Page 11 - Banking Finance June 2020

RBI CORNER

spective of whether they lend through chinery within the organisation. "ARCs of India (SBI), and a lender to Altico,
their own digital lending platform or shall keep the information about assets had said last September that if any
through an outsourced lending plat- they acquire strictly confidential and bank makes a "selfish move", it can
form, must adhere to the Fair Practices shall not disclose the same to anyone have a negative impact on the rest of
Code guidelines in letter and spirit." including other companies," RBI said. the system. "You have taken care of
Besides, it added, the banks and NBFCs the Rs. 50-100 crore (exposure), and
must also meticulously follow regula- RBI directs HDFC Bank to felt happy for saving your money, but
tory instructions on outsourcing of fi- if you are damaging the system, then
nancial services and IT services. return Rs. 210 crore to it is not proper," Kumar had said, with-
Mashreq Bank out naming the private sector bank,
RBI tells ARCs to follow RBI has asked HDFC Bank to return Rs. according to PTI.
uniform standards 210 crore to Dubai-based Mashreq RBI approves reappoint-
Bank, which was debited from non-
The Reserve Bank of India has told as- bank lender Altico Capital's account
set reconstruction companies (ARCs) to ment of Shyam Srinivasan
last year to net off its loans, according
follow uniform standards while buying to sources. as Federal Bank MD & CEO
bad loans from banks and to avoid co- RBI has approved the reappointment
ercive practices during recovery of In September 2019, the Indian private of Shyam Srinivasan as the MD & CEO
loans from borrowers. The banking sector lender had debited a part of the of the Federal Bank, w.e.f. September
regulator directed these entities to put money raised by Altico through an ex- 23, 2020 (the completion of the
fair practices code (FPC) in place to ternal commercial borrowing (ECB) present term of office) till September
ensure transparency. This is "in order from Mashreq Bank. These ECB funds 22, 2021.
to achieve the highest standards of were parked by Altico in HDFC Bank.
transparency and fairness in dealing The private lender's action was In a corporate filing, the bank men-
tioned, "As required under Regulation 30
with stakeholders", RBI said Thursday prompted by initial signs of stress at of SEBI (Listing Obligations and Disclo-
in a note to ARCs. the company. Its long-term and short- sure Requirements Regulations, 2015),
The fair practice should be approved by term issuer ratings were subsequently we wish to inform you that the approval
their respective boards. The regulator downgraded by rating agency India from Reserve Bank of India has been
suggested that they should publicly in- Ratings on 3 September from AA- to received on July 16, 2020 for the reap-
vite participation in auction of bad A+, and from A1+ to A1, respectively. pointment of Mr. Shyam Srinivasan as
loans to ensure maximum buyers while "The revision takes into account the the MD & CEO of the Bank, w.e.f. Sep-
the terms of such sale should be de- continued pressure on the real estate tember 23, 2020 (the completion of the
cided after consulting with investors in sector, which has resulted in a weak- present term of office) till September 22,
the security receipts as per SARFAESI ened operating environment for the 2021 alongwith remuneration as pro-
Act 2002. construction lending business; the posed by the Bank."
ARCs are told to release all securities on stretched working capital cycle for real Federal Bank announced its unaudited
repayment of dues or on realisation of estate borrowers causing volatile de- financial results for the quarter ended
the outstanding amount of loan, subject linquencies, tighter funding, resulting June 30, on Wednesday. The bank's net
to any legitimate right or lien for any in wider spreads, and diluted on-bal- profit rose 4.3% to ?401 crore year on
other claim they may have against the ance sheet liquidity buffers," the rat- year and 33% quarter on quarter.
borrower. "ARCs shall not resort to ha- ing agency had said.
The bank's net interest income rose
rassment of the debtor. ARCs shall en- Following this, Altico Capital was unable
sure that the staff are adequately to pay close to Rs. 20 crore in interest 12.3% Y-O-Y to Rs. 1,296 crore in quar-
trained to deal with customers in an ap- to Mashreq Bank, leading to a series of ter ended June 2020 over Rs. 1,154
propriate manner," RBI said. defaults and the company's lenders get- crore in the same quarter last year.
Other income grew 24.7% YoY to Rs.
RBI is also of the view that these rms ting into a huddle to resolve the stress. 488.37 crore for Q12020 against Rs.
should form grievance redressal ma- Rajnish Kumar, chairman, State Bank 391.52 crore for the Q1 2019. T

BANKING FINANCE | JUNE | 2020 | 11