Here are all the updates from banking sector this week.
Banking sector never disappoints the markets. This week saw some big bang announcements in the sector with Axis Bank selling 9 percent stake to raise Rs 11,000 crore and the country's largest bank — State Bank of India — reporting their financial results with improvement in bad loans.
This weekend will be a busy one for public sector bank heads as they huddle up with experts and government officials to discuss and brainstorm over banking sector’s troubles with focus on improvement in credit growth and reducing non-performing assets amid capital needs for most banks.
Here are the updates from this week:
The board of Axis Bank on Friday approved a 9 percent stake sale to Bain Capital and other investors including LIC in its bid to raise capital worth Rs 11,626 crore by issue of equity-linked securities on a preferential basis.
Punjab National Bank to close down or shift up to 300 loss-making branches in a year
The country's second largest government bank, Punjab National Bank (PNB) said it has plans to close down, merge or relocate about 200-300 of its loss making branches over next 12 months as a part of its consolidation plan.
Insolvency and Bankruptcy
With increased interest to buy stressed insolvency accounts from existing promoters and other corporates, State Bank of India Chairman said bidders must be clear of any wrongdoing, not be wilful defaulters and are seeing increased interest from a lot of existing promoters.
Business tycoon Sajjan Jindal, promoter of JSW Group, which is among the domestic suitors to buy stressed steel assets, has called for disallowing dubious promoters to bid to prevent misuse of the Insolvencyand Bankruptcy Code (IBC).
WATCH | Banking sector this week
Financial Results
State Bank of India, despite posting a 38 percent drop in net profit in the second quarter as against last year and 21 percent fall from the previous quarter, the government-owned bank witnessed improvement in its asset quality with a reduction in gross NPAs by Rs 1,954 crore and net NPAs were reduced by Rs 9863 crore from last quarter.
Chairman Rajnish Kumar said he expects most of the accounts from Reserve Bank of India’s second list to be referred to the insolvency courts and spiked its provisions to improve the bank’s loss absorption capacity.
On similar lines, Punjab National Bank chief Sunil Mehta expects five NPA (non-performing asset) accounts from the first Reserve Bank of India’s first list of large stressed accounts to find a resolution within the stipulated timeframe and about 70 percent from the second list to be taken to the insolvency courts.
Bank of India
Public sector lender Bank of India's second quarter earnings beat analyst expectations, and even the asset quality improved, but the loan growth was tepid. Profit for the quarter stood at Rs 179 crore, which was higher by 41 percent compared with Rs 127 crore in year-ago despite lower other income and operating income.
Rajan says no to politics
Former Reserve Bank of India Governor Raghuram Rajan has no plans to consider the Rajya Sabha seat offer by Arvind Kejriwal's Aam Aadmi Party (AAP).
Demonetisation Anniversary
As the ruling government celebrated the Anti-Black Money Day and Opposition slamming it as anti-people, a year later, bankers were of the view that demonetisation improved formal banking, built current and savings account deposits and pushed digitisation in a big way.
In other news, the Reserve Bank of India asks active Board involvement and quarterly updates by banks and financial institutions are required to keep a check on cyber security threats.
