SBI IN THE NEWS

SBI pitches for separate telecom spectrum for financial services (February 22, 2017)

Arundhati Bhattacharya, Chairman of State Bank of India, has called for earmarking telecom spectrum separately for the financial services sector so that issues such as transactions being timed out due to lack of bandwidth are effectively addressed. Speaking at a panel discussion organised by the Indian Banks’ Association, Bhattacharya said telecom companies have a different aim: carry voice, data, make profits, and even have their own payments banks. So, for them, carrying financial transactions through their telecom network is not a priority, she said. She asked: “Is it possible to have a separate spectrum only for financial transactions?” A separate network only for financial transactions. Security (of transactions) could be also done better.

If we want financial transactions to be simple, easy and convenient, this is probably one way of doing it?” She observed that there were cases of card transactions, where SMS alerts about the transaction being executed were received by the customer 24 hours after the transaction had been done. “Ever since demonetisation was announced and digital transactions had spiked, the infrastructure itself, that is, the spectrum on which all these transactions are done, wasn’t sufficient to carry them...” She observed that transacting digitally had be convenient enough to be adopted by people. “That is not happening because the infrastructure doesn’t seem to be there,” she said.

Markets, Not Coercion, Will Cure Bank NPAs (February 22, 2017)

On Monday, the heads of 10 top public sector banks (PSBs), led by Arundhati Bhattacharya, chief of India’s largest lender, State Bank of India (SBI), met finance minister ArunJaitley. The objective was, ostensibly, to discuss the load of bad debt on the books of banks and how to manage it. But as this newspaper reported, a far more serious topic was on the agenda: the threat of harassment of bank officers and management by income tax, enforcement, the Central Bureau of Investigation (CBI) and other investigative branches for loans made in the past that have subsequently soured. This is not paranoia: in January, the CBI arrested a former chairman of IDBI Bank, questioning his decision to lend Rs 950 crore to the now-defunct Kingfisher Airlines.

The arrest froze lending for new projects, as bankers turned increasingly riskaverse. But if PSBs, India’s largest lenders, are paralysed, the flow of credit to business will dry up, choking any chance of revival of investment and growth. Estimates say that by end-December 2016, bad loans were 12.5% of total lending in the system, an appalling number. Fear of arrests will prevent bankers from agreeing to any realistic haircut while restructuring bad loans, stymying things further. Instead of barking at banks and sending sleuths to hound lenders, the government must give them confidence to resume their normal activity of lending and accepting deposits. Liquidity must return to the system. India now has a new bankruptcy law: if loans go bad, banks should invoke its provisions to quickly seize assets of companies and sell these to asset reconstruction companies, which can then auction these to the highest bidder. Market-led solutions, not sarkari coercion, must be the cure for our bad-debt headache.

State Bank rebrands its corporate website (February 21, 2017)

State Bank of India on Monday said it has rebranded its corporate website as ‘bank.sbi’ from sbi.co.in/bank.sbi’is the highest domain protocol, known as generic top level domain (gTLD), which enables an organisation to use its corporate name as their website’s top-level identifier, instead of using a more traditional ‘.com’ or ‘.co.in’ domains. "Due to its non-replicability, a gTLD site like '.sbi' conveys an assurance to the customer that the site is authorised, genuine and is not an inappropriate or phishing site," SBI said.

Lenders cut reserve prices of KFA properties for March 6 Auction (February 18, 2017)

SBI The 17-lender consortium to the defunct Kingfisher Airlines (KFA) has once again put on block Kingfisher House in the city and Kingfisher Villa in Goa, with a 10 per cent reduction in the reserve prices. The auctions of prime assets of troubled businessman Vijay Mallya are schedule for March 6, SBICAPS Trustee, which is auctioning the properties on behalf of the lenders, said in a public notice on Friday. While the Kingfisher House is being auctioned for the fourth time, the Kingfisher Villa is being put on sale for the third time. The reserve price of the erstwhile headquarters of the grounded airline, Kingfisher House, is set at Rs.103.50 crore, 10 per cent lower than the third failed auction held last December when the reserve price was kept at Rs.115 crore. In the first auction of the Kingfisher House last March, the reserve price was set at Rs.150 crore and in second one in August, it was fixed at Rs.135 crore. The prime property has a built-up area of over 17,000 sqft and is located in the plush Vile Parle area near the domestic terminal.

