financial news 16-08-2018

16.08.2018: Today's Banking / Financial News at a Glance

 To tackle NPA problem, RBI puts 200 stressed bank accounts under scanner : As part of its effort to contain rising non-performing assets (NPAs), the RBI has started scrutiny of 200 large accounts to assess the level of stress and provisioning done against them by respective banks. Reserve Bank of India (RBI) is examining as to whether banks have followed prudential norms in respect of these stressed assets, a senior public sector bank official said. It is also assessing classification, provisioning and debt recast in respect of those loans, the official added. This is a part of a regular annual inspection of the book of the banks that the central bank undertakes each year after the closure of the financial year, another official said. - Business Standard

 RBI rejects tool used for Kotak stake dilution : The Reserve Bank of India (RBI) rejected the means by which Uday Kotak diluted his promoter stake in Kotak Mahindra Bank. The lender insisted it was compliant with regulations, setting the scene for a possible showdown with the regulator as a December deadline looms. Kotak had sought to lower his stake to 20%, as stipulated, by selling nonconvertible perpetual noncumulative preference shares (PNCPS) to a group of investors earlier this month. The limit has to be met by December. “RBI has today communicated to us that our PNCPS issuance does not meet their promoter holding dilution requirement,” Kotak Mahindra said in a statement to the exchanges on Tuesday evening. “We continue to believe that we have met the requirement and will engage with the RBI in this behalf.” A Kotak Mahindra spokesperson said the bank does not have anything to add to the stock market notice. - Economic Times

 NPCI blames Cosmos Bank's 'own IT environment' for Malware attacks : The National Payments Council of India (NPCI) on Wednesday blamed the Cosmos Bank's "own IT environment" for the unprecedented cyber loot which left the Pune-based bank poorer by Rs 94.42 crore. In a statement, the NPCI's Head Risk Management, Bharat Panchal, said "the NPCI's systems are fully secure and this particular issue has occurred within the (Cosmos Bank's) own IT environment. "This has happened due to malware-based attack on the bank's IT system which has caused a fraud. Under the attack, maximum transactions have been reported from outside India," Panchal pointed out. - Economic Times

 North Korean connection to Cosmos hacking? Signs point to Bangladesh heist masterminds : Hackers targeted an 112-year-old Pune bank, Cosmos, last week in a multi-pronged attack to transfer over Rs 94 crore over multiple days to foreign bank accounts. About Rs 78 crore was withdrawn in more than 12,000 ATM transactions in 28 countries between 3 pm and 10 pm, India time, on Saturday. Another 2,800 transactions were made in different places within India, amounting to about Rs 2.5 crore, during the same period. On Monday, Rs 13.5 crore was transferred to a Hong Kong-based entity using the Society for Worldwide Interbank Telecommunications (SWIFT) facility.  The highly orchestrated event, according to some experts, could be the handiwork of Lazarus, North Korea's most prolific hacking group that has pulled off some audacious attacks around the globe -- from leaking and destroying Sony Pictures' data to siphoning of tens of millions of dollars from banks in Poland and Bangladesh. - Economic Times

 Banks finalising power firms' debt resolution plans : Banks, led by State Bank of India, are close to finalising resolution plans for at least half a dozen stressed power companies involving total loans of ₹50,000 crore, which could result in banks taking more than 50% haircut, bank officials said. Haircut is the amount that lenders will have to forgo to settle a loan. The race for a quick resolution is to meet the August end deadline set by RBI for referring these companies to the bankruptcy court. Lenders are of the view that a resolution for power companies outside the bankruptcy court would fetch them better value compared with their likely recovery under the bankruptcy process. “Lenders have shortlisted Adani for KSK Mahanadi, Edelweiss ARC is sole bidder for Coastal Energen, JSW Energy is highest bidder for Prayagraj Power, and Agri Trade Resources is likely to acquire SKS Power,” said a senior bank official who requested not to be identified. - Economic Times

 India Post Payments Bank launch by PM Modi on Aug 21 to be a grand affair : The launch of the much-delayed India Post Payments Bank (IPPB) promises to be a grand affair. Prime Minister Narendra Modi will do the honours in Delhi’s Talkatora stadium along with Communications Minister Manoj Sinha on August 21. Simultaneous launches are also being planned across all the 650 districts of the country and a schedule for the same is being drawn up. The importance of the launch can be gauged from how ministers have been asked to inform the Prime Minister’s Office and take prior permission before leaving the country on August 21. In case a minister wishes to leave the country, separate arrangements need to be made, sources clarified. - Business Standard

 Government accepts NHB MD Sriram Kalyanaraman's resignation :  National Housing Bank (NHB) Managing Director Sriram Kalyanaraman has resigned amidst allegations of favouring housing finance companies. The government has accepted the resignation and also ordered a vigilance inquiry against him. There are allegations that unethical practices were adopted by the housing regulator for sanctioning refinance facility to various housing finance companies. A senior government official confirmed the developments and said that Kalyanaraman had tendered his resignation which has been accepted. “This is a part of the government’s endeavour to clean the banking system. Any maleficence will not be tolerated,” the above quoted official said. - Economic Times

 Sebi eyes framework for timely disclosure of loan defaults by listed firms : Markets regulator Sebi is looking to stipulate a framework for timely and detailed disclosures of loan defaults by listed entities to enhance transparency. Several companies and rating agencies have come under the regulatory scanner for failing to make timely disclosure about the loan default risks. Tightening of the disclosure norms is aimed at helping banks to recognise their stressed assets as non-performing more uniformly and enhance transparency in the securities market. "Sebi aims at examining stipulation of timely and detailed disclosures pertaining to defaults on debt obligations by listed entities to enhance transparency," the regulator said in its annual report for 2017-18. - Business Standard

