MUMBAI: Government has shunted out Bank of Baroda executive director KV Rama Moorthy, as an investigation by Reserve Bank continues into granting 70 million dirham loan to the troubled Atlas Jewellery Group, when he was heading its Dubai branch.
In an unprecedented move, Moorthy has been shifted to a smaller state-run lender United Bank of India (UBI). He assumed his new job on August 29 as executive director.
Moorthy confirmed to PTI that he has been transferred to United Bank following a government notification.
RBI had recently initiated a probe into the operations of BoB's Dubai branch and had reportedly told the government that his continuance may lead to a conflict of interest.
http://economictimes.indiatimes.com/industry/banking/finance/banking/atlas-group-probe-government-transfers-bank-of-baroda-executive-director-kv-rama-moorthy/articleshow/48943474.cms
12 executive directors invited for interviews to select 4 PSB heads
MUMBAI: Having appointed managing directors and CEOs of five large public sector banks last month, the government has now invited 12 executive directors of state-run banks to fill the posts of heads in four smaller banks --
Corporation Bank, Andhra Bank, Indian Bank, UCO Bank for interviews on September 16.
Corporation Bankchairman and managing director S R Bansal is retiring next January, while the other three banks are already headless.
"Around 12 executive directors have been called for interviews," sources told PTI.
The executive directors called for interviews in New Delhi on September 16 are --
1. S K Kalra (Andhra Bank),
2. R K Gupta (Bank of Maharashtra),
3. R K Takkar and Trishna Guha ( Dena Bank),
4. B K Divakara (Central Bank),
5. M K Jain (Indian Bank),
6. S N Patel (Oriental Bank of Commerce),
7. Mukesh Jain (Punjab & Sind Bank),
8. Ram S Sangapure and B Rao (PNB),
9. J K Garg (UCO Bank) and
10B S Ramarao ( Vijaya Bank).
Indian Bank is headless since its chairman and managing director T M Bhasin was appointed as a Commissioner in the Central Vigilance Commission in June.
Similarly, Andhra Bank is headless after superannuation of CVR Rajendran in August who had served the bank as its chairman and managing director.
UCO Bank chairman and managing director Arun Kaul had also retired on August 31.
After appointing MDs and CEOs at five large banks -- Bank of Baroda, Punjab National Bank, Bank of India, Canara Bankand IDBI Bank -- the government had last month issued norms for selection of MDs and CEOs in the remaining 17 state-run banks.
As per the guidelines, the selection to the top job in state-run banks would be from the existing pool of executive directors (EDs) or deputy managing directors (DMDs) with a remaining service period of two years.
In August, the government had appointed two private sector professionals -- P S Jayakumar (managing director and CEO of VBHC Value Homes) and Rakesh Sharma (MD and CEO of private lender Laxmivilas Bank) as MD and CEO of Bank of Baroda and Canara Bank, respectively.
It had also appointed M O Rego (Deputy MD, IDBI Bank), Kishore Kharat Piraji (Executive Director, Union Bank), and Usha Ananthasubramanian (CMD, Bhartiya Mahila Bank) as MDs and CEOs of Bank of India, IDBI Bank and Punjab National Bank, respectively.
After these five appointments, the then Financial Services Secretary Hasmukh Adhia had said heads of other PSBs would be from existing public sector banks and not private sector executives.
The post of chairman and managing director at Bharatiya Mahila Bank is vacant after Usha Ananthasubramanian joined PNB as MD and CEO.
Besides, the government has invited six deputy MDs of State Bank of India for interview for the post of Managing Director, on September 16.
The interviews are taking place to fill up the vacancy which will be created on superannuation of P Pradeep Kumar, who looks after corporate banking group, on October 31.
The six candidates include -- Praveen Kumar Gupta (MD, SBI Caps), Varsha Purandare (DMD & Chief Credit Officer), Dinesh Khara (MD, SBI Mutual Fund), Sunil Srivastava (DMD - Corporate Strategy and New Business), Shashi Kumar (DMD - Inspection & Management Audit) and M S Shastri (DMD and Chief Risk Officer).
The Lehman effect on Indian banks-The Mint
The effect is hard to ignore, but after seven years, it’s time the Indian banks got over it and made a fresh beginning
A few senior executives of the state-run banking industry disagreed with what I wrote a week ago—that they are apprehensive about new banks eroding their customer base. According to them, state-owned banks have the strength and agility to take on competition. When the first set of new banks appeared on the scene in the mid-1990s, core banking solutions were something unknown to the state-run lenders, but they embraced the technology and changed the way banking was done.
The senior bankers blame the current state of affairs on the Indian economy—after all, banks are a proxy for the economy and when growth falters and the investment climate is dull, banks cannot thrive. The villain of the piece, it seems, is the US investment bank Lehman Bros Holdings Inc.
India suffered relatively less from the global financial crisis that followed the collapse of Lehman Bros, but local banks went for large-scale restructuring of loans, many of which later turned bad.
While that created a big pool of bad assets, the sluggish economic growth has discouraged companies from investing in new projects.