State Bank of India Local Head Office, Chennai (February 17, 2017)

Smt. Arundhati Bhattacharya, Chairman, State Bank of India in the presence of Shri B.RameshBabu, Chief General Manager, Shri InduSekhar, Shri JonnaRaghava, General Managers and executives of SBI, Chennai Circle inaugurated new initiatives by SBI, Chennai Circle viz. SBI Exclusif a Wealth Management Initiative, Chennai Metro Transit Combo Card, e-Hundi facility for pilgrims at “BoologaVaigundam” Srirangam temple and “Tab Kiosk”.

SBI, associate banks shares rise sharply on Cabinet nod (February 17, 2017)

Cabinet approval for the proposed merger plan of State Bank of India’s associated banks with the SBI perked up interest in the stocks of these public sector lenders. While SBI gained 0.65 per cent on the BSE, associate banks State Bank of Mysore, State Bank of Travancore and State Bank of Bikaner & Jaipur surged 4.66 per cent, 4.21 per cent and 3.48 per cent, respectively. According to analysts, the key areas to watch are: branch rationalisation, human resources management, cost rationalisation, capital adequacy ratio and, most importantly, asset quality.

As of December 31, the balance sheet of SBI and its five associates — SBBJ, SBH, SBM, SBP and SBT— stood at over Rs.32 lakh crore. Besides the three listed associate banks, the two unlisted associate banks which will be merged with the SBI are State Bank of Patiala and State Bank of Hyderabad. The Cabinet, however, did not approve the merger of BharatiyaMahila Bank (BMB) with the SBI. Issuance of shares Last year, the board of SBI had approved issuance of a maximum 13.63 crore equity shares of face value Rs.1 each to the shareholders of SBBJ, SBM, and State Bank of Travancore, besides the Government of India for its shareholding in BMB. The swap ratio had been fixed at 28 shares of SBI of face value Rs.1 each for 10 equity shares of SBBJ of face value Rs.10 each.

Similarly, SBM and SBT shareholders will receive 22 shares of SBI for every 10 shares they hold in the respective associate banks. Branch rationalisation, if executed well, could prove to a key synergy benefit from the merger, said MotilalOswal Securities. The cost savings on account of treasury operations, audit, technology, etc, would lower the cost-to-income ratio in the long term, it added. The integration process is unlikely to have any material adverse effect on the bank’s profitability, said an analyst with a domestic brokerage firm. For MotilalOswal, the immediate negative impact would be from pension liability provisions (due to different employee benefit structures) and harmonisation of accounting policies for NPA recognition.

SBIs Bhattacharya sees no problem in merging arms... (February 17, 2017)

THE merger of five associate banks with State Bank of India (SBI) will result in the capital adequacy ratio of the merged entity falling by about 54 basis points (bps) to 13.19% from 13.73%, chairman Arundhati Bhattacharyasaid on Thursday “ We will still be very close to 14% and, therefore, it is not a really major worry for us,” she said, explaining that 79 bps of capital from the fourth-quarter infusion of funds by the government and profit had not been taken into account. The new entity’s gross non-performing asset (NPA) ratio will rise by 147 bps to 8.7 %. Bhattacharya said the gross NPA ratio would not go up too much as the bank has been working to ensure that provisioning levels of the associate banks were raised to SBI’s standards. “By the time they come in, all of the provisions that they needed to have made will be made, to the extent possible,” the chairman said.

Consolidated deposits of the merged entity will be Rs.26,04,473crore while gross advances will be of 18,76,727crore. The consolidated balance sheet size will be Rs.32,18,498 crore. Bhattacharya added that the real estate assets of the associates have already been revalued and accounted for in their books after taking the stipulated haircut. Addressing concerns about wage expenses, Bhattacharya said, “All of the associate bank people will be offered the wage package that our people have for the relevant grades. It’s up to them toeither accept that or retain whatever package they have right now They actually have a choice to do that. Sol do not think there will be any wage-related changes. ”

The bank expects the merger to lead to synergies in terms of treasury operations, the reorganisation of some head offices and the consequent redeployment of some administrative staff in direct operations. For large advances, where the associates are part of consortia.t heir limits will get taken over by SBI and people managing thoseaccounts would also be released for looking after other businesses, Bhattacharya said. Other functions related to account management, such as audit and information technology, will also become consolidated. Bhattacharya refused to put a value on these synergies and said that it there will be more clarity on this once the merger is completed.

