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New Delhi: IDBI Bank has allotted 15.8 crore equity shares, equivalent to a 7.16 per cent stake, on a preferential basis to Life Insurance Corporation (LIC), which now holds over 14 per cent in the state-run lender.
The allotment of shares is part of IDBI Bank’s plan to offload government shareholding as part of privatisation move.

In the Budget speech, Finance Minister Arun Jaitley had said that the process of transformation of IDBI Bank has started.

“Government will take it forward and also consider the option of reducing its stake” to below 50 per cent, he said.
IDBI Bank in a regulatory filing on Monday said that the preferential allotment of 15,87,61,801 shares to LIC happened on March 23, 2016,

Earlier, LIC held a 7.21 per cent stake (137,017,058 shares) in the bank. Post-acquisition, the stake of the LIC in IDBI Bank goes up to 14.37 per cent or 295,778,859 shares.

Government at present holds a 72 per cent stake in the bank, down from more than 80 per cent earlier.

Meanwhile, a section of IDBI Bank employees today went on a four-day strike to protest the government’s move to privatise the bank. Earlier this month, IDBI Bank chief Kishor Kharat had said that international institutions like CDC of England and GIC of Singapore have shown some interest in buying stake in the bank. Besides, there were media reports that the government was in talks with the International Finance Corporation (IFC), a World Bank Group member, to sell up to 15 per cent up stake in the struggling infra lender-turned commercial bank.

In the December quarter, the bank had reported its worst numbers with a net loss of Rs. 2,183 crore on a massive rise in NPAs, making it the second largest loss in the history of the nations banking history after Bank of Baroda’s over Rs.3,342 crore in the same period.

Shares in IDBI Bank, on Monday, ended 3.60 per cent lower at Rs. 68.25 apiece on the BSE, whose benchmark Sensex index finished down 1.46 per cent.

[“source-ndtv”]

New Delhi: The Reserve Bank of India is likely to approach policy easing with caution and go for a measured cut next week amid a recent bounce in global oil prices and partial implementation of a public sector wage bill, according to a report by DBS.

The DBS report said a 25 bps cut is largely factored in with few quarters also discussing the possibility of a more aggressive 50 bps cut, but there is little scope of a bunched up move.

“Given the recent bounce in global oil prices, partial implementation of a public sector wage bill and indications that the US Fed might resume rate normalisation in April/June, we see little scope of a bunched up move,” DBS said.

The declining inflation and negative industrial outlook have strengthened a case for the RBI cutting interest rate in its first bi-monthly monetary policy for 2016-17 on April 5.

“The central bank might see credence in approaching policy easing with caution, with a measured cut next week,” DBS added.

RBI Governor Raghuram Rajan on February 2 left the key interest rate unchanged citing inflation risks and growth concerns.

Meanwhile, RBI Governor Raghuram Rajan on March 12 said the government sticking to fiscal consolidation roadmap of reducing deficit to 3.5 per cent of the GDP in 2016-17 was comforting.

On how that would feed into monetary policy, he had said “wait and see”.

The report further noted that while low inflation implies a broadly low rate environment, the central bank will be wary of the implications on savings, with the official leaning for real rates to be maintained between 1.5-2 per cent.

DBS said price action will draw direction from next week’s RBI rate review and five state elections starting next month.

The month-long state elections will kick-start with Assam and West Bengal (first phase) going to the polls on April 4, followed by Tamil Nadu, Kerala and Pondicherry.

These five states cumulatively make up 51 of the 245 seats in the upper house of Parliament.

Chennai: Non-banking finance company Sundaram Finance has revised interest rates on deposits by 25 basis points with effect from April 1, 2016.

Interest rates for 12, 18, 24 and 36 months stand reduced to 8 per cent per annum from existing 8.25 per cent, the Chennai-based firm said in a statement.

Interest rates for senior citizens would be reduced to 8.50 per cent per annum from 8.75 per cent for all tenors.

Recently, the company’s deposit balance crossed the Rs 2,200 crore mark, it added.

New Delhi: State-run Bank of India on Tuesday said the government has approved a capital infusion of Rs. 1,150 crore in lieu of preferential allotment of shares.

“The government of India has conveyed their approval to infuse capital funds to the tune of Rs. 1,150 crore in the bank by way of preferential allotment of equity shares in favour of government of India,” Bank of India said in a statement.

This is part of the government’s plans to infuse Rs. 5,050 crore in the public sector banks.

In the first tranche, as many as 13 public sectors banks were given fund support of Rs. 19,950 crore. Of this, State Bank of India (SBI) got the highest amount of Rs. 5,393 crore.

Besides, the government infused Rs. 2,229 crore in IDBI Bank,Rs. 2,009 crore in Indian Overseas Bank and Rs. 1,732 crore in Punjab National Bank.

