Mumbai: After witnessing decline in profit for six consecutive quarters, State Bank of India (SBI), the country’s largest lender, reported 3.3 per cent net profit growth to Rs 3,349 crore for the quarter ended June, compared to Rs 3,241 crore in the corresponding period of last year. Arundhati Bhattacharya, Chairman, SBI, said: “Pressure (on asset quality) appears to be subsiding. But we need to see a pick-up in the economy to see appreciable changes in asset quality.” Net interest income grew 15 per cent to Rs 13,252 crore and fee income growth was 11 per cent to Rs 2,837 crore, though there was a fall in treasury income. The profitability got a boost of Rs 6,000 crore from sale of stressed assets to asset reconstruction companies (ARCs) during the quarter, of which Rs 5,566 crore was non-performing. In the previous financial year, the bank sold Rs 3,700 crore of assets to ARCs. The profit was marginally higher than a consensus Bloomberg estimate of Rs 3,279 crore. Investment provisions of Rs 552 crore, as compared to a gain of Rs 531 crore a year before, weighed on profitability as bond yields hardened during the quarter. Profitability would have improved further if the states of Andhra Pradesh and Telangana had not made pre-poll promises of loan waivers. Of the fresh slippages of Rs 9,932 crore, that in the farm loan portfolio was Rs 1,959 crore and Andhra Pradesh alone accounted for Rs 600 crore of additional slippage. http://www.business-standard.com/article/companies/sbi-q1-net-up-3-33-at-rs-3-349-cr-114080800280_1.html
FM TO ASK OFFICIALS TO MAKE PLAN FOR MEETING TAX TARGETS
New Delhi: Finance Minister Arun Jaitley will ask officials to make an action plan to meet tax targets when he addresses annual conference of chief commissioners and directors general of customs, central excise and service tax on Monday. The finance ministry said the main focus of the conference would be on challenges in achieving revenue targets set for indirect taxes for 2014-15. The discussions have been planned on various areas of revenue augmentation — revenue analysis, scrutiny of returns submitted by assessees, audit, enforcement measures, dispute resolution and recovery of tax arrears among others. There will be discussions on the recommendations contained in the First Report of Tax Administration Reforms Commission (TARC), goods and services tax (GST) and GSTN, budgetary changes and policy initiatives among others. “Discussions on emerging challenges and opportunities in indirect tax administration would also form an important part of the two-day conference. The topics included in this segment are leveraging IT for revenue augmentation, implementation issues on cadre restructuring, budgeting and infrastructure, national training policy 2012: competency gaps, agreements of trade facilitation and management of vigilance cases and preventive vigilance among others,” the statement said. http://www.business-standard.com/article/economy-policy/fm-to-ask-officials-to-make-action-plan-for-meeting-tax-targets-114080800544_1.html
INFLATION TARGETING: RAJAN’S STANCE RISKS STAND-OFF WITH GOVT
Mumbai/New Delhi: Reserve Bank of India (RBI) Governor Raghuram Rajan has set himself a target of lowering consumer inflation and is even ready to raise rates to achieve it, risking friction with the new government, if he is seen as overstepping. Rajan, well known within the RBI for pragmatism, now must work with the government of Prime Minister Narendra Modi, which understands the need for – and wants – lower inflation, but doesn’t see the value in hard targets. The governor’s people skills may be tested when Finance Minister Arun Jaitley attends Sunday’s RBI board meeting in Delhi, representing a government that is equally keen on boosting an economy that has just had two consecutive years of sub-5 per cent growth. The meeting comes after Rajan, the star economist appointed by the previous Congress regime, surprised markets after the RBI’s policy review on Tuesday by establishing in clear terms the RBI would get consumer inflation down to 8 per cent by January 2015 and 6 per cent one year later. http://www.business-standard.com/article/finance/inflation-targeting-rajan-s-stance-risks-stand-off-with-govt-114080900044_1.html
RUPEE RECOVERS FROM 5-MTH LOW
Mumbai: The rupee reversed losses on Friday and rose from a five-month low due to dollar sale by banks and exporters. There are speculation that exporters repatriated earnings to benefit from the currency’s slide to a five-month low. The rupee ended at 61.15 versus the US dollar compared to the previous close of 61.23. During intra-day trades the rupee had touched a low of 61.74. The Indian currency had ended at 61.76 on March 5. On Friday, the rupee had opened at 61.61 a dollar. “The rupee recovered due to the Reserve Bank of India’s presence through state-run banks. There were also dollar sale by exporters,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai. Continuing with the rising trend for the eight consecutive week, the country’s foreign exchange kitty surged $2.714 billion to $320.564 billion on a healthy increase in the core currency assets. With this jump, the total reserves are just shy of the all-time high of $321 billion achieved in late 2011. The overall reserves had surged $813.2 million to $317.85 billion in the previous reporting week. Foreign currency assets (FCAs) rose $2.73 billion to $293.78 billion for the week ended July 25, 2014, the Reserve Bank of India (RBI) said in its weekly statement here on Friday. http://www.business-standard.com/article/finance/rupee-recovers-from-5-mth-low-114080900030_1.html
