Andhra Bank, the mid-size public-sector bank whose home turf is Andhra Pradesh-Telangana, has been struggling with a large-size bad loan volume. The NPA situation is so bad that some employees’ unions had gone to the extent of staging dharnas in front of the defaulters’ offices. One union now plans to march to the residence of a Telugu superstar who owes the bank ₹40 crore! At a whopping gross NPA of 6 per cent, Andhra Bank has the sixth largest bad loan stockpile among the banks and rumours have been afloat that it would be merged with Bank of Baroda or some other bank.
CVR Rajendran, Chairman and Managing Director, said the splitting of Andhra Pradesh had taken a huge toll on the bank’s health. In an interview with BusinessLine, Rajendran, who will be retiring soon, says achche din is yet to come to the banking industry. (My Comment : He is retiring very soon and now only he will tell the truth, As long as one is in service he remains to be number one Yesman of Minister to survive ))
Excerpts:
When the Modi Government took over, many bank chiefs were positive that its pro-business orientation would help reduce public sector banks’ NPAs in three months. Has achche din come to the banks yet?
We are all a little disappointed. The government is not as quick in making economic policy changes as we had expected. Maybe, it is making long-term policies. But you must remember that the PV Narasimha Rao Government had taken all the key economic decisions in its first 100 days. These policies changed India’s economy.
As a banker, when do you expect the economy to make a turnaround?
My guess is, one year. There are a lot of favourable factors that can help the government take critical decisions on key economic issues. The oil price is less than a half of what it had been. The current account position is comfortable. Global attitude to India is positive. And, the government has a majority in the Lok Sabha.
You attended the Gyan Sangam of public sector banks held at Pune in the first week of January. What were the takeaways?
Again, a little disappointing. We made our presentations and the government listened. The Prime Minister wanted us to work towards building two-to-four global-size banks like China’s through mergers and acquisitions.
But he said the government would not push for it; and that the process should be market-driven. He is willing to listen.
There was an informal consensus against mergers and takeovers at the meeting. Most banks are in trouble now and no one is willing to take over weak banks and bear the additional liabilities. For the next two years, I don’t think there would be any mergers between public sector banks.
So, Andhra Bank is not going to be merged with another bank?
No, at least not for two years. If it remains weak after two years and even after the economy improves, maybe. We are going to work hard to retain our separate identity. Our employees are against merger. Our top priority now is to recover the bad loans.
How did your bank acquire so much NPAs?
A huge chunk of the NPA is from the infrastructure and power sectors. A large number of infra and power companies in the country are owned by the Telugu people and naturally, being the lead bank in the State, they had taken loans from us. Many of these companies are now in ICU (intensive care unit). Delay in government’s policy-making is one major reason for this. Of course, there are a lot of wilful defaulters too.
How did the division of Andhra Pradesh impact your bank?
The long agitation for a separate State of Telangana hit our business badly as 1,300 of our 2,300 branches are located in Andhra-Telangana States. It also fundamentally changed the credit culture in the region. Since political parties made competing loan waiver offers, borrowers refused to repay their loans. This affected farm and small loans most. We were the lead bank in the undivided Andhra Pradesh, now we have lost that status in Telangana (mainly because of ‘Andhra’ in the bank’s name).
But, in the long run, the split will benefit all the banks as well as the economy. There is going to be a feverish pace of development activities in both States because of their competitive development agendas.
What is your view of the Modi Government’s decision to split the Chairman-cum-Managing Director post in banks?
What is your view of the Modi Government’s decision to split the Chairman-cum-Managing Director post in banks?
I support it because there is a lot of power concentrated in the hands of the CMD. The banks’ boards are not powerful in controlling the CMD.
However, the benefits will depend on who becomes the Chairman. If the Chairman, is corrupt he/she can collude with the CEO for their mutual benefits.
