Tides of 28.07 2015

1.  HDFC Bank is set to expand its micro ATM operations further, boosting new customer enrolments online through Aadhaar cards. Starting October 2014, India’s second-largest private sector bank has been using micro-ATMs to authenticate the personal information of prospective customers in remote areas. This is done in less than a minute, requiring just the customer’s Adhaar number and finger impression, thereby doing away with physical documentation to conform to the Know Your Customer (KYC) guidelines. The bank is doing an e-KYC pilot at 16 ultra small (with one or two employees) branches, where it will be placing these machines permanently. , The number of such branches is likely to increase to 300 in the next three-four months. HDFC Bank has nearly 1,600 micro-ATMs on the ground and also aims to double this count to over 3,000 during the period.

2.  A bench of the Jammu and Kashmir High Court ruled in a case that the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act) cannot be enforced in that State. This Act, passed in 2002, empowered banks and financial institutions to recover the money they had lent to borrowers without going through an elaborate court process. When the Act was passed, bankers projected it as the panacea for all their problems. The impression given was that borrowers would quiver and quake at the very prospect of a banker coming to them armed with a SARFAESI notice. A little over a decade hence, reality has been different. Bankers will concede that they have probably succeeded only one in four times when they used the Act. The High Court judgment on the issue of the applicability of the Act in the State is therefore a setback for banks.

3.  Private sector lender IndusInd Bank has completed the acquisition of Royal Bank of Scotland’s (RBS) diamond and jewellery loan portfolio.“The acquired loan portfolio is approximately Rs. 4,100 crore.” On April 10, 2015, the Hinduja Group-promoted bank had announced that it had entered into an agreement to acquire the diamond and jewellery financing business and related deposits portfolio of RBS in India, subject to regulatory approvals.The deal is projected to enhance IndusInd Bank’s position and market share in the diamond and jewellery financing business. It already has a presence in that segment. RBS has 20 branches across 10 cities in the country.In 2012, it took a strategic decision to exit its customer facing business in Asia Pacific.After the RBI allowed RBS to sell its retail banking business to rival HSBC in 2012, the UK-based bank had said it would wind down its business gradually.

4.  Saraswat Cooperative Bank, India’s largest urban cooperative bank, expects to cross the Rs. 50,000-crore mark in terms of total business conducted by the end of March 2016.In FY2015, the bank’s total business (deposits plus advances) grew 14 per cent ( Rs. 5,559 crore) to Rs. 44,969 crore. Deposits grew 13.5 per cent to Rs. 27,171 crore and advances increased 15 per cent to Rs. 17,798 crore. In the financial year ended March 31, 2015, net profit grew 29 per cent to Rs. 190 crore ( Rs. 147 crore in FY 2013-14). The bank declared a dividend of 15 per cent (10 per cent).As on March 31, 2015, gross NPAs (non-performing assets) as a percentage of total advances edged lower to 4.02 per cent ( Rs. 715 crore in absolute terms), against 4.69 per cent ( Rs. 726 crore).Net NPAs, however, edged up to 0.67 per cent ( Rs. 115 crore) as against nil in the previous year.