Page 9 - Banking Finance September 2021

BANK UPDATE

State bank of india gives the lines of small finance banks (SFBs) The recent banking regulation amend-
and universal banks, a Reserve Bank of ment has empowered RBI to declare
special offers India (RBI)-appointed expert panel said certain securities issued by urban co-
There will be no processing fees in a report. The committee under the operative banks under the Securities
charged on personal and pension loan chairmanship of former RBI deputy Contract Regulation Act to facilitate
customers. State Bank of India an- governor N.S. Vishwanathan proposed listing and trading in recognized stock
nounced concessional interest rates, a four-tier structure for urban coopera- exchanges. The committee has recom-
waiver of processing charges on loans tive banks or UCBs based on the size mended that until such time, RBI may
and higher deposit rates on specific of deposits and capital availability, consider allowing banks in tier-3 and
tenures to commemorate India's 75th among other factors. tier-4 cities with the necessary technol-
Independence day.
In its report, the committee said tier- ogy and wherewithal to issue shares at
SBI said it will waive processing fees 3 urban cooperative banks with depos- a premium to people residing in their
for its car loan customers, and has of- its of Rs. 1,000 crore to Rs. 10,000 areas of operation, subject to certain
fered up to 90% on-road financing for crore must function like SFBs if they conditions.
their car loans. Customers applying meet a capital adequacy ratio of 15%.
fora car loan through the bank's YONO The loan portfolio of tier-3 urban co-
app will get a special interest conces- operative banks shall conform to the HDFC Bank net profit rises
sion of 25 basis points (bps). YONO us- stipulations made for SFBs, it added. 16%
ers can avail car loans at an interest
Tier-4 UCBs with deposits of over Rs. HDFC Bank reported a lower-than-ex-
rate starting at 7.5 per cent per an- 10,000 crore should be allowed to func- pected net profit of Rs 7,729.6 crore
num, the bank said.
tion like universal banks if they meet for the quarter ended June 2021, an
Customers looking for gold loans will the 9% capital adequacy ratio require- increase of 16.1% over the correspond-
get a 75 basis point reduction in the ment, leverage ratio and has a fit and ing quarter last year. The bank re-
interest rates at 7.50%. One basis proper board and chief executive. The corded a net profit of Rs 6,658 crore
points is 0.01 percentage point. No urban cooperative banks will have op- in the corresponding quarter last year
processing fees will be charged for cus- erational freedom for branch expan- and Rs 8,186 crore for the quarter
tomers applying for gold loans through sion and authorized dealer licence on ended March 2021.
The bank had announced a waiver on a par with universal banks.
processing fees on home loans till Profits were constrained by a 23% rise
Smaller UCBs with deposits of up to Rs. in provisions to Rs 4,803 crore from Rs
August 31, 2021. Its home loan starts 100 crore will be categorized as tier-1 3,891 crore in the corresponding quar-
at 6.70% per annum. UCBs and those with deposits of Rs.
ter last year. The ratio of gross non-
There will be no processing fees 100-1,000 crore will be categorized as performing assets (bad loans) to gross
charged on personal and pension loan tier-2 UCBs. advances rose to 1.47% from 1.36% a
customers. The committee also proposed the set- year ago. Speaking at the bank's an-
Frontline healthcare workers will get a ting up of an umbrella organization nual general meeting, Atanu
50 basis point concession on personal (UO) with a minimum capital of Rs. 300 Chakraborty, chairman, HDFC Bank,
loans, which will soon be available for crore and a regulatory framework simi- said the pandemic has induced general
application under car and gold loans as lar to non-banking financial compa- risk aversion which has translated into
nies. "In the long run, the UO may take
well. lower spending.
up the role of a self-regulatory organi-
RBI panel bats for treating zation for smaller UCBs, where the UO On the RBI action against the bank for
could run an independent audit/inspec- not being able to fix glitches in
UCBs as SFBs tion and supervisory division that may its online services, Chakraborty said

Large urban cooperative banks (UCBs) conduct both offsite and onsite super- they have taken the action in the right
should be allowed to function along vision," it said. spirit. T

BANKING FINANCE | SEPTEMBER | 2021 | 9