Last year, the government announced a revamp plan, ‘Indradhanush’, to infuse Rs. 70,000 crore in state-owned banks over four years, while they will have to raise a furtherRs. 1.1 lakh crore from markets to meet their capital requirements in line with global risk norms Basel-III.

In line with the blueprint, PSU banks will get Rs. 25,000 crore this fiscal and also in the next fiscal year.

Besides, Rs. 10,000 crore each would be infused in 2017-18 and 2018-19.

New Delhi: Public sector lender Union Bank of India on Tuesday said it has raised Rs. 1,000 crore by issuing bonds on private placement basis.

Oriental Bank of Commerce (OBC) said it will raise over Rs.178 crore by selling stake to LIC.

“Union Bank of India has issued 10,000 basel III compliant Tier II bonds of face value of Rs. 10 lakh each aggregating to Rs.1,000 crore on private placement basis,” it said in a filing on BSE.

The bonds, issued for a 10-year tenure, bears 8.61 per cent per annum of coupon rate.

The bonds are rated IND AA by India Rating, the bank said.

OBC, in its Extraordinary General Meeting, held on Tuesday said it will issue and allot 2,15,48,758 equity shares at an issue price of Rs. 82.79 aggregating to Rs. 178.40 crore to LIC on preferential basis.

New Delhi: State-run Vijaya Bank today said the government has approved a capital infusion of Rs 220 crore in lieu of preferential allotment of shares.

“Government has decided to infuse capital funds to the tune of Rs 220 crore in Vijaya Bank by way of preferential allotment of equity in favour of Government of India as part of capital infusion for financial year 2015-16,” Vijaya Bank said in a BSE filing.

This is part of government’s plan to infuse Rs 5,050 crore in public sector banks. In the first tranche, as many as 13 public sectors banks were given fund support of Rs 19,950 crore. Of this, SBI got the highest amount of Rs 5,393 crore.

Besides, the government infused Rs 2,229 crore in IDBI Bank, Rs 2,009 crore in Indian Overseas Bank and Rs 1,732 crore in Punjab National Bank.

Last year, the government had announced a revamp plan ‘Indradhanush’ to infuse Rs 70,000 crore in state-owned banks over four years, while they will have to raise a further Rs 1.1 lakh crore from markets to meet their capital requirements in line with global risk norms Basel-III.

In line with the blueprint, PSU banks will get Rs 25,000 crore this fiscal and also in the next fiscal. Besides, Rs 10,000 crore each would be infused in 2017-18 and 2018-19.

New Delhi: State-owned United Bank of India (UBI) today said the government has approved capital infusion of Rs 480 crore in lieu of preferential allotment of shares.

“The government has decided to infuse capital funds to the tune of Rs 480 crore in the bank by way of preferential allotment of equity in favour of the Government of India,” UBI said in a BSE filing.

This is part of the government’s plan to infuse Rs 5,050 crore in public sector banks. In the first tranche, as many as 13 public sectors banks were given fund support of Rs 19,950 crore. Of this, SBI got the highest amount of Rs 5,393 crore.

Besides, the government has infused Rs 2,229 crore in IDBI Bank, Rs 2,009 crore in Indian Overseas Bank and Rs 1,732 crore in Punjab National Bank. Last year, the government had announced a revamp plan ‘Indradhanush’ to infuse Rs 70,000 crore in state-owned banks over four years, while they will have to raise a further Rs 1.1 lakh crore from markets to meet their capital requirements in line with the global risk norms Basel-III.

In line with the blueprint, PSU banks will get Rs 25,000 crore this fiscal and also in the next fiscal. Besides, Rs 10,000 crore each would be infused in 2017-18 and 2018-19.

Mumbai: National Bank of Agriculture and Rural Development (Nabard) on Tuesday said it has disbursed Rs 2,500 crore in refinance to non-banking lenders in the first year of starting the facility.

“We started refinance for NBFCs only this year and have disbursed Rs 2,500 crore within one year. Most of the support is to NBFC-MFIs,” Nabard chairman HK Bhanwala told reporters here.

He said the body is “very satisfied” with the book and wishes to grow its exposure to NBFCs in FY17, but declined to give a target.

Many NBFCs supported by Nabard have received in-principle nods from Reserve Bank to work as a small finance bank, he said.

Bhanwala said Nabard will continue supporting such entities and added it has an outstanding of Rs 700 crore from Bandhan Bank, which transformed itself into a universal bank from being a micro-lender last year.

He said Nabard exercises full caution and supports only better rated NBFCs with the refinance facility.

Nabard is slated to close the year with an overall outstanding of over Rs 85,000 crore on long-term refinance, of which Rs 2,000 crore is the one for NBFCs.

He, however, declined to give any additional numbers saying those will be made available only after the end of the fiscal.