CENTRAL BANK EASES NORMS FOR MORTGAGE GUARANTEE FIRMS
Mumbai: The Reserve Bank of India (RBI) has eased norms for mortgage guarantee companies (MGC), allowing these firms to use contingency reserves to make good the losses suffered by the mortgage guarantee holders without the apex bank’s approval. However, RBI said such a measure can be initiated only after exhausting all other avenues and options to recoup the losses. The change in the guidelines has been made in the wake of representations received from the industry, and keeping in view the long-term beneficial impact of development of the mortgage guarantee industry. The extant guidelines provided for a lower appropriation to contingency reserves if provision made towards losses exceeded 35 per cent of the premium or fee earned during a financial year. It did not specify the exact level of contingency reserves to be created. RBI clarified that in such a case, the contingency reserves could go to a minimum of 24 per cent of the premium or fee earned. This would be such that the aggregate of provisions made towards losses and contingency reserves was at least 60 per cent of the premium or fee earned during a financial year. While calculating the capital adequacy of MGCs, the mortgage guarantees provided by the MGCs might be treated as contingent liabilities. http://www.business-standard.com/article/finance/central-bank-eases-norms-for-mortgage-guarantee-firms-114080900029_1.html
SBI BOTTOMLINE RISES AFTER 6 QUARTERS
Mumbai: The country’s largest lender, State Bank of India, saw its net profit rise for the first time in six quarters, touching Rs. 3,349 crore in the April to June period. Profit inched up 3 per cent on the back of stable loan and interest income growth. It was muted due to a substantial increase in the provision for bad loans, which soared 72 per cent to Rs. 3,903 crore, against Rs. 2,266 crore in the year-ago period. “Pressures on the asset quality front, as such, do appear to be subsiding. However, we need the economy to pick up to see an appreciable change in asset quality,” said Arundhati Bhattacharya, Chairman and Managing Director. The bank’s net interest income, the difference between interest earned and expended, grew 15 per cent, while other income fell 5 per cent to Rs. 4,252 crore during the quarter. Aided by more recoveries and lower slippages, gross bad loans or non-performing assets (NPAs) declined marginally, to Rs. 60,434 crore ( Rs. 60,891 crore). The gross NPA ratio was at 4.90 per cent (5.56 per cent). http://www.thehindubusinessline.com/todays-paper/sbi-bottomline-rises-after-6-quarters/article6297232.ece
CORPORATION BANK NET PROFIT FALLS 39% ON BAD LOAN PROVISION
Mangalore: Corporation Bank has recorded a net profit of Rs. 231.47 crore during the first quarter of 2014-15 against Rs. 377.98 crore in the corresponding period of the previous fiscal, a decline of 38.76 per cent. Addressing presspersons here on Friday, SR Bansal, Chairman and Managing Director, said the bank decided to declare one particular account of Rs. 532 crore as NPA (non-performing asset) during the quarter. Terming that account as a long standing one, he said almost all the banks have exposure in this account. “Without auditors’ interference, we have shown it as NPA. That is the biggest hit in this quarter,” he said. When asked about the details of that account, Bansal said it belongs to a company involved in processing and trading of rice. The bank’s gross non-performing assets stood at Rs. 5,469.94 crore ( Rs. 2,748.78 crore), and net NPAs at Rs. 3,694.24 crore ( Rs. 1,900.30 crore) during the first quarter of 2014-15. The bank made provisions (other than tax) and contingencies of Rs. 458.90 crore ( Rs. 447.02 crore) during the period. Bansal said the bank has set up verticals for controlling NPAs and monitoring standard accounts. He said the bank will also start a vertical to monitor the new branches. More than 800 branches were opened after 2011. The net interest income stood at Rs. 944.24 crore ( Rs. 964.73 crore), and other income at Rs. 361.60 crore ( Rs. 581.19 crore). http://www.thehindubusinessline.com/todays-paper/tp-news/corporation-bank-net-profit-falls-39-on-bad-loan-provision/article6297273.ece
SHANKAR TO HEAD IDFC’S PROPOSED BANK RURAL FORAY
Mumbai: Having received the in-principle nod to start a full fledged bank, IDFC on Friday appointed Ravi Shankar as the head of the proposed bank’s financial inclusion and rural business initiative. Shankar, who joins the company from non bank lender Fullerton India Credit Company, will be heading the initiative called ‘Bharat Bank’, a statement from IDFC said. He will be responsible for conceptualising and building the rural and inclusion business in the bank and will be based at the corporate office in the country’s financial capital, it said. At Fullerton, Shankar was the head of business and marketing and took care of both urban and rural businesses, and corporate social responsibility activities, it said. He has been associated with various sectors including retail finance, business consulting, advertising, automotive and aviation in a career spanning 29 years, it said. “Ravi has managed large teams across geographies and has been instrumental in running a rural finance business profitably. http://www.business-standard.com/article/pti-stories/idfc-appoints-shankar-to-head-proposed-bank-s-rural-foray-114080800390_1.html
