FRIDAY FRAGRANCES: BANKING NEWS OF 05.09.2014 CONTRIBUTED BY SHRI.D.S.GANESAN 1. RBI reverse repo mops up liquidity Business Line / Mumbai / September 4: The Reserve Bank of India on Thursday sucked out short-term surplus liquidity aggregating ₹48,387 crore from the banking system through the overnight variable reverse repo auction. The weighted average rate (the interest rate that banks will earn) worked out to 7.84 per cent. “One good thing about the RBI’s liquidity management strategy is that it is bringing down volatility in the call money rate, which is now veering around the repo rate. This will also help monetary policy transmission,” said NS Venkatesh, Executive Director, IDBI Bank. 2. ‘RBI needs to focus on banking needs of new States, North-East’ Business Line / Thiruvananthapuram / September 4: The All-India Reserve Bank Employees Association has said that the apex bank needs to focus its attention on the developmental needs of the newly-formed States and those to the north-east of the country. Though the RBI has tier-III offices in these State capitals, the banking needs of their area under command yearn for attention, the Association said in response to internal restructuring plans of the banking regulator. The RBI has chalked up a mandate for development, that is not only sector-specific but also region-specific. According to this, the tier-III offices play a key role here. Currently, skeletal in their structure, these should be made full-fledged establishments, able to cater to the needs of the local people. Development mandate Availability of adequate currency notes/coins, development of cooperative and non-banking finance companies, suitable banking network, financial inclusion and financial literacy are issues that need to be accorded high priority. A department for currency management should, ideally, be opened in all tier-III offices and there should be recruitment of staff at the base level periodically. The HR Department had sought the views of the Association in response to its document on the ‘operational blueprint for organisational restructuring and implementation of the human resources initiatives.’ It proposes reorganising the RBI into verticals across departments, shifting of certain divisions/sections from one to the other, and lateral recruitments of officers at the highest levels, among others. Movements from one cluster to the other should be smooth and transfer of officers from one cluster to the other or from one office to the other should be least disruptive, while being non-discriminatory. The Association said that the top hierarchy is disproportionately large when compared with the State Bank of India or Punjab National Bank, the country’s largest and second largest banks, whose geographical and numerical coverage surpasses that of the RBI. Delegation of powers Inspections in a sensitive areas, such as banking and non-banking activities, should be delegated to regional offices, the Association said. These offices should be given adequate authority to function in the areas under their jurisdiction in all matters. As far as micro-finance and non-banking finance companies are concerned, an overwhelming majority of them remain outside the purview of the RBI’s supervision. This needs to be reversed, it said. Forex transfers Another sensitive area is transaction of foreign exchange. The RBI avoids direct inspection of banks in this regard and relies on the information furnished by the banks. All these areas have to be appropriately looked into. Otherwise, the proposed restructuring and clustering will be merely cosmetic, the Association observed. 3. Asset quality of nine state-owned banks remains under pressure: Fitch Business Line / Mumbai / Sept 4: Fitch Ratings has affirmed the ratings on nine Indian banks stating that the asset or the loan quality of state-owned banks remains under pressure. The long-term Issuer Default Ratings (IDR) on State Bank of India (SBI), Bank of Baroda, Bank of Baroda New Zealand (BOB NZ), Punjab National Bank, Canara Bank, IDBI Bank, ICICI Bank and Axis Bank has been affirmed at BBB-, while Indian Bank has been affirmed at BB+. The outlook on IDRs is stable, Fitch said in a note. “Asset quality at state-owned banks remains under pressure, while certain large banks non-performing loans (NPLs) and restructured loans have grown at a slower pace in the recent two quarters,” the rating agency added. SC ruling on coal assets Early signs of deleveraging in the corporate sector are encouraging. However, the impact of the Supreme Court ruling on coal assets may be less onerous than expected if productive