Anshula Kant, chief financial officer at SBI, had earlier said that the terms of the merger are such that for every 10 shares of State Bank of Bikaner and Jaipur, shareholders will get 28 equity shares of SBI. For every 10 shares State Bank of Mysore, shareholders will get 22 shares of SBI and for every 1Oshares of State Bank of Travancore they will get 22 shares of SBI. The other two associates. State Bank of Hyderabad and State Bank of Patiala, are fully-owned, unlisted subsidiaries of SBI.

 

 

 

SBI gets nod for mega merger, to catapult into global top 50 (February 16, 2017)

Seeking to create a global sized bank, the government on Wednesday gave go ahead to the merger plan of State Bank of India (SBI) and its five associate banks but did not take a decision with regard to BharatiyaMahila Bank. “The Cabinet had earlier in-principle cleared the (merger) proposal. It had gone to the Boards of various banks which have granted the approvals. The recommendations of the Boards were considered today and the Cabinet cleared the proposal,” finance minister ArunJaitley said. The associate banks which will be merged with SBI are: State Bank of Bikaner & Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Patiala (SBP) and State Bank of Hyderabad (SBH). “With this merger, the SBI, with all these five subsidiaries merging in it, will also become a very large bank, not merely from a domestic point of view but actually a global player in its very size,” the minister said after the Union Cabinet meeting. With the merger of all the five associates, SBI is expected to become a global-sized bank with an asset base of Rs.37 lakh crore or over $555 billion, 22,500 branches and 58,000 ATMs. It will have over 50 crore customers

Big Bank Theory: Merger of SBI, associates cleared (February 16, 2017)

Moving ahead with the longpending reform of consolidation in the banking sector, the government on Wednesday cleared State Bank of India’s acquisition of five subsidiary banks. “State Bank of India will become a global player after the merger. The exercise will also lead to reduced cost of funds,” said Finance Minister ArunJaitley after the meeting of the Union Cabinet, which approved the proposal. The subsidiaries to be merged include State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Travancore, State Bank of Mysore and State Bank of Patiala.

An official statement said this will strengthen the banking sector and improve its profitability and efficiency, as well as create a stronger entity post- merger. The merger will help save over Rs.1,000 crore in the first year. The Cabinet also approved the introduction of a Bill in Parliament to repeal the State Bank of India (Subsidiary Banks) Act, 1959 and the State Bank of Hyderabad Act, 1956. Jaitley said that the proposal for merging BharatiyaMahila Bank with SBI is under consideration. Oil fields In another significant decision, the Cabinet Committee on Economic Affairs approved the award of contracts under the discovered small field bid round. Contracts would be awarded in 31 contract areas, which would include 23 onshore and eight offshore discovered small fields of ONGC and Oil India.

The proposal for the National Health Policy that seeks to guarantee universal access to health facilities was, however, not taken up, Jaitley said. Meanwhile, to improve the collection of statistics across the country, the Cabinet also approved amendments to the Collection of Statistics Act, 2008. This would extend the Act to Jammu and Kashmir and strengthen the data collection mechanism in the State. The Cabinet also approved the setting up of a Food Legumes Research Platform at Amlaha in Madhya Pradesh

SBI plans Korea-Nepal, Korea-India remittance corridors (February 16, 2017)

State Bank of India is planning to soon start two remittance corridors — between Korea and Nepal and Korea and India. It is also considering starting a Nepal desk in the bank to promote Indian investments in the Himalayan country and vice-versa. Managing Director B Sriram said, “SBI is going to shortly roll out two remittance platforms for remittance from Korea to India and Nepal. We were quite amazed with the Nepalese population that is operating out of Korea and this is something we would like to tap. “These platforms will benefit the Nepalese expatriates in Korea, providing a seamless and hassle-free remittance experience as well as bringing down the cost of transactions.” Sriram underscored that his bankhas a significant presence in Nepal via the subsidiary route, with about 70 branches and 100 ATMs. Nepal SBI is the third-largest bank in Nepal. After inaugurating the Korea desk, set up in collaboration with Korea Development Bank (KDB),

