49,360 crore have either in most cases the sector is facing stress too, moratorium expiring or tenure expiring in which is causing this repayment issues for 2020. This is against Rs 34,017 crore worth them,” said Babu Sivaprakasam, partner at of loans in 2019. “Developers have to start Economic Laws Practice. principal repayment post the moratorium Source: https://economictimes.indiatimes.com/ period and without this announcement, we industry/banking/finance/banking/after-rbis-ruling-on- would definitely have seen a surge in non- troubled-builders-dues-rs-20k-crore-realty-loans-in- performing loans in the developer loan for-a-rejig/articleshow/ 74367742.cms segment as many developers whose projects Dated: Feb 28, 2020 are either stuck or delayed would not have • Full Digitalization Of Banking Sector, been able to make the principal and interest How This Can Be Achieved: repayments,” said Sandeep Reddy, co- founder, Propstack. The measure is expected When I moved to Bombay 35 years ago, the to boost the real estate sector struggling with waiting period for a landline phone was three high inventory, poor prices and incomplete years. Now, with one call or over an app, a projects. Data suggests that nearly 174,000 mobile phone, a landline and high-speed homes are stuck in seven big India cities. broadband with TV connectivity can become Buyers displayed aversion towards under- operational in less than three minutes. A construction projects with share of completed similar transformation took place in the properties in overall sales going up to 25% in capital markets in the 1990s. Electronic stock 2019 as compared to 11% in 2014. “There are exchanges, stock depositories and payment several real estate companies that are facing system overtook the physical stock trading bankruptcy proceedings as one of their system, manual stock-keeping and paper- based settlements, ensuring transparency, reach and exponential growth in trading volumes. Consequently, India’s capital markets are now one of the largest in the world in terms of volume. Banking, too, can become a frictionless experience. With the right leadership and regulatory support, a completely electronic banking experience of ‘Anybank, Anywhere, Anytime’ is not out of reach. In the future, the customer could open an account at any bank, and a central banking depository (CBD) could maintain a ‘universal bank account’ (UBA) of customers. It would keep records of all banking transactions of

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 63 an account-holder, eliminating the need for their digital platforms for fund transfer, multiple account-keeping at multiple banks. lending, payments and wealth management. This would provide interoperability, where This system will not only significantly bring customers can change banks while retaining down the cost of banking transactions, but also the same account number. A common central remodel banking. A buy-in of the regulators know-your-customer (KYC) agency would to make the required regulatory framework not just be a repository of data submitted available could be a starting point. ‘Anybank, by banks, but it will also be authorised to Anywhere, Anytime’ would, indeed, require carry out various levels of KYC checks on a lot of ground-up model development and a an account-holder. This would ensure a big leap of faith. seamless on-boarding of account holders for Source: https://economictimes.indiatimes.com/ banking services, and easy switch from one industry/banking/finance/banking/full-digitalisation- bank to another. With a KYC certificate and of-banking-sector-how-this-can-be-achieved/ a CBD number, one could walk into any bank articleshow/74408411.cms to open an account. Banks will be able to Dated: Feb 28, 2020 retrieve the data from the server of CBD with no incremental data entry. After ensuring • Three-Day Bank Strike From March 11 a uniform KYC process, this will also avoid Deferred: multiplicity of KYC across different banks and other such agencies. To bring down costs and The proposed three-day bank strike in the improve efficiency, various banking channels country called by various unions from March could also be shared. A shared white-labelled 11 has been deferred following ‘positive’ ATM and business correspondent network developments at the bipartite meeting held already enable customers to make cash in Mumbai on Saturday, an AIBEA statement deposits and withdrawals, and Aadhaar- said here. The strike had been called by the enabled Payment System (AePS) payments constituents of United Forum of Bank Unions through an outsourced network. A white- (UFBU), the umbrella body of the trade labelled branch network could carry out unions in the banking sector. All India Bank banking services and retail operations of Employees’ Association (AIBEA) statement various banks in a non-discriminatory said that in the bipartite meeting, which was manner quite like the VFS Global application held between the unions and Indian Banks centres that provide visa application services Association (IBA), discussions were held in for multiple countries under the same roof. respect of offer of increase in pay slip cost These could also provide last-mile reach to to 15 per cent, demand for five-day banking digital banks. A banking settlement/clearing among others. The statement added that IBA agency could conduct interbank settlements has agreed to discuss all other issues raised of fund positions based on transactions in by the unions. Bank unions had observed a the UBA. Rating agencies could also access two-day strike from January 31 after talks transaction flows in accounts to strengthen over wage revision failed to make headway their assessment of individuals. Quoting with the IBA. the depository number, one can perform Source: https://economictimes.indiatimes.com/industry/ a transaction on the specific bank’s online banking/finance/banking/three-day-bank-strike-from- platform. Banks could then focus on march-11-deferred/articleshow/74418143.cms enhancing their product suites and enriching Dated: Feb 29, 2020

