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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Punjab Sind Bank Q4 result, reported net loss as NPA provision rises

State-run Punjab and Sind Bank today reported a net loss of Rs 524.62 crore for the last quarter of 2017-18 due to a significant rise in provisioning for bad assets.

The bank had posted a neoss to bt profit of Rs 8.33 crore in the same period of 2016-17. The bank had suffered a net loss of Rs 258.25 crore in third quarter ending December.Income remained almost flat at Rs 2,122.05 crore in the quarter against Rs 2,110.11 crore in the same period of last year.

The provisioning for bad loans increased to Rs 738.36 crore for the quarter as against Rs 464.51 crore in the same quarter of the previous fiscal, according to a regulatory filing by the bank.For the full 2017-18 fiscal, the bank reported a loss of Rs 743.80 crore against a net profit of Rs 201.08 crore in the fiscal ended March 2017.

Income for the year fell to Rs 8,529.95 crore from Rs 8,750.97 crore a year ago.The NPA provisioning increased to Rs 1,722.43 crore from Rs 1,106.33 crore in the year ago fiscal.

The bank said the board of directors at its meeting held today has not recommended any dividend for the financial year 2017-18. Bank's gross non-performing assets (NPAs) or bad loans surged to 11.19 per cent of the gross loans as on March 31, 2018 from 10.45 per cent as on March 31, 2017. In value terms, gross NPAs stood at Rs 7,801.65 crore against Rs 6,297.59 crore.

Net NPAs were down at 6.93 per cent (Rs 4,607.87 crore) from 7.51 per cent (Rs 4,375.08 crore). The lender said it was required to make additional provisions in case of six borrowal accounts covered under the Insolvency and Bankruptcy Code (IBC).

"Similarly... In respect of five borrowal accounts covered under the process of Insolvency and Bankruptcy Code (IBC), the Bank was required to make additional provision," it added.

It further said that even as the provisioning requirement in respect of NCLT account has been reduced from 50 per cent of secured portion to 40 per cent of secured portion as on March 31,2018, the bank has however not exercised the option of dispensation available in respect of old accounts in which provision of 50 per cent was already held by bank upto Dec 2017 quarter.

The Bank has availed the option of provisioning requirement in respect of 2 NCL T accounts admitted during the quarter ending March 2018 by providing 40 per cent provision in said accounts, it said.

Also, in view of fraud reported during the year in certain banks in respect of one gems and jewellery borrower, the Bank has classified the account as NPAs and provided fully, it added.On divergence in asset classification and provisioning for NPAs as per Risk Assessment Report of RBI, the bank has shown a gap of Rs 542.70 crore in gross NPAs and Rs 217.50 crore in net NPAs for 2016-17.

Taking into account the Rs 217.50 crore divergence in provisioning for NPAs, the adjusted net profit for fiscal ended March 2017 has come down to Rs 58.85 crore.The bank had earlier reported net profit of Rs 201.08 crore for that year. The provision coverage ratio and liquidity coverage ratio as at 31 March 2018 works out to 54.31 per cent and 102.87 per cent respectively, the bank said.

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Five banks may be put under RBI's prompt corrective action(PCA) plan

  

Canara bank and Union Bank of India are among five public sector banks that might be put under the Reserve Bank of India's prompt corrective action plan. According to ICRA ratings show the net non-performing assets (NPAs) of these five banks rose above 6 per cent in December 2017.

If the banking regulator places them under PCA, the action may drive these banks to recall additional tier-1 (AT-1) bonds, which is included in Tier-1 capital, of Rs 157 billion from investors.Apart from Canara bank and Union bank, the other PSBs that might come under PCA are Andhra Bank, Punjab National Bank, and Punjab & Sind Bank.

According to ICRA, over the past 4 years, PSBs have raised AT-I bonds totalling Rs. 603851 crore to shore-up their Tier-I capital ratios in the backdrop of losses, increasing capital requirements under Basel III and limited capital infusion by the Government of India (GoI) in relation to their requirements. "Inclusion in PCA, coupled with recapitalisation of PSBs by the government has triggered a 'regulatory event' and an early recall of AT-I bonds" by these banks, says the report. 

RBI earlier stated that the PCA framework was intended to encourage banks to eschew certain riskier activities and focus on conserving capital so that their balance sheets can become stronger. The PCA framework would apply without exception to all banks operating in India, including small banks and foreign banks, operating through branches or subsidiaries based on breach of risk thresholds of identified indicators.

A bank will be placed under the PCA framework based on the audited Annual Financial Results and the Supervisory Assessment made by RBI. Last year in December, RBI initiated PCA against Bank of India (BOI) for mounting of bad loans placing various restriction on the bank including issuance of fresh loans and dividend distribution. The BoI would not be alone to face the RBI action as there are nine other such banks, mostly state-owned banks, for having higher stressed assets. They include IDBI Bank, Indian Overseas Bank, Bank of Maharashtra, United Bank of India, Dena Bank, Corporation Bank, UCO Bank, Central Bank of India and Oriental Bank of Commerce. In June 2017, RBI gave similar clarifications while initiating banks under the PCA framework. 

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Punjab & Sind Bank Q3 result, reported loss

Public sector Punjab and Sind Bank has reported a net loss of Rs 258.25 crore in the third quarter ended December 2017, owing to over two-fold jump in NPA provisioning. It had reported a net profit of Rs 77.51 crore in the corresponding October-December period of 2016-17.

Operating profit of the bank, however, was up at Rs 353.13 crore for the December quarter of 2017-18 against Rs 277.10 crore in the same period a year ago, the bank said in a regulatory filing.

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Punjab and Sind Bank Q2 profit slips 78%

State-owned Punjab and Sind Bank (PSB) today reported a 77.8 per cent decline in net profit at Rs 13.70 crore for the second quarter ended September, mainly due to rise in bad loans. 

Net profit of the bank stood at Rs 61.89 crore for the same quarter a year ago. 

Total income also declined to Rs 2,166.64 crore in the second quarter from Rs 2,203.74 crore in the corresponding period a year earlier, PSB said in a statement. 

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Punjab & Sind Bank Q1 net profit rises

Punjab & Sind Bank today announced the financial results for the Quarter ended June,2017. The Bank has earned an operating profit of Rs 305.44 crore. 

Net Profit of Rs 25.37 crore for the quarter ended June,2017 as compared to Rs 8.33 crore in last quarter.

In comparison to last quarter, Net profit of the bank as on 30.06.2017 surged to Rs 25.37 crore registering a growth of 204.56%. 

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Number of public sector banks may go down to 12 as govt mulls consolidation

The government is working on a consolidation agenda with a view to creating 3-4 global-sized banks and reduce the number of state-owned lenders to about 12, an official said.

The 21 public sector banks would get consolidated to 10- 12 in the medium term, the official said. As part of a three-tier structure, the official said, there would be at least 3-4 banks of the size of State Bank of India (SBI), the country’s largest lender.

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PSB merger: 7 banks miss August deadline to meet 25% public float norm

As discussions on the merger of some public-sector banks (PSBs) pick up pace, seven PSBs, especially United Bank of India, could miss the August deadline to meet the 25% public float norm. So the finance ministry may request capital markets regulator Securities and Exchange Board of India to extend the deadline for the PSBs, sources told FE. As of end-March, the government held more than 75% in seven PSBs — United Bank of India, Indian Bank, Bank of Maharashtra, Central Bank ofIndia, Punjab and Sind Bank, Indian Overseas Bank and UCO Bank.

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