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QBiz: State-run Bank NPAs Fall; Paytm Bank Posts Loss in FY18

1. State-run Bank NPAs Decline by Rs 23,860 Cr

Various initiatives taken by the government have yielded results, with the bad loans of public sector banks declining by over Rs 23,000 crore from a peak of Rs 9.62 lakh crore in March 2018, said a senior finance ministry official.

At the same time, public sector banks (PSBs) have also made a record recovery of Rs 60,726 crore in the first half of the current financial year, which is more than double the amount recovered in the corresponding period last year.

According to the latest Finance Ministry data, non-NPA accounts overdue by 31 to 90 days (Special Mention Accounts 1 & 2) of PSBs have declined by 61 percent over five successive quarters from Rs 2.25 lakh crore as of June 2017 to Rs 0.87 lakh crore in September 2018.

(Source: PTI)

2. Paytm Payments Bank Posts Rs 20.7 Crore Loss in FY18

Paytm Payments Bank registered net loss of Rs20.7 crore for the fiscal ended 31 March 2018, according to regulatory documents.

Its total loss stood at Rs 30.7 crore during 22 August 2016 to 31 March 2017, the documents filed with the corporate affairs ministry showed.

Paytm Payments Bank, which was incorporated in August 2016, formally began its operations in 2017.

The total income grew to Rs 721.9 crore in financial year ended 31 March 2018 compared to Rs 2.47 crore in 22 August 2016 - 31 March 2017 period, the documents sourced by business intelligence platform, Tofler showed.

Tofler said Paytm Payment Bank’s total expenses for the fiscal were reported as Rs 740 crore.

Most of the income of the bank (about Rs650 crore) is earned as commission, exchange and brokerage, including that earned on wallet utilisation, it added.

(Source: PTI)

3. Health of Banks Set to Improve: RBI

Indian banks, especially those in the public sector, that have been reeling under stressed assets for the last few years, may have something to cheer about in the new year.

This is because the Reserve Bank of India (RBI), in its annual ‘Trends and Progress of Banking in 2017-18’ report, pointed out to the revival in credit growth in the first half of current financial year, and said, “overall improvement in the health of the banks is on the cards.”

In addition, the banking regulator also noted that the stressed assets of banks had begun to stabilise, albeit at elevated levels.

“Hearteningly, credit to industry — which constitutes the major share in the aggregate — has picked up steam after depressed conditions in the previous year,” the report said.

It added that the banks’ capital positions had been buffered and the provision coverage ratio had improved to 52.4 percent by end-September 2018.

(Source: The Hindu)

4. Lemon Tree Hotels’ Share Price Rises After JV with Warburg Pincus Arm

Shares of Lemon Tree Hotels jumped on Friday, 28 December after the company agreed to enter into a joint venture with Magnolia Grove Investment, an affiliate of Warburg Pincus group. Lemon Tree Hotels share price gained by more than 14 percent to hit the day’s high at Rs 77.80.

The stock was trading up 5.80 points, or 8.43 percent, at Rs 74.60 on BSE at the time of reporting. On 27 December, stocks of Lemon Tree Hotels closed on Rs 68.65, up 0.44 percent from the last close.

The JV Hamstede Living Private Limited will construct, acquire, develop, operate and lease short and long-stay real estate projects, with a primary focus on student housing, co-living for working professionals/adults and multi-family users.

The joint venture has been formed to develop rental housing projects envisaging investments of Rs 3,000 crore over a period of time.

(Source: The Financial Express)

5. RBI Says No to Dilution of Bank Capital Norms

The Reserve Bank of India (RBI) on Friday, 28 December, opposed government calls to relax the rules for risk weights and capital requirement for Indian banks, while simultaneously announcing its intention to revise existing prudential regulations.

The RBI warned that relaxing the current risk-adjusted capital norms, often termed as Basel-III-plus norms, could hit the economy at a time when defaults are high and provisions low.

Instead, the central bank now proposes to take a fresh look at exposure and investment guidelines, and the existing risk management framework.

In its Trends and Progress Report published on Friday, the central bank said that applying Basel-specified risk weights will understate the “true riskiness” of loans on the books of these banks.

At present, the capital adequacy norms for Indian banks are higher than those recommended under Basel.

(Source: Livemint)

6. OYO to Buy Back Shares from Existing, Past Employees in Jan

OYO Rooms has said on Friday, 28 December, that it would buy ESOPs from 250 of current and former employees worth nearly Rs 50 crore in January 2019. The buy back program would be carried out through a secondary acquisition programme led by one of the company’s existing investors, OYO said in a statement.

The ESOP liquidity programme is expected to be worth nearly $150 – $200 million over the coming few years, company said.

“Today, we are announcing this programme for eligible employees. This is part of our continuing efforts to express our gratitude and reward our employees for their hard work, perseverance, and commitment to the Company and its mission”, OYO Hotels & Homes CHRO Dinesh Ramamurthi said.

Earlier this month, company’s founder Ritesh Agarwal said that he is aiming to turn the hotel chain into the world’s largest by 2023 as it expands into newer countries in the Middle East, South East Asia and Europe.

(Source: The Financial Express)

7. AAAR Okays GST on Inter-State Office Services

In a blow for companies with a presence in multiple states, the Karnataka Appellate Authority for Advance Rulings (AAAR) has upheld the levy of goods and services tax on services rendered by one office branch to other centres.

In-house service functions such as human resources and payrolls, if carried out from a centre in one state for offices in other states, will attract GST for which it will have to issue an invoice.

A large business based in New Delhi with centralised finance, IT and HR functions for branches across states would be deemed to be providing support services to the other locations and would need to raise invoices charging GST.

“We uphold the ruling dated 27.07.2018 passed by the Karnataka Authority for Advance Ruling…,” the AAAR said.

The decision has wide ramifications for companies with offices in many states, adding to their transaction costs and compliance burden even though the tax paid can be adjusted against their final GST liability.

(Source: The Economic Times)

8. Bengal Chem, Country’s First Maker of Snake Anti-Venom, to Resume Production

The country’s first anti snake venom-maker, Bengal Chemicals & Pharmaceuticals, plans to resume production of its flagship offering, the anti-snake venom serum.

A proposal in this regard is awaiting clearance from the centre. Set up by the renowned Bengali chemist and nationalist entrepreneur Acharya Prafulla Chandra Ray in Kolkata in 1901, the company – nationalised in 1980 – was forced to stop production of the life-saving serum in 2006-07 following the lack of good manufacturing practice clearances and ageing donor animals, including horses.

The unit was then producing 100,000 vials annually.

According to PM Chandraiah, Managing Director and Director (Finance), the Bengal Chemicals & Pharmaceuticals will invest approximately Rs 30 crore as it plans to buy donor animals (horses) and have a new manufacturing set-up. The company’s Kolkata unit will be leveraged for the manufacture of antivenom. The target is to have an annual capacity of 400,000 vials.

(Source: The Hindu BusinessLine)

9. Sanjay Sethi Appointed JNPT Chairman

Senior bureaucrat Sanjay Sethi has been appointed as the chairman of the Navi Mumbai-based Jawaharlal Nehru Port Trust (JNPT), according to a government order.

The 1992-batch IAS officer of the Maharashtra cadre has been appointed to the post for a period of five years, the order issued by the Personnel Ministry said.

In another order, the ministry said senior police officer Baljit Singh has been appointed as the security head of the Oil and Natural Gas Corporation Ltd (ONGC).

Singh is a 1996-batch IPS officer of the Jharkhand cadre. He has been appointed as the Executive Director (Security), ONGC, for five years.

(Source: PTI)

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