assets are allowed to continue operating without disruption. “Fitch expects the pressure on asset quality at the rated banks to persist for another couple of quarters. The banks, particularly the state-owned ones, will increasingly focus on raising capital to meet more stringent capital requirements under the Basel III regulatory framework, which will be progressively implemented in India. Viability ratings In addition, the viability ratings (VRs) of certain banks will continue to be under pressure, but the affirmations on their VRs factor in efforts to raise capital and the expectation that asset quality would not deteriorate materially from current levels and reach their worst during the current financial year. SBI, ICICI Bank and Axis Bank are the only ones among Fitchs rated Indian banks to have investment-grade VRs of bbb-, reflecting their superior stand-alone credit profiles. The drivers for the private banks (ICICI Bank and Axis Bank) VRs are their strong capital metrics, better-than-average asset quality, good profitability, robust funding profile and better management quality. ICICI Bank has had a consistently strong capitalisation track record, while Axis Bank has managed its asset quality better and made notable improvements to its capitalisation and retail funding. 4. RBI directive to banks on KYC norms for medium and low risk customers Business Line / Mumbai / Sept 4: The Reserve Bank of India on Thursday asked banks and all India financial institutions to dispense with the requirement of ‘positive confirmation’ at two/three years in respect of medium and low risk customers respectively. Positive confirmation pertains to obtaining Know-Your-Customer related updates through e-mail/ letter/ telephonic conversation/ forms/ interviews/ visits, etc. The central bank, however, said the requirements of client due diligence measures applied when establishing an account-based relationship and on-going due diligence would continue. The central bank also said the requirement of applying client due diligence measures to existing clients at an interval of two/eight/ten years in respect of high/medium/low risk clients respectively, would continue taking into account whether and when client due diligence measures have previously been undertaken and the adequacy of data obtained. Physical presence of the clients may, however, not be insisted upon at the time of such periodic updations. 5. Union Bank plans to raise Rs. 1,386 cr via QIP Business Line / Kolkata / Sept 4: Union Bank of India aims to raise ₹ 1,386 crore through a qualified institutional placement (QIP) issue. The QIP is likely to be floated by the end of this fiscal. The QIP may be floated after the second quarter. We have got the shareholder approvals and necessary clearances from RBI, Arun Tiwari, Chairman and Managing Director, Union Bank of India, said. He was speaking to reporters on the sidelines of the 11th FICCI Banking Conclave organised here in the city. This apart, the bank will also look to upgrade its representative office in Sydney (Australia) to a full-fledged branch office. The Sydney office will be operational by the end of this fiscal. 6. ICRA: Fresh NPAs on uptick for PSBs Business Line / Sept 4: Asset quality pressures continue to haunt public sector banks despite the improved sentiments in the market after measures are addressed to revive the economy due to policy paralysis, as per rating agency ICRA. The rate of generation of fresh non-performing assets (NPAs) remained elevated for Public sector banks (3.5%), and as result, their gross NPAs increased by 20 basis points (bps) to 4.6% in Q1, FY2015; the NPAs of private banks also increased by 20 bps to 2.0% for the same quarter, ICRA said in a report. ICRA analysed the performance of 26 PSBs and 15 private banks for the quarter ended June 30, 2014. “Going forward, ICRA expects PSBs’ gross NPAs to be at 4.4-4.7% as on March 31, 2015, as against 4.4% as on March 31, 2014 and 4.6% as on June 30, 2014. Overall, the Gross NPAs of the banking sector (PSBs + private banks) could be at 4-4.2% as in March 2015, as against 3.9% as in March 2014 and 4.0% as in June 2014,” the report said. However, ICRA highlighted that there was a significant drop in fresh referrals to the CDR (corporate debt restructuring) Cell for restructuring during Q1, FY2015. If the current trend were to continue, one may expect some containment of the standard restructured book. Overall, the Gross NPA percentage plus 30% of standard restructured advances remains large at 5.5-5.7% (around Rs. 3.5-3.7 lakh crore as of June 2014) and may continue to impact profitability over the short term. Moreover, new investment norms for asset reconstruction companies too could add to the NPA pile up. Going forward, in addition to economic activity, management of one large steel exposure (estimated at 0.6% of banking credit), the Supreme Court’s decision on coal blocks, and deleveraging efforts by large corporate groups, among other factors, could shape the asset quality profile of banks. 