Finance minister pushes for rural credit
The Centre wants PSU bank to focus on the rural segments as bank credit show signs of picking up among retail lenders and SMEs.
Finance minister Nirmala Sitharaman on Thursday asked public sector banks to strengthen regional rural banks (RRBs) and ensure a smooth flow of credit to Kisan Credit Card (KCC) holders to boost rural incomes.
During the half-day-long meeting with the CEOs of public sector lenders, she reviewed the performance of RRBs with the heads of sponsor banks and chairmen of RRBs.
She advised Indian Banks’ Association and sponsor banks to play a lead role in technological advancements in the RRBs.
Sitharaman asked all the public sector banks to join the account aggregator system by end of July.
An account aggregator (AA) is a type of RBI-regulated entity (with an NBFC-AA license) that helps an individual securely and digitally access and share information from one financial institution they have an account with to any other regulated financial institution in the AA network. Data cannot be shared without the consent of the individual.
Banks are expected to report good numbers for the first quarter ended June 30, 2022 aided by the revival in credit growth and an improvement in asset quality. The country’s No. 1 private sector bank HDFC Bank declares its results on July 16.
A Motilal Oswal report said that banks in its coverage will deliver an annual 26 per cent growth in net profits for the quarter ended June 30, 2022.
Their pre-provision operating profit could see a marginal decline due to higher mark-to-market (MTM) losses. The brokerage expects HDFC Bank to report a 20 per cent growth in net profits at Rs 9,725 crore.
ICICI Bank could see its bottom line rise 39.7 per cent to Rs 6,448 crore.
HDFC Bank on Thursday announced a 0.20 per cent hike in its marginal cost of funding-based lending rate across all tenors. This is the third such move by the lender in as many months since May and takes the overall amount of the rate hikes to 0.80 per cent.
Among PSU banks, State Bank of India is expected to post a 16.8 per cent rise in net profits to Rs 7,595 crore. On the other hand, Bandhan Bank is projected to report a 122 per cent rise — though a sequential 56 per cent fall — in net profits to Rs 829 crore.
The brokerage said bank credit grew 12 per cent on a year-on-year basis for the period ended June 17. Among the segments home, vehicle, unsecured, and small businesses are doing well, while the demand for commercial vehicles is also showing an improvement.
Moreover, the credit cards business is seeing a healthy momentum, with spending remaining strong during the quarter.
The defence ministry on Thursday allowed three private sector banks to provide financial services to it for overseas procurement of military hardware.
The banks are HDFC Bank Ltd, ICICI Bank and Axis Bank.
Only authorised public sector banks were utilised to provide services such as letter of credit and direct bank transfers to the ministry for overseas procurement.