PSBS

psbs-remain-government-captives

PSBs remain government captives

Structural problems of the PSBs, most of them imposed by the government and its system of political governance, has incrementally increased the government shares in 12 PSBs even as it has been seen trying really hard to offload its shares.
For instance, the huge recap infusion of Rs2.6-lakh crore into the PSBs over the past three years - to offset their bad loans - has sharply accelerated government holdings in these banks which could, in turn, limit the size of future capital infusion in certain banks. Of the 12 PSBs, the government holds 92-96 percent in four of them and 83-89 percent in five banks.
Of course, the government would like to offload its shares in PSBs. But the problem is there are very few takers for shares of PSBs despite cheap valuations of 0.4-0.6 times book. The only way investors' appetite in the shares of PSBs can be whetted up is by way of withdrawing the government's socialist hands from the functioning of these banks and driving them towards following the best global banking practices.
Once this transition takes place, investors would be glad to chase PSBs shares and enable the government to recover its cost plus profit. 

16 Sep 2020
dfs-asks-psbs-to-defer-avoidable-expenditure-in-view-of-covid-19

DFS asks PSBs to defer avoidable expenditure in view of COVID-19

The government has asked Public Sector Banks to defer avoidable expenditure including the purchase of staff cars and refurbishment of guest houses for more productive utilization of financial resources amid coronavirus pandemic.

Department of Financial Services (DFS) has issued a detailed advisory to heads of all PSBs saying it was necessary that banks take appropriate actions to ensure productive use of their financial resources for core business activities. The advisory comes against the backdrop of PNB recently purchasing three Audi cars worth over Rs 1.30 crore for travel of its top executives.

Banks are advised to defer avoidable expenditure beyond the current financial year, including the purchase of staff cars, except where unavoidable. DFS has also directed banks to postpone expenditure on decorative, non-functional items for the interiors in non-customer facing premises like administrative offices and back offices and refurbishment of guest houses.

Further, banks have been asked to effect a significant reduction in expenditure on activities other than those pertaining to core business activities. Besides, DFS has directed banks to avoid travel and adopt digital means of communication as well as make effective use of locally available administrative officers.

DFS, which comes under the finance ministry, has asked banks to place the advisory before their respective boards and issue appropriate instructions internally. In addition, DFS has directed banks for revision of entitlements and perquisites such as entitlements to fixed assets like vehicles and furniture and lease/ rent amounts admissible for hired residential accommodations.

18 Jun 2020
psbs-remain-government-captives

PSBs remain government captives

By IndianMandarins 16 Sep 2020

Structural problems of the PSBs, most of them imposed by the government and its system of political governance, has incrementally increased the government shares in 12 PSBs even as it has been seen trying really hard to offload its shares.
For instance, the huge recap infusion of Rs2.6-lakh crore into the PSBs over the past three years - to offset their bad loans - has sharply accelerated government holdings in these banks which could, in turn, limit the size of future capital infusion in certain banks. Of the 12 PSBs, the government holds 92-96 percent in four of them and 83-89 percent in five banks.
Of course, the government would like to offload its shares in PSBs. But the problem is there are very few takers for shares of PSBs despite cheap valuations of 0.4-0.6 times book. The only way investors' appetite in the shares of PSBs can be whetted up is by way of withdrawing the government's socialist hands from the functioning of these banks and driving them towards following the best global banking practices.
Once this transition takes place, investors would be glad to chase PSBs shares and enable the government to recover its cost plus profit. 

dfs-asks-psbs-to-defer-avoidable-expenditure-in-view-of-covid-19

DFS asks PSBs to defer avoidable expenditure in view of COVID-19

By IndianMandarins 18 Jun 2020

The government has asked Public Sector Banks to defer avoidable expenditure including the purchase of staff cars and refurbishment of guest houses for more productive utilization of financial resources amid coronavirus pandemic.

Department of Financial Services (DFS) has issued a detailed advisory to heads of all PSBs saying it was necessary that banks take appropriate actions to ensure productive use of their financial resources for core business activities. The advisory comes against the backdrop of PNB recently purchasing three Audi cars worth over Rs 1.30 crore for travel of its top executives.