7. Jan Dhan Yojana: KVG Bank opens over 1 lakh accounts Business Line / September 4, 2014: Karnataka Vikas Grameena Bank (KVG Bank), a Syndicate Bank sponsored regional rural bank, has opened 1,10,268 accounts under under Pradhanmantri Jan Dhan Yojana within a week in north Karnataka. Ashok Reddy Chairman, KVG Bank, while sharing district-wise information, said the bank has opened 21,854 accounts in Belgaum, 19,983 at Haveri, 18,733 at Bagalkot, 14,010 at Gadag and 13,002 in Dharwad district. The campaign is said continue up to January 26, 2015. 8. IDBI Bank launches e-lounge in Mumbai branch Business Line / Mumbai / Sept 4: IDBI Bank on Thursday launched its first ‘e-lounge’. The e-lounge is unmanned and located at Mahim branch, Mumbai. At IDBI Bank’s e-lounge, banking services that the customers can, on a self-service basis, enjoy are facilities such as ATM, Automated Cash Deposit (with a receipt and instant credit of the amount), Automated Cheque Deposit (with an acknowledgment receipt), Automated Pass Book Printing, e-Transact terminal for various Card and Net Banking holders to view balance, make a funds transfer, pay bills and recharge. The platform also contains an LED screen providing details of Interest rates, products and services and a Hotline to our Customer Care Centre, the bank said in a statement. 9. Shriram Group says interested in securing small bank licence Business Line / Mumbai / Sept 4: Chennai-based Shriram Group, which failed to secure a banking licence in the recent round of licencing, has not given up the hope and is now looking at applying for a small bank licence. The Reserve Bank had in July issued the draft guidelines for licencing of small banks and payment banks. “The draft guidelines for small banks have been issued and we have given our suggestions and asked for some clarifications. “Once the RBI comes out with the final guidelines and if we know that there is an opportunity for us then we will definitely apply for it,” Shriram Group director G S Sundarajan told PTI. He said that the group wants to get into banking space as it would fill up the gap it has in terms of our product offerings. In the last round of banking licencing, as many as 25 corporates, including Aditya Birla Nuvo, Bajaj Finserv, Reliance Capital, LIC Housing Finance, L&T Finance and Shriram Capital, among others had applied. The RBI, however, gave in-principle approval only to infrastructure financing firm IDFC and micro-lender Bandhan. Sundarajan said his group will apply for a small bank licence only if the regulations do not affect its existing businesses. “If we have to convert our existing NBFCs (Non-banking financial company) into the bank then we may not be interested... we will remain an NBFC only,” he said. In the previous round of granting banking licence, Shriram Capital had showed its discomfort over the regulation which insisted on merging of Shriram Transport Finance Corporation and Shriram City Union into the bank if a licence were to be issued. 10. I have enough liquidity to look after my growth needs: Arundhati Bhattacharya Business Standard / Mumbai / September 5, 2014 Interview with SBI Chairman Arundhati Bhattacharya, who completes a year as State Bank of India chairman this month-end, says she sees much more optimism now than six months ago. In an interview with Manojit Saha & Abhijit Lele, she says she expects stalled projects coming back on track in two quarters. Edited excerpts. All are talking about green shoots. What’s your take? I see much more optimism now than six months ago. People are indeed talking about new projects, investments and expansion. But these things take time to fructify. You have to give two quarters after a recovery in economy to see an impact on banks’ books. It’s not an easy process. The project pipeline has really run dry; it will take time to get it moving again. I think we have to wait until January before things get started again. You mean new projects will start coming from January... The first push will come from stalled projects, as getting something already on the ground back on track is easier. In the next two quarters, stalled projects will start moving. New projects are at least a year away. SBI