Page 6 - Banking Finance September 2022

BANK UPDATE

During 2017-18, the write-off by banks Of the total 12, three lenders State which was billed as the biggest merger
stood at Rs 1,61,328 crore, he said. Bank of India, Punjab National Bank and amalgamation transaction in
and Bank of India -- reported fall in India's corporate history.
In all, he said, bank loans to the tune
their profits ranging from 7-70 per
of Rs 9,91,640 crore have been writ- Post the merger, the combined bal-
cent.
ten off in the last five years-2017-18 to ance sheet will be Rs. 17.87 lakh crore
2021-22. Decline in profit by these lenders has and the net worth of the combined
been attributed to Mark-to-Market entity will be Rs. 3.3 lakh crore as of
Banks want a say in staff (MTM) losses due to hardening bond December 2021.
yields.MTM losses occur when the fi-
vigilance cases
nancial assets held are valued by the
Small towns corner 80%
Banks have reached out to the govern- market at a price lower than the pur-
ment demanding that the Lokpal chase price. home loans
should consult lenders before referring There has been a boom in demand for
vigilance cases against employees to home loans in tier-2 and -3 cities and
Bank's NPA provisioning
investigating agencies like the Central towns due to the hybrid working
falls as recoveries improve
Bureau of Investigation (CBI). model, expansion of MSMEs and
Listed banks continued to report lower
Under the existing provisions, on re- smaller ancillary businesses, besides
provisioning for Non Performing assets
ceipt of a complaint, the Lokpal may the post-pandemic recovery in these
(NPAs) in the June quarter for the sec-
order a preliminary investigation by its locations. Leading housing finance
ond consecutive quarter amid reced-
inquiry wing or refer the case to any companies have recorded 60-80% of
ing stress on assets and sufficient pro-
agency, including the CBI, if it finds a their sanctioned home loans emerging
visioning in the previous quarters. For
prima facie case. from tier-2 and -3 cities during the first
a sample of 29 banks, loan loss provi-
quarter of the current fiscal.
Banks have pointed out that the Advi-
sioning fell by 23.7% year-on-year to Rs
sory Board for Banking and Financial The demand from the southern states
29,185.1 crore in the June quarter with
Frauds (ABBFF) already examines bank is on the higher end. At the same time,
two out of every three banks report-
frauds of 3 crore and above and rec- experts in the real estate sector said
ing lower NPA.
ommends appropriate action. They the recent hike of 50 basis points
want the Lokpal to refer cases to ABBFF (100bps = 1 percentage point) by the
CCI greenlight for merger
rather than initiating a separate in- RBI could affect sentiment of
of HDFC with HDFC Bank
quiry either independently or through homebuyers, causing a short-term im-
other investigative agencies. The mega merger of HDFC Limited, pact in sales.
the country's largest housing finance
Profit of public sector company, with HDFC Bank, the Banks seek higher fees
country's largest private sector bank by
banks up 9.2% to Rs. from NHAI to run FASTag
balance sheet size, moved a step closer
15,306 crore in Q1 towards final closure with the Compe- services
tition Commission of India (CCI) giving
All the 12 public sector banks earned Banks have asked the National High-
its approval for the transaction.
a cumulative profit of about Rs 15,306 ways Authority of India (NHAI) to re-
crore, registering a 9.2 per cent "Commission approves proposed com- vert to higher FASTag project manage-
growth annually, despite poor showing bination involving amalgamation of ment fee (PMF) to ensure its viability
by large lenders like SBI and PNB. HDFC Limited, HDFC Bank, HDFC In- for the issuer bank.
vestments and HDFC Holdings," the
During the April-June period of the pre- In a set of recommendations sent by
CCI said in a tweet.
vious fiscal, state-owned banks re- the Indian Banks' Association (IBA) and
corded a total profit of Rs 14,013 It may be recalled that the Boards of also individually by several private and
crore, according to quarterly numbers HDFC and HDFC Bank had on April 4 state-run banks to the ministry of road
published by public sector lenders. approved a scheme of amalgamation, transport and highways (MoRTH) and

6 | 2022 | SEPTEMBER | BANKING FINANCE