New Chairpersons appointed for three PSU banks

The Narendra Modi government today appointed non-executive chairpersons for three state-run banks.

Charan Singh, the RBI chair professor at the Indian Institute of Management, Bangalore, has been appointed as the non-executive chairman of Punjab & Sind Bank, Financial Services Secretary Rajiv Kumar tweeted.

Anjali Bansal, the former managing director of TPG Private Equity, has been appointed at Dena Bank, while Tapan Ray, the former corporate affairs secretary, will take charge at Central Bank of India. The three appointees will be part-time non-official directors on the boards of the three public sector banks.

The appointments have been made based on the suggestions of Banks Board Bureau headed by Bhanu Pratap Sharma, Kumar tweeted.

The government has been experimenting with appointing experts from a variety of fields as chairpersons of public sector banks. In 2015, Ravi Venkatesan had been appointed as the non-executive chairperson of Bank of Baroda. In the same year, G Padmanabhan, former executive director of the RBI had been appointed as chairperson of Bank of India.

This is a move towards separating the responsibility between chairman and managing directors for better functioning of public sector banks, Kumar said while announcing the fresh appointments on Thursday.

Each of the three banks where new chairpersons have been appointed are grappling with stress.

Dena Bank, for instance, was recently told to stop fresh lending by the RBI. The bank reported a gross non performing assets ratio of 22 percent as of March 2018. Central Bank of India, too, had a bad loan ratio close to that of 21 percent. Punjab and Sind Bank is in a marginally better position with a bad loan ratio of 11 percent.

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RBI puts one more bank under prompt corrective action (PCA)

The Reserve Bank of India (RBI) has initiated prompt corrective action against Dena Bank in view of high non-performing assets (NPAs), restricting the bank from giving new loans and new hiring.

The public sector bank had on Friday reported widening of its net loss to Rs1,225.42 crore in the March quarter on mounting bad loans and higher provisions to cover them. The net loss stood at Rs575.26 crore in the January-March quarter of 2016-17. Sequentially, the loss widened from Rs380.07 crore in December quarter of 2017-18.

“Reserve Bank of India, vide their letter dated May 31, 2017, has initiated Prompt Corrective Action for Dena Bank and imposed certain restrictions, in view of high Net NPA and negative RoA ( return on assets),” the bank said in a regulatory filing. In continuation to the above, “we wish to inform that the RBI vide their letter dated May 07, 2018 (received by the Bank on May 08, 2018) has restricted the Bank from assuming fresh credit exposure and recruitment of staff,” the central bank added.

Dena Bank said it was put up to the board in its meeting held on 11 May 2018. Bank’s asset quality has worsened with the gross NPAs hitting a high of 22.4% of the gross advances as on 31 March 2018, from 16.27% as of end-March 2017. In value terms, the gross NPAs, or bad loans, rose to Rs16,361.44 crore from Rs12,618.73 crore.

Net NPAs were also up at 11.95% (Rs7,838.78 crore) from 10.66% (Rs7,735.12 crore).

In January, Allahabad Bank had informed about being placed under RBI’s PCA mechanism. The central bank has initiated similar action against other public sector banks, including IDBI Bank Ltd, Indian Overseas Bank and UCO Bank before this.

The banking regulator had in April 2017 issued a new set of enabling provisions under the revised PCA framework with a clause that if the bank does not show improvement then it could be either be merged or taken over by other bank.

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Dena Bank result, widens Q4 loss

State-owned Dena Bank on Friday reported widening of its net loss to Rs1,225.42 crore in the March quarter on mounting bad loans and higher provisioning to cover them.

The net loss was Rs575.26 crore in the January-March quarter of 2016-17. Sequentially, the loss widened from Rs380.07 crore in December of 2017-18. The bank reported loss on annual basis as well, the third year in a row due to ballooning non- performing assets (NPAs).

For the entire fiscal, 2017-18, the bank has posted a net loss of Rs1,923.15 crore. In 2016-17, it had reported a net loss of Rs863.63 crore; in 2015-16, it Rs935.32 crore.

It had clocked a net profit of Rs265.48 crore in 2014-15. Dena Bank’s total income in the fourth quarter of last fiscal also came down to Rs2,390.68 crore from Rs2,612.08 crore in the year-ago period. Its interest income was down at Rs2,067.38 crore, as against Rs2,297.11 crore.

Income for the full fiscal also fell to Rs10,095.75 crore, as against Rs11,433.07 crore in 2016-17, the bank said in a regulatory filing. The interest income of the bank also fell during the year to Rs8,932.23 crore, from Rs10,181.67 crore a year ago.

The public sector lender said that its board of directors has not recommended any dividend for 2017-18. Bank’s asset quality has worsened with the gross NPAs hitting a high of 22.4% of the gross advances as on 31 March 2018, from 16.27% as of end-March 2017.

In value terms, the gross NPAs or bad loans rose to Rs16,361.44 crore from Rs12,618.73 crore. Net NPAs were also up at 11.95% (Rs7,838.78 crore) from 10.66% (Rs7,735.12 crore). Thus, the bank parked aside Rs2,150.60 crore as provisioning for bad loans for the March quarter, as against Rs878.18 crore in the year-ago period.

For entire fiscal, the provisioning for bad assets rose to Rs4,281.80 crore, as against Rs2,457.75 crore. Provision coverage ratio stood at 60.20% as on 31 March 2018.

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Dena Bank slips in red with loss in Q3

State-run Dena Bank today reported a loss of Rs 380.07 crore for the third quarter ended December 31, due to surge in bad loans and provisioning.

The bank had posted a profit of Rs 35.3 crore in the same quarter last year. Total income also declined to Rs 2,475.96 crore from Rs 2,999.5 crore in the December quarter previous fiscal.

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Dena Bank to offer the cheapest Home Loan among all Public Sector Banks

Dena Bank on Wednesday announced a new offer on a home loan. The new rate has been pegged at 8.25 percent, which is touted as the cheapest one available. This means the state-owned bank becomes the leader in terms of the cheapest loan rate offered by any lender. Previously, the position was held by State Bank of India (SBI). 

SBI earlier in November had announced to give home loans at 8.3 percent. Notably, the offer by Dena Bank is a part of the retail loan carnival that will start from November 16, and end on December 31 of this calendar year.

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Dena Bank Q2 loss widens , asset quality worsens

Public sector Dena Bank's net loss more than quadrupled to Rs 185.02 crore during the second quarter ended September.

There was a net loss of Rs 44.32 crore on bank's balance sheet during the July-September quarter of 2016-17.

As per directions for initiating Insolvency Process- Provisioning Norms, in respect of nine borrowal accounts covered under provisions of IBC, the bank was required to make additional provision of Rs 278.82 crore to be proportionately spread over three quarters starting from the second quarter, i.e. September 2017 in order to make required provision by March 2018, the bank said in a regulatory filing.

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Vijaya Bank, Dena Bank eye merger

While there are talks of higher recapitalization for PSU banks, the government is also not dropping the ball on another important issue of consolidation in the banking space. Sources tell ET Now that two mid sized PSU banks are in initial exploratory talks for a possible merger. 

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Dena Bank, OBC, IOB and Central Bank of India could be the initial targets for Merger

The government’s decision to set up an ‘alternative mechanism’ to fast-track consolidation among public sector banks (PSBs) to create strong lenders will help the PSBs streamline costs and improve governance, but a continuous focus on risk management and capital infusion from the government are crucial for a turnaround, industry experts said.

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