Their arguments have encouraged me to take a look at how Indian banks performed in the five years before the collapse of Lehman Bros in September 2008—between fiscal year 2003 and 2008, when both inflation and interest rates were low and credit demand was high—and six years after that, between 2009 and 2015, much of which has seen high inflation and interest rates and low credit growth. Comparable data are available for 36 listed banks—25 public sector and 11 private banks.
In the five years between 2003 and 2008, the net profit of listed banks grew at a compound annual growth rate, or CAGR, of 18.4%. In absolute term, the collective net profit of this set of banks was Rs.14,520 crore in 2003, and this rose to Rs.33,826 crore at the end of March 2008.
However, as a group, private banks’ net profit grew at a CAGR of 28.1% in this period, compared with 16.1% for state-run banks. The contrast is starker in the six years that followed the Lehman crisis—between 2009 and 2015, the listed banks’ net profit grew at a CAGR of 10.8% but the public sector banks’ CAGR dropped to 1.73% even as private banks’ net profit grew at a CAGR of 30%.
This has happened because banks had to set aside money or provide for their growing bad loans. In the five years preceding the Lehman bankruptcy, gross non-performing assets (NPAs) of the listed banks actually dropped at a CAGR of 3.33%. The drop in gross NPAs of public sector banks was even sharper—a 5.42% CAGR decline to Rs.39,663 crore from Rs.52,419 crore.
However, after the Lehman crisis, the listed banks’ gross NPAs rose at a CAGR of close to 40% in six years till 2015, from Rs.59,571 crore to Rs.3.19 trillion.
In the June 2015 quarter, it rose even further. During this period, public banks’ gross NPAs rose at a staggering 45.6%—from Rs.44,200 crore to Rs.2.89 trillion while private banks’ gross NPAs grew at one-third the pace—14.6%.
The story of net NPAs, after provisioning, is similar. In the five years between 2003 and 2008, listed banks’ bad assets actually declined. But in the six years between 2009 and 2015, the net NPAs of listed banks grew at 45.23%. As a group, private banks’ net NPAs grew at 13.9% while public banks’ net NPA growth was almost four times that—a CAGR of 51.3%.
If we look at the movement of NPAs as a percentage of loans for individual banks, the contrast is equally stark.
Among large private banks, ICICI Bank Ltd’s gross NPAs rose from 3.3% in March 2008 to 4.32% in March 2009 and dropped to 3.68% in June 2015. For HDFC Bank Ltd, the comparable figures are 1.34%, 1.98% and 0.95%; for Axis Bank Ltd, they were 0.72%, 0.96% and 1.38%.
State Bank of India, the largest lender in the country, had gross NPAs of 3.04% of advances in March 2008; it dropped to 2.86% in March 2009 and rose to 4.29% in June 2015. The comparable figures for Punjab National Bank are 2.74%, 1.6% and 6.47%; and for Bank of Baroda, 1.84%, 1.27% and 4.13%.
The same trend is visible in net NPAs, where HDFC Bank and Axis Bank have all along recorded bad loans of less than 1%, while ICICI Bank’s net NPAs dropped from 1.55% in March 2008 to 2.09% in March 2009 and 1.58% in June 2015.
In the case of both Bank of Baroda and Punjab National Bank, net NPAs rose from less than 1% in 2008 and 2009 to more than 4% in June 2015, while State Bank of India’s net NPAs veered between 1.78% in March 2008 and 2.24% in June 2015. Clearly, public banks are more vulnerable than their peers in private sector when it comes to the quality of assets.
As far as business growth is concerned, the Lehman collapse affected all. In the five years before it, the deposit portfolio of the listed banks grew at a CAGR of about 20%. While 25 public banks’ deposits grew at 17.6%, the 11 private banks’ deposits grew at 32.8%, albeit on a smaller base.
Post the Lehman bankruptcy, till March 2015, the listed banks’ deposit growth dropped to 18.9%. While public banks’ deposits grew at a marginally higher pace of 18.6%, private banks’ deposit growth slipped to 20.6%.
The deceleration in the loan book is sharper. Between 2003 and 2008, the listed banks’ loan book grew at a CAGR of 26.3%—with public banks’ loan growth at 24.5% and private banks’ at 34.3%. In the past six years, the loan growth of listed banks slowed to 20.2%, with private banks growing at 22.2% and public banks at 19.7%.
Indeed, the Lehman effect on Indian banks is hard to ignore, but after seven years, it’s time the Indian banks got over it and made a fresh beginning.
Tamal Bandyopadhyay, consulting editor at Mint, is adviser to Bandhan Bank, India’s newest bank. He is also the author of Sahara: The Untold Story and A Bank for the Buck.
A few senior executives of the state-run banking industry disagreed with what I wrote a week ago—that they are apprehensive about new banks eroding their customer base. According to them, state-owned banks have the strength and agility to take on competition. When the first set of new banks appeared on the scene in the mid-1990s, core banking solutions were something unknown to the state-run lenders, but they embraced the technology and changed the way banking was done.