64 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 Top Banking Developments

• WhatsApp Pay Gets NPCI Nod To Source: https://economictimes.indiatimes.com/ Expand UPI Project To 10 Million industry/banking/finance/banking/ whatsapp-pay-gets- Users: npci-nod-to-expand-upi-project-to-10-million-users/ articleshow/74020316 .cms Facebook-owned instant messaging platform WhatsApp has received permission from Dated: Feb 08, 2020 the National Payments Corporation of India • HDFC Bank, Mastercard, SAP Concor (NPCI) to expand its pilot United Payment Join Hands To Manage Spending In Interface (UPI) services to 10 million users, Corporate Sector: according to Nandan Nilekani, the architect HDFC Bank, Mastercard and SAP Concur of unique identity database Aadhaar and have joined hands for spending management UPI. Nikelani was speaking at an IIT Industry services for the corporate sector. HDFC Bank Conclave event on Friday. WhatsApp’s will offer a corporate credit card for business payment feature, called WhatsApp Pay, is travellers, providing a one-stop solution for designed to run on UPI developed by the payment and expense management during NPCI which allows users to pay others or do business trips, said a release on Tuesday. “The business transactions through their bank corporate credit card will enable seamless accounts. WhatsApp has been running integration of all business-related spend into a pilot for one million users and has SAP Concur offerings, enhancing employee struggled to get a full-fledged licence since experience, increasing visibility, saving the rollout of the project in 2018. On Friday, money, and improving corporate efficiency,” a media report said that NPCI has allowed it said. The card is supported by Mastercard. WhatsApp to increase that to 10 million SAP Concur is a travel, expense, and invoice customers, citing an unnamed official from management solutions provider. Parag the RBI. NPCI and WhatsApp declined to Rao, country head (payments business and comment. WhatsApp has over 400 million marketing) of HDFC Bank, said, “Corporates users in India, which is its largest market. can gain greater insights and control, while WhatsApp Pay will compete with Google ensuring regulatory and tax compliance Pay, PhonePe and Paytm. Nilekani said through this solution. Together with SAP six countries have asked to study the UPI Concur solutions, we aim to reinvent the system. He said Google has asked the US way Indian corporates experience business Federal Reserve to adopt the UPI model that travel.” Mankiran Chowhan, managing it plans for FedNow, an interbank settlement director (Indian subcontinent), SAP Concur, system. Recently, Facebook said it expects said that by automating and integrating to roll out WhatsApp Pay in a number of travel, expense, and invoice management, countries, in the next six months. CEO Mark the company is helping customers build an Zuckerberg said commerce and payments intelligent spend management platform. are areas that will be important for private “This enables them to uncover valuable social platforms such as WhatsApp and spend data, simplify processes, and make Messenger. smart decisions. Using our joint solution,

