BF September 2020 Cover.Cdr

BANK UPDATE BANKING NEWSNEWSNEWS IS passes Banking Regula- Sitharaman also made it clear that the Emerging Entrepreneurs Business Centre was not encroaching into the (EEB) to support the emerging needs tion (Amendment) Bill, terrain of the States and was only us- of the unbanked and under banked 2020 ing its powers under Items 43 and 45 segment of customers. in the Union List of the Constitution to The Lok Sabha passed the Banking The vertical will focus on supporting enact this law. Regulation (amendment) Bill 2020 that this segment of customers in their jour- seeks to protect the depositors of co- "This Bill is in exercise of the powers ney to becoming entrepreneurs. In operative banks and empower the vested under the Union List item and addition to micro loans, the vertical will Reserve Bank of India (RBI) to regulate therefore consultation with States is also manage micro home loan, micro the banking activities of c ooperative not necessary. Consultation with States bazaar loan and micro enterprise loan, societies. is required only on those in the concur- said a press statement issued by the Replying to the over two-hour discus- rent list", she added. bank. sions on the Bill in the lower house, the Sitharaman said that the Centre had to The bank has further appointed Kumar Finance Minister Nirmala Sitharaman promulgate an ordinance in June as it Ashish as the Executive President and asserted that the Centre "cannot and was felt that the Covid-19 pandemic Head to spearhead EEB. Ashish has does not want to undermine the coop- could make the already weak coopera- over 26 years of experience in setting erative movement" in the country, but tive banks more "fragile" and this had up and managing businesses of signifi- would want the RBI to effectively regu- to be avoided. cant scale in retail and business bank- late those ing, rural banking, microfinance, agri Finance Minister, Nirmala Sitharaman SBI inks MoU with Aus banking and treasury. cooperative societies if they are under- bank Ashish spent about two decades at taking banking activities. "For better ICICI Bank, where in his last role, he State Bank of India (SBI) in Australia has governance, we need to have banking was Senior General Manager & Retail inked a memorandum of understanding regulations to apply on them", she Business Head for North India. During (MoU) with Australian digital Bank Volt said. the long stint with ICICI Bank, he also Bank for serving Indian migrants in the led the rural, agri-business and Sitharaman highlighted that in the last Australian market. two decades as many as 430 coopera- microfinance portfolios for the bank. tive societies have been de-licensed Bandhan Bank's new verti- In his last assignment prior to joining and liquidated. However, not a single Bandhan Bank, Ashish was Group Di- commercial bank under RBI supervision cal to help entrepreneurs rector, Airtel Money, in Africa (a divi- under the Banking Regulation Act had Bandhan Bank, which recently com- sion of Airtel Africa), which runs mobile gone into liquidation in the last two pleted five years of operations as a money operations across 14 countries decades, she added. bank, has set up a new vertical called in sub-Saharan Africa. BANKING FINANCE | SEPTEMBER | 2020 | 5 BANK UPDATE Ashish will be based out of Bandhan ies were much lower at 51 per cent of In the light of the economic and busi- Bank's headquarters in Kolkata and will the pre-COVID period in January-Feb- ness environment in India besides the report to Chandra Shekhar Ghosh, ruary and 57 per cent of the levels downward pressures in the financial Managing Director and Chief Executive observed in July-August last year. sector, increase in NPAs, slow growth Officer. in overall business variables, among Personal bankruptcy: SC others, the bank gauges the capital PSBs see faster uptick in requirements for the near to medium rejects SBI appeal against term from time to time, it said. retail credit inquiries dur- Anil Ambani ing Jul-Aug The Supreme Court dismissed the ap- 12 PSBs join to launch The state-run lenders are seeing faster peal of State Bank of India (SBI) seek- Doorstep Banking Services pick up in retail credit inquiries than ing vacation of the stay granted by the The 12 public sector banks (PSBs) in their private counterparts on quicker Delhi High Court on personal bank- the country have forged an alliance to reopening of branch network, a report ruptcy proceedings initiated by the launch Doorstep Banking Services by a credit information company (CIC) bank against Reliance Group chairman (DBS) at 100 top deposit centres across said. Despite the inroads done by digi- Anil Ambani. the country. tal alternatives, through which lenders SBI's case is that it had granted credit This move is part of