has not grown its loan book since March. Do you think it can repeat last year’s credit growth of 15 per cent this year? With half the year already over, I don’t think we will reach 15 per cent. This quarter will be low, mainly due to the effect of a high base. We had grown at a high rate last September, especially in the corporate space. Going forward, we definitely see it picking up in October and November. By the end of this quarter, loan growth could be at the same level as March, or there could be some shrinkage. Isn’t expanding the loan book a conscious strategy? The fact is, credit demand itself is slow. We are very clear we don’t want to rush in if we see the risk is not in line with our appetite. So, to an extent, it is consciously managed. Unless there is credit demand from good firms, there is no rushing. At present, retail is doing better than the corporate segment. SBI has seen a decline in bad loans in the last two quarters. Do you think the trend is sustainable or was it a one-off event mainly due to NPA sale? What will happen is that the numbers will stabilise. The rate of increase of fresh NPA creation will come down. The restructuring pipeline is also less strong than the earlier. The restructuring pipeline was about Rs 3,700 crore but all of these may not be restructured in this quarter. RBI has eased norms for Basel-III -compliant bonds. What does it mean for SBI?It’s on the lines of what we had written to RBI. The additional Tier-I (AT1) capital instruments will be a little less costly. We always wanted to take AT1. So far as capital raising is concerned, We don’t need it at this point because we are not growing much. At this point SBI’s capital adequacy is 12.56 per cent if you take into account profits for the quarter ended June 2014. I want to make my bank more profitable at this point. I have enough liquidity and capital to look after my current growth needs. How much is the surplus liquidity that SBI has? More than Rs 50,000 crore. Is there any possibility of reducing the base rate to boost credit growth? I dont think so. Our base rate is the lowest. I dont think that is the way to boost credit growth Have you seen a decline in cost of funds? No, because there is a belief that interest rate is on top of the cycle. That has made more people putting money in fixed deposits rather than putting that in the short end. So, cost of funds has not come down. In fact, it has gone up slightly. So are you planning to cut deposit rates? We have already reduced the rate for up to one-year deposits. I dont see any immediate fall in deposits rates for longer tenure maturities. Do you see RBI reducing interest rate any time soon? RBI has quite clearly signalled that they will cut rates only if they are sure that inflation is comprehensively under control. I think they will stick to that. United Bank of India has declared Kingfisher Airlines and Vijay Mallya a wilful defaulter. As the leader of the consortium of lenders, are you also planning such a move? UBI has done it in respect of a loan taken from outside the consortium. For the loan given by the consortium, we have been looking at ways and means of doing it and as a result, we have also ordered a special audit. If the audit finding gives us a good ground for doing it, we will do it. There is a new found aggression among public sector banks, which is evident from the proactive steps they are taking in cases like KFA or Bhushan Steel. What has changed? Banks have always been trying to recover assets as far as possible. The reason why it is being noticed now is because the numbers are big and high profile accounts are involved. One of the reasons that stops fast action is that we have a rule of law and we have to go through the courts. In respect of the account that you are mentioning (Kingfisher), 22 court cases are there. We have to put in a large number of resources to fight these cases. Its not as if you want to do something and you can do it tomorrow. We are asking both the government and the regulator to provide teeth to the regulations that are available to ensure we can get things done faster. Wilful default is not a law at present; it is a regulation. We need a wilful defaulter law, we need a bankruptcy law. We need all of these things as legal provisions. The PJ Nayak committee had raised concerns on governance in public sector banks. Whats your view? Corporate governance has to come in many ways. The fact of the matter is that the quality of board members has to improve, though I must say its not an issue as far as SBI is concerned. The selection process of top management should ensure