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 65 organisations can make strategic decisions - HDB Financial Services, said, “The HDB- based on insights unique to their business Acko partnership is a great step towards and gain a consolidated view of their boosting the overall customer experience.” budget, drive control on how employees Ashwin Ramaswamy, business head - spend money, automate payments to speed partnerships at Acko said, “This partnership up processing, and ensure compliance and springs from a shared commitment towards data accuracy,” Chowhan said. Porush Singh, a consumer-first approach, from both the division president (South Asia), Mastercard, brands. Between Acko’sinsurtech expertise said the new corporate card solutions allow and HDB’s digital EMI capabilities, we will access to enhanced features for traveller deliver an insurance cover that is simple, convenience and increased protection quick and will protect consumers in their against fraud including in-built proprietary time of need.” Acko’s General Insurance tools . “It will help to capture and consolidate Company was founded in 2016 by Varun Dua, accurate financial reporting to enable deep a fin-tech serial entrepreneur, Acko provides analysis for greater cost savings,” Singh said. innovative products with personalized Source: https://economictimes.indiatimes.com/industry/ pricing based on customer behaviour and banking/finance/banking/hdfc-bank-mastercard-sap- data analytics. concor-join-hands-to-manage-spending-in-corporate- Source: https://economictimes.indiatimes.com/ sector/articleshow/ 74195632.cms industry/banking/finance/banking/acko-partners-with- Dated: Feb 18, 2020 hdb-financial-services/articleshow/74322127.cms Dated: Feb 26, 2020 • Acko Partners With HDB Financial Services: • HDFC Bank Launches Co-Branded Credit Card With IndiGo: Acko General Insurance, has announced a partnership with HDB Financial Services, HDFC Bank on Thursday joined hands a Non-Banking Financial Company (NBFC). with the country’s largest airline IndiGo to HDB Financial Services (HDBFS) offers launch a co-branded credit card, which will Aabhar cards (EMI cards) to its customers effectively work like a loyalty programme for when they avail sales finance from general the carrier. Labelled Ka-ching, the card will trade stores/ large format retail etc. The offer many benefits like complimentary air insurance covers are in-built features of tickets, lounge access, 5 per cent cashback the Aabhar card. Acko will be powering the or reward points on Indigo bookings, and Aabhar card holder with micro insurance 3 per cent cashback on dining, grocery and cover which will provide a range of benefits entertainment, the companies said. With including Vector borne disease cover, loan over 14 million active cards, HDFC Bank is protector and hospital cash allowance to by far the largest credit card issuer in the HDB customers, according to a release. This country, and hopes to sell 1 million Ka-ching collaboration will offer HDBFS customers cards over the next three years. Parag Rao, insurance covers at no additional cost head of the cards business at the bank, told with EMI cards such as the HDB Blue and that around 20 per cent of its total cards are Platinum Aabhar cards. Claims can be filed co-branded, and such cards see around 30 through Acko’s website. Speaking on the per cent more spending. The bank also has partnership, Rakesh Kumar, product head similar tie-ups with Walmart and Times

66 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 Group. It also had a similar card with the also earn 10-15 per cent rewards on dining, now-defunct Jet Airways. Rao said travel and shopping, transport, medical bill spends with hospitality contribute 12-13 per cent of total featured partners, apart from priority check- spend on the bank’s credit cards. About the in, seat choice, and complimentary meals. delinquency rate in the cards business, Rao The card is being launched in partnership said like the parent HDFC Bank, which has the with Mastercard, which is the largest issuer best asset quality with under 1.5 per cent bad for HDFC Bank, Rao said. Porush Singh of loan levels, cards business also has the lowest Mastercard said Ka-ching card comes with NPA levels. He, however, did not quantify the highest safety standards. He said co- it in percentage. IndiGo Chief Commercial branded cards constitute as much as 30 per Officer William Boulter said this is the first cent of total cards in company’s home market such tie-up for the airline and expressed in the US. hope that Ka-ching card will help it increase Source: https://economictimes.indiatimes.com/ customer satisfaction. The premium variant industry/banking/finance/banking/hdfc-bank- of the card offers complimentary air tickets launches-co-branded-credit-card-with-indigo/ worth Rs 1,500-3,000, apart from host of other articleshow/74339726.cms benefits, and can be redeemed against its tickets, Boulter said. He said customers can Dated: Feb 28, 2020 Top Banking Appointments