Banks are advised to defer avoidable expenditure beyond the current financial year, including the purchase of staff cars, except where unavoidable. DFS has also directed banks to postpone expenditure on decorative, non-functional items for the interiors in non-customer facing premises like administrative offices and back offices and refurbishment of guest houses.

Further, banks have been asked to effect a significant reduction in expenditure on activities other than those pertaining to core business activities. Besides, DFS has directed banks to avoid travel and adopt digital means of communication as well as make effective use of locally available administrative officers.

DFS, which comes under the finance ministry, has asked banks to place the advisory before their respective boards and issue appropriate instructions internally. In addition, DFS has directed banks for revision of entitlements and perquisites such as entitlements to fixed assets like vehicles and furniture and lease/ rent amounts admissible for hired residential accommodations.

merger-of-10-psbs-into-four-likely-today!

Merger of 10 PSBs into four likely today!

By IndianMandarins 05 Feb 2020

The government is likely to give go ahead to the merger plan of 10 public sector banks (PSBs) into four. The scheme for amalgamation is likely today. Union Cabinet led by Prime Minister Narendra Modi will have the cabinet meet on February 5 and is expected to approve merger of these PSBs. As per the scheme which has been put up before the Cabinet for its approval, the merger of the balance sheets will be completed by April 1, 2020.

Boards of all 10 PSBs will meet to approve the swap ratios afterwards. The merger scheme will have provisions to safeguard interests and rights of workers in these banks. This will be the biggest merger exercise of PSBs, which was announced by Finance Minister Nirmala Sitharaman in August 2019.

sekar-is-md-&-ceo,-iob;-others-appointed-osd-and-ed-in-psbs

Sekar is MD & CEO, IOB; others appointed OSD and ED in PSBs

By IndianMandarins 10 Apr 2019

The NaMo administration on Tuesday announced the appointment of Karnam Sekar  appointed MD & CEO of Indian Overseas Bank ( w.e.f. 01 July 2019) till his retirement on 30 June 2020. Presently, Karnam is MD & CEO of Dena Bank. He is considered OSD and Whole-time Director in IOB beginning 01 April 2019. Further, R A Sankara Narayan (MD & CEO, Vijaya Bank) was appointed to the post of MD & CEO in Canara Bank till his retirement  on 31 January 2021.

 

In addition, appointments of OSDs and EDs were also cleared in various public-sector banks. Accordingly;

  • Dr Rajesh Kumar Yaduvanshi (ED, Dena Bank) appointed Executive Director in Punjab National Bank for a period ending 01 April 2020. He will retire in June 2021.
  • Nageswara Rao Y (ED, Vijaya Bank) appointed OSD and Whole-time Director in Syndicate Bank till his retirement in January 2021.
  • Murali Ramaswami (ED, Vijaya Bank) appointed Executive Director in Bank of Baroda w.e.f 01 October 2019 till his retirement on 31 December 2020. He would function as OSD till 30 September 2019.

interviews-for-appointment-of-heads-of-nhb-and-iifcl-today

Interviews for appointment of heads of NHB and IIFCL today

By IndianMandarins 25 Mar 2019

Interviews for the appointment of heads of India Infrastructure Finance Company (IIFCL) and National Housing Bank (NHB) are scheduled to be held on Monday - that is today. Both have been headless for a long time.

 

The Department of Financial Services (DFS) is learned to have shortlisted five candidates for IIFCL and 12 candidates for the post of managing director of NHB. The interview panel comprises the Financial Services Secretary, Department of Personnel and Training Secretary and some external members.

 

According to the public notice issued by the DFS, the candidate should have at least 25 years of experience as on the date of the vacancy in different verticals in commercial banks or financial institution. Of this, two years of experience should be either at the board level or GM in nationalized banks or CGM in IFCI, SIDBI, IIFCL, Exim Bank, SBI or RBI.

 

According to the notice, even officers serving as joint secretary or above in the Government of India or at an equivalent in the state government with 2 years long experience in the field of commercial or industrial finance are eligible.

 

The appointment will be initially for 3 years and may be extended by up to 2 years based on performance.

 

It may be recalled that candidates were interviewed in 2017 for the post of managing director (MD) IIFCL but none was selected.