The senior bankers blame the current state of affairs on the Indian economy—after all, banks are a proxy for the economy and when growth falters and the investment climate is dull, banks cannot thrive. The villain of the piece, it seems, is the US investment bank Lehman Bros Holdings Inc.
India suffered relatively less from the global financial crisis that followed the collapse of Lehman Bros, but local banks went for large-scale restructuring of loans, many of which later turned bad.
While that created a big pool of bad assets, the sluggish economic growth has discouraged companies from investing in new projects.
Their arguments have encouraged me to take a look at how Indian banks performed in the five years before the collapse of Lehman Bros in September 2008—between fiscal year 2003 and 2008, when both inflation and interest rates were low and credit demand was high—and six years after that, between 2009 and 2015, much of which has seen high inflation and interest rates and low credit growth. Comparable data are available for 36 listed banks—25 public sector and 11 private banks.
In the five years between 2003 and 2008, the net profit of listed banks grew at a compound annual growth rate, or CAGR, of 18.4%. In absolute term, the collective net profit of this set of banks was Rs.14,520 crore in 2003, and this rose to Rs.33,826 crore at the end of March 2008.
However, as a group, private banks’ net profit grew at a CAGR of 28.1% in this period, compared with 16.1% for state-run banks. The contrast is starker in the six years that followed the Lehman crisis—between 2009 and 2015, the listed banks’ net profit grew at a CAGR of 10.8% but the public sector banks’ CAGR dropped to 1.73% even as private banks’ net profit grew at a CAGR of 30%.
This has happened because banks had to set aside money or provide for their growing bad loans. In the five years preceding the Lehman bankruptcy, gross non-performing assets (NPAs) of the listed banks actually dropped at a CAGR of 3.33%. The drop in gross NPAs of public sector banks was even sharper—a 5.42% CAGR decline to Rs.39,663 crore from Rs.52,419 crore.
However, after the Lehman crisis, the listed banks’ gross NPAs rose at a CAGR of close to 40% in six years till 2015, from Rs.59,571 crore to Rs.3.19 trillion.
In the June 2015 quarter, it rose even further. During this period, public banks’ gross NPAs rose at a staggering 45.6%—from Rs.44,200 crore to Rs.2.89 trillion while private banks’ gross NPAs grew at one-third the pace—14.6%.
The story of net NPAs, after provisioning, is similar. In the five years between 2003 and 2008, listed banks’ bad assets actually declined. But in the six years between 2009 and 2015, the net NPAs of listed banks grew at 45.23%. As a group, private banks’ net NPAs grew at 13.9% while public banks’ net NPA growth was almost four times that—a CAGR of 51.3%.
If we look at the movement of NPAs as a percentage of loans for individual banks, the contrast is equally stark.
Among large private banks, ICICI Bank Ltd’s gross NPAs rose from 3.3% in March 2008 to 4.32% in March 2009 and dropped to 3.68% in June 2015. For HDFC Bank Ltd, the comparable figures are 1.34%, 1.98% and 0.95%; for Axis Bank Ltd, they were 0.72%, 0.96% and 1.38%.
State Bank of India, the largest lender in the country, had gross NPAs of 3.04% of advances in March 2008; it dropped to 2.86% in March 2009 and rose to 4.29% in June 2015. The comparable figures for Punjab National Bank are 2.74%, 1.6% and 6.47%; and for Bank of Baroda, 1.84%, 1.27% and 4.13%.
The same trend is visible in net NPAs, where HDFC Bank and Axis Bank have all along recorded bad loans of less than 1%, while ICICI Bank’s net NPAs dropped from 1.55% in March 2008 to 2.09% in March 2009 and 1.58% in June 2015.
In the case of both Bank of Baroda and Punjab National Bank, net NPAs rose from less than 1% in 2008 and 2009 to more than 4% in June 2015, while State Bank of India’s net NPAs veered between 1.78% in March 2008 and 2.24% in June 2015. Clearly, public banks are more vulnerable than their peers in private sector when it comes to the quality of assets.
As far as business growth is concerned, the Lehman collapse affected all. In the five years before it, the deposit portfolio of the listed banks grew at a CAGR of about 20%. While 25 public banks’ deposits grew at 17.6%, the 11 private banks’ deposits grew at 32.8%, albeit on a smaller base.
Post the Lehman bankruptcy, till March 2015, the listed banks’ deposit growth dropped to 18.9%. While public banks’ deposits grew at a marginally higher pace of 18.6%, private banks’ deposit growth slipped to 20.6%.
The deceleration in the loan book is sharper. Between 2003 and 2008, the listed banks’ loan book grew at a CAGR of 26.3%—with public banks’ loan growth at 24.5% and private banks’ at 34.3%. In the past six years, the loan growth of listed banks slowed to 20.2%, with private banks growing at 22.2% and public banks at 19.7%.
Indeed, the Lehman effect on Indian banks is hard to ignore, but after seven years, it’s time the Indian banks got over it and made a fresh beginning.
Tamal Bandyopadhyay, consulting editor at Mint, is adviser to Bandhan Bank, India’s newest bank. He is also the author of Sahara: The Untold Story and A Bank for the Buck.
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