Page 7 - Banking Finance April 2016

BANK UPDATE

SBI raises Rs. 3,000 cr from bonds to fund growth Bad loans swells to Rs 4
lakh crore the market
State Bank of India had said that it has means, including public offer and over-
raised Rs. 3,000 crore from bonds to seas issuance of shares, in the next 14 value
fund business growth. months.The funds raised will help the
For every Rs 100 parked in shares of
The bank earlier issued bank meet global risk public sec-
30,000 Basel-III compli- norms, Basel-III, which tor banks,
ant Tier-ll bonds, in the will kick in from March investors
nature of debentures of 2019. carry the
a face value of Rs. 10 burden of
lakh each at par, SBI The committee of direc- Rs 150 as
said in a statement. tors, at a January 15
Bonds with 10 years maturity will give meeting, authorised the bad loans, which have cumulatively
8.45 per cent annually to investors who bank to seek shareholders' approval swollen to Rs 4 lakh crore or 1.5
have subscribed to such bonds on pri- and to write to the Government of times the market value of these
vate placement basis, it said. India and RBI seeking their approval lenders.
for extending the period of approval
Recently, SBI received board approval for raising capital up to Rs. 15,000 In comparison, bad loans of private
to raise Rs. 15,000 crore from various crore till March 2017, SBI had said. sector banks are just about 6.6 per
cent of their total valuation. In case
Finmin to instruct payment banks to open branches in of PSU banks, if loans that face the
risk of being declared NPAs (Non Per-
un-banked areas forming Assets) going ahead are also
taken into account, their overall
The Odisha state government has Ltd, Department of Posts Ltd, Fino stressed advances are estimated to
be almost double at over Rs 8 lakh
urged the Union Finance Ministry to PayTech Ltd, National Securities De- crore. The problem appears less
acute at private sector banks as
instruct payments banks licensed by pository Ltd, Reliance Industries Ltd, their gross NPAs are only about one-
eighth at about Rs 46,000 crore,
the Reserve Bank of In- Dilip Shantilal Sanghvi, which is also, well below their total
market value.
dia (RBI) to set up Vijay Shekhar Sharma,
branches in un-banked Tech Mahindra Ltd and The Reserve Bank has set March
regions in the state. Vodafone m-Pesa Ltd. 2017 as deadline for banks to clean
These payments banks up their balance sheets, forcing them
"The efforts by pay- are mandated to target to promptly disclose NPAs, take re-
ments banks to establish financially excluded customers like mi- medial measures and also make ad-
branches will help supplement the grant workers, low-income households equate provisions in their financial
work being done by public sector and and tiny businesses. statements. The banks have begun
private banks to open brick-and-mortar complying with effect from their lat-
est set of financial results, which are
branches in the un-banked gram At present, out of 6,238 GPs of the for the quarter ended December 31,
panchayats (GPs) of the state", said a state, as many as 4,597 GPs were iden- 2015.
senior government official. tified as un-banked in 2014. The State
Level Bankers Committee (SLBC) has The gross NPAs of banking sector are
The RBI has licensed 11 entities to consequently decided to open a brick- estimated at over 5 per cent of to-
open payments banks -- Aditya Birla and-mortar branch in each of the 4,597 tal loans, while overall stressed as-
Nuvo, Airtel M Commerce Services Ltd, unbanked GPs. sets (including declared and potential
Cholamandalam Distribution Services loans) are at about 11 per cent.

Wilful defaulters owe SBI Rs. 11,700 cr

Loans worth Rs 11,700 crore given by State Bank of India have been locked up
as non-performing assets as nearly 1,160 defaulters have willfully decided not
to repay. The bank had identified 1,164 cases of wilful default with outstanding
loan amount of Rs 11,705 crore, as on September 2015, according to data col-
lated by the Finance Ministry.

BANKING FINANCE | APRIL | 2016 | 7