Government is considering mid-sized to small banks for its first round of privatisation.

Government has shortlisted four mid-sized state-run banks for privatization, under a new push to sell state assets and shore up government revenues, three government sources said.

Privatisation of the banking sector, which is dominated by state-run behemoths with hundreds of thousands of employees, is politically risky because it could put jobs at risk but Prime Minister Narendra Modi's administration aims to make a start with second-tier banks.

The four banks on the shortlist are Bank of Maharashtra, Bank of India, Indian Overseas Bank and the Central Bank of India, two officials told Reuters on condition of anonymity as the matter is not yet public.

Two of those banks will be selected for sale in the 2021/2022 financial year which begins in April, the officials said. The shortlist has not previously been reported.

The government is considering mid-sized to small banks for its first round of privatisation to test the waters. In the coming years it could also look at some of the country's bigger banks, the officials said.

The government, however, will continue to hold a majority stake in India's largest lender State Bank of India, which is seen as a 'strategic bank' for implementing initiatives such as expanding rural credit.

A finance ministry spokesman declined to comment on the matter.

India's deepest economic contraction on record caused by the pandemic is driving the push for bolder reforms, economists say.

Government also wants to overhaul a banking sector reeling under a heavy load of non-performing assets, which are likely to rise further once banks are allowed to categorise loans that soured during the pandemic as bad.

PM Modi's office initially wanted four banks to be put up for sale in the coming fiscal year, but officials have advised caution fearing resistance from unions representing the employees.

Read More

Central Bank of India Q3 net profit up 6.5%

State-owned Central Bank of India on Tuesday reported a 6.5 per cent rise in its net profit to Rs 165.41 crore in the third quarter ended December. The bank had posted a net profit of Rs 155.32 crore in the corresponding year-ago period.

Total income, however, fell to Rs 6,556.98 crore in October-December period of 2020-21 as against Rs 7,278.29 crore in same period of 2019-20, the bank said in a regulatory filing. Interest income for the quarter under review was down to Rs 5,782.61 crore from Rs 6,028.88 crore in the year-ago quarter.

The bank’s asset quality improved with gross non-performing assets(NPAs) falling to 16.30 per cent of the gross advances as of December 31, 2020, from 19.99 per cent by end of December 2019.

In value terms, gross NPAs or bad loans stood at Rs 29,486.07 crore as against Rs 33,259.59 crore. Net NPAs in the said quarter also came down to 4.73 per cent (Rs 7,514.65 crore) from 9.26 per cent (Rs 13,568.05 crore) in the year-ago period.

Provisions for bad loans and contingencies also decreased to Rs 743.74 crore for Q3FY21 from Rs 1,249.21 crore kept aside for the year-ago quarter.

Read More

Eye on this PSBs to be privatise: Govt mulls corporate, foreign bank participation

 

Indian policymakers are discussing ways to open up the banking sector via easing norms for corporate and foreign bank participation in acquiring public sector banks that the central govt is looking to privatise, sources with knowledge of the matter told ET Now.

Currently, industrial houses that have less than 60% of their turn over from non-financial entities are not allowed to apply for bank licences and their equity participation is also limited to 10%, as regulators have feared that this could risk financial stability because of the propensity of the corporates to milk banks for ‘self-loans.’

ET Now learns that there’s a rethink on the existing policy between policymakers even as the discussions are at an “early stage”. Sources say the government and the central bank may move with “abundant caution” and will take into account global experience and prior experience as well. 

Greater regulatory vigilance in terms of preferring corporate players with a long term 10-year business plan, “Fit & Proper Criteria” for corporate participation for taking equity in banks, tighter norms for related party transactions could be put in to ensure no excessive concentration or risks to financial stability. 

"We need to open up the banking system but the move will be designed with “abundant caution” and will need stonewalling from misuse. Opening up banking sector will come with greater regulatory vigilance on banks, fin institutions," one of the officials told ET Now.

Policymakers are also discussing allowing foreign banks with Indian subsidiaries to participate in buying government stake when state-owned banks like Central Bank of India, Bank of India, Punjab and Sind Bank, IOB and UCO Bank are privatised. 

The banking sector has been plagued with rising bad loans leading to decline in capital adequacy ratios and in some cases failure. Recently, Yes Bank was saved through government and RBI intervention when SBI lead consortium infused more capital into the private lender to save it from bankruptcy. Last week the government and RBI had to intervene to aid the rescue of Lakshmi Vilas Bank by the Indian subsidiary of DBS Bank, a move that reflected a change in thinking of the central bank and the government. 

Besides DBS, there are only one other foreign bank that has Indian subsidiaries -- SBM Bank. SBM Bank (India) Limited (Subsidiary of SBM Group) and DBS Bank India Limited have been issued licence on December 6, 2017, and October 4, 2018, respectively for carrying on banking business in India through a wholly-owned subsidiary. 

The widening of this move to allow foreign banks to buyout public sector banks when the government decides to privatise them will not only increase competition in the sector leading to efficiency but will also make a paradigm shift in the sector. The larger aim is to make Indian banks globally competitive. 