WESTERN UNION MAY APPLY FOR PAYMENTS BANK LICENCE
Mumbai: Western Union, the world’s largest money-transfer company, is planning to apply to the Reserve Bank of India (RBI) for a payments bank licence. “We are definitely looking at applying for payments bank. It is an opportunity for us and we are visiting it. The payments bank guidelines are a reflection that we need to be able to provide a broader set of financial services to a very broad community and the traditional ways of doing that are just not working,” Kerry Agiasotis, president & global managing director, Western Union Business Solutions, told Business Standard. In the draft norms for payments banks, RBI has said telecom companies, retailers, pre-paid instrument issuers (PPIs), non-banking financial companies (NBFCs), real estate cooperatives and public sector entities can apply to get a licence to set up payments banks. The minimum paid-up capital for such a bank is required to be Rs 100 crore, of which the promoters’ contribution would be at least 40 per cent. Payments banks are allowed to accept deposits and facilitate remittances and payments but cannot lend. http://www.business-standard.com/article/finance/western-union-may-apply-for-payments-bank-licence-114080900032_1.html
MUTUAL FUNDS EMERGE FROM THE SHADOW OF LAST CRASH
Mumbai: Money flowing into the equity schemes of mutual funds is back at a level last seen before the 2008 financial crisis, when the stock market tanked 60 per cent. In July, mutual fund managers received Rs 10,845 crore from investors, the most in a month since January 2008. This was also when the BSE Sensex had risen as much as 50 per cent to 21,000 in a year. Last year, investors pulled out about Rs 10,000 crore from mutual funds but were back with Rs 20,000 crore in the three months ended July, following the Narendra Modi-led National Democratic Alliance government coming to power at the Centre in May. Sources said money had been flowing into equity mutual funds, owing to a surge in the market. “Some fixed-income money has started shifting to equities. A reasonable proportion is through switches,” said Ajit Menon, executive vice-president of DSP BlackRock Mutual Fund. A change in tax rules for debt funds in Union Budget 2014-15 has also made fixed-income investments less attractive. http://www.business-standard.com/article/markets/mutual-funds-emerge-from-the-shadow-of-last-crash-114080900034_1.html
UTI MUTUAL FUND AIMS TO RAISE RS 500 CR VIA NEW EQUITY FUND SCHEME
Pune: UTI Mutual Fund has proposed to launch a close ended Equity scheme ‘UTI-Focussed Equity Fund-Series I’. The new fund offer will open for subscription on August 13 and will close on August 27, 2014. UTI Mutual Fund aims to raise up Rs 500 crore from this fund. “We are targeting Rs 500 crore from the issue. The new fund was timed to take advantage of a cycle of high returns expected to begin from the ongoing bull run in the Indian equity markets. The current market conditions that suggest some stocks can still offer handsome gains in coming years going by a positive operating cash flows and net profits of over Rs 50 crore. With moderation in inflation and interest rates, UTI MF expects the EBITDA margins to improve significantly in the coming years as the present margin at a little over 16 per cent was lower than the long-term average of 18 per cent,” said Debashish Mohanti, country head,-retail and executive vice president, UTI Mutual Fund in Pune today. Anoop Bhaskar and Lalit Nambiar are the fund managers of the scheme. The minimum amount of investment is fixed at Rs 5,000 and in multiples of Re 1 thereafter. And the scheme will be listed on the NSE. He added, “Most of the key drivers of growth are turning positive to push the demand while the new fund will choose the equity of companies that are well positioned to increase their bottom-line including those of the cyclical sectors during this period. The corporates are expected to see double digit earnings growth in coming 2-3 years.” http://www.business-standard.com/article/companies/uti-mutual-fund-aims-to-raise-rs-500-cr-via-new-equity-fund-scheme-114080800568_1.html
MF ASSETS AT RECORD HIGHS ON INFLOW INTO EQUITY FUNDS