SBI Chairman Arundhati Bhattacharya said: “This (creating country-specific desks) is a model which we can energise to attract business from foreign countries into India.” This is the second countryspecific desk, the first being Japan desk, that was set up by the bank under the aegis of its investment banking subsidiary SBI Capital Markets. Siddhartha Sengupta, Deputy Managing Director, said the bank is looking at having a Nepal desk. Bhattacharya observed that when corporates look to foreign shores for investment opportunities, they are often inhibited by the foreign rules, regulations, systems, lack of ready access to banking facilities and above all, cultural dissimilarities.

These are compounded when the companies looking for such business opportunities are small and medium enterprises, which require handholding, she added. “The bilateral trade (between India and South Korea) has gathered momentum in recent years, reaching $16.89 billion in 2015-16. India has grown to become Korea’s fifth-largest export market.

Cabinet OKs Merger of SBI &Associates (February 16, 2017)

The Cabinet approved a proposal to merge the five subsidiaries of State Bank of India with the parent, kick-starting consolidation among public sector lenders. The merger will bring nearly a quarter of all outstanding loans in India’s banking sector to SBI’s books. The combined entity will have a mammoth network of nearly 23,000 branches, further increasing the dominance of the nation’s largest bank. Two of the five associate banks —State Bank of Patiala and State Bank of Hyderabad — are unlisted.

Among the other three, Mumbai- based SBI holds a 75% stake in State Bank of Bikaner & Jaipur, 90% in State Bank of Mysore and 79% in State Bank of Travancore. “This merger will lead to far greater operational efficiency,” said FM ArunJaitley in a briefing after a Cabinet meeting on Wednesday. “There will be synergy in operations within these banks, which will also cut down the cost of operations and thus cost of funds.” The Cabinet Committee on Economic Affairs also approved the award of contracts to develop 31 areas comprising 44 discovered small hydrocarbon fields that had been lying undeveloped for decades. This is expected to speed up commercial development of these fields.

In June last year, the government had given an in-principle approval for the merger of the associate banks with State Bank of India. “We have now entered the last lap,” State Bank of India chairman Arundhati Bhattacharya told ET. “Merger will create a stronger, more efficient (and) vibrant entity. Date (of the merger) will be as per (government) notification.” The SBI-associate merger is an important step towards strengthening the banking sector through consolidation of public sector banks, a government statement said, suggesting the possibility of more consolidations.

“It is in pursuance of the Indradhanush action plan of the government (to revamp functioning of state-run banks) and it is expected to strengthen the banking sector and improve its efficiency and profitability,” it noted. State Bank of India’s shares closed 0.68% lower at.Rs.268.65 Wednesday, in line with the broader Mumbai market. The listed subsidiaries also closed almost flat, or lower. The merger is likely to result in recurring savings, estimated at more than.Rs.1,000 crore in the first year through a combination of enhanced operational efficiency and reduced cost of funds, the government said. “The merger will also lead to better management of high-value credit exposures through focussed monitoring and control over cash flows, instead of separate monitoring by six different banks,” the statement said. Existing customers of subsidiary banks will benefit from access to SBI’s global network, it added.

GLOBAL PLAYER Jaitley said with this merger, SBI will become a large bank; in fact, a global player. According to market estimates, after the merger, SBI will have more than 50 crore customers and an asset base of .Rs 37 lakh crore. A decision on BharatiyaMahila Bank will be taken later The merger plans will follow as earlier decided, the government said. Earlier this month, SBI chairman Bhattacharya had hinted that the merger might get delayed. “We were planning to do it by March but again because of demonetisaiton it will probably mean a deferment of a quarter,” she had said.

The government had given her one-year extension amid the lender’s consolidation with its associate banks. There has been no consolidation among state-run banks since State Bank of Indore was merged with SBI in 2010. SBI took over State Bank of Saurashtra in 2008. The merger of State Bank of India with the associates will minimise vulnerability to any geographic concentration risks faced by the subsidiary banks, the government said.

