Public sector bank stocks fall 20-30% from peak as investors face reality of falling profitability
Driven by buoyant narratives & robust profitability in the past, stocks of many public sector banks rose over 400% since 2020. They have fallen sharply over the last few months. Key Points
ThePrintFM asks public sector banks to improve deposit growth
Tribune News Service Chandigarh, August 19 Union Finance Minister Nirmala Sitharaman on Monday asked heads of public sector banks to make concerted efforts to garner deposits by conducting special drives as mobilisation of deposits could further be improved to fund... Key Points
The TribuneFM Sitharaman asks PSBs to push deposit drive by taking 'concerted efforts' following RBI's consistent war
Finance Minister Nirmala Sitharaman chaired a meeting in Delhi to review Public Sector Banks' performance. Discussions included areas like Deposit Mobilisation, Digital Payments, Cyber Security, and Access to Credit under Financial Inclusion. Sitharaman urged banks to focus on efficient customer service, rural outreach, and increasing credit flow for initiatives like PM Surya Ghar Muft Bijli Yojana. Collaboration against fraud and cyber risks was also emphasized, along with implementing new credit assessment models for MSMEs. Key Points
Economic Times300 Indian banks hit after ransomware attack cripples payment systems: Report
A ransomware attack on a service provider of banking technology systems has temporarily shut down nearly 300 small banks across India. An audit was being conducted to ensure the attack does not spread further. Key Points
India TodayMargin squeeze to dent banks' Q1 profits, loan growth may offer silver lining
Banks' Q1 profits face headwinds: Emkay Global predicts a sluggish 4% growth in pre-provisioning operating profits for the June quarter. This slowdown, affecting private lenders most, is attributed to shrinking margins and rising operational costs. Key Points
Economic Times
Adding more to bank stocks; IT still not giving confidence: Andrew Holland
Avendus Capital CEO, Andrew Holland, optimistic about banking sector recovery. IT sector linked to US interest rates. Global factors influence market sentiment. Nifty levels may rise pre-election. Confidence returning post-turmoil, with focus on consumer spending and small banks. Holland further says: The largecap banks will perform and if the commentary in the results season is more positive that the worst is over, Key Points
Economic TimesLenders seek anonymity for officers tagging wilful defaulter accounts
Lenders seek RBI guidance on protecting officers' identities identifying defaulters. Recent court order mandates disclosing committee members. Indian banks Association seeks advice too. Risks highlighted for officers personally named. Key Points
Economic TimesNifty financial service index stocks: Are headwinds slowing down?
In the last three years, different segments of financial service have witnessed very different trends. Trend not in terms of business but in terms of headwinds or tailwinds. While the large private banks have stagnated, some of the small private sectors have come back into the limelight. PSU banks as a pack have made a comeback, insurance companies are still searching for direction, asset management companies have been able to get their mojo back while NBFC are facing new challenges in terms of higher provisions to regulatory. So,each to own it probably defines when it comes head or tailwinds. But what is the common factor is that most of these have a high FPI holding. Now FPIs have largely been the seller in the Indian markets, occasionally they have made a comeback for a short period of time. At this point of time, they are neither major buyers or sellers, but this equilibrium will change. When that happens, it is this set of 20 stocks which will signal which way the wind is blowing for which segment. Key Points
Economic TimesGood Friday bank holiday 2024: Are banks closed today?