Also, if the Chairman’s post is created to accommodate a retired IAS officer or a ruling party politician, the situation will be worse.
http://www.thehindubusinessline.com/industry-and-economy/banking/banking-industry-yet-to-see-achache-din-andhra-bank-chief/article6835351.ece
PSU banks’ NPAs rise to Rs 2.16 lakh cr-The Statesman 30.01.2015
Mumbai, 29 January: The non-performing assets of nationalised banks increased sharply from Rs 9,190 crore in 2011-2012 to Rs 2,16,739 crore in 2013-2014, according to the Reserve Bank of India.
Former journalist Mr Ketan Tirodkar obtained this data from the Central bank under the right to information.
Mr Tirodkar has filed a public interest litigation in Bombay High Court seeking a CBI investigation into what he terms “an NPA scam”.
The High Court had, in March last year, directed the CBI to inform what action it had taken against 140 cases of fraud registered by the RBI in connection with the NPAs of nationalised banks
My Comment on above news is as follows:
This refers to quarterly result of a few PS banks booking lesser profit and greater NPA in quarter ended December 2014 compared to past quarters. Keeping in view NPA position of banks, , CMD of Andhra Bank has also expressed his opinion candidly in an interview that position of banks is not likely to improve very soon and Achhe Din are yet to come. His has to retire very soon and hence some clarity has come out.As long as top officials are in service , their one and only one duty is to please ministers willingly or unwillingly.
They promise every quarter that bank's Balance Sheet will improve from next quarter as Previous Prime Minister Mr. Manmohan Singh used to say on price rise issue. When people used to cry on rising price, he used to tell them that situation will ease from next quarter. He used to dilute the intensity of angry people by saying that economy of the country is in control and in good condition and all possible efforts are being taken to contain rising prices.
Similarly in Public sector banks, Non Performing Assets has been rising every quarter and it will continue to rise quarter after quarter. And after bad quarterly result, CMD of each bank says that bad debts will be contained from next quarter and soon they will improve.
In one quarter they somehow or the other manage the data but in next quarter they declare some bad debts. This hide and seek policy has been in play since long. In every quarter , some bank will declare bad debts and book lesser profit or loss and in next quarter some other bank will book greater profit and improvement in NPA position. This vicious circle will never end. NPA of PS banks have crossed two lac crore in March 2014 and will undoubtedly cross 5 lac crore in March 2016 if RBI does not change the policy of NPA and that of restructuring to please Crying CMDs and to please Modi Sarkar who are building pressure for more and more lending .
In my view , no power on earth can stop rising trend in NPA without manipulation or without changing the norms of NPA. I have been of this view for last several years and I may be termed as negative minded by extremely positive minded person or by Yesman of the system. But sooner or the later reality precipitates and surfaces out in open.
We have seen the fate of many banks in the past , not only weak banks but also so called strong banks. I do not blame United Bank or Uco Bank or Central Bank or Allahabad Bank, Indian Bank or Indian Oversea Bank. Even banks considered as strong banks like SBI, PNB, Union, Oriental bank are gradually exposing their hidden sins. A bank used to be strong not because of inherent quality asset but due to clever mind of top officials of that bank who had so many fraudulent tools to conceal bad assets quarter after quarter. This is why , many times bad result comes out only after retirement of a Clever CMD. This has happened in SBI, PNB, Union Bank, Oriental, United , Central Bank, Indian Bank , IOB , Vijya Bank and other banks so many times.
Unfortunately neither RBI nor Ministry of Finance ever took the trouble to know why and how a CMD conceals Bad debts and how another declares it after former retires . Even if some audit is carried out for doing some SHOW business, the auditors is so chosen that he or she submits favourable report or the bad report if submitted is put under carpet to save top officials of the bank who have very excellent relation with top RBI officials or politicians. System has been bad since long. It is not that a few top officials are corrupt , but the corrupt officers at top post one after other has damaged the entire system and there is none to change the system. Now corruption has become the system and the culture of the bank. Good officers in such case avoid taking promotion or taking higher responsibility and bank thus run by mostly bad officers or inexperienced officers.