 

So, the Department of Financial Services (DFS) invited fresh applications in August last year. In total, the infrastructure lender has been without a regular MD for the past 20 months.

 

The housing finance regulator NHB became headless in August last year following the resignation of Sriram Kalyanaraman amid allegations of irregularities and misconduct against him.

cvc-smells-rat-in-sale-of-stressed-assets-of-psbs

CVC smells rat in sale of stressed assets of PSBs

By IndianMandarins 19 Mar 2019

The Central Vigilance Commission (CVC) has drawn the government's attention to several irregularities in the transactions involving the sale of PSBs' non-performing loan accounts to Asset Reconstruction Companies (ARCs). 

 

This has prompted the department of financial services to write to all PSBs, asking them to analyze all accounts of over Rs 50 crore and initiate action after examining accountability of executives and lodge complaints with law enforcement agencies.

 

“Instances have come to the notice of the commission, wherein prudence has not been observed while taking a decision on the sale of the stressed asset to ARCs. Irregularities have been noticed in estimating the value of underlying securities (which) is much higher than the value at which the assets were sold to ARCs, post-sale realization from assets, management fees and expenses charged by ARCs, etc,” the CVC said after an analysis of 302 cases of over Rs 50 crore from 2014-15 to 2017-18.

 

In at least 48 cases, assets were sold to ARCs below the realizable value of securities that the borrower had given as security at the time of availing of the loan. In several cases, banks were found to be fixing the reserve price without factoring in the accrued interest, resulting in banks having to take a deeper haircut, the CVC said in its report to the government.

 

It also said that in case of companies that are sold as a “going concern”, the primary value of stocks and equipment were not factored in, while fixing the reserve price.

 

Similarly, in 55 cases, assets were sold within a year of the date of the account turning into a non-performing asset (NPA), without banks initiating recovery action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act.

 

In all, 22 irregularities and gaps in regulations have been pointed out by the vigilance body, prompting the government to swing into action.

rbi-fines-several-banks

RBI fines several banks

By IndianMandarins 06 Mar 2019

The Reserve Bank of India has fined two public sector banks for non-compliance of directions on Swift messaging software. On Tuesday, Bank of Baroda was slapped a Rs 4 crore penalty and Canara Bank Rs 2 crore for delayed implementation of the Swift related operational controls.

 

Swift is the global messaging software used for transactions by the financial entities. It may be noted that the huge Rs 14,000 crore fraud at the Punjab National Bank was a case of misuse of this messaging software. Post the PNB fraud, which came to light in February 2018, the RBI has been tough on banks to tighten all kinds of transactions. The RBI had asked banks to take time-bound measures to strengthen internal controls to avoid fraud transaction.

 

Earlier today, the apex bank slapped Rs 1 crore fine on private sector lenders ICICI Bank and Yes Bank for non-compliance of directions on Swift.

Allahabad Bank was fined for non-compliance of RBI directions dated February 20, 2018, pertaining to the reconciliation of Nostro on a real-time basis with immediate effect, as per a BSE filing.

 

On Monday, the RBI had slapped a total monetary fine of Rs 8 crore on three banks- Karnataka Bank, United Bank of India and Karur Vysya Bank for not complying with the directions related to Swift.

 

Earlier on Saturday, four banks - State Bank of India (SBI), Union Bank of India, Dena Bank and IDBI - had informed stock exchanges about monetary penalty slapped on them by the RBI for non-compliance with various directions. A fine of Rs 3 crore was imposed on Union Bank, Rs 2 crore on Dena Bank, and Rs 1 crore each on IDBI and the SBI.

four-directors-re-nominated-for-psbs

Four directors re-nominated for PSBs

By IndianMandarins 02 Mar 2019

The NaMo administration, on Friday, announced the re-nomination of four Non-Official Directors on the Board of Directors of banks as follows:-

  1. Dr Archana Ravindrarai Dholakia- Bank of Maharashtra
  2. Prof. (Dr) Radha R Sharma- Allahabad Bank
  3. Amit Chatterjee- UCO Bank
  4. M Bhagwantha Rao- Corporation Bank

free stat counter