• HDFC Bank Appoints Anjani Rathor Source: https://economictimes.indiatimes.com/ Chief Digital Officer: industry/banking/finance/banking/hdfc-bank- appoints-anjani-rathor-chief-digital-officer/ Largest private sector lender HDFC Bank articleshow/74048175.cms on Sunday announced the appointment of Anjani Rathor as its chief digital Dated: Feb 09, 2020 officer. Rathor joins from telco Bharti • Axis Bank Appoints Shri Puneet Airtel, where he used to serve as the chief Sharma As CFO: infiltration officer of the consumer sector. Axis Bank on Thursday said its board The role of CDO has been vacant since has approved appointment of Puneet incumbent Nitin Chugh left the job. It can Sharma as Chief Financial Officer (CFO). be noted that the lender has been facing a His appointment will be effective from slew of challenges on its online banking in March 6, the private sector lender said in a recent past. HDFC Bank managing director regulatory filing. Sharma replaces Jairam Aditya Puri said Rathor’s credentials and Sridharan, who has resigned as the group leadership abilities make it a good addition executive and CFO of the bank, with effect to its leadership team. Rathor studied from the close of business hours on March aersospace engineering at IIT Kharagpur 5, it said. Prior to joining Axis Bank, Sharma and holds a post graduate diploma in spent 12 years at Tata Capital as a senior management from IIM-Calcutta, a bank management functionary and was the group statement said.

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 67 CFO since 2014 accountable for financial is credited with building consumer loans control, financial planning & accounting portfolio from scratch, as part of a strategy and taxation amongst other deliverables, the to expand the loan book adopted by the statement said. bank. He is also credited with diversifying Source: https://economictimes.indiatimes.com/ the bank’s book with new products like industry/banking/finance/banking/axis-bank-appoints- loans against property, personal loans and puneet-sharma-as-cfo/articleshow/74332857.cms credit cards, besides its main vehicle finance business. Based in New Delhi at present, Dated: Feb 27, 2020 Kathpalia used to head the consumer loans • IndusInd Bank Names Shri vertical at ABN Amro Bank, and had joined SumantKathpalia As CEO: with Sobti and others who had joined Private sector lender IndusInd Bank on Indusind Bank in 2008. He is a chartered Thursday announced the appointment of accountant by qualification. In his previous Sumanth Kathpalia as the CEO succeeding roles, he has worked with Citibank and Bank RomeshSobti who turned around a sinking of America. He has had a vast and varied bank a decade ago with a band of colleagues experience in consumer banking, project from ABN Amro. Kathpalia, a long-term management, credit cards, bancassurance, colleague of Sobti takes over at a time when wealth management and consumer finance. the stock is at a yearly low and investors Last year in November, the bank had said worry about its bad loans. Kathpalia is the it has finalised a candidate to succeed Sobti head of consumer loans at the Hindujas- and submitted an application to RBI seeking promoted lender and will take over in approval. “We have been occupied with the March once Sobti retires after being at succession planning for years, there have the helm for over a decade. “The bank has been no assumptions on extensions,” Sobti received a communication from the RBI had told ET in an interview in November. today, approving the appointment of Mr. “You give the potential candidate a wider SumantKathpalia, who currently heads role and the organisation starts sensing that. the bank’s consumer banking business, as The parallel run would be for 3-4 months not its Managing Director & CEO for 3 years, for 12-18 months.” with effect from March 24, 2020, post Source: https://economictimes.indiatimes.com/ the retirement of Mr. RomeshSobti, the industry/banking/finance/banking/ indusind- current MD & CEO,” the bank said in a bank-names-sumant-kathpalia-as-ceo/ communication. The 55-year-old Kathpalia articleshow/74340835.cms has also been with the bank since 2008 and Dated: Feb 27, 2020