Good Friday bank holiday: The RBI has categorised these holidays under the Negotiable Instruments Act, Real-Time Gross Settlement Holidays, and Banks' Closing of Accounts. Find out in which states banks are closed for Good Friday on March 29. Key Points
Economic TimesIndian banks' NIMs may narrow 10-20 bps in next two years: Fitch Ratings
Fitch Ratings predicts a 10-20 basis point narrowing of Indian banks' net interest margins (NIMs) over the next two years due to increased competition for deposits, leading to higher funding costs. Fitch expects banks' earnings to remain resilient, driven by net interest income, although the compression in NIMs could restrict their medium-term earnings potential. Key Points
Economic Times
CBI, banks differ over fair hearing to ‘old’ cases of ‘fraud’
CBI is reportedly insisting on what could be a retrospective application of last years SC ruling that a borrower must be given a hearing before the account is classified as ‘fraud and a “reasoned order” must follow if such an action is taken. But bankers are unwilling to go back to these past matters. Key Points
Economic TimesChina pushes banks to speed approvals of new loans to private developers, say sources
Chinese regulators are urging banks to expedite the approval of new loans to cash-starved private property developers to revive homebuyer sentiment and alleviate lenders' asset quality. The whitelist mechanism, Beijing's latest support measure, aims to ease the sector's liquidity squeeze and stimulate home purchases. Despite repeated nudges from Beijing, most top domestic banks have remained reluctant to bolster credit exposure to the crisis-hit property sector. Key Points
Economic TimesThe great central bank interest rate policy reversal kicks off
Central banks are set to cautiously decrease interest rates to prevent inflation resurgence from low unemployment. Incremental adjustments will differ from past hikes, with expected rates higher than historic lows due to global economic shifts. Key Points
Economic TimesFD rates up to 9.5%: These 8 banks offer over 9% interest rate on fixed deposits for senior citizens
FD interest rates in March 2024: Senior citizens are offered a higher rate of interest rate on FDs compared to those offered on general citizen FDs. Here's a look at small finance banks that provide higher interest rates on senior citizen fixed deposits. Key Points
Economic TimesPSU bank stocks ride past private sector peers in 2024, but how long will good days last?
Private banks lost to PSBs in 2024 as the latter gave double-digit returns. HDFC Bank saw a correction in share prices, FIIs sold financial stocks, and Goldman Sachs issued a “sell” call on YES Bank. PSU banks rallied, but caution is advised in the sector. Key Points
Economic Times
RBI asks for info on gold loan frauds
The Reserve Bank of India has asked banks to share info on gold loan frauds and review lending processes after employees manipulated the system. A whistle-blower complaint revealed collusion with customers, manipulated repayments, and liens. RBI banned IIFL Finance from new gold loans. No response from RBI. Key Points
Economic TimesWill banks switch to a five-day work week soon? What IBA has agreed upon - details here
India Business News: Banking in India may shift to a Monday to Friday schedule, closing on Saturdays and Sundays. This decision is subject to government approval. The new Key Points
Times Of IndiaNo banking on Saturdays? 5-day work week for banks approved by IBA; from when it is applicable
5-day work week for banks: Bank employees may soon work a five-day week, i.e., Monday to Friday. This means that banks will be closed on all Saturdays and Sundays. Key Points
Economic TimesReconstruction and restructuring paying up finally? 7 PSU banks stocks with upside potential of up to 16%
While PSU banks stocks have been doing well for more than an year, it is the divergence between the performance in the PSU and private sector banks which has brought more limelight on PSU banks. Given the fact that stocks have done well and comparisons are bound to be made with the fact that just a year back they were quoting at much below what they are quoting today, will this performance sustain. The answers to this question would not be in black and white, but in probability and possibility. The fact that these banks have gone through a process of restructuring and reconstruction for almost seven years, through which they have braved covid, mergers and changes in process in how the decisions in terms of lending are made their balance sheets much more believable. This is not to say that in future there would be no NPA’s but the fact is the probability of the sudden shock of NPA’s shooting up has gone down. So, before taking a decision it is better to look at what has changed on the ground both at macro and micro level for this part of the Indian banking sector. Key Points
Economic TimesBank profitability to remain healthy despite some moderation: Moody’s
NIMs will decline marginally as banks reprice maturing deposits at higher rates to fully reflect previous increases in interest rates. A slowdown of growth in higher-yielding loans after the Reserve Bank of India (RBI) increased risk weights for riskier loans to NBFCs and unsecured retail loans will also contribute to falls in NIMs, the ratings firm said. Key Points
Economic Times