The reign of flatterers and bribe earners is not going to end as long as drastic steps are not taken to correct the culture from its source , from its origin and until a few from each bank are punished ,irrespective of the fact that he is in service or retired. Message of good or bad governance percolates down from top and not goes up from bottom. Unfortunately for every fault of top officials or ministers , blame goes to juniors and sometimes to middle management officials who had little role either in sanction of loan or in monitoring of loan or in account turning bad.
It is bad luck that inspecting, auditing, vigilance and all Regulating agencies are birds of same feather and hence they all avoid taking any punitive action against erring officials and try to pass the time or postpone taking decision on files related to corrupt officials. Actions are taken against some officers who do not have any Godfather backing him. There is deep rooted and strong unity among bad officials in all organisations specially in banks where good officials treat it better to keep mum and remain away from mainstream.
FE Best Banks awards: When the going gets tough, these people get going-Financial Express
It was a tough year, one that most banks would not like to recall — a time when the economy had slipped into a slowdown, quality assets were scarce and more loans were turning toxic. But amidst the gloom of 2012-13, a few banks showed they could rise to the task and come through with flying colours.
And it’s to these eight banks that The Financial Express will raise a toast on Friday. Giving away the FE Best Banks awards at a glittering ceremony in the country’s financial capital will be Jayant Sinha, union minister of state for finance. Also present on the occasion will be Maharashtra chief minister Devendra Fadnavis.
The FE Best Banks awards are the most coveted in the banking space with banks vying with one another to own one. For 2012-13, HDFC Bank walked away with the prize in the new private sector banks category while Bank of Baroda (BoB) was at the top of the heap in the public sector banks category.
HDFC Bank also picked up a couple of awards for profitability and efficiency. As always, Aditya Puri, managing director, accepted the announcement with his usual equanimity. “We’re more optimistic now than ever before about the future,” Puri remarked.
Ranjan Dhawan, executive director, BoB, told FE his bank was highly honoured to be recipient of the Financial Express award.
Ravneet Gill, chief executive, Deutsche Bank, adjudged the winner among foreign banks, said he was delighted to win an award from a publication as highly admired as The Financial Express. “The award is a recognition of Deutsche Bank’s sustained and unwavering focus on clients, product innovation and principled growth,” Gill said.
Rana Kapoor, MD & CEO, Yes Bank, runner-up among new private sector banks, endorsed the prestige the survey carries with it. “Yesbankers are pleased to win this coveted recognition from The Financial Express which reinforces Yes Bank’s growing stature as a leading Indian private sector bank,” Kapoor said.
HS Upendra Kamath, MD & CEO, Tamilnad Mercantile Bank, also expressed his delight. “We are happy to receive this award from a prestigious institution like Financial Express this year as well,” Kamath said.
K Venkataraman, MD & CEO, Karur Vysya Bank, said it’s been a great honour to receive this award for the fourth year in a row. “In the tougher environment, getting continuous recognition gives satisfaction to all of us the in bank,” Venkataraman said.
The Financial Express has always taken care to ensure the survey is a fair one. Since numbers play a big part in the methodology, consultancy firm EY makes sure the weightages assigned to various parameters are relevant. Given the criteria are tough, only the very best make the cut.
Among others who rose to the challenge, this time around, are HSBC, which won for strength and soundness, BNP Paribas, which was ranked number one for credit quality, and Bank of Maharashtra, which picked up an award for growth.
http://www.thehindubusinessline.com/industry-and-economy/banking/banking-industry-yet-to-see-achache-din-andhra-bank-chief/article6835351.ece
PSU banks’ NPAs rise to Rs 2.16 lakh cr-The Statesman 30.01.2015
Mumbai, 29 January: The non-performing assets of nationalised banks increased sharply from Rs 9,190 crore in 2011-2012 to Rs 2,16,739 crore in 2013-2014, according to the Reserve Bank of India.
Former journalist Mr Ketan Tirodkar obtained this data from the Central bank under the right to information.