SBI Takes Lead in Blockchain, to Use it to Prevent Fraud (February 16, 2017)

State Bank of India has taken the lead in bringing lenders and tech companies together for using blockchain technology to share information among banks which will eventually help prevent frauds and tackle bad loans which are almost onefifth of banks’ loan book. The SBI’s initiative, christened Bankchain, is in partnership with IBM, Microsoft, Skylark, KPMG and 10 commercial banks. The country’s largest lender has also tied up with a startup firm Primechain Technologies for this exercise. Axis Bank, ICICI Bank and Federal Bank, which are experimenting with this technology in some way or the other, have teamed up with SBI as well.

Blockchain, the technology behind cyber currency Bitcoin, follows the concept of a centralised registry that can be accessed by all members, and every event is registered as an unalterable ‘block’. “Being the largest bank, SBI has taken the lead in initiating blockchain, and we are in talks with banks and other companies for this,” said M Mahapatra, deputy managing director, SBI, confirming the development to ET. “To start with, we have formed a forum which has proposed to start with trade finance and loan documents can be put on the block,” he said. Bankers said that digitally signed documents that are part of consortium lending and which have to be shared can be put up as a block so that they will be known to all members.

(At present, they are either physically exchanged or mailed to each other). All the subsequent events related to the loan can be put on the block so that members can take informed decisions. Another business where blockchain can be used as a tool is in trade finance where there’s a risk of fraud with the merchant going to multiple banks with the same invoice to get the bill discounted. If documents are put on the blockchain, everyone will know which invoices have been discounted by Bank X and this could prevent multiple discounting frauds. “Today, there are several banks pursuing individual blockchain strategies. These individual initiatives will be meaningful when they are used by all the banks. For instance, a payment system such as NEFT cannot be successful if it is adopted by only one bank,” said a senior bank official .

* TECH ALLIANCE The SBI’s initiative, christened Bankchain, is in partnership with IBM, Microsoft, Skylark, KPMG and 10 commercial banks

SBI chief seeks more clarity to resolve NPAs (February 16, 2017)

State Bank of India chairman Arundhati Bhattacharya on Wednesday said banks need some more clarity and dispensations to resolve the stressed assets problem. “We are looking at how to resolve the stressed assets problem, but we need some dispensations and more clarity Unless those dispensations are given, it is difficult to take the resolution process forward,” she told reporters.

Banks should be allowed to amortise losses on account of haircuts they will have to take while resolving a bad as set, Bhattacharya said. “If in case we need deeper haircuts, then can they be spread over a few quarters? In case we need certain types of instruments or conversion then for conversion can Sebi extend what they have allowed in SDR for these con-versions as well,” she elaborated. Bhattacharya said the resolution processes should be such that if bankers take decision, it cannot be challenged later.

“We also need to ensure that whatever we do the process is such that it cannot be questioned and for this there are certain requirements which we are trying to ensure,’’she said. The banking sector has suggested to the roads ministry that planning of road projects be prepared by global consultants, she said. “In a recent meeting with the roads minister, we gave a suggestion to have project plans prepared by the global consultancy agencies, to create a kind of empanelment of such agencies, tracking how well they do these over the years and then accordingly rank them for future projects,” the SBI chairman said. SBI on Wednesday launched a Korea desk in Mumbai in collaboration with the Korea Development Bank to help investments.

“There is huge amount of trade going on between the two nations, therefore we feel that setting up of this desk will give traction to it,” Bhattacharya said. Bilateral trade stood at $16.89 billion in the previous fiscal. The Korea desk will facilitate establishment of a banking relationship with Korean corporates and nationals, provide in-formation on industries and sectors. Such information can be utilised by Korean companies for taking business decisions and securing rupee funding in India.

Rate cut: SBI beats RBI in past 2 years (February 14, 2017)

While the Reserve Bank of India (RBI) kept egging banks on to cut lending rates further, a study of the bank rate easing cycle since the beginning of 2015 has shown that most banks have slashed rates quite substantially. The State Bank of India (SBI), the country’s largest bank by assets, has in fact reduced rates by 1.85 per cent, more than what the RBI did, while the HDFC Bank has equalled the cuts by the RBI at 1.75 per cent. Most other leading banks like the ICICI Bank, Punjab National Bank (PNB) and Axis Bank are also not far behind cutting rates by 1.60 per cent.

