Budget For Banks

The central bank had advised banks to take action to prevent/detect/contain malpractices or wrongdoing by staff. In the said circular, banks were also advised to strengthen the internal/concurrent audit process including random visits/scrutinies so as to detect and avoid any malpractice in the exchange/deposit of specified bank notes in branches.

As many as 156 senior officials of various state-owned banks were suspended and 41 transferred after they were found involved in irregularities related to demonetisation, Parliament was informed on Friday.

Certain bank officials have been found involved in irregularities relating to demonetisation. On the basis of prima facie involvement in the irregularities, public sector banks (PSBs) have so far reported to have placed 156 officials under suspension and to have transferred 41 officials," finance minister Arun Jaitley said in the Lok Sabha.

Vijaya Bank has informed the exchanges that a notice of strike has been given by the All India Bank Employees’ Association (AIBEA), the All India Bank Officers’ Assocation (AIBOA) and the Bank Employees’ Federation of India (BEFI) on February 7, 2017.

The bank note to the exchanges said the call for strike is for industry-level issues and not any bank-level issues.

A section of bank trade unions have threatened to go on a day-long nation-wide strike on February 7 to press various demands including complete removal of restrictions imposed during demonetisation period and safeguarding the autonomy of the Reserve Bank of India.

“It was expected that the government and the RBI would take necessary steps to mitigate the problems faced by the banks and the public but even now, we find that there is acute shortage of cash supply to the banks with the result that branches are not able to honour even the restricted payment of Rs 24,000/100,000 per week,” AIBEA General Secretary C H Vekatachalam said.

Apart from All India Bank Employees’ Association( AIBEA), other unions which will be part of the strike are All India Bank Officers’ Association (AIBOA) and Bank Employees Federation of India.

Jalandhar, January 31

The banks in city would work normally on February 7 as the strike call given by the All India Bank Employees Association, All India Bank Officers Association and Bank Employees Federation of India has been postponed to February 28. The decision was taken at a high level meeting of the United Forum of Bank Unions held at New Delhi today.

The call for strike on February 7 was given by AIBEA, AIBOA and BEFI to seek the attention of the government on the sufferings faced by employees and general public due to demonetisation.

Banks Position Improved Through Budget

A big infrastructure spending push, the boost to affordable housing and a fiscal deficit target of 3.2% of gross domestic product announced in the Union budget came as a big boost to banks.

A tax concession on provisions for bad loans also came as a relief for Indian banks which are struggling with gross non-performing assets of around Rs6.7 trillion.

Other measures that will boost credit growth include affordable housing projects being given infrastructure status and the highest target for farm credit at Rs10 trillion. After the government’s move to withdraw Rs500 and Rs1,000 notes on 8 November, bank credit growth has fallen to around 5%, the lowest in a couple of decades.

Another positive announcement for the banking sector was the government’s comparatively tame net market borrowing figure of Rs3.48 trillion in 2017-18, as compared with Rs4.25 trillion in the current year. The net borrowing figure takes into account the securities that will be bought back, Jaitley said.

Capital expenditure data provided in the budget document reveals that the gross market borrowing is set at Rs5.8 trillion for the new financial year, which is approximately the same as 2016-17.

Jaitley also said the government proposes to increase allowable provision for non-performing asset (NPA) from 7.5% to 8.5%. This will reduce the tax liability of banks, he said. Allowable provision is the amount of bad loan provision that is tax deductible.

Capital infusion of Rs10,000 crore for recapitalization of PSU Banks will be a morale booster in scenarios where Banks are in dire need of capital for Credit growth and Basel III compliance. Further, the deductions allowed for NPA provisions made by banks have been increased upto 8.5% of the income which will act as a breather in supplementing profitability of banks,”.

Overall it’s a neutral budget. Low fiscal deficit and lack of any populist measures like the farm loan waiver turned out to be positive for the banking stocks. Lower deficit will also ensure that Reserve Bank of India has more space to cut rates. The only negative thing is lower capital infusion in public sector banks,”