 Videocon loan issue: ICICI Bank explores consent option with Sebi ; ICICI Bank has intensified efforts to settle the alleged conflict of interest issue involving Managing Director and Chief Executive Officer Chanda Kochhar with the Securities and Exchange Board of India (Sebi). The bank's newly-appointed chairman, Girish Chandra Chaturvedi, met Sebi chief Ajay Tyagi on Monday and discussed how the matter could be resolved, said people with direct knowledge of the development. Chaturvedi showed his intention to file a consent application with the capital markets regulator to end the ongoing probe into the Videocon loan matter, they said. - Business Standard

 Canara Bank to hire social media agency for customer outreach : Canara Bank plans to hire a social media agency as part of its brand promotion and to reach customers in a better way. The bank is looking for a social media service provider who can assist in creating and managing a strong social media presence as per the prevailing market trend and requirements of the bank, Canara Bank said in a notice. Currently, the bank’s marketing and retail resources wing uses manual methods for managing its social media accounts. “The bank intends to engage a service provider who can provide social media services and assist in creating and managing a strong social media presence,” the bank said detailing the scope of work. - Live Mint

 Accused in Rs 5,000 crore bank fraud case held in Dubai : Nitin Sandesara, an absconding director of a Gujarat-based pharma company which is being probed in a Rs 5, 000 crore fraud case, has been arrested in Dubai, officials said.  Officials said Sandesara was arrested by Dubai police based on a non-bailable arrest warrant issued by an Indian court. "The legal process post the arrest is taking place in Dubai. We are waiting for details. Indian agencies will try to get him deported," a senior official said. Reportedly, Indian probe agencies had information on Nitin Sandesara being in Dubai, following which the authorities alerted the officials in United Arab Emirates. The company and its directors are being probed. CBI has booked Vadodara-based Sterling Biotech, its directors Chetan Jayantilal Sandesara, Dipti Chetan Sandesara, Rajbhushan Omprakash Dixit, Nitin Jayantilal Sandesara and Vilas Joshi, chartered accountant Hemant Hathi, former director Andhra Bank Anup Garg and some unidentified persons in connection with the alleged bank fraud case. - Economic Times

 Larger UCBs surprised at not being allowed to spread provisioning for MTM losses on G-Secs : The Reserve Bank of India’s move to restrict the option of spreading provisioning for mark-to-market losses on government securities to smaller urban co-operative banks (UCBs) has stumped the larger players in this segment. The central bank had initially given this option of spreading provisioning for mark-to-market losses (MTM) that arose due to the systemic impact of sharp increase in the yields on Government Securities only to scheduled commercial banks and small finance banks. But when co-operative banks raised questions about being denied this benefit, the RBI extended it to UCBs, but only to those with deposits of less than ₹100 crore. - Business Line

 Insurers see rising demand for policies on online platforms : A large number of Indians are also shopping for insurance policies.Though the number of insurance policies sold online is still small, online insurance marketplaces and insurers are seeing a lot of interest not just from large towns but also from smaller towns for online policies. Insurance penetration was at an estimated 3.49 per cent in India in 2016-17, which is much below the global average, and the online space is creating not just awareness but is also helping customers who do not have to depend on agents. “Customers are using online marketplaces to read up on insurance covers, understand exclusions and make informed choices,” said Rakesh Goyal, Director, Probus Insurance, adding that the company sells nearly 18,000 policies online every month with plans to expand their portfolio of products thanks to high demand. - Business Line

‘ Technology has helped us open multiple channels to serve rural customers’ : Ujjivan Small Finance Bank is putting technology to good use to bring a slew of banking services, including government schemes, to the doorsteps of the unserved and under-served segments of society. Vijay Balakrishnan, Chief Marketing Officer, sheds light on the journey so far and the way forward. Ujjivan SFB’s pre-launch research indicated that most of its customers had limited exposure to formal banking channels, and even those who did, had found the experience daunting, given that a significant percentage of them are neo-literates or semi-literates. Technology has enabled us to open multiple channels to serve customers and reduce our operating costs. Ujjivan offers to its customers services such as instant account opening on a wireless hand-held device, 24/7 internet and mobile banking, and biometric ATMs where fingerprints are the new pins, and form-free banking. - Business Line

 Challenges ahead as Ayushman Bharat insurance scheme gets set for launch :Prime Minister Narendra Modi has announced that the government-sponsored health insurance scheme – Ayushman Bharat, now rechristened Pradhan Mantri Jan Arogya Abhiyan – would now be launched in less than a month-and-a-half. It surely seems an ambitious target. However, as the deadline looms, challenges on the ground remain immense. Since a month now, close to 7,000 hospitals have applied to be empanelled, said the scheme’s CEO, Indu Bhushan. “We have yet not closed the application process on the portal. Meanwhile, we are in the process of vetting hospitals. If the hospital does not adhere to norms infrastructurally, they cannot be a part of the scheme,” he said. North-eastern states and others such as Bihar have poor hospital infrastructure to begin with, he explained. - Business Line

 Foreign exchange market being monitored: Jaitley : Sending out a word of assurance, Union Minister Arun Jaitley said on Wednesday India’s foreign exchange reserves are comfortable by global standards and sufficient to mitigate any undue volatility in the currency market. His remark has come a day after the rupee slipped to an all-time low of 70.09 in intra-day trade. The country’s currency exchange rate market is being monitored to address any unexpected situation, he said. “The developments are being monitored closely to address any situation that may arise in the context of the unsettled international environment,” Jaitley said in a series of tweets. - Business Line