This shows that there isn’t much room to cut rates further. While the pace with which banks slashed rates in 2015 and 2016 was slow—lagging far behind the RBI induced policy rate cuts—the demonetization has come as a blessing in disguise for banks and helped them keep pace with the RBI’s rateeasing cycle. Flushed with funds post-demonetization, banks were forced to cut rates to lure customers in a competitive market. All big banks and a majority of medium and small banks have reduced rates much more than the 0.90 per cent that the RBI governor pointed out. From the time the RBI began the rate-easing cycle on January 15, 2015, when it reduced repo rate by 0.25 per cent, to its last cut in October 2016, the Central bank had slashed policy rates by 1.75 per cent.

Last Wednesday, after unveiling the monetary policy, RBI governor Urjit Patel said, “There is still scope for the lending rates to come down because our policy rates came down by 1.75 per cent and weighted average lending rates have come down only by 0.85- 0.90 per cent.” But a quick perusal of the data would reveal that even smaller lenders like Federal Bank, the IDBI Bank, IndusInd Bank and Kotak Mahindra Bank have all reduced rates by 1.15-1.30 per cent, much more than the governor’s estimate Arundhati Bhattacharya, chairman, SBI, told DNA: “We have passed on the rate cuts by cutting our lending rates more than the rate cuts undertaken by the RBI.” The SBI has undertaken a 1.85 per cent cut in its lending rate during the RBI’s rate-easing cycle.

The MCLR is a dynamic rate to which all new loans are bench-marked and reviewed by all banks every month. Prior to that, banks had base rate, a floor rate below which they were not allowed to lend. However, after the MCLR regime set in, banks have hardly reduced their base rate—the rate to which a majority of the old customers are tied to. This means that old borrowers who are still linked to the base rate will continue to pay a higher interest rate. Customers are however free to move on to the MCLRlinked rates. Rajiv Anand, executive director, Axis Bank, said, “The demonetization helped banks bring down their MCLR. But these deposits have started to flow out. The MCLR is very volatile.”

SBI Q3 net more than doubles to Rs.2,610 crore (February 13, 2017)

A healthy increase in non-interest income, a tight leash on interest expenses, and lower loanloss provisioning helped State Bank of India (SBI) more than double its third-quarter standalone net profit to Rs.2,610 crore. Net interest income (the difference between interest earned and interest paid) rose 7.70 per cent to Rs.14,752 crore, while noninterest income jumped 59 per cent to Rs.9,662 crore. While total deposits jumped by a healthy 22 per cent to Rs.20,40,778 crore, total advances edged up only 5 per cent to Rs.14,97,164 crore.

Advances growth was mainly on the back of robust 17.50 per cent growth in retail loans. Thanks to the copious deposit inflows during demonetisation, India’s largest bank received low-cost current account, savings account (CASA) deposits amounting to Rs.1,52,731 crore in the reporting quarter. Hence, CASA deposits jumped to 46.55 per cent of total deposits as against 42.70 per cent in the year-ago quarter. Chairman Arundhati Bhattacharya said SBI expects to end the current year with advances growth of about 6 per cent.

SBI Serves up a Sizzling Show in Q3, Net More Than Doubles (February 13, 2017)

Buoyed by healthy fees and trading profits, the country’s largest lender State Bank of India (SBI) saw net profit zoom 134% to Rs.2,610 crore for the third quarter. Announcing the results, the PSU lender said problem loans have peaked and it expects credit growth to improve in the coming fiscal year. The bank’s top brass hinted demand for loans would have gained momentum in third quarter if not for the sudden demonetisation exercise. “We were expecting demand pick-up to happen by Q3 and that has not happened.

May be if there was no demonetisation done by the government, there could be some demand pick-up that would have happened. We have to wait for the demand pick-up to be actually visible. At that point we can confidently say that the things are getting back on track,” said Arundhati Bhattacharya, chairman of SBI. Weak loan demand slowed growth in net interest income which rose 7.7% to Rs.14,752 crore. The bank’s loan book rose just about 4.8% on a year-on-year basis to Rs.14.2 lakh crore. However, if the investments of Rs.48,000 crore in corporate bonds and Rs.45,000 crore in commercial paper are included, the loan book growth stood at 6.2%. This year the bank expects credit growth to be just 6.5% and is targeting 11% next year.

