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SBI LIVE: Chairman Dinesh Khara to announce strategic initiatives at 12 noon; bad bank, more mergers on cards? – The Financial Express

SBI press conference today follows the Reserve Bank of India’s Resolution Framework 2.0 and COVID-related loan relief measures unveiled by Governor Shaktikanta Das on 5 May 2021.

SBI Press Conference LIVE: State Bank of India (SBI) has called for a press conference today at 12 noon to announce some strategic initiatives, along with Indian Banks Association (IBA). According to various unconfirmed media reports, SBI Chairman Dinesh Khara and IBA Chairman Rajkiram Rai are expected to make announcements on bank mergers, or the formation of a ‘bad bank’. Bankers may also discuss the government’s likely relief measures to combat COVID-19 pandemic. SBI press conference today follows the Reserve Bank of India’s Resolution Framework 2.0 and COVID-related loan relief measures unveiled by Governor Shaktikanta Das on 5 May 2021. The presser today may discuss the implementation and progress of these measures.

SBI Chairman Dinesh Khara, Indian Banks Association (IBA) Chairman Rajkiran Rai starts joint conference

State Bank of India (SBI) Chairman Dinesh Khara  along with Indian Banks Association (IBA) Chairman Rajkiran Rai to announce some strategic initiatives shortly

SBI (standalone) reported 80% y-o-y increase in Q4FY21 net income, driven by 19% y-o-y growth in NII (7% below expectations owing to Rs 21 bn of accrued interest write-off and Rs 8.3 bn of interest-on-interest waiver). Asset quality surprised positively with aggregate of slippages and restructuring at Rs 464 bn against a guidance of Rs 600 bn. The second wave of COVID-19 may cause greater distress in the Tier III & below geographies and SBI could face relatively higher NPLs vs. the first wave.

Nomura

The country’s GDP is likely to grow at 1.3 per cent in the fourth quarter of 2020-21 and may see a contraction of around 7.3 per cent for the full financial year, according to an SBI research report ‘Ecowrap’. The e-National Statistical Office (NSO) will release the GDP estimates for the March 2021 quarter and provisional annual estimates for the year 2020-21 on May 31.

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RBI on May 5 announced that banks will have COVID loan book and will earn 40 basis points more under Reverse repo

The RBI Governor faces a tough task this time, with a Confluence of challenging parameters emerging in the economy on account of the second wave of covid and lurking uncertainties. The present double-digit wholesale price inflation is going to lead to a rapid jumping of retail inflation too, with a lag effect. This could prompt RBI to shift to a hawkish stance. However, in Revival and sustenance, a bold approach is expected and desired from RBI with no change in repo rate. Jyoti Prakash Gadia, Managing Director, Resurgent India

The second wave of Covid-19 will weigh upon goods and services tax (GST) collections and states own tax revenues (SOTR) in FY22 as infections are seen curtailing the consumption of discretionary items and contact-intensive services, rating agency Icra said on Thursday. Icra said the state governments’ FY22 budgets had projected a welcome fiscal consolidation after the pandemic-induced disruption in FY21. However, most of these budgets were published before the second surge in Covid-19 infections, which has reignited uncertainty regarding growth and fiscal outlook. 

RBI Governor on May 5, announced on-tap liquidity window of Rs 50,000 crore with tenure of up to 3 years at repo rate being opened till March 31, 2022. RBI also announced targeted long-term repo operation for small finance banks (SFBs) of up to Rs 10,000 crore. 

The Reserve Bank of India (RBI) on Thursday said the second Covid wave’s macro-economic cost to the country could hopefully be limited to the June quarter with a possible spillover to July, even as it chose not to alter its GDP growth outlook for FY22 from 10.5%. This turns out to be marginally higher than the recently revised estimates by Moody’s (9.3%) and S&P (9.8%).

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In 2019, the government announced it would recapitalise banks. The move made a Rs 48,000 crore hole in the government’s coffers. Further, this year Rs 20,000 crore worth of bank recapitalisation is planned.  The hope with bank merger is that the government would have to eventually spend less on recapitalising, as banks would have better capital buffers. 

The Reserve Bank of India (RBI) on Thursday said that asset quality of the banks would need close monitoring along with their preparedness for higher provisioning in coming quarters.In its semi-annual financial stability report, RBI had earlier said that the bad loan ratio of banks could rise to 13.5% under the baseline stress scenario by September 2021. The regulator has cautioned banks as lenders will have to show true picture of bad loans after Supreme Court lifted interim stay on classifying non-performing assets (NPA) in March 2021.

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After hitting a three-year low of 5.1% in the first half of FY21, the credit growth gained pace from November 2020 as the economy started opening up after pandemic-triggered lockdowns. In its annual report for the nine-months ended March 2021, the Reserve Bank of India (RBI) said the worst was over for the credit growth.

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The Indian economy has been slowing, now at 5-6 percent range, and will need quite a bit of policy-change reforms, in a difficult world environment, to be successful in the decade ahead,” said Martin Wolf, Chief Economics Commentator, Financial Times. He was in conversation with Anil Sasi, National Business Editor, The Indian Express.

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The Finance Minister had in her Union Budget speech had proposed to set up an Asset Reconstruction Company (ARC) to manage the non-performing assets (NPA). The ARC would take over the bad assets of banks and then sell these to AIFs (alternate investment funds).

There would be some impact, as the banking sector tends to move in tandem with the macro environment. Overall, slippage and restructuring applications for FY21 stood at Rs 46,416 crore, well below guidance of the bank. A definitive assessment of the impact of Covid-19 is dependent upon circumstances as they evolve in the subsequent period, said SBI chairman Dinesh Khara

SBI’s net interest income (NII) grew 19% on-year to Rs 27,067 crore. On the back of this, SBI’s operating profit increased 7% on-year and 14% sequentially to Rs 19,700 crore.

State Bank of India (SBI) reported an 80% on-year increase in its net profit to Rs 6,451 crore for the March quarter (Q4FY21) on the back of a healthy growth in interest income, improved asset quality and lower provisioning.

There have been suggestions by expert committees in favour of merging banks in India. The M Narasimham Committee had recommended that India should have fewer but bigger and better-managed banks to ensure optimal use of capital, the efficiency of operations, wider reach and bigger profitability.

The pandemic hit last March and all high frequency indicators (nearly 60 of them) were peaking before that, till February. If the pandemic had, counterfactually, hit in April, our growth would have reached 6 per cent… India is the only country to have changed its narrative and brought in seminal changes to the way we think about the economy,” said KV Subramanian, Chief Economic Advisor, Government of India.

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The Finance Ministry has already announced a number of bank mergers, in an effort to tidy up the banking infrastructure in the country. In 2019, the finance minister has announced the merger of 10 state-owned banks. 

On the Indian economy losing momentum: Prior to the pandemic, between June 2019 and till the budget was presented in February 2021, there was certainly a slowdown, a shortage of liquidity, and therefore, when people needed money, they couldn’t get it; we undertook a lot of measures to ensure that liquidity reaches people. In fact, much before the festive season in India, between September and October, we had ensured that banks, NBFCs and others reached out with liquidity. So that year we did have a specific problem of banks not being able to extend credit, which was sorted out and in early 2021, we saw clear signs of recovery. With that, we presented a budget in February 2021. But, of course, within weeks after presenting the budget, there was Covid-19.

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According to media reports, bankers may discuss the liquidity support measures amid rising Covid-19 cases in India unveiled by RBI’s Governor Shaktikanta Das on 5 May 2021.

State Bank of India (SBI) has called for a press conference today at 12 noon to announce some strategic initiatives, along with Indian Banks Association (IBA).