Shivratri 2024 bank holidays: These states will observe three-day bank closures; here’s the full list
India Business News: As the country gears up to celebrate Mahashivratri on March 8, several states will experience an extended weekend as banks remain closed. The decision to close banks during this time is in accordance with directives from state governments and the Reserve Bank of India (RBI). Key Points
Times Of IndiaPaytm wallet users not to face disruption: RBI Guv
Says 85% of them linked to other banks. As many as 80-85 per cent Paytm wallet users will not face any disruption because of regulatory actions, and the... Key Points
The Tribune Indiabanks turn to bulk deposits to meet credit demand on tepid retail FDs
In a report released on Monday, Nomura analysts pointed out that in February 2024, the monthly issuance of CDs for the banking system at ₹1.3 lakh crore was at a five-year high. While CDs are a very small part of system deposits (2% of system deposits as of February 2024), the sharp rise in issuance is indicative of a continued resource crunch faced by banks. Key Points
Economic TimesSometimes volatility may be an opportunity for long-term investors: These bank stocks can give over 18% re
Banking sector is probably the best proxy play to the Indian economy. The reason, banks provide the lifeline of capital to all the sectors which form part of any economy, whether it is retail loans or corporate loans. So when these sectors do well, banks have a higher credit growth. So, if the economy is likely to grow faster than there is no way banks are not going to do well. Because there is a certain amount of ownership overhang in private sector banks and also the fact that voices from India’s largest bank are expecting to witness a revival of the capex cycle, it would be better to have a basket of stock from both segments of the banking sector. Until yesterday, the correction in bank stocks was largely led by HDFC bank, today, some of the PSU banks have witnessed some minor decline from their high’s. At this point of time, it could be just another round of profit booking but it would be better to keep an eye given the a segment where fundamentals have improved after decades and street has just started to take that into account, for long term investors, opportunities might be present. Key Points
Economic TimesNew lending landscape: Fintech powers banks to storm NBFC bastion
The lending landscape in India is undergoing a change with the spread of digitisation and the advent of fintechs. In the past, banks were hobbled by the lack of infrastructure and costs involved in expanding their geographic footprint into the hinterland. But fintechs and advancements in technology enabled banks to extend their reach without significant inflation in fixed costs. Key Points
Economic Times
8-10% correction likely in Nifty as well as broader markets: Amit Khurana
Amit Khurana, Head of Equities at Dolat Capital, expects a broader correction of up to double digits on the Nifty. PSU banks have been downgraded due to mean reversion in credit costs. Some pockets of the PSU universe, such as city gas distribution companies, still offer value. Shriram Finance is viewed positively. Key Points
Economic TimesBank deposits losing sheen? Why more savers are moving to higher-yielding investment options
India Business News: Bank deposits are losing their appeal as more savers in India are turning to higher-yielding investment options like mutual funds and direct stock ownership. Find out why and how this trend is affecting banks' access to low-cost deposits. Key Points
Times Of IndiaMore savers ditch bank deposits to flirt with equity
Indian banks face challenges as urban savers shift to Dalal Street instruments like mutual funds and stocks, causing a decline in low-cost current and savings account (CASA) deposits. Private sector banks are particularly affected, while public sector banks also face difficulties in attracting deposits from corporate and government accounts. Key Points
Economic TimesFor long-term investors: Besides HDFC Bank, keep an eye on others, these bank stocks can give over 18% ret
In one corner of the Street, a select few are debating about “What will happen to HDFC Bank?” Being a widely held bank in the institutional category of investors, this was bound to happen. Let them debate as many other private & public sector banks are moving on their path. One should keep an eye on them besides the much-talked-about HDFC Bank. For private sector banks, the majority of them have seen recovery as some kind of rational trade is still taking place even in the private banking space. For PSU banks, after a short few days of volatility movement, they have been able to recover faster, indicating continued interest. Probably at another time, private banks may be getting classified as “Private banks - Ex HDFC bank”. Yes, there will be higher volatility in the short term, but if induced by volatility if one is taking any sell decision in the private banking space, one should remember that the lenders in question have created wealth in the long term. Key Points
Economic TimesFinancial frauds: Why RBI crackdown on Paytm may just be the beginning
India Business News: Learn why RBI is targeting Paytm and other financial frauds in India. Find out how this crackdown will impact the banking and fintech sectors. Key Points
Times Of India
Are banks closed tomorrow, February 17?