“Our target is 11%. I think the government will be doing quite a few things to get credit growth back. I am sure they are aware of the fact that we cannot attain the kind of a GDP growth that we have estimated without credit picking up,” said Bhattacharya. “We are also seeing a large number of projects that were on the drawing board seeing growth like projects in the road, railways and transmission sectors.” Gross bad loans stood at Rs.1.08 lakh crore, or 7.2%, of the loan book. After provisions of Rs.7,244 crore, net bad loans stood at Rs.61,430 crore, or 4.2% of total loans. The share of impaired loans (restructured and gross NPA) stood at 9.6% of the loan book. The watch list loans that the bank fears may slip into bad loan basket stood at Rs.17,992 crore down from Rs.34,776 crore as on March 31, 2016. The bank saw slippages – downgrade from standard loan to sub-standard category – of Rs.10,185 crore.

“The fact of the matter is that chunky pieces are obviously out of the way. Overall stress reduction will only happen when the economy is doing much better. For the economy to do much better, we need demand to show much better pick-up,” Bhattacharya said. Non-interest income rose 58% to Rs.6,087 crore partly driven by the stake sale of SBI Life on which the bank earned Rs.1,755 crore in the third quarter. Global net interest margin stood at 2.78% against 2.93% in the corresponding period last year. Due to demonetisation, the bank’s deposit market share jumped 74 basis points as it garnered Rs.1.33 lakh crore during the note-ban exercise. Total deposits rose 22% to Rs.20.4 lakh crore. The share of current and savings account (CASA), also known as low-cost deposits, stood at 46.5% from 42.7% a year ago.

It's the end of good times for Mallya (February 08, 2017)

Former liquor baron Vijay Mallya suffered a serious setback after the Karnataka High Court on Tuesday ordered the winding up of United Breweries (Holding) Ltd, the 102-year-old parent company of the UB Group. The order follows United Breweries (Holding) Ltd's failure to pay back creditors, including banks, as per corporate guarantees extended to the now defunct Kingfisher Airlines Ltd (KFA). Justice Vineet Kothari delivered the verdict in a sitting held through video conferencing from the Dharwad Bench, while allowing petitions filed by unsecured creditors and suppliers like IAE International Aero Engines AG and Rolls-Royce & Partners Finance Limited, as well as the secured creditors - a consortium of 14 banks led by State Bank of India. Legal experts said the promoter, Mallya, who holds 7.91 per cent in UBHL in his personal capacity, can go on appeal and get the order overturned. The court can also suspend the process of winding up. Mallya along with the promoter group firms control 52.34 per cent of UBHL. Most of the shares of the promoter have, however, been pledged to various lenders.

"He has lost a big gamble he made, thanks to his advisers. He will surely appeal against the court order," a former top official close to Mallya told Business Line. He said Mallya had been advised even six months ago to call truce with the banks and settle all outstanding dues immediately. "But his team involved in the case kept up the pressure, asking him to fight it out. They kept assuring him that as they had fought this case for two years, there was a good chance of a reconciliation which will be to his advantage," the former official said. Sources also said developments during the past one month clearly indicate that the government and the enforcement agencies are closing in on Mallya who has taken refuge in London. Last month, the debt recovery tribunal allowed the lenders led by State Bank of India to recover Rs.6,203 crore from him. It was followed by an order from capital markets regulator SEBI, which debarred him and six others of United Spirits from the securities market.

It also asked him to step down from all the boards of his group companies. A few days later, the CBI arrested the former chairman of IDBI Bank, four other officials of the bank and four former Kingfisher Airlines executives in an alleged money laundering case. Referring to financial reports and constant increase in the losses and complete erosion of net worth and refusal of UBHL to square up its "guarantee obligations", the Court said, "UBHL is a commercially insolvent company and is unable to meet its admitted financial obligations and square up its admitted liability towards the petitioning creditors." "…on a totality of the facts and circumstances, this court is of the firm and clear opinion that the UBHL also deserves to be wound up for its failure to discharge its liability towards the petitioning creditors, which is far in excess of its net worth and the assets of the company…," Justice Kothari said.