that people who are coming in should come for a specific period of time. If they come for too short a period, they cannot really implement any long lasting changes. To the credit of the government, I must, say they have already thought of these things. There is a thinking about lateral entry in the top positions of SBI. Do you think that is required? Movement of that nature unless there is a logic to it, makes no sense. SBI has a large number of subsidiaries/associates and all of us get a stint to work as number one in some subsidiaries before becoming the chairman. So, we do have the feel of the market as well as an outside view. If a person is coming from outside, then he or she should get five to seven years term as chairman to allow him some space for some kind of learning curve. I am an SBI insider; even I needed some time to get adjusted after coming to this chair. 11. Union Bank doesnt want external agency to run Bhushan Steel Business Standard / Kolkata / September 5, 2014 Last month, Bhushan Steels vice-chairman and managing director, Neeraj Singal, was arrested by CBI Union Bank of India, one of the many lenders to Bhushan Steel, is not in favour of appointing an external agency to run the troubled steel maker. “It (the crisis at Bhushan Steel) has not reached that level. One person has been taken into custody but large organisations are not run by one person. If the chairman of a bank retires, should the bank come to a halt? The answer is no. It (Bhushan Steel) is an institution and institutions are not run by an individual,” Arun Tiwari, chairman and managing director of the bank, said. Bhushan Steel’s Vice-Chairman and Managing Director Neeraj Singal was arrested by the Central Bureau of Investigation (CBI) last month for allegedly offering a bribe to Sudhir Kumar Jain, the now suspended chairman and managing director of Syndicate Bank. The steel company has borrowed close to Rs 40,000 crore from 35 lenders. While the loans are still classified as standard assets, the arrest has cast a shadow on the companys ability to repay its dues. Banks have directed a forensic audit to find out whether the money borrowed was diverted and not used for the purpose for which it was given. A recovery road map drawn by SBI Caps, the merchant banking arm of State Bank of India (SBI), has suggested that the troubled steel-maker should sell and lease back some of its critical assets to reduce debts. Suggestions were also made to appoint an external agency to run the company. Tiwari, however, appeared optimistic. “If you see the assets on the ground – Rs 40,000 crore has some economic value. All the stakeholders, including employees of Bhushan Steel, have to be taken care of. The corrective action plan is already in place. Also, as on date, it (loans to Bhushan Steel)is still a performing asset,” he said. He did not quantify Union Bank’s loan exposure in Bhushan Steel. Separately, Tiwari said the state-run lender plans to raise Rs 1,386 crore through a qualified institutional placement (QIP). “We will wait for the right time and right price to raise the funds. We already have the shareholders approval for this.” Tiwari also said while the incidence of loans turning non-performing has reduced, there could be fresh slippages in coming quarters. “Incidence of NPAs (non-performing assets) has reduced but it does not mean you wont have NPAs. For that to happen, banks will have to lend only against fixed deposit receipts,” he said. The bank has sold Rs 325 crore of bad loans to asset reconstruction companies in 2012-13 (April-March). Tiwari said while the bank plans to sell NPA accounts in the current financial year, it will only conclude a transaction if it gets an appropriate price for those assets. 12. Banking systems NPAs to inch up in FY15: Icra Business Standard /Mumbai / September 5, 2014 For the whole banking sector also the gross NPA is expected to increase to 4-4.2% at the end of this financial year Despite lenders claiming bad loans are under check, the asset quality of banks continues to worsen. Rating agency Icra estimates public sector banks’ gross non-performing assets (NPAs) to stand at up to 4.7 per cent at the end of this financial year, compared with 4.4 per cent at the end of FY14. For the entire banking sector, gross NPAs are expected to stand at 4-4.2 per cent, against 3.9 per cent at the end of March this year and four per cent at the end of June. “The rate of generation of fresh NPAs remained elevated for public sector banks (3.5 per cent) and, as result, their gross NPAs increased by 20 basis points to 4.6 per cent in the first quarter of