68 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 Top Expert Reports

• Slowdown In Bank Lending May medium term, and the government’s mega- Bottom Out This Fiscal (CRISIL): push to infrastructure will translate into credit growth only gradually,” Crisil said. As CRISIL Ratings stated a slowdown in bank for this fiscal, it is expecting some growth lending may be bottoming out this fiscal, momentum in the fourth quarter, after a while gross credit off take may rise 8-9% subdued first three quarters. RBI’s move year-on-year in fiscal 2021 backed by retail to exempt banks from cash reserve ratio demand. Bank loan may grow at about 6% (CRR) requirement for incremental credit this fiscal, the rating firm said. “A gradual to certain sectors for up to five years, may pick-up in economic activity, continuing support lending. Incremental net domestic demand for retail loans, and strong growth credit this fiscal up to December 2019 is just in lending by private sector banks should a fifth of what it was a year ago. Lending drive the uptick,” it said in a note published to the retail segment and non-banking on Tuesday. Crisil’s senior director Krishnan financial companies (NBFCs) showed Sitaraman said that structural shifts such as good growth, while credit to corporates favourable demographics, rising propensity (ex-NBFC) and micro, small, and medium to leverage for personal consumption, enterprises (MSME) declined. “Retail credit increase in availability of financing, and should continue to grow at a healthy clip reasonable risk-adjusted returns for of about 16 per cent next year, supported lenders, would continue to support retail by sustained demand for unsecured loans, lending. Its share of total bank credit is muted business growth for non-banks as expected to rise around 400 bps to 28 per well as steady levels of pool purchases,” the cent between March 2019 and March 2021. rating firm said. Securitization transactions The corporate lending (excluding lending through the direct assignment route have to NBFCs) is expected to remain subdued surged almost 40 per cent to Rs 59,000 crore in fiscal 2020 and thereafter, may witness in the first half of fiscal 2020, compared a slight uptick. Crisil projected a modest 2-3 with Rs 42,700 crore a year ago. per cent rise in this segment, leading to a fall in its share in total bank credit to 48 per Source: https://economictimes.indiatimes.com/ cent at the end of March 2021 from 51 per industry/banking/finance/banking/ slowdown-in- cent three summers back. “Low capacity bank-lending-may-be-bottom-out-this-fiscal-crisil/ utilisation in the economy would keep articleshow/74304864.cms private investments muted in the near to Dated: Feb 26, 2020

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 69 Top RBI Circulars

Circular Number Date Of Issue Department Subject

RBI/2019-2020/168 28.2.2020 Financial Inclusion Formation of new districts in the State of FIDD.CO.LBS. and Development Tamil Nadu – Assignment of Lead Bank BC.No.18/02.08.001/2019-20 Department Responsibility

RBI/2019-2020/167 26.2.2020 Department of External Benchmark Based Lending – DOR.DIR.BC.No.39/ Regulation Medium Enterprises 13.03.00/2019-20

RBI/2019-2020/166 26.2.2020 Financial Inclusion Short Term Crop Loans eligible for Interest FIDD.CO.FSD.BC.No.1785/ and Development Subvention Scheme (ISS) and Prompt 05.02.001/2019-20 Department Repayment Incentive (PRI) through KCC

RBI/2019-2020/165 26.2.2020 Department of Investment in Certificates of Deposit (CDs) - DOR.No.Ret.BC.38/ Regulation Reporting in Form ‘A’ Return 12.01.001/2019-20

RBI/2019-2020/164 25.2.2020 Department of Implementation of Section 51A of UAPA, DOR.AML.BC.No.37/ Regulation 1967 - Addition of two entities to 1267 List 14.06.001/2019-20