The discussion on this is at early stage but the policy could be timed with the government's larger privatisation policy that will allow selling of some Indian public sector banks. Bank of India, Central Bank of India, Bank of Maharashtra, Punjab & Sind Bank are some of the state-run lenders that the government is looking to privatise.

Read More

Central Bank of India Q2 Results: Net profit rises 20%

Central Bank of India on Friday reported over 20 per cent rise in its net profit at Rs 161 crore for the second quarter ended September 30. The bank had posted a net profit of Rs 134 crore in the corresponding quarter of the previous financial year.

Its total income grew nearly 2 per cent to Rs 6,833.94 crore during July-September 2020, against Rs 6,703.71 crore in the year-ago period, Central Bank of India said in a regulatory filing.

Operating profit improved to Rs 1,458 crore, registering a growth of 42.16 per cent from Rs 1,026 crore a year ago, it said.

The lender also improved on its bad assets ratio with the gross non-performing assets (NPAs) falling to 17.36 per cent of gross advances by the end of September 2020, from 19.89 per cent by the end of September 2019.

Net NPAs fell to 5.60 per cent, against 7.90 per cent in the year-ago quarter.

In value terms, the gross NPAs fell to Rs 30,785.43 crore from Rs 33,497.22 crore, while net NPAs stood at Rs 8,683.58 crore as against Rs 11,551.91 crore.

Provisions for bad loans and contingencies, however, rose to Rs 1,104.92 crore for the reported quarter of 2020-21, from Rs 791.33 crore in the year-ago period.

The bank's total business stands at Rs 5,00,737 crore as against Rs 4,73,080 crore, it added.

Read More

Central Bank of India Q1 Net profit rises 21%

Public sector Central Bank of India on Tuesday reported a 21 per cent rise in its consolidated net profit at Rs 147.21 crore in the quarter ending June. The bank had posted a net profit of Rs 121.61 crore during the same quarter a year ago.

Total income of the bank (consolidated) rose to Rs 6,751.86 crore during April-June quarter of 2020-21 as against Rs 6,518.37 crore in the same period of 2019-20, Central Bank of India said in a regulatory filing.

On a standalone basis, the net profit of the bank was up 14.5 per cent at Rs 135.43 crore during the first quarter of FY 2021 as against Rs 118.33 crore a year ago. Income increased to Rs 6,726.68 crore from Rs 6,493.55 crore.

The bank showed improvement in its asset quality as the gross non-performing assets (NPAs) or bad loans, as a percentage of gross advances as on June 30, 2020, fell to 18.10 per cent from 19.93 per cent as on June 30, 2019.

Likewise, the net NPA ratio came down to 6.76 per cent from 7.98 per cent.

This helped the bank cut down on its provisions for bad loans and contingencies, which stood at Rs 974.64 crore for June quarter FY 2021 as against Rs 1,034.78 crore a year-earlier period.

Read More

Central Bank of India net loss narrows to ₹1,529 crore in Q4

Public sector lender Central Bank of India's net loss narrowed in the March quarter to ₹1,529 crore owing to a substantial decrease in provisioning and higher net interest income (NII).

The bank had posted a net loss of ₹2,477.41 crore in the same period a year ago. In the December quarter, the bank had made a profit of ₹155.32 crore.

The bank had set aside provisions of ₹2,178.33 crore during the quarter under review, of which provisions for bad loans stood at ₹1,583.25 crore. Its total provisions were down 53.98% from ₹4,733.82 crore parked aside for the year-ago period.

Total income during the quarter under review was at ₹6,723.73 crore as against ₹6,620.51 crore in the year-ago period, Central Bank of India said in a regulatory filing.

The bank's net interest income (NII) was at ₹1,925.81 crore, up 20.18% from ₹1,602.46 crore in Q4 of FY19. Other income fell 30.52% to ₹794.68 crore for the quarter ended 31 March, against ₹1,143.69 crore for the same quarter last year.

Its gross non-performing assets (NPAs) of the bank stood at 18.92% of gross advances as at March-end, down from 19.29% in the year-ago period. The bank's net NPAs were at 7.63%, down from 7.73%.

Central Bank of India's total deposits were up 4.64% to ₹3.14 trillion for the year ended 31 March against ₹3 trillion a year ago. Its advances grew 3.12% to ₹1.51 trillion as on 31 March 2020, over ₹1.47 trillion for the same period last year.

Read More

Top Public Sector Banks In India 2020

These banks have emerged to be trusted brands where people deposit and invest money without thinking twice. Some of these banks stand out when it comes to offering services and are thus a preferred choice of greater number of people.

Here is a look at some of the best public sector banks in India.

1] State Bank of India 

Commonly known as SBI, this bank was set up in the year 1955. It is one of the oldest and the most trusted public sector banks in India. SBI is owned by the Indian government. It offers all kinds of banking services and is known for maintaining transparency in its dealings. It boasts of more than 40 crore satisfied customers.

After receiving an overwhelming response from people in India, the bank went on to open its branches worldwide. Today, it has nearly 200 offices in 36 different countries.  The headquarters of SBI are located in Mumbai.

