Page 8 - Banking Finance December 2024

BANK UPDATE

from 23.3% at the end of September
Microfinance institutions should refrain from reck- 2023.
less lending: DFS Secretary

Microfinance institutions (MFIs) have played a crucial role in fostering fi- Bank deposits perk up as
nancial inclusion but they should refrain from any reckless lending, Financial mobilisation drive bears
Services Secretary M. Nagaraju said.
fruit, outstrip credit off
"We should all be careful on this. Any reckless or poor underwriting norms
regarding lending to Self Help Groups (SHGs) or Joint Liability Groups (JLGs) take
will only harm the sector," he said at an event organised by Sa-Dhan here. Banks' deposit mobilisation efforts, in-

Anything that will impact their capacity to repay back will actually harm cluding by offering higher interest rate
MFIs, he said. on 12 years tenor, seem to be bearing
fruit, going by the latest RBI data on
"So, we should be very careful in what we lend, when we lend and how we
lend because their financial literacy is limited their exposure to the outside scheduled banks' statement of position
world is limited. We should not capitalize on that. We should actually try to in India.
empower them, provide the needed finance and also ensure hand holding In the reporting fortnight ended Octo-
so that they flourish," he said. ber 4, 2024, banks' deposit
mobilisation outstripped credit off take
Terming it as a "high quality loan tember quarter on increase in delin- by a wide margin.
book", the statement from Kotak quency. It is after a few quarters that deposit
Mahindra Bank said the deal aligns The pure-play credit card company, growth has decisively outpaced credit
with its strategy to "transform for scale promoted by the country's largest growth. This could also help correct
and focus on customer centric lender State Bank of India (SBI), had the high credit deposit ratio in the
growth" and will help drive its retail reported a net profit of Rs 603 crore banking system. All scheduled banks
assets growth.
in the previous quarter a year earlier. mopped up deposits aggregating Rs.
"The high-quality loan book from Stan- However, the total income in the sec- 4,20,217 crore against a credit off take
dard Chartered Bank allows KMB to ond quarter of the current fiscal year of Rs. 1,75,363 crore in the reporting
build on its strength in the affluent rose 8% to Rs 4,556 crore, from Rs fortnight.
customer segment and further rein- 4,221 crore a year ago, SBI Card said Fitch Ratings' officials, in a report,
forces its leadership in the retail lend- in a regulatory filing. The interest in- opined that a widening of the deposi-
ing space," the statement said. come grew 20% to Rs 2,290 crore, tor base from the top 15 urban centres
The deal comes around two years af- while income from other sources de- could augment inflows and support
ter StanC's peer Citi sold its entire re- clined 2% to Rs 2,131 crore. There was banks' deposit retention.
tail business to Kotak's larger rival Axis slight deterioration in the company's
Bank. asset quality with the gross non-per- In response to the cumulative policy
forming assets rising to 3.27% of the repo rate hike of 250 basis points (bps)
Kotak Mahindra Bank was slapped
gross advances as of September, from since May 2022, the weighted average
with regulatory restrictions, which dis- 2.43% a year earlier. domestic term deposit rate (WADTDR)
allow it from on boarding any cus- on fresh and outstanding deposits of
tomer through the online and mobile Net NPAs (bad loans) also rose to Scheduled Commercial
banking channels. 1.19% from 0.89% in the correspond-
ing quarter of the previous year. Im- Banks (SCBs) increased by 243 bps and
SBI Card Q2 profit down pairment losses and bad debts ex- 190 bps, respectively, during May 2022
penses increased 63% to Rs 1,212 to August 2024. Simultaneously, the
33 pc to Rs 404 crore crore in the September quarter as weighted average lending rates

SBI Cards and Payment Services Ltd compared to Rs 742 crore a year ear- (WALRs) on fresh and outstanding ru-
(SBI Card) reported a 33% decline in lier, it said. On capital adequacy, the pee loans of SCBs have increased by
net profit to Rs 404 crore for the Sep- company said the ratio fell to 22.1% 190 bps and 119 bps, respectively.

8 | 2024 | DECEMBER | BANKING FINANCE