Page 7 - Banking Finance April 2023

BANK UPDATE

Biden vows to protect US PSBs gross NPA dips to "Doing so will immediately halt the
exodus of deposits from smaller banks,
bank deposits 5.53%; profits at Rs. 70K cr
stabilize the banking sector and
President Joe Biden vowed to hold in FY23 greatly reduce chances of more bank
"fully accountable" the people respon- failures," the Mid-Size Bank Coalition
The government has taken various re-
sible for the failure of Silicon Valley of America said in a letter to regula-
forms following which asset quality of
Bank and a second financial institution, tors seen by Bloomberg News.
public sector banks has improved sig-
Signature Bank, as he sought to reas-
nificantly with gross NPA ratio declin- The collapse this month of Silicon Val-
sure Americans their deposits are safe.
ing from the peak of 14.6 per cent in ley Bank and Signature Bank prompted
"I am firmly committed to holding March 2018 to 5.53 per cent in Decem-
a flood of deposits out of regional lend-
those responsible for this mess fully ber 2022, Parliament was informed. ers and into the nation's largest banks,
accountable and to continuing our ef-
All PSBs are in profit with aggregate including JPMorgan Chase & Co. and
forts to strengthen oversight and regu-
profit being Rs. 66,543 crore in 2021- Bank of America Corp. Customers
lation of larger banks so that we are
22, and that further increased to Rs. spooked by the bank failures were tak-
not in this position again," Biden said
70,167 crore in first nine months of ing refuge in firms seen as too big to fail.
in a statement.
current financial year, Minister of State
for Finance Bhagwat K Karad said in a E-rupee worth over Rs. 130
Swiss bank UBS eyes
written reply to Lok Sabha.
crore in circulation: FM
Credit Suisse takeover
U.S. authorities are working with Swiss NRI deposit inflows more Digital or e-rupee worth over Rs 130
crore is in circulation as of February
counterparts to broker a deal for UBS
than double
28, according to Finance Minister
AG to buy all or part of Credit Suisse
Continuing rupee fall and higher inter- Nirmala Sitharaman. On November 1,
Group AG, Bloomberg News reported
est rate have seen NRI deposits nearly
citing people familiar with the matter. 2022, the Reserve Bank of India (RBI)
doubling in the first eight months of
launched pilots in digital rupee in the
U.S. officials might seek to weigh in on 2012-13 to USD 11.24 billion from USD
wholesale segment (e-Rs.) and in the
matters which can impact the finals 6.39 billion a year ago, according to the
retail segment (e-Rs.) on December 1,
terms of the deal between the banks, Reserve Bank data.
2022.
according to the report.
However, the non-resident (ordinary)
State Bank of India, Bank of Baroda,
An official at the Federal Reserve de- rupee accounts and foreign currency
Union Bank of India, HDFC Bank, ICICI
clined to comment on the report, while nonresident accounts saw an outflow
Bank, Kotak Mahindra Bank, Yes Bank,
the Treasury Department did not im- this year as against an inflow last year,
IDFC First Bank, and HSBC are among
mediately respond to a Reuters re- according to the central bank data.
the nine institutions participating in
quest for comment. UBS is mulling a
It can be noted that the rupee had hit the digital rupee wholesale trial, ac-
takeover of its embattled Swiss peer,
an all-time low of 57.32 to the dollar cording to Sitharaman.
sources have told Reuters. The plan
on June 14. However, the rupee ended
could see the Swiss government offer “As on February 28, 2023, the total
at 54.76 to the dollar, which is 4.67 per
a guarantee against the risks involved, digital rupee – Retail (e-Rs.) and digi-
cent stronger from its all-time low.
while Credit Suisse's Swiss business tal rupee – wholesale (e-Rs.) in circu-
could be spun off. lation is Rs 4.14 crore and Rs 126.27
US banks ask FDIC to in-
crore, respectively,” Sitharaman said in
U.S. and European banking executives
sure all deposits for two a written reply in the Lok Sabha.
and regulators have taken measures to
shore up the industry to restore confi- years The e-Rs. is a digital token that func-
dence. The Biden administration has A coalition of midsize US banks asked tions as legal tender. It will be released
moved to backstop consumer deposits federal regulators to extend FDIC in- in the same denominations as paper
while the Swiss central bank loaned surance to all deposits for the next two cash and coins are now. It is distributed
billions to Credit Suisse to stabilize its years, arguing the guarantee is needed via financial intermediaries, such as
shaky balance sheet. to avoid a wider run on the banks. banks.
BANKING FINANCE | APRIL | 2023 | 7