FY15. During the same quarter, the NPAs of private banks increased by 20 basis points to two per cent,” Icra said. The agency expects the sale of bad loans to asset reconstruction companies to decrease; this might further increase the NPAs in the banking system. Had it not been for the sale of NPAs to asset reconstruction companies, the banking system’s gross NPAs would have been 20-30 basis points higher, Icra said. As the Reserve Bank of India has mandated asset reconstruction companies to invest and hold 15 per cent in security receipts, against five per cent earlier, the sale of NPAs to these companies might decrease. During the quarter ended June this year, there was a significant fall in fresh referrals to the corporate debt restructuring cell. Icra said at the end of the June quarter, the standard restructured book continued to be relatively large---about six per cent for public sector banks and five per cent for the entire banking system. 13. Decoding wilful defaulter tag Business Standard / September 5, 2014 On Monday, United Bank of India (UBI) declared grounded Kingfisher Airlines and its chairman, Vijay Mallya, wilful defaulters for non-payment of dues. Three company directors, Subhash R Gupte, Ravi Nedungadi and Anil Kumar Ganguly, also figured on the list. But the move is not the first instance of a bank declaring an individual or a company a wilful defaulter, and is unlikely to be the last. On July 1, the Reserve Bank of India (RBI) released a master circular on wilful defaulters, outlining instructions for lenders in the event of default. Bankers also explained the process of identifying and declaring borrowers as wilful defaulters, discussed below: Wilful defaulter A borrower is classified as a wilful defaulter in any of the following events: • The borrower defaults despite having the capacity to repay his dues • The borrower defaults and has not used the money for the specific purpose for which the loan was availed • The borrower defaults, has siphoned off the funds, and the money is not available with him in form of other assets • The borrower defaults and has disposed the assets given as security against the loan without informing lenders Identifying wilful defaulters Bankers say there is an internal committee, normally headed by an executive director that examines cases of wilful defaults. The credit monitoring or recovery departments give their reports on borrowers deemed to have defaulted wilfully to this committee. The panel examines the efforts made by the bank to recover the dues, the repayment capacity of the borrower, end use of the funds before identifying an individual as wilful defaulter. The decision taken on classification of wilful defaulters is well documented and supported with evidence Declaring wilful defaulters Once a borrower is identified as a wilful defaulter, the bank sends him/her a notice with the reasons for the same. The borrower is generally given 15 days to make a representation against the decision to the grievance redressal committee. This committee is either headed by the chairman and managing director or by the executive director who is not part of the panel on identification of wilful defaulters. The bank declares a borrower wilful defaulter if he fails to offer a proper explanation or avoids the grievance redressal committee hearing repeatedly despite notices. Penal measures Banks are advised to send their list of wilful defaulters to RBI, Securities and Exchange Board of India (Sebi) and Credit Information Bureau India (Cibil). This is aimed at preventing wilful defaulters from accessing capital markets and borrowing from other banks and financial institutions. The penal measures include the following: • No additional facilities will be granted to listed wilful defaulters by banks and financial institutions • Promoters of companies that have been identified for siphoning of funds, misrepresentation of accounts and fraudulent transactions will be debarred from institutional finance for floating new ventures for a period of five years • Legal process against wilful defaulters will be initiated. Lenders may initiate criminal proceedings also • Banks will adopt a proactive approach for a change of management of the willfully defaulting borrower unit. • Wilful defaulters will not be allowed to take up board positions in any company Reporting to RBI, other regulators Banks have to give the list of suit-filed accounts of wilful defaulters of Rs 25 lakh and above at the end of every quarter to a credit information company. Lenders will give a quarterly list of wilful defaulters where suits have not been filed only to RBI. Banks are advised to send the data on wilful defaulters to RBI and credit information companies at the earliest but not later than a month from the reporting date. Banks have been directed to consider all cases of wilful defaults of Rs 1 crore and above filing of suits. Lenders can also consider criminal action where instances of fraud by the defaulting borrowers have been detected. Banks need not report cases [i] where outstanding amount due is below Rs 25 lakh and [ii] where lenders have agreed for a compromise settlement and the borrower has fully paid the compromised amount. 