Page 8 - Banking Finance February 2023

BANK UPDATE

per cent compared to 0.85 per cent at will help in widening the tax base and Their capital adequacy ratio is much
December 31, 2021. plug the leakages, said experts. above the regulatory requirement and
varies between 14-20 per cent. To aug-
There were net additions of Rs 1,119
crore to gross NPAs in Q3 FY23. Recov- Investment banks see fees ment their resources, banks are rais-
ing growth funds from the market and
eries and upgrades of NPAs, excluding
drop to 4-year low also by selling their non-core assets,
write-offs and sale, stood at Rs 4,604
Year 2022 was a tough one for invest- they added.
crore in Q3 FY2023. The gross NPAs
ment banking as total fees generated
written-off were Rs 1,162 crore. The Government last provided capital
in India fell 16% year on year, making
The provisioning coverage ratio on support to banks in 2021-22. It had
it the lowest annual tally since 2018,
NPAs was 82 per cent at December 31, earmarked Rs. 20,000 crore for
data from financial markets tracker
2022. Its total capital adequacy ratio recapitalisation of PSBs through
Refinitiv showed.
was 18.33 per cent and tier-1 capital supplementary demands for grants.
adequacy at 17.58 per cent. India investment banking activities
The Government infused Rs. 3,10,997
generated $989 million in 2022, com-
Total advances increased by 19.7 per crore to recapitalise banks during the
pared to around $1.2 billion in 2021
cent to Rs 9,74,047 crore and depos- last five financial years i.e., from 2016-
and $1.1 billion in 2020.
its rose by 10.3 per cent year-on-year
17 to 2020-21, out of which Rs. 34,997
to Rs 11,22,049 crore at December 31, Fees collected by investment bankers
crore were sourced through budgetary
2022. in 2022 from activities tied to equity
allocation and Rs. 2,76,000 crore
markets more than halved from 2021
through issuance of recapitalisation
Jan Dhan accounts total as the number of initial public offerings
bonds to these banks.
(IPOs), especially in tech, slumped.
balance surge to Rs. 1.80-
Fees for ECMs (equity capital markets)
lakh crore in Dec 2022 underwriting stood at $203 million, Credit card rewards for
The total balance in basic bank ac- down 54% from year ago.
high 'scorers'
counts under Pradhan Mantri Jan Dhan
Analysts note that a rise in tech IPOs Credit cards with rewards are reward-
Yojana (PMJDY) reached Rs. 1.80-lakh
in 2021, including that of Zomato and ing only for those who know how to
crore. As on December 30, 2022, the
Paytm, led to a spike in banker fees in profit from the system, according to a
total balance stood at Rs. 1,80,857
that year, and in comparison, 2022 only paper released by the Federal Reserve.
crore with 47.84 crore beneficiaries.
saw the IPO of tech logistics startup
Out of this, 26.54 crore are women. Consumers with high credit scores ben-
Delhivery. Refinitiv data showed that
efit the most because they tend to
IPOs from Indian issuers raised $7.6
Banks to report every spend more money - thus earning more
billion in 2022, a 55.3% decline from a
rewards such as cash back or miles - and
penny paid as interest to year ago, but the number of IPOs saw
pay on time, according to the study.
a 23.8% year-on-year increase.
depositor
Card holders with lower credit scores
The Income Tax department has noti- overspend to try to earn more points
Govt may not announce
fied that effective January 5, each
and incur higher interest payments
bank, financial institution and post of- capital infusion for PSU stemming from outstanding balances.
fice has to report every rupee of inter-
banks In all, the economists estimate that
est paid to a depositor. "The informa-
about $15.1 billion is transferred annu-
tion is to be reported for all account/ The Government is unlikely to an-
deposit holders where any interest nounce capital infusion for public sec- ally from less to more educated, poorer
exceeds zero per account in the finan- tor banks (PSBs) in the upcoming Bud- to richer, and from areas with a higher
cial year, excluding Jan Dhan ac- get as their financial health has im- percentage of minorities to whiter
counts," said the notification. proved significantly and they are on ones. The results aren't so much driven
The limit earlier was set at Rs. 5,000 track to earn a combined profit of Rs. by income as by the level of financial
per person per financial year. The move 1 lakh crore, sources said. sophistication, they said.
8 | 2023 | FEBRUARY | BANKING FINANCE