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FS Weekly Digest; 1st week June

Major highlights for the week. This will be released every Sunday, for the week gone past. For Daily details, refer to date wise ‘Daily Bytes’. Any specific update for Sunday will be captured here and not separately in Daily Bytes (only Mon to Friday)

1st Week of June (1st June to 4th June)

  1. Bank of India, which has breached PCA levels for both Asset performance (NNPA at 6.9%- Mar17 and a negative ROA back to back (-0.94, -0.24), is planning to sale its stake in some subsidiaries to raise capital. For detail on BOI & other bank FY17 performance, click here.
  2. PSB, rattled by double whammy of stressed assets, straining of CRAR & need to raise capital under Basel III norms, are expected to hit the market for equity sale. RW: While the target is to raise nearly INR 58000 crore, question is going by their performance will there be enough takers? Or expect LIC or some state-run institution to bail them? The challenge for GOI is that this share sale would not yield lower than expected prices
  3. Next week (5th June week) will be to watch for out 2 reasons; RBI monetary policy released on 7th June and possible rate cuts etc and do the monsoon hits the country as expected.
  4. IBA (Indian Bank Association) has conveyed the banks are not yet ready to go live with the new GST indirect tax regime, scheduled for 1st July launch. With less than a month there, the technology & infrastructure challenges will be difficult to overcome by the banks in this timeframe
  5. World bank feels that demonetization can have a long term positive impact on the country revenue if the income reported to tax authorities increases because of demonetization & follow on steps taken by ITax. Click here for our view on demonetization impact.
  6. SBI makes it mandatory for new recruits to furnish Aadhar number for verification of candidature (except at J&K, Meghalaya & Assam)
  7. SBI announces new service charges which is expected to bolster the bank’s fee income (part of non-interest income and an increasing interest point for banks. Refer to our cartoon on this.
  8. The Finance minister reemphasized that NPA resolution is an ongoing activity and expects more action from RBI under the new ordinance (RW though believes that the new ordinance falls short. Click to read…).
  9. SBI outlined the need for ‘standardizing security infrastructure is the key and deploying secure Cloud services is the first step toward’ warding off cyber threats in banking
  10. In an apparent curtail of BBB (Banks Bureau Board), its power to appoint CEOs for PSU has been taken away & put with financial services secretary headed committee
  11. JP Morgan to fork out $35 Million to settle the conflict on interest case
  12. RBI Governor, Urjit Patel, calls on FM, Arun Jaitley, before monetary policy review. The review is expected around 5th/ 6th June
  13. RBI initiates PCA (prompt corrective action) against Dena bank. To understand more on PCA & Dena bank status, click here (Dena bank NNPA worsens to 10.66% and so is ROA. FY17 ROA at -0.67 is not healthy)
  14. Good monsoon may augur well for the economy and GDP as well. As of now, Met predicts a good monsoon this year
  15. GST council cleared the pending rules for the rollout of GST from July 1 in India
  16. Axis bank claims to have 70% transactions digital compared to only 12% from physical branches and is betting big on Aadhar enabled payments and mobile based app banking
  17. Uday Kotak to head the new SEBI corporate Governance panel

Source:

FS Daily Bytes, Publicly available news reports

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