Mr Tirodkar has filed a public interest litigation in Bombay High Court seeking a CBI investigation into what he terms “an NPA scam”.
The High Court had, in March last year, directed the CBI to inform what action it had taken against 140 cases of fraud registered by the RBI in connection with the NPAs of nationalised banks
My Comment on above news is as follows:
This refers to quarterly result of a few PS banks booking lesser profit and greater NPA in quarter ended December 2014 compared to past quarters. Keeping in view NPA position of banks, , CMD of Andhra Bank has also expressed his opinion candidly in an interview that position of banks is not likely to improve very soon and Achhe Din are yet to come. His has to retire very soon and hence some clarity has come out.As long as top officials are in service , their one and only one duty is to please ministers willingly or unwillingly.
They promise every quarter that bank's Balance Sheet will improve from next quarter as Previous Prime Minister Mr. Manmohan Singh used to say on price rise issue. When people used to cry on rising price, he used to tell them that situation will ease from next quarter. He used to dilute the intensity of angry people by saying that economy of the country is in control and in good condition and all possible efforts are being taken to contain rising prices.
Similarly in Public sector banks, Non Performing Assets has been rising every quarter and it will continue to rise quarter after quarter. And after bad quarterly result, CMD of each bank says that bad debts will be contained from next quarter and soon they will improve.
In one quarter they somehow or the other manage the data but in next quarter they declare some bad debts. This hide and seek policy has been in play since long. In every quarter , some bank will declare bad debts and book lesser profit or loss and in next quarter some other bank will book greater profit and improvement in NPA position. This vicious circle will never end. NPA of PS banks have crossed two lac crore in March 2014 and will undoubtedly cross 5 lac crore in March 2016 if RBI does not change the policy of NPA and that of restructuring to please Crying CMDs and to please Modi Sarkar who are building pressure for more and more lending .
In my view , no power on earth can stop rising trend in NPA without manipulation or without changing the norms of NPA. I have been of this view for last several years and I may be termed as negative minded by extremely positive minded person or by Yesman of the system. But sooner or the later reality precipitates and surfaces out in open.
We have seen the fate of many banks in the past , not only weak banks but also so called strong banks. I do not blame United Bank or Uco Bank or Central Bank or Allahabad Bank, Indian Bank or Indian Oversea Bank. Even banks considered as strong banks like SBI, PNB, Union, Oriental bank are gradually exposing their hidden sins. A bank used to be strong not because of inherent quality asset but due to clever mind of top officials of that bank who had so many fraudulent tools to conceal bad assets quarter after quarter. This is why , many times bad result comes out only after retirement of a Clever CMD. This has happened in SBI, PNB, Union Bank, Oriental, United , Central Bank, Indian Bank , IOB , Vijya Bank and other banks so many times.
Unfortunately neither RBI nor Ministry of Finance ever took the trouble to know why and how a CMD conceals Bad debts and how another declares it after former retires . Even if some audit is carried out for doing some SHOW business, the auditors is so chosen that he or she submits favourable report or the bad report if submitted is put under carpet to save top officials of the bank who have very excellent relation with top RBI officials or politicians. System has been bad since long. It is not that a few top officials are corrupt , but the corrupt officers at top post one after other has damaged the entire system and there is none to change the system. Now corruption has become the system and the culture of the bank. Good officers in such case avoid taking promotion or taking higher responsibility and bank thus run by mostly bad officers or inexperienced officers.
The reign of flatterers and bribe earners is not going to end as long as drastic steps are not taken to correct the culture from its source , from its origin and until a few from each bank are punished ,irrespective of the fact that he is in service or retired. Message of good or bad governance percolates down from top and not goes up from bottom. Unfortunately for every fault of top officials or ministers , blame goes to juniors and sometimes to middle management officials who had little role either in sanction of loan or in monitoring of loan or in account turning bad.