the EASE (En- are receiving inquiries and even dis- facilities to Reliance Communications hanced Access and Service Excellence) bursing loans online, branch offices (RCom) and Reliance Infratel (RTIL) in continue to play an important role, 2015 and the same were personally Reforms for PSBs. Transunion Cibil said in the report. guaranteed by Ambani pursuant to a Initially, non-financial services will be The lenders get in touch with CICs deed of personal guarantee of Septem- available to all customers, especially while doing diligence on every credit ber 23, 2016, furnished by him. senior citizens, persons with disabili- proposal, which triggers in inquiries. ties, and defence forces, among oth- It can be noted that many analysts J&K Bank to raise up to ers. The non-financial services include pick-up of cheque / demand draft / pay have said that a large share of the in- Rs. 4,500 cr capital cremental credit demand is coming order; new cheque book requisition from the more aggressive private sec- through equity, debt slip, 15G / 15H forms, IT / GST challan; tor lenders who also have larger capi- Public sector Jammu and Kashmir Bank issue of request for standing instruc- tal buffers. is looking to raise up to Rs 4,500 crore tions; and request for account statement. "Public (sector) lenders saw the biggest through equities and debt, according rebound in inquiries in July and August to its annual report. The services will also include delivery 2020, most likely because they were The bank will seek shareholders' ap- of non-personalised cheque book; early in recommencing operations than proval for the fund raise proposal in its term-deposit receipt; acknowledg- their private and NBFC (non-bank fi- annual general meeting to be held on ment; TDS / Form 16 certificate issu- nance companies) counterparts," the September 28, 2020, the lender said in ance; and pre-paid instrument / gift report by Cibil said. its Annual Report 2019-20. card. Inquiries from over a dozen state-run The implementation of Basel III guide- Financial services - cash pick-up and lenders for the two months were at lines has necessitated the need for delivery - will be available from Octo- 102 per cent of the same observed in banks in India to augment their capi- ber 2020. The services, which will be January-February this year and 118 per tal base. interoperable among these banks, will cent of that in the same period a year This becomes important as Basel III be gradually scaled up beyond the 100 ago, it said. capital requirements call for increase locations. The same numbers for the private sec- in quantity and quality of capital, be- The services will be rendered by the tor lenders were at 70 per cent and 78 sides providing for capital buffer dur- Doorstep Banking Agents deployed by per cent, respectively, while for NBFCs ing economic downturn, the lender the selected Service Providers at 100 and housing finance companies, inquir- said in its report. centres across the country. T 6 | 2020 | SEPTEMBER | BANKING FINANCE RBI CORNER RESERVE BANK NEWSNEWSNEWS RBI asks banks to upgrade 2020 due to health reasons. It has been But this is the first time in this fiscal decided to appoint A.K. Dixit, ex-gen- year (April 2020-March 2021, or FY21) system to auto identify eral manager, Union Bank of India as that the central bank has announced NPAs the new administrator of the bank with an outright open market operation The Reserve Bank of India, asked effect from 23 September," RBI said in (OMO) purchase. In OMOs, the RBI banks to upgrade their systems by June a notification. buys or sells bonds from the secondary 30, 2021, for identification of non-per- Detailing the reasons behind the slug- markets. forming assets (NPA) and calculation of gish turnaround of PMC Bank, the regu- The RBI had last done an outright provisioning. lator said huge losses by the bank and OMO purchase operation on March The central bank noted that many steep erosion in deposits pose chal- 26, of Rs 15,000 crore. banks are still not yet fully automated lenges to revival. After that, all the OMOs were simul- and are resorting to manual identifica- "While the administrator of PMC bank taneous buy and sell operations, in tion of NPAs. All borrowal accounts, and the RBI have been exploring vari- which the central bank bought long- including temporary overdrafts, irre- ous options for resolution of the bank, term securities and sold short-term spective of size, sector or types of lim- several factors such as huge losses in- securities. its, shall be covered in the automated curred by the bank resulting in its en- This exercise is also called 'Operation IT-based system (system) for asset clas- tire net worth getting wiped out, steep Twist' in market parlance.

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