The banking sector stayed relatively less abuzz this week compared to the previous weeks with follow-up news on non-performing assets (NPAs) and retail segment, interest rate reduction by banks and push by the Reserve Bank.
There was, however, one interesting development towards the end of the week as news came forth that RBI will shortly issue new Rs 50 denomination banknotes.
Before the humdrum of NPAs starts, customers will see the new Rs 50 notes in Fluorescent Blue colour. Here's what it looks like:
Another interesting information came about the Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts, which observed that since demonetisation, there has been a drop in deposits of nearly Rs 10,000 crore, down 13 percent from its peak balance in December 2016.
In another big event likely on Tuesday August 22 would be the bank employee strike in protest of the privatisation of banks. This may impact the cash transactions and cheque clearing financial services at the bank branch levels. However, internet and mobile banking services and ATMs will remain unaffected.
Bad loans
Coming to NPAs, after most banks reported their financial results in the previous few weeks, a trend of rise in retail NPAs emerged with pressure on banks growing beyond the corporate loan stress
Over 30 banks, which have already reported their first quarter earnings, have recorded an increase of nearly Rs 45,000 crore in their gross non-performing assets (NPAs).
Further, the pace of NPA growth was highest in the first quarter as compared to the last five quarters. NPAs grew 16.6 percent on a quarter-on-quarter basis to reach Rs 829,338 crore as of June 2017.
Additionally, public sector banks reported 20 percent jump in the outstanding loans by nearly 9,000 wilful defaulters who collectively owed to lenders more than 92,000 crore at the end of March this year.
In a fund raising news on Monday, RBL Bank (former Ratnakar Bank) announced its capital infusion of Rs 1,680 crore by selling 3.26 crore shares for Rs 515 per share on a preferential basis to marquee investors.
Interest rates
In major news after the State Bank of India reduced savings deposit rates last week, large private lender HDFC Bank also, on Thursday, cut interest rates on most of its savings accounts to 3.5 percent from 4 percent.
HDFC Bank customers with savings bank account balance of Rs 50 lakh and above will continue to earn interest at 4 percent per annum, the lender said in a statement.
As many as seven banks in the country slashed savings interest rates mainly due to the fall in the rate of inflation and surplus money, thanks to demonetisation.
RBI Governor Urjit Patel wants effective transmission of policy rate cuts into bank’s lending interest rates for inflation-less growth, and resolution of bad loans to revive investments and credit growth.
On affordable housing, Axis Bank is offering a home loan product for loans up to Rs 30 lakh to "reward" customers with regular repayment behaviour helping them reduce EMIs by up to 12 months.
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