State-owned banks need Rs 2 trillion in capital over next two years: Moody’s

Public sector banks (PSBs), which have already had weak capital buffers, will need at least $25 billion in funding from external sources as the economic slowdown will hurt asset quality and drive up credit costs, said Moody’s Investors Service. The Week

A look at Chinese central bank’s growing India footprint

In the backdrop of an anti-China sentiment festering in Indian markets, an unfazed People’s Bank of China (PBOC) has been steadily adding to its India tally. The Chinese central bank followed up its March stake buy in HDFC with another fresh purchase — this time in ICICI Bank’s qualified institutional placement (QIP).
Economic Times

Loans worth Rs 8.4 lakh crore may enter recast scheme: Report

Loans worth Rs 8,40,000 crore, or 7.7 per cent of the total bank credit, of corporates and non-corporates, including retail, agri, micro, small and medium enterprises segments, are likely to get restructured under the Reserve Bank of India’s proposed loan restructuring scheme to bring down Covid-related stress, according to an India Ratings report. Indian Express

Pawar bats for cooperative banks

NCP  chief Sharad Pawar has strongly opposed the Centre’s move to amend the Banking Regulation Act, which will enable the Reserve Bank of India to convert urban cooperative banks into private banks. He said, the Union government had promulgated an ordinance in last week of June even though the amendment bill to the Banking Regulation Act was tabled in Lok Sabha in March this year and could not be discussed because of Covid-19. Times of India  

RBI to pay Rs 57,128 crore dividend to Modi government

The Reserve Bank of India board on Friday approved a dividend payout of Rs 57,128 crore to the government. Rs 1.76 lakh crore transferred last year, which included Rs 1.23 lakh crore as dividend and Rs 52,637 crore excess provisions identified as per the revised Economic Capital Framework (ECF). Inventiva

Modi government’s plan to boost economy by squeezing more loans out of banks ignores an old lesson

Between March 1 and May 8, public sector banks in India sanctioned loans worth Rs 5.96-lakh crore ($79 billion), according to finance minister Nirmala Sitharaman. A combination of easy availability of capital and government intervention has had a disastrous outcome for public sector banks in the past. The consequence of the push to stoke economic growth at the cost of banks’ health has held to the accumulation of non-performing assets in this decade.

ICICI Bank raises Rs. 15,000 crore

The country’s second largest private sector lender ICICI Bank on Saturday said it has completed the allotment of equity shares under its qualified institutional placement (QIP) and raised approximately ₹15,000 crore to fund its business growth and meet regulatory capital requirement. Mint

RBI invested a record $12.8 bn in US Treasuries in June

The Reserve Bank of India purchased a record $12.8 billion US Treasury papers in June, underscoring the central bank’s accent on investment safety. With the latest tranche of investment, RBI now holds $182.7 billion worth of US government securities in June compared with $169.9 billion in May. Economic Times

4 PSU banks to become private by end of this year; govt draws list of these names for stake sale

The government may privatise four PSU banks as early as by the end of this fiscal year, Reuters reported citing unidentified officials. The government has drawn a list of four PSU banks, namely, Punjab & Sind Bank, Bank of Maharashtra, UCO Bank, and IDBI Bank, in which it directly or indirectly holds majority stakes, and wants to disinvest equity. Senior officials told Reuters that the move is made in an effort to generate government revenue, which is severely hit amid the coronavirus crisis. Financial Express

Credit growth to MSME sector falls sharply despite government’s relief measures

The micro, small and medium-sized industries (MSMEs), the most vulnerable to the Covid-19 induced economic stress, are facing a hard time in getting loans as banks remain risk-averse and continue cherry-picking credit portfolios with caution. An analysis of the latest bank credit growth data from the Reserve Bank of India (RBI) showed credit offtake in the MSME sector suffering a steep year-on-year contraction of 12.7 per cent in June 2020 alone. In fact, lending to this sector saw a de-growth of 17 per cent year-on-year (y-o-y) so far this year beginning late March when the lockdown was imposed.  New Indian Express

What Job Losses in the Formal Sector Tell Us About the Lockdown’s Impact on Economy

As the employment crisis in India’s informal economy slowly abates with the resumption of normal activity, the public spotlight is quickly turning to the damage caused to formal sector jobs. New data from the Centre for Monitoring Indian Economy (CMIE), an independent body that measures and tracks economic indicators, has said that salaried jobs took a big hit during the COVID-19 lockdown, with the total loss estimated to be at 18.9 million during April 2020-July 2020. The Wire

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