Banks in India follow RBI guidelines for holidays. February 17 is not a bank holiday, but February 24 is. Certain states have specific holidays in February, such as Chhatrapati Shivaji Maharaj Jayanti and State Day/Statehood Day. Key Points
Economic Timesbanks should be mindful of legal, cyber risks emanating from AI: RBI Deputy Governor
RBI Deputy Governor T Rabi Sankar emphasised the importance of the banking sector and its stakeholders being vigilant about legal and cyber risks, as well as addressing skill gaps arising from Artificial Intelligence (AI). Speaking at the 19th Annual Banking Technology Conference organized by the Indian Banks' Association (IBA) in Mumbai, he urged banks to prioritize customer convenience and tailor their services accordingly. Key Points
Economic TimesIndia expects $1.8 billion in dividends from state-run banks in 2024/25: Finance Ministry official
India's state-run banks are expected to generate nearly $2 billion in dividends for the government in the next fiscal year, marking a significant increase from this year. Prime Minister Narendra Modi's efforts to strengthen state banks, including mergers and a bankruptcy law, have contributed to their improved financial performance. State banks are projected to have net profits exceeding $12 billion in the current fiscal year, driven by strong credit demand. Key Points
Economic TimesIndia’s growing economy needs bigger banks
Finance minister Nirmala Sitharaman has said India needs more banks the size of State Bank of India, or even larger. By global comparison, our banking sector is small. It also needs efficiency. What happened to bank privatization? Key Points
mintbanks to expedite resolution with exporters for trade facilitation
On Monday, financial services secretary Vivek Joshi held a review meeting to address banking and insurance related issues faced by exporters and importers. To ensure a seamless process, banks were advised to engage with clients to expedite resolution of their problems while appropriately examining compliance requirements, the ministry noted in a statement. Key Points
Economic Times
Paytm bank: ‘Disruption doesn’t mean banks becoming cowboys...'
India Business News: The article discusses the challenges and considerations faced by fintechs when they become banks. It emphasizes the need for a balance between customer convenience and regulatory compliance. The role of the Reserve Bank of India (RBI) in promoting innovation in payments is also highlighted. The article raises questions about allowing disruptive entities to establish banks and the impact of recent developments at Paytm. It mentions the risk associated with a few apps handling all UPI payments and the need for stress testing in the system. The article also addresses the actions taken by RBI against Paytm and the potential inconvenience caused to consumers. Key Points
Times Of IndiaAxis, ICICI go slow on hiring, HDFC Bank pushing ahead
Private-sector banks like Axis Bank and ICICI Bank are slowing their hiring pace as they near optimal manpower levels. Attrition rates have decreased and the demand for young workers with digital skills has subsided. Key Points
mintTaking risk & understanding risks are two different things; 13 PSU banks, 7 with upside potential of up to
In the last two weeks, there has been a clear divergence in the performance of the banking space. While private sector banks were under pressure, the PSU banks have either been able to keep their head above water or even moved upward. The question is it a rotational trade, where the money stays in banking but moves from private sector to public sector banks or this is due to the fact that PSU banks have actually cleaned up their act and they are set for a long term re-rating. This question becomes important because PSU banks have seen a run up in their stock prices, so should one buy at these levels or not is the open question whose answer even the best of the name on the street are looking for and the fact is it is not easy to come. Key Points
Economic TimesBank holidays on Republic Day 2024 weekend: Is it a three-day holiday weekend for banks? Know details here
India Business News: Find out if the Republic Day 2024 weekend will be a three-day holiday weekend for banks. Get all the details here. Key Points
Times Of IndiaRam Mandir Pran Pratishtha: Is it a bank holiday today for the Ram Mandir inauguration; know the details here
India Business News: Find out if it is a bank holiday today for the Ram Mandir inauguration. Get all the details about the bank holiday situation on this day and the significance of the Ram Mandir Pran Pratishtha ceremony. Key Points
Times Of India
Looking for hidden gems? Look into these 3 sectors: Anshul Saigal
Anshul Saigal says some people are holding cash but I would say the majority are not holding cash. What that means is that the majority are not expecting a meaningful correction while some are expecting a meaningful correction. An investor who is looking for defensives should go for FMCGs. An investor who is looking for long-term wealth creation should look at QSRs. And there are now multiple opportunities in that space to make money over the next few years. Key Points
Economic TimesRam Mandir Ayodhya inauguration: Is it a bank holiday on January 22? Here’s what you need to know
India Business News: Get all the information about the January 22 holiday for Ram Mandir Ayodhya inauguration. Find out if it is a bank holiday and other key details here. Key Points
Times Of IndiaA rotational trade underway for good? 5 PSU banks with upside potential of up to 34%
