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1st signs of Chinese pullback from the place that started it all

In the first sign of de-escalation after the June 15 clash, Chinese troops moved back in Galwan & Pangong Tso.

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06 July, 2020, 04:54 PM IST

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No relief for Mudra Shishu loan borrowers during moratorium

The subvention will begin from June for the next one year for borrowers that had opted out of the moratorium offer. RBI extended the moratorium benefit till August 31 for borrowers under stress. The ministry also said that banks, NBFC and MFI that channel Mudra loans to the bottom-of-the-pyramid borrowers cannot raise interest rates on Shishu loans till the subvention scheme remains operational.

Chinese banks go slow on large loans

Charge filings with the Ministry of Corporate Affairs, compiled by data intelligence provider Propstack,...

Federal Bank bets on gold loans to drive credit demand in sluggish economy

The bank is targeting gold loan growth to touch 35 per cent during...

  • The Indian banking sector's exposure to the MSME sector contracted by more than Rs 35,000 crore from Rs 4.8 lakh crore in March to Rs 4.5 lakh crore in May, latest Reserve Bank of India (RBI) data on sectoral credit deployment showed.

    Loan growth to all major sectors contracted during April-May, RBI data shows. Loans to industry contracted 1.5 per cent compared to 2.5 per cent dip last year. Loans to services contracted 2 per cent compared to a dip of 5.3 per cent last year. These two sectors account for about 60 per cent of the banking sector's loan portfolio.

    "Asset quality will likely be impacted most for personal loans and credit cards with home loans and auto loans experiencing less of a shift" said a report by credit bureau Transunion Cibil. Based on a historical analysis of consumer payment hierarchy, the TransUnion CIBIL research observed that when norrowers face financial distress, they pay mortgages first, then personal loans, and cards are the last product to be prioritized in terms of payment obligations relative to those other products.

    Lenders have also requested that they be allowed to extend this scheme to borrowers of those banks and NBFCs that were capital-starved and unable to extend credit to even customers with a good rating.

    ​​Gold loans are a quick way for people to access cash when other avenues are not open," said CVR Rajendran, CEO at CSB Bank. Gold loans also are less risky for lenders as rising gold prices means the loan to value ratio is always kept in check.

    ​The RBI had announced the moratorium, which ends August 31, to protect borrowers hit by the Covid-19 crisis. The lenders opposed any interest waiver and defended the right to charge interest on interest, saying any waiver would set a bad precedent.

    The facility comes with a simplified procedure and competitive rate of interest, the bank said in a press release.

    The rating agency analysed top 500 debt-heavy private sector borrowers and said the additional stressed loans will take the cumulative quantum of delinquent loans to Rs 4.21 lakh crore over the FY21 and FY22.

    The coronavirus pandemic has led to prolonged lockdowns and a chilling of economic activity, forcing the RBI to declare a six-month voluntary moratorium on loan repayments till September.

    Rating agency Crisil in a recent report said bank credit growth is likely to nosedive to a multi-decadal low of 0-1 per cent in 2020-21 as economic activity is sharply impacted by the COVID-19 pandemic.

    A top government official told ET that public sector banks are trying to reach out to MSMEs, which are their existing customers, for loans under the ‘Atmanirbhar Bharat’ package that promised ₹3 lakh crore in collateral free loan.

    The finance ministry on Monday said banks have sanctioned over Rs 75,000 crore loans so far under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector reeling under stress due to the coronavirus-induced lockdown.

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