2] Bank of India

This bank was established in the year 1906 as a privately owned entity. However, after the nationalization of banks, it became a public sector bank. This change took place back in 1969. The bank has 5,500 branches operating across the country. 

It has been serving millions of Indians by catering to their banking requirements.The bank also has its branches outside the country. It operates in 22 other countries with around 60 branches. New York, Paris, London and Singapore are among the countries where Bank of India has its branches.

3] Punjab National Bank

This bank came into being in the year 1895. It was founded under the guidance of one of the greatest Indian leaders of all times, Lala Lajpat Rai. The bank was established as a part of the Swadeshi movement. PNB was managed solely by Indians.

It became extremely popular in the pre-independence era and is still trusted as much. It offers several banking services and is known for providing quality banking products. The bank has around 7000 branches and has its presence in every nook and corner of the country.

4] Bank of Baroda

Bank of Baroda was opened in Vadodara, Gujrat in the year 1908. The bank is known to offer quality banking and finance services to its customers ever since its inception.

It is known to be the second largest nationalized bank in the country. The bank does not only operate in India but has its presence around the world. It operates in as many as 25 countries across the globe with more than 75 million happy customers. Dena bank and Vijaya bank merged with Bank of Baroda recently thereby making it an even bigger entity.

5] Central Bank of India

Central Bank came into being in the year 1911. It has been serving the customers happily ever since the beginning. The bank is known to offer numerous banking products.

It has a team of qualified and experienced bankers who have the answer to all your banking related queries and are always happy to help their customers. The bank has nearly 5,000 branches operating pan India. It also has offices in Hong Kong and Nairobi.

The headquarters of this bank is set up in Mumbai.

6] Canara Bank

Established in the year, 1906, Canara bank has its headquarters in Bengaluru. The bank has more than 6000 branches and nearly 9500 ATMs operating across the country. It offers several banking products and is known to offer impeccable service. It has more than 8 crore happy customers.

The bank does not only operate in India but has its branches in many other countries too. It has been serving people in New York, Hong Kong, Shanghai, London, Manama, Leicester, Johannesburg and Dubai.

7] Union Bank of India

Union Bank of India started as a limited company in the year 1919. It became a full-fledged bank in the year 1969 after nationalisation. The bank offers numerous banking products. By providing quality banking services consistently for years it has managed to acquire more than 5 crore customers.

Its customer base is increasing with every passing year. It is the proud owner of over 4500 branches spread across India. It also has branches in 4 other countries including Hong Kong, Sydney, Dubai and Antwerp.

8] UCO Bank

UCO Bank was established back in the year, 1943. It has its headquarters in Kolkatta, West Bengal. The bank has around 50 branches across the country and nearly 4000 plus service units. It has also made its presence overseas with branches in Singapore and Hong Kong.

9] Bank of Maharashtra

Bank of Maharashtra came into being in the year, 1935. The bank has been offering excellent service to its customers ever since its inception. It provides all kinds of banking and finance services. It has its headquarters in Pune. 87.74% of the total shares of the bank are held by the Government of India.

10] Indian Overseas Bank

Indian Overseas Bank was established back in the year, 1937. It has more than 3,400 branches across the country. The bank offers a host of banking services to meet the requirement of different segments of customers. After its success in the country, the bank went on to open branches in foreign land. It has 6 foreign branches.

You can safely open account and acquire other banking services from any of these banks!

Read More

Central Bank of India reports higher loss for FY19 due to NPA divergence

Central Bank of India has reported an increased net loss of Rs 6,430.48 crore for 2018-19 due to NPA divergence after assessment of higher bad loans by the Reserve Bank. The net NPA divergence -- the difference between the NPAs reported by the bank and that assessed by the RBI -- was at Rs 2,565 crore for 2018-19. Central Bank of India had reported a net loss of Rs 5,641.48 crore in 2018-19 earlier. "The adjusted (notional) net profit after tax for the year ended March 31, 2019 after taking into account the divergence in provisioning is (-) Rs 6,430.48 crore," the bank said in a regulatory filing. Banks are required to report divergences in their asset classification and provisioning as per Sebi guidelines issued on October 31, 2019.

The bank had reported Rs 11,333.24 crore net NPAs during the year while the RBI assessed it at Rs 13,898.24 crore, leaving a gap of Rs 2,565 crore. The divergence in provisioning also increased by Rs 788 crore for the fiscal ended March 2019. Market regulator Sebi has put in place tighter disclosure norms, directing all listed banks to disclose any divergence in bad loan provisioning within 24 hours of receiving RBI's risk assessment report, rather than waiting to publish the details in their annual financial statements.

Banks, including Indian Bank, Union Bank of India, Bank of India, Indian Overseas Bank and Lakshmi Vilas Bank, have already reported their NPA divergences for the last fiscal. The disclosures need to be made in case the banks' additional provisioning for non-performing assets (NPAs) assessed by the RBI exceeds 10 per cent of the reported profit before provisions and contingencies, and if the additional gross NPAs identified by the RBI exceed 15 per cent of the published incremental gross NPAs.

Read More