14. Gross NPAs of PSU banks to be about 4.4% in FY15: ICRA Financial Express / New Delhi / Sep 04 2014 Asset quality for public sector banks will remain a concern with gross non-performing assets (NPAs) expected to remain at elevated level of about 4.4 per cent in the current fiscal despite the revival in the economy, says a report. PSU banks gross NPAs are to be at 4.4-4.7 per cent as on March 31, 2015, as against 4.4 per cent as on March 31, 2014 and 4.6 per cent as on June 30, 2014, said the ICRA report. Overall, the Gross NPAs of the banking sector (PSBs and private banks) could be at 4-4.2 per cent as in March 2015, as against 3.9 per cent as in March 2014 and 4 per cent as in June 2014, it said, adding that the asset quality pressures continued to take a toll of banks performance during the first quarter of the current fiscal. During Q1, 2014-15, GDP grew by 5.7 per cent in year-on- year, as against 4.6 per cent in the previous two quarters, following pickup in industrial growth. ICRA expects GDP growth to improve to 5.3-5.5 per cent in 2014-15 from 4.7 per cent in the previous fiscal. Manufacturing output rose 3.5 per cent in first quarter, after having contracted by 1.4 per cent in the previous quarter. However, it said, these are early positive signs and the sustainability of these indicators would hold the key to revival in credit growth as well as improvement in banks asset quality profile. The y-o-y growth figures for banks domestic credit and deposits remain moderate, respectively, at 12.8 per cent and 12.4 per cent in the first quarter of the current fiscal. The report said, the rate of generation of fresh non-performing assets (NPAs) remained elevated for PSBs (3.5 per cent), and as result, their gross NPAs increased by 20 basis points to 4.6 per cent in the first quarter; the NPAs of private banks also increased by 20 basis points to 2 per cent for the same quarter. However, there was a significant drop in fresh referrals to the CDR Cell for restructuring during April-June quarter. If the current trend were to continue, one may expect some containment of the standard restructured book. The standard restructured book is relatively large at more than 6 per cent for PSBs and over 5 per cent for the banking system as a whole as of June 30, 2014. it said. Overall, the Gross NPA percentage plus 30 per cent of standard restructured advances remains large at 5.5-5.7 per cent (around Rs 3.5-3.7 lakh crore as of June 2014) and may continue to impact profitability over the short term. Going forward, in addition to economic activity, management of one large steel exposure (estimated at 0.6 per cent of banking credit), the Supreme Courts decision on coal blocks, and deleveraging efforts by large corporate groups, among other factors, could shape the asset quality profile of banks, it said. 15. Mobile banking may raise lenders risks, say experts Economic Times / Mumbai / Sep 04: Mobile banking is being portrayed as the next big thing by banks and telecom companies, but security experts warn that such telecom networks were never designed with banking in mind and could increase risks for banks. Security experts say that even though the value in transactions through basic mobiles is not high there will be volume-based vulnerability. He caution comes at a time when the government is planning to extend banking service on basic telephones using the *99# command or USSD (Unstructured Supplementary Service Data) - a communication protocol for GSM providers. When compared to SMS, USSD is considered to be relatively more secure because no copies of messages are stored on customers phones or at the SMSC. The big risk lies on the fact that data carried within the communication channel (between handset and USSD gateway) is not encrypted, said Sanjay Deshpande, co-founder and CEO, Uniken-a company that specializes in Cyber security. It is not just basic mobiles, even smart phones are vulnerable.
Posted on: Fri, 05 Sep 2014 04:11:25 +0000
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