Page 6 - Banking Finance July 2021

BANK UPDATE

of India, mentioned it'll velocity up an impressive turnaround with a strong employees have died during the two
funds. "As IMPS, NEFT and RTGS are net profit in the pandemic-hit FY21 waves of covid-19 and now the lack of
shifting into real-time funds, NACH after suffering losses for six years in a clarity on jobs is quite frustrating, he
being accessible on all days will assist row. Indian Overseas Bank (IOB) said.
staff get salaries on time, sooner and reported a net profit of Rs. 831 crore
Others said that privatization would be
even on weekends," he mentioned. in FY21 against a net loss of Rs. 8,527
unfair to those who joined these banks
crore in FY20, on the back of strong considering the benefits of being in the
Karnataka Bank reports operating profit that stood at Rs. public sector. Changing the structure of
frauds of Rs. 160.35 cr 5,896 crore against Rs. 3,534 crore, these institutions, they said, would
aided by higher noninterest income, make it difficult for many to adjust to.
Karnataka Bank Ltd has informed the which was at Rs. 5,559 crore (Rs.
BSE that it has reported to the Reserve 3,306 crore). "Many employees are worried that
Bank of India frauds in the credit even if there is no direct
facilities extended to two listed retrenchment, there might be large
companies. The total amount of fraud PSU Bank staff seek job voluntary retirement schemes,
reported in these two credit facilities security assurance after pushing people to leave," said Devidas
stood at Rs. 160.35 crore. Tuljapurkar, convener of the United
privatization
The bank said both these accounts The proposed privatization of PSU Forum of Bank Unions (UFBU), an
were classified as NPA (non-performing lenders has cast a fear in bank umbrella body of nine bank unions.
asset), and have been fully provided employees who fear loss of jobs and Tuljapurkar believes that attempts
for. "As such, there is no impact on the could also be made to outsource
financials of the bank going forward," pensions, with unions vowing indefinite several jobs, leading to retrenchment
it said. An outstanding amount of Rs. strikes to counter any adverse in clerical roles. "While officers might
138.41 crore has been treated as announcement. People who joined not bear the brunt of such measures,
fraud in the case of Reliance government-owned banks with job clerical jobs are at great risk if
Commercial Finance Ltd, and 100 per security in mind believe that while privatization is implemented," he said.
cent provision has been made. The mergers largely did not lead to job
percentage of bank's share in the losses, privatization will.
multiple banking arrangement was Union finance minister Nirmala Union Bank of India raises
1.98 per cent. There were 22 lenders Sitharaman announced in the FY22 Rs 850 crore through
under multiple banking arrangement in Union budget that the government will bonds
this case. It said the company was reduce its stake in two public sector
dealing with the bank since 2014. banks apart from IDBI Bank. To be Union Bank of India has raised Rs 850
crore by issuing Basel-III-compliant
In the case of Reliance Home Finance sure, she said in March that bonds on a private placement basis.
Ltd, an outstanding amount of privatization would not hurt the
Rs.21.94 crore has been treated as interests of employees. The bank has allotted Basel-III-
fraud, and 100 per cent provision has Though the government has not compliant tier-II bonds, which are in
been made. The percentage of bank's named any bank yet for privatization, the nature of debentures eligible for
share in the multiple banking various news reports have pointed to inclusion in tier-II capital, aggregating
arrangement was 0.39 per cent. There Central Bank of India, Indian Overseas to Rs 850 crore, Union Bank of India
were 24 lenders under multiple banking Bank, and Bank of Maharashtra as (UBI) said in a regulatory filing.
arrangement in this case. It said the likely candidates. The tenor of the bond is 10 years and
company was dealing with the bank it has a coupon rate of 7.19 per cent
"We are not sure about what is
since 2015. per annum.
happening. I have a colleague who left
Indian Overseas Bank a cushy job to come work at the bank The lender said there is a call option
and is now worried about losing his on the bonds which can be applicable
posts profit in FY21 job," said a banker at one of the three on or after the fifth year from the date

Indian Overseas Bank (IOB) has staged lenders mentioned above. Several bank of allotment (June 24, 2021).

6 | 2021 | JULY | BANKING FINANCE