It is bad luck that inspecting, auditing, vigilance and all Regulating agencies are birds of same feather and hence they all avoid taking any punitive action against erring officials and try to pass the time or postpone taking decision on files related to corrupt officials. Actions are taken against some officers who do not have any Godfather backing him. There is deep rooted and strong unity among bad officials in all organisations specially in banks where good officials treat it better to keep mum and remain away from mainstream.
FE Best Banks awards: When the going gets tough, these people get going-Financial Express
It was a tough year, one that most banks would not like to recall — a time when the economy had slipped into a slowdown, quality assets were scarce and more loans were turning toxic. But amidst the gloom of 2012-13, a few banks showed they could rise to the task and come through with flying colours.
And it’s to these eight banks that The Financial Express will raise a toast on Friday. Giving away the FE Best Banks awards at a glittering ceremony in the country’s financial capital will be Jayant Sinha, union minister of state for finance. Also present on the occasion will be Maharashtra chief minister Devendra Fadnavis.
The FE Best Banks awards are the most coveted in the banking space with banks vying with one another to own one. For 2012-13, HDFC Bank walked away with the prize in the new private sector banks category while Bank of Baroda (BoB) was at the top of the heap in the public sector banks category.
HDFC Bank also picked up a couple of awards for profitability and efficiency. As always, Aditya Puri, managing director, accepted the announcement with his usual equanimity. “We’re more optimistic now than ever before about the future,” Puri remarked.
Ranjan Dhawan, executive director, BoB, told FE his bank was highly honoured to be recipient of the Financial Express award.
Ravneet Gill, chief executive, Deutsche Bank, adjudged the winner among foreign banks, said he was delighted to win an award from a publication as highly admired as The Financial Express. “The award is a recognition of Deutsche Bank’s sustained and unwavering focus on clients, product innovation and principled growth,” Gill said.
Rana Kapoor, MD & CEO, Yes Bank, runner-up among new private sector banks, endorsed the prestige the survey carries with it. “Yesbankers are pleased to win this coveted recognition from The Financial Express which reinforces Yes Bank’s growing stature as a leading Indian private sector bank,” Kapoor said.
HS Upendra Kamath, MD & CEO, Tamilnad Mercantile Bank, also expressed his delight. “We are happy to receive this award from a prestigious institution like Financial Express this year as well,” Kamath said.
K Venkataraman, MD & CEO, Karur Vysya Bank, said it’s been a great honour to receive this award for the fourth year in a row. “In the tougher environment, getting continuous recognition gives satisfaction to all of us the in bank,” Venkataraman said.
The Financial Express has always taken care to ensure the survey is a fair one. Since numbers play a big part in the methodology, consultancy firm EY makes sure the weightages assigned to various parameters are relevant. Given the criteria are tough, only the very best make the cut.
Among others who rose to the challenge, this time around, are HSBC, which won for strength and soundness, BNP Paribas, which was ranked number one for credit quality, and Bank of Maharashtra, which picked up an award for growth.
Oriental Bank of Commerce Q3 net down 91.3% at Rs 19.56 crore-Businss Standard
The bank had posted net profit of Rs 224.3 crore for the October-December quarter of 2013-14
Public sector lender Oriental Bank of Commerce (OBC) today reported a 91.27% decline in net profit at Rs 19.56 crore for the third quarter ended December 31, 2014, dragged by higher provisions.
The bank had posted net profit of Rs 224.3 crore for the October-December quarter of 2013-14, OBC said in a BSE filing.
OBC's total income rose by 7.79% to Rs 5,458.79 crore during the October-December period from Rs 5,063.98 crore in the same period last year.
During the quarter under review, the bank's provisioning other than tax and contingencies jumped by 57.75% to Rs 885.14 crore from Rs 561.1 crore in the same quarter of the previous fiscal.
The bank's gross NPAs increased to 5.43% at the end of third quarter from 3.87% in the corresponding period in the previous year.
Shares of Oriental Bank of Commerce were trading at Rs 292.70 apiece, down 6.49% from its previous close on the BSE.