RBI/2019-2020/163 20.2.2020 Department of Implementation of Section 51A of UAPA, DOR.AML.BC.No.36/ Regulation 1967 - Removal of two entries from 1267 14.06.001/2019-20 List

RBI/2019-2020/162 20.2.2020 Foreign Exchange Exim Bank's Government of India A.P. (DIR Series) Circular Department supported Line of Credit of USD 11.13 No.21 million to the Government of the Republic of Suriname

RBI/2019-2020/161 18.2.2020 Department of Implementation of Section 51A of UAPA, DOR.AML.BC.No.35/ Regulation 1967: Addition of one new entry to 1533 14.06.001/2019-20 Democratic Republic of the Congo (DRC) Sanctions list

RBI/2019-2020/160 11.2.2020 Department of Micro, Small and Medium Enterprises DOR.No.BP.BC.34/ Regulation (MSME) sector – Restructuring of Advances 21.04.048/2019-20

RBI/2019-2020/159 10.2.2020 Department of Incentivising Bank Credit to Specific Sectors DOR.No.Ret.BC. Regulation – Exemption from CRR Maintenance 30/12.01.001/2019-20

RBI/2019-2020/158 07.2.2020 Department of Prudential Norms on Income Recognition, DOR.No.BP.BC.33/ Regulation Asset Classification and Provisioning 21.04.048/2019-20 Pertaining to Advances - Projects under Implementation

RBI/2019-2020/157 07.2.2020 Department of Implementation of Section 51A of Unlawful DOR.AML.BC.No.32/ Regulation Activities Prevention Act (UAPA), 1967- 14.06.001/2019-20 Updates to ISIL (Da'esh) & Al-Qaida Sanctions List

RBI/2019-2020/156 06.2.2020 Department of Guidelines on Merchant Acquiring Business DOR.RRB.BL.BC.No.31/ Regulation – Regional Rural Banks 31.01.001/2019-20

RBI/2019-2020/155 05.2.2020 Financial Inclusion Interest Subvention Scheme for MSMEs FIDD.CO.MSME. and Development BC.No.17/06.02.031/2019-20 Department

70 | ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 List Of ASSOCHAM Banking & Financial Services Publications

Name Of Report Cost

14th Annual Banking Summit-cum-Social Banking Excellence Awards 2018 Rs. 2,000/-

Indian Valuation System In Changing Scenario: “A Game Changer” Rs. 1,500/-

Building The NBFC Of The Future – A Scalable And Profitable Model Rs. 2,000/-

11th Global Insurance Summit “Increasing Role of Insurance for Economic Growth Rs. 1,500/-

White Paper On Household Savings In India & Simplification Of Insurance Rs. 1,500/-

Code of Hope – The Insolvency And Bankruptcy Code Is Changing The Bad-Loan Resolutions Rs. 2,000/- Paradigm, One Step At A Time

Bolstering of ARCs – Focus on Quicker Resolution & Co-Investor Model Among Imperatives Rs. 1,000/-

Deepening The Debt Market – Issues and imperatives Rs. 1,000/-

Strengthening the IBC Code Rs. 1,500/-

Role of Trade Finance for Inclusive Growth Rs. 1,500/-

* For Purchasing any of these Report Please Contact The Editorial Committee

Upcoming Conferences for Assocham Department of Banking & Financial Services

National Summit on infrastructure Financing April 2020 New Delhi

ASSOCHAM Banking E-Bulletin 10th March, 2020 Volume 56

For Advertising Opportunity in this Magazine, Speaker Slot to a Company Representative or Marketing Opportunity in any of the above mentioned Conferences, Please Contact: Dr. Rajesh Singh Kushagra Joshi M: +91-9871204880 M: +91-8447365357 E: [email protected] E: [email protected]

ASSOCHAM Banking e-Bulletin | February 2020 | Volume 55 | 71