Probably banking is a word which many may not like to hear given the fact that the fall has been led by the banking sector. But the fact is short term market moves are different from what is happening in the real business. In the case of PSU banks, there has been an improvement in performance in the last two quarters. Yes, there will be some cyclical pressure on margins but beside margins there is more to PSU banking space, which is credit off take that too from large private corporates. Given the higher probability of capex cycle is likely to revive, these banks are much better placed due to the size and skill set to lend to such sectors. Key Points
Economic TimesTime to look beyond large private sector banks? 6 midcap banks with upside potential of up to 31%
Post 2015 and then again in 2018, RBI did a strong rejig in various banking policies, right from capital adequacy to the operational matrix were tightened. The first set of banks which street took note of were larger private sector banks than PSU banks. There is another set of banks, which dont have the distribution reach which large private banks have, but when it comes to ownership they are not the same as the PSU banks. They have very different hybrid kinds of ownership, a sort of quasi private sector banks. These are private sector banks of mid-sized banks which operate in particular regions. Over a period of time they have also been forced to clean up their act. Will they see a strong re-rating? Key Points
Economic TimesCommon rules for lookout circular on defaulters in works
A bank executive said any such framework will also need approval from the Reserve Bank of India to ensure there are no breaches of regulatory norms. That discussion is also on, he said. In 2018, the government included the chairman, chief executive officers and managing directors of public sector banks in the list of individuals who could seek the issuance of LOC against offenders to prevent their escape from the country. Key Points
Economic Times
Is it too late to enter PSU banking space now? Rahul Shah answers
“These last two years, especially the last six to seven quarters, have been PSU banks. The numbers have been better and what the management has guided, most of the banks have delivered that way.” Key Points
Economic TimesTake some chips off mid, smallcaps; 5 largecaps to go for now: Sanjiv Bhasin
Sanjiv Bhasin says: “There is no such thing as sitting on cash. It is better to be in largecap banks. I still like three PSUs -- IRCTC, CONCOR, and IEX and we are invested in those as a disclosure. They have just started to perform. We are up about 20% on our portfolio on these.” Key Points
Economic TimesDeclaration of dividends by banks: RBI reviews certain norms, eligibility criteria
The Reserve Bank of India (RBI) has revised its guidelines for the declaration of dividends by banks. The RBI has requested banks to consider divergence in classification and provisioning for Non-Performing Assets (NPAs) and the trend observed under supervisory findings. banks must also consider auditors' findings and Emphasis of Matter in the Audit report before declaring dividends. Key Points
Economic Times2023 flashback: 17 cooperative banks closed down, highest in nine years
After 2014, a total of 60 cooperative banks -- both urban and rural -- were closed due to failure while three banks were revived including the Punjab & Maharashtra Cooperative Bank, which was merged with Unity Small Finance Bank. In 2022, a total of 12 cooperative banks shut shop. Key Points
Economic TimesFinance Minister meets heads of PSBs, reviews financial performance
New Delhi, Dec 30 (PTI) Finance Minister Nirmala Sitharman on Saturday held a meeting with heads of public sector banks and reviewed their financial performance. During the meeting, concerns related to cyber security and the risks on the financial sector were discussed, sources said. Issues related to fraud and wilful defaulters and progress on the […] Key Points
ThePrintFM Nirmala Sitharaman chairs meeting to review performance of Public Sector Banks
New Delhi [India], December 30 (ANI): Union Finance Minister Nirmala Sitharaman chaired a meeting on Saturday to review the performance of Public Sector banks (PSBs) on various parameters, informed a press release. The progress on the acquisition of accounts by the National Asset Reconstruction Company Ltd (NARCL) was also deliberated. Show Full Article Sitharaman directed […] Key Points
ThePrintFinance Minister Nirmala Sitharaman meets heads of PSBs, reviews financial performance
This is the probably last full review meeting before the presentation of Budget 2024-25 and general elections later next year. As per PTI sources, issues related to fraud and wilful defaulters and progress on the National Asset Reconstruction Company Ltd (NARCL) came up for discussion during the meeting. Key Points
Economic TimesExpect some consolidation over the first quarter of 2024: Karthik Kumar
Karthik Kumar says: “My fund has a good mix of PSU banks, private banks, and even non-banking players as well. PSU banks have had a good rally for the year so far. So, to that extent, the valuation differential has narrowed and now it comes down to selecting stocks on a case-by-case basis rather than looking at it as a group, as a whole.” Key Points
Economic TimesLarge international banks ask many Indian HNIs to close accounts
Two British banks, a Swiss lender, and an Emirates institution severed ties with over two dozen Indians in the last two months. These individuals had initially opened accounts under the RBI's Liberalised Remittance Scheme (LRS), allowing up to $250,000 annual investment. Key Points
Economic TimesBanks' bad debts drop to 3.2% in 1st half of 2023-24, lowest since 2013. Over 50% due to write-offs
Share of gross non-performing assets of Scheduled Commercial banks has fallen consistently since March 2018. But RBI report shows recoveries from written-off loans remain low. Key Points
ThePrint