Union Bank slips on poor results-Hindu Business Line 28.01.2015
January 27, 2015:
The bank had posted net profit of Rs 224.3 crore for the October-December quarter of 2013-14, OBC said in a BSE filing.
OBC's total income rose by 7.79% to Rs 5,458.79 crore during the October-December period from Rs 5,063.98 crore in the same period last year.
During the quarter under review, the bank's provisioning other than tax and contingencies jumped by 57.75% to Rs 885.14 crore from Rs 561.1 crore in the same quarter of the previous fiscal.
The bank's gross NPAs increased to 5.43% at the end of third quarter from 3.87% in the corresponding period in the previous year.
Shares of Oriental Bank of Commerce were trading at Rs 292.70 apiece, down 6.49% from its previous close on the BSE.
Union Bank slips on poor results-Hindu Business Line 28.01.2015
January 27, 2015:
The stock of Union Bank of India slipped 7 per cent on Tuesday, after the company delivered disappointing results for the December quarter. The bank’s net profit fell by 13 per cent over last year, primarily driven by increase in employee cost and provisioning on bad loans.
The bank’s advances grew by a subdued 8.9 per cent during December, lower than the industry credit growth of 10 per cent during this period.
Credit growth
Aside from a slower credit growth, rise in bad loans, which is now 5 per cent of loans, up from 4.69 per cent in the September quarter, also impacted the bank's earnings. With restructured assets, another 5 per cent of loans, the bank’s stressed assets have been weighing on the bank’s capital base.
Union Bank of India has a tier I capital of 7.3 per cent (6.5 per cent norm) as of December 2014, stretching it thin. The return on equity is an abysmal 6.6 per cent down from about 8.3 per cent in the previous year.
Net interest margin
The bank’s net interest margin, which has been under pressure, is likely to face further stress as the bank lowered its base rate by 25 basis points after the RBI’s policy rate cut on Januay 15. The yield on loans is already down 10 basis points sequentially in the December quarter
Shares of Bank of Baroda plunged 14% to Rs 186 after reporting a sharp 68% year on year (yoy) drop in net profit at Rs 334 crore for the third quarter ended December 31, 2014 (Q3), due to higher provisions for stressed loans and tax provisions.
The government-owned bank had profit of Rs 1,048 crore in a year ago quarter.
Net interest income (interest earned minus interest expended) however grew 7.5% at Rs 3,286 crore on yoy basis.
Analysts on an average had expected profit of Rs 1,329 crore on net interest income of Rs 3,626 crore for the quarter.
The provisions for bad loans increased by 66% at Rs 1,262 crore against Rs 762 crore in previous year quarter, Bank of Baroda said in a statement.
The bank’s net non performing assets (NPA) as a percentage of net advances were at 2.21% in December quarter, from 1.74% in September quarter.
Read also Government Plan for Merger of Banks and Idea Of Low Interest Regime
PSU banks under pressure post Bank of Baroda Q3 results; CNX PSU Bank index tanks 6%
BOB, SBI, PNB, Canara Bank, Andhra Bank, Oriental Bank, Union Bank, BOI and IOB were down 4-14% on NSE
Shares of Bank of Baroda plunged 14% to Rs 186 after reporting a sharp 68% year on year (yoy) drop in net profit at Rs 334 crore for the third quarter ended December 31, 2014 (Q3), due to higher provisions for stressed loans and tax provisions.
The government-owned bank had profit of Rs 1,048 crore in a year ago quarter.
Net interest income (interest earned minus interest expended) however grew 7.5% at Rs 3,286 crore on yoy basis.
Analysts on an average had expected profit of Rs 1,329 crore on net interest income of Rs 3,626 crore for the quarter.
The provisions for bad loans increased by 66% at Rs 1,262 crore against Rs 762 crore in previous year quarter, Bank of Baroda said in a statement.
The bank’s net non performing assets (NPA) as a percentage of net advances were at 2.21% in December quarter, from 1.74% in September quarter.
Read also Government Plan for Merger of Banks and Idea Of Low Interest Regime