Mumbai: Aided by strong inflow into equity and liquid schemes, the assets under management of mutual funds increased three per cent in July to Rs. 10.06 lakh crore against Rs. 9.75 lakh crore recorded in June. The size of the mutual fund industry is close to the record high of Rs. 10.11 lakh crore logged in May, according to data released by the Association of Mutual Funds in India on Friday. Liquid funds attracted the highest inflow of Rs. 25,589 crore taking the total assets to Rs. 2.44 lakh crore. The fund flow in these schemes is largely cyclical in nature as it witnessed an outflow of Rs. 67,997 crore in June as large corporate and banks withdrew money to pay advance tax. Equity MFs hogged the limelight by attracting an inflow of Rs. 10,845 crore in June. The AUM under equity funds was up 4 per cent to a record high of Rs. 2.52 lakh crore compared with Rs. 2.42 lakh crore in June. Inflows into equity funds have improved substantially in the last four months with the markets performing better. The benchmark Nifty gained 1.44 per cent in July and 22.48 per cent since January 2014. Sunil Subramaniam, Deputy CEO, Sundaram Mutual Fund, said equity schemes have managed to attract flows from debt funds which have become less attractive after the government extended the period for claiming tax benefit to three years from one year. http://www.thehindubusinessline.com/todays-paper/tp-markets/mf-assets-at-record-highs-on-inflow-into-equity-funds/article6297243.ece
SEBI BARS BENGAL FIRM FROM MOBILISING FUNDS
Kolkata: Securities and Exchange Board of India (SEBI) has asked West Bengal-based I-Core E-Services Ltd not to mobilise funds and prohibited it from issuing prospectus or offer document. A SEBI order has restrained the unlisted company from “mobilizing funds through issue of equity shares, debentures, preference shares or through issuance of any kind of security to the public”. The order, issued by Prashant Saran, whole time member of SEBI, on July 25, was made public on Friday. In its preliminary investigation SEBI found that the company was engaged in unlawful fund-mobilising activity through the issue of shares, non-convertible debentures and redeemable preference shares without complying with provisions of the Companies Act, 1956 and SEBI regulations. It raised funds though various instruments from several thousand investors. SEBI also found a number of irregularities in its accounts and in its disclosures to the Registrars of companies. SEBI, which acted on several complaints from investors, also came across alleged non-return of deposited money after maturity. SEBI also directed the company not to dispose off assets of the company or divert any funds raised from the public. http://www.thehindubusinessline.com/todays-paper/tp-news/sebi-bars-bengal-firm-from-mobilising-funds/article6297277.ece
MF JULY INFLOW MOST IN 6½ YEARS
Mumbai: In what should cheer the mutual fund industry, equity schemes saw robust inflows for the second straight month, with inflows in July the highest in six and a half years, reports fe Bureau in Mumbai. Equity schemes saw inflows of R10,815 crore, the highest since January 2008, latest data from industry body Amfi show. What’s more, cumulative three-month inflows from May to July stand at over R20,000 crore. This year MF schemes have seen inflows of R19,750 crore against outflows of R8,708 crore in calendar year 2013. Experts say the market rally in the past few months is getting investors back to the market, which had been subdued for the better part of the last six years. The benchmark CNX Nifty gained 1.4% in July and is up about 22% in the year to date. In May, the BJP government bagged the largest single-party mandate since 1984, helping the Sensex past the 25,000 levels, driving overseas investors to India and sparking hopes of a new, secular bull run in the country’s equity market. “While the momentum of inflows had started to build from November 2013 onwards, it seems to have become meaningfully entrenched since May 2014 and should herald a sustainable trend moving forward,” said a Deutsche Bank Markets Research report. According to Sunil Singhania, CIO (equity investments) at Reliance MF, the outlook on the economy is a lot more positive and investors are realising that equities is the most promising asset class right now. http://www.financialexpress.com/news/mf-july-inflow-most-in-6-years/1277805
SEBI MOOTS STRICTER RULES FOR SECURITISATION TRUSTEES
Mumbai: Capital market watchdog Sebi has proposed stricter norms, including enhanced responsibilities, for trustees managing issuance of securitised debt instruments. Besides, the regulator has suggested a standardised term sheet for securitisation transactions, that covers both public issues and private placements. Generally, securitisation refers to creating a financial instrument by pooling various debt instruments and then selling them to investors. Sebi said the proposals are aimed to ‘‘further rationalise and clarify the roles and responsibilities of the securitisation trustees and explore some other aspects’’. The suggestions are part of the concept paper on securitisation transactions released on Friday. Under the proposed norms, the trustee should call for periodic reports, supervise the implementation of conditions regarding creation of security for securitised debt instruments and take steps to ensure protection of investors as well as resolve their grievances. The trustee should ‘‘ensure on a continuous basis that the trust property is available and adequate at all times to pay the securitised debt instrument holders’’, as per the paper. http://www.financialexpress.com/news/sebi-moots-stricter-rules-for-securitisation-trustees/1277755
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