Page 7 - Banking Finance December 2022

BANK UPDATE

37,567 crore net in the year-ago pe- trillion in April, SBI research said in its The union government decided to in-
riod. This is the highest profit recorded latest 'Ecowrap' report. crease the term of wholetime directors
by Indian banks in any quarter. in public sector banks, including MD &
"Even as the banking system has
CEOs, to 10 years, from five years, a
Private banks have collectively re- moved closer to a calibrated liquidity
move aimed to bring in younger talent
ported a profit of Rs 33,165 crore, coupled with higher signaling rates,
in the top position.
which is around 67% more than Rs one thing has still not changed; that is
19,868 crore in the previous year. Pub- credit risk not getting adequately A candidate can be appointed for 5
lic sector banks have reported a com- priced in, even as credit demand is at years initially, which can be extended
bined net of Rs 25,685 crore for Q2, up decadal highs and liquidity remains sig- for another five years, the govern-
50% from Rs 17,123 crore in FY22. nificantly downsized," said the report ment said in a Gazette. This is also
by India's largest lender. applicable for executive directors who
More than half of the profit has been
are also wholetime directors.
generated by SBI, which posted its "A back of envelope estimate suggests
highest quarterly earnings of Rs 13,256 that the core funding cost of the bank-
crore, an increase of 74% over previ- ing system is currently at around 6.2%, Nine Russian banks open
ous year. SBI's record net has made it while the reverse repo rate is at 5.65%.
special vostro accounts for
the most profitable company this quar- No wonder, banks are currently en-
ter on a consolidated basis. The con- gaged in a fierce war to raise depos- Re trade
solidated net profit of SBI at Rs 14,752 its, with rates being offered up to As many as nine special vostro accounts
crore was higher than Reliance Indus- 7.75% in select circumstances," it said. by Russian banks have been opened
tries' Rs 13,656 crore. with two Indian banks after the Re-
RBI Governor Shaktikanta Das said
In the private sector, HDFC Bank re- earlier this year that banks cannot "pe- serve Bank of India (RBI) gave its per-
ported a net profit of Rs 10,605 crore, rennially" rely on the central bank's mission to do so to facilitate settlement
an increase of 20%. ICICI Bank re- money to support credit offtake and of international trade in rupee. It will
ported a profit of Rs 7,758 crore (up they must mobilise their own funds and pave the way for the settlement of
37%), Axis Bank Rs 5,330 crore (70% resources. India's trade with Russia in rupees.
gain) and Kotak Bank Rs 2,581 crore Commerce Secretary Sunil Barthwal
(27% increase). said: "Nine accounts have been
10 Executive Directors ap-
opened. One in UCO Bank, one in
pointed at PSBs
Banks not pricing in credit Sberbank, one in VTB and 6 with
Days after the government increased IndusInd Bank."
risk fairly: SBI report
the tenure of whole-time directors in
Russia top two banks-Sberbank and
Banks are not adequately pricing in
public sector banks to 10 years, ten
VTB Bank -have emerged as the first
credit risk as the liquidity condition
executive directors have been ap-
foreign lenders to receive the approval.
tightens and interest rates remain
pointed to public sector banks for a
Russia's Gazprom, which does not have
high, said State Bank of India in a re-
three-year period, subject to a review
its branches in India, has also opened
search report.
after two years.
this account with state-run UCo Bank.
Over the last few months, the Reserve
These are: Lalit Tyagi (Bank of Baroda),
"We want to promote rupee trade
Bank of India (RBI) has front-loaded
Binod Kumar (Punjab National Bank),
because that is in the nation's interest.
rate hikes and calibrated excess liquid-
Ashok Chandra (Canara Bank),
We would also not be looking unnec-
ity in the banking system as it seeks to
Ramasubramanian (Union Bank),
rein in elevated inflation. essarily for dollars. To the extent, ru-
Mahesh Bajaj (Indian Bank), M
pee trade is possible, we will go for it,"
While the liquidity conditions have Paramasivan (PNB), Subrat Kumar
Barthwal told reporters here.
eased in November on the back of the (Bank of India), Malladi Venkat Murali
The RBI had in July notified the new
government accelerating spending, Krishna (Central Bank of India),
mechanism to settle international
the average net durable liquidity in- Rahendra Saboo (UCO Bank), and
trade in rupees to reduce the depre-
jected into the banking system has Sanjay Mudaliyar (Indian Overseas
ciation of the rupee against the dollar.
dropped to Rs 3 trillion from Rs 8.3 Bank).
BANKING FINANCE | DECEMBER | 2022 | 7