Page 10 - Banking Finance October 017

BANK UPDATE

Jan Dhan Yojana getting SMEs advised to go for equity capital instead of debt
stronger In order to drive the businesses in a healthier manner, the State Bank chairman
Arundhati Bhattacharya urged the Small and Medium
The Pradhan Mantri Jan Dhan Yojana Enterprises (SMEs) to focus on raising funds through
appears equity instead of debt.
to have
stabilised "One of the major problems facing SMEs in our country
after 3 is lack of equity. Equity capital is a much-neglected area
years in the SME sector," Bhattacharya told an SME summit
with 30 and asked them to learn from technology players which
crore beneficiaries and transactions have sourced large amount of equity to ramp up their business and market share.
picking up. Quoting the examples of e-commerce companions like the Flipkart and Amazon,
she said these firms have done wonders with the help of equity.
The total balance in these accounts
stood at Rs.65,697 crore as on August Bank deposit rates to reduce
9. The rural tilt of the scheme comes
Post reduction in savings rates, the Indian Banks may experience improved net
across in the fact that 17.61 crore
interest margins by 15-18 bps. There is no formal
beneficiaries, out of a total of 29.48 indication of corresponding decrease in lending
crore account-holders, hail from rural rates.
and semi-urban branches. The Na-
tional Payments Corporation of India "PSBs, with a stable, large and granular savings de-
(NPCI) has so far issued 22.70 crore posit base, will have additional manoeuvrability
RuPay cards to account-holders. over private peers to cut MCLR. The maximum cut in MCLR for PSBs can be 35
basis points. For private banks, the threshold is 25 basis points. This could inten-
Banks are seeing increasing traction sify competition among large lenders with strong savings deposit franchise and
in these accounts. "We thought the capitalisation towards gaining credit market share," Niyogi said.
spurt in Jan Dhan accounts was driven
SBI has 36 % savings deposits, and Punjab National Bank has 34 %. Private sec-
by demonetisation, and there are al-
tor lenders such as ICICI (35 %), HDFC Bank and Axis (around 30 %) will also
legations that some of them were
used to launder black money. Inves- benefit from the competition.
tigations are on, but the mainte- "All banks with savings deposits of 30 per cent will benefit. But not everyone will
nance of stable balances in these pass it on to their borrowers. For example, SBI has already said that the merger
accounts may disprove this argu- of associate banks has led to 60 to 80 bps erosion in margins and hence they
ment," said a senior executive of SBI. cannot lower lending rates. But lenders like HDFC Bank who wants to gain mar-
ket share especially on the corporate lending side will be more aggressive in
"Regular and healthy" transactions cutting lending rates," said Asutosh Mishra, analyst at Reliance Securities.
are being reported across banks, he
added. According to the NPCI, which
handles the RuPay cards being given Bank Fund is public money: Jaypee Infratech case
to Jan Dhan customers, out of 385 Funds given by banks and financial creditors to developer Jaypee Infratech are
million RuPay cards, 225 million are also public money and cannot be given any less priority than those provided by
of Jan Dhan accounts. other creditors.

"In the past three years, domestic
card usage has taken off, thanks to Online business leads to closure of 762 bank branches
Jan Dhan," says AP Hota, who re- in Britain
cently demitted office as MD and As lenders cut costs by pushing business online, the Banks in Britain are set to
CEO of the NPCI, and who played a close a record 762 branches this year. According to Reuter's analysis, the num-
key role in the implementation of the ber of branches shut or ear marked for closure so far this year is more than the
scheme. 583 closed in 2016.

BANKING FINANCE | OCTOBER | 2017 | 9

Sashi Publications Pvt Ltd Call 8443808873/ 8232083010