Public sector banks in India post Rs3,221 crore profits in first half

Public sector banks (PSBs) have returned to profitability in 2019-20, posting an aggregate profit of Rs3,221 crore in the first half ending September, Minister of State for Finance Anurag Singh Thakur said in the Parliament.

PSBs had posted huge losses in 2017-18 and 2018-19 financial years due to heavy provisioning for non-performing assets and other contingencies, according to the minister.

State-run lenders had posted aggregate operating profits during 2017-18 and 2018-19 of Rs1,55,603 crore and Rs1,53,871 crore respectively.

However, they made aggregate provisions for NPAs and other contingencies of Rs2,40,973 crore and Rs2,35,623 crore in FY2018 and FY2019, respectively, he said in a written reply in Lok Sabha on Monday. This resulted in aggregate net losses of Rs85,370 crore and Rs81,752 crore in 2017-18 and 2018-19 respectively.

“Further, PSBs have returned to profitability in the current fiscal, reporting an aggregate profit of Rs3,221 crore in the aggregate profit of Rs 3,221 crore in the first half of the current fiscal,” Thakur said.

He said their aggregate gross advances increased to Rs 68.76 lakh crore as on March 31, 2014 from Rs 25.03 lakh crore as on March end 2008. As per RBI inputs, the primary reasons for the spurt in stressed assets have been observed to be, aggressive lending practices, wilful default/loan frauds/corruption in some cases, and economic slowdown, the minister said.

He was responding to a question whether the losses into a question whether the losses in public and private sector banks have been caused by increasing frauds.The Asset Quality Review (AQR) initiated in 2015 by the RBI for clean and fully provisioned bank balance-sheets revealed high incidence of non-performing assets (NPAs), the minister said.

The RBI has issued various guidelines on safeguards on frauds, misappropriation, embezzlements and defalcation of funds for Urban Cooperative Banks (UCBs), he added.

Stock price of Yes Bank on BSE extended losses on Tuesday, falling nearly 12 per cent, as investors feared an adverse outcome of the crucial board meeting later.

The Ravneet Gill-led fourth largest bank is expected to take a call on the $2 billion investment offers.

A spike in volumes (trading in a stock) was also seen in Yes Bank as investors rushed to sell the banks shares ahead of the board meeting which may well prove to be the turning point for the bank.

Yes Bank has also been the most active stock for the past consecutive months owing to divergent news flow.

Investors are running scared over reports that the bank may decline to accept the $1.2 billion offer by the controversial Canada-based Erwin Singh Braich. The investment offer by Braich is the biggest chunk of the $2 billion investments offer to revive the struggling bank.

A lack of enthusiasm was seen among investors after bank last month declared the list of investors who have offered to invest in Yes Bank.

Investors doubt stemmed from the fact that Braich has been involved in a number of bankruptcy cases, lawsuits and failed business deals.

Besides, the lack of information on Braich, who seems to steer the revival of the struggling Yes Bank, has also troubled investors off-late. Moreover, some reports have also emerged that marquee investor Rakesh Jhunjhunwala may also be out of contention.

Earlier the company had informed the exchanges that it will raise $2 billion by way of preferential allotment of shares.

Investors that the bank informed included Capital International which committed to invest at least $120 million, Discovery Capital, $50 million, Ward Ferry, $30 million, Erwin Singh Braich, $1.2 billion, Rakesh Jhunjhunwala, $25 million, and Aditya Birla Family Office, $25 million.

Net inflows into equity mutual funds dipped sharply to multi-year lows in November as on one hand, outflows from credit risk funds continued, while inflows into equity funds fell as much as 85 per cent. Net inflows into equities stood at Rs 933 crore last month, a three-year low and a drop of nearly 85 per cent month-on-month, according to data released by the Association of Mutual Funds in India (AMFI).

Equity ETFs registered inflows of Rs 2,954 crore in November as compared to Rs 5,906 crore in October. “Equity net inflows have fallen sharply in November due to profit-booking by investors,” said NS Venktatesh, CEO, AMFI.

Credit risk funds continued to suffer due to huge outflows. Last month, the 44-player mutual fund industry witnessed outflows of Rs 1,899 crore from credit risk funds in November, an increase of 37.4 per cent from the month ago period. Meanwhile, SIP inflows soared to all-time highs in November, AMFI said. It was at Rs 8,272 crore, up 27 crore from last month’s numbers.

Indo-Asian News Service