New Delhi: The government is looking at a scheme for encouraging its employees to invest part of their 7th Pay Commission salary hike in a fund which would be used for recapitalisation of state-owned banks.

High income government officials, according to sources, could be roped in to invest in the fund by offering lucrative incentives like tax breaks or higher returns.

As per the proposal, higher income government staff from the rank of Section Officer may be asked to shell out 50 per cent of increased salary towards bank capitalisation bonds, the sources said.

Top officials of the Finance Ministry had a preliminary discussion over the issue last week, sources said.

However, no decision has been taken yet, they said, adding that Committee of Secretaries is looking into the matter and various alternatives are being considered.

This proposal is being considered to find more resources for recapitalisation of public sector banks which are saddled with gross non-performing assets (NPAs) of Rs. 3.61 lakh crore at the end of December 2015, as against Rs. 39,859 crore in the private sector.

Gross NPA ratio as percentage of advances rose to 7.30 per cent while for private banks, it stood at 2.36 per cent as of December-end.

The Reserve Bank of India has asked public sector banks to clean up their balance sheets by March next year. Cleaning to books would require additional capital infusion than what has been envisage in the ‘Indradhanush’, a revamp plan announced last year by the government to infuse Rs. 70,000 crore in state-owned banks over four years, while they will have to raise a further Rs. 1.1 lakh crore from markets to meet their capital requirements in line with global risk norms Basel-III.

In line with the blueprint, PSU banks were given Rs. 25,000 crore in the last fiscal year and an equal amount is planned for the current fiscal year. As per the plan, Rs. 10,000 crore each would be infused in 2017-18 and 2018-19.

It is believed that the government provided as much as Rs.70,000 crore in the Union Budget 2016-17 for implementation of Seventh Pay Commission for 47 lakh government employees and 52 lakh pensioners.

While the Budget did not provide an explicit overall provision number, the government had said the 7th Pay Commission hike has been built in as interim allocation for different ministries and Budget numbers were credible.

Implementation of the Pay Commission report in toto is to cost the government Rs. 1.02 lakh crore.

New York: US banks are generally expected to post dismal results when their earnings season gets under way next week, but some analysts say to dig deeper: the fine print in the results, and what bank bosses say, could actually help these long-suffering stocks bounce back.

Four of the S&P 500’s top-weighted banks, J P Morgan Chase, Wells Fargo, Bank of America and Citigroup, are set to report grim first-quarter revenues and profits starting on Wednesday.

Analysts are expecting first-quarter reports in the financial sector to show a 9.2-per cent decline in earnings and a 0.2-per cent rise in sales.

The financials have been the worst performing S&P 500 sector this year, down 8 per cent as the broader S&P 500 is flat.

“We think banks are about as low as they can go,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

Bank shares are cheap compared to the rest of the market. Companies in the S&P financial sector are selling at roughly 12.8 times estimated earnings over the next 12 months, compared with 16.7 times forward earnings for the broader S&P 500.

Investors like Mr Ghriskey will be parsing those reports to determine if the low prices present buying opportunities or simply reflecting the sad reality of poor earnings for some time to come.

Mr Ghriskey, who said he’d be “very surprised to see positive earnings”, said he will look beyond the numbers in the case he can gleam optimistic forecasts from bank managers. His firm is modestly overweight on financial services.

The sector has remained troubled since the global financial crisis as banks have battled prolonged low interest rates, faced an onslaught of pricy reform mandates, and, more recently, were hit by lending to risky oil and gas companies.

Even at seabed-low prices, it won’t be easy for banks to prove their shares are a good buy.

Investors will look for notes about the type of exposure banks have to the energy sector, which is facing its first quarterly loss in at least a decade, according to Thomson Reuters data, and is expected to be the biggest drag on the S&P 500.

Bank shares could become more appealing if the companies can show a relatively healthy energy portfolio or that they are losing less money than expected on energy loans. Their forecasts might also strengthen if oil prices are in fact settling, as has seemed to be the case recently.

US oil prices, which had fallen to a low of about $26 a barrel by mid-February, had stabilized near $40 in March.

Investors will also look for signs of strength in banks’ investment and trading arms, said Nomura senior analyst Steven Chubak.

“Any constructive comments on the capital markets outlook would be well-received given the very challenging operating backdrop in Q1,” Mr Chubak said.

Kim Forrest, vice president at Fort Pitt Capital Group in Pittsburgh, does not expect much from the financial sector going into earnings week, but said investors will be looking for opportunity due to the low prices.

An incentive to buy could include commentary about an increase in the demand for loans and banking products. “That could propel their shares higher,” Ms Forrest said.

Earnings week begins in earnest across sectors on Monday, with metals company Alcoa scheduled as the first to report. Looking at the broad S&P 500, analysts’ forecasts have been reduced so low that many companies are likely to beat estimates despite frail earnings.