The court had on November 18, 2016 ordered the winding up of KFA. Pointing out that whatever assets left now cannot be in the control, possession and active management of UBHL, the court said that "it would be necessary, safe, reasonable and expedient to takeover these assets from the company and hand over the same to the Official Liquidator to proceed further for winding up UBHL, in accordance with law". The court also directed the Official Liquidator to file a status report within four weeks about taking over the assets of UBHL and also about the pending cases against the company in various other legal fora. The deposits of Rs.1,280 crore made in the court based on interim orders would be utilised for distribution as per the law during the winding up process, the court said. UBHL shares tumbled following the court order. The scrip closed 2.45 per cent lower at Rs.39.80.

Big blow to Mallya, Karnataka High Court orders winding up of UBHL (February 08, 2017)

In a major jolt to liquor baron Vijay Mallya, the Karnataka High Court on Tuesday ordered the winding up of United Breweries (Holdings) (UBHL), the parent company of UB Group, for recovering dues payable by the UBHL-promoted defunct Kingfisher Airlines. "This court has come to a conclusion that the respondent company UBHL deserves to be wound up for failure to discharge their duties to pay up their creditors," Justice Vineet Kothari said in his order allowing petitions by banks and aircaft lessors. Justice Kothari of the Dharwad Bench of the high court pronounced the order through video conferencing.

The creditors, including BNP Paribas, the lead petitioner, State Bank of India (SBI) and aircraft lessors and engine makers such as Rolls Royce and IAE had moved the court to get back their dues of Rs.146 crore. The judge said the assets of the respondent company cannot be left under the control of UBHL and could be handed over to official liquidator to achieve the winding up process as per the law. "The assets whatever are left now cannot be left under the control, possession and management of the respondent company, and if necessary could be handed over to official liquidator to proceed further until winding up of the respondent company is achieved in accordance with the law," he said.

The lenders to Kingfisher Airlines filed the case against UBHL seeking dues from the now defunct airline. UBHL had given corporate guarantees for loans to run Kingfisher, which has virtually caused the collapse of Mallya's liquor empire. Mallya owns 52.34 per cent in UBHL. Justice Kothari also disposed of all interlocutory applications filed by UBHL. The latest blow to the liqour baron comes after a Central Bureau of Investigation court last month issued a non-bailable warrant against him in the Rs.720-crore IDBI Bank loan default case as the agency sought his extradition from the UK. Earlier, the Debt Recovery Tribunal here had ordered the SBI-led consortium of banks to start the process of recovering over Rs.6,203 crore, at 11.5 per cent annual interest rate, from the embattled tycoon and his companies in another Kingfisher Airlines case.

* The creditors, including BNP Paribas, the lead petitioner, State Bank of India, had moved the court to get back their dues of Rs.146 crore

SBIs brand ambassador (February 08, 2017)

State Bank of India (SBI) on Tuesday put out a big advertisement in newspapers seeking probationary officers for the bank. Half the advertisement has a smiling picture of the bank's chairman, Arundhati Bhattacharya (pictured), who herself was part of the 1977 batch of probationary officers. SBI plans to recruit 2,200 probationary officers. "Are you next?" the ad says, as it offers to create "leaders of tomorrow". Listing the reasons why one should join the bank, the ad says the topmost emolument could be "overseas exposure". SBI has 196 foreign offices in 36 countries, which can offer global positions through "overseas postings even at an early career stage". According to a senior official of the bank, the photograph of the chairman brings in an aspirational value and will help attract bright, young applicants.

ITC, L&T and SBI Among Top Picks After Budget (February 06, 2017)

Benchmark indices have recouped all their losses inflicted by demonetisation, but several stocks that did well during most of the 2016 are struggling to regain their momentum. Investors thought the Budget last week would be the next impetus, but the government chose to play it safe in terms of big bang announcements. ET spoke to brokerages for their top picks after the Budget:

State Bank of India (CMP Rs.277; Target: Rs.310):

SBI is poised to remain major beneficiary of demonetisation. With higher use of digital mode of transaction, gradual improvement in operating efficiency, we expect PAT growth at 45% CAGR in FY 2016-18E.