SBI posted a net profit of ₹16,884 crore in the April-June quarter of 2023-24. File
| Photo Credit: Reuters

State Bank of India (SBI) on August 3 reported an almost flat standalone net profit at ₹17,035 crore for the first quarter of the current financial year.

The country’s biggest lender had posted a net profit of ₹16,884 crore in the April-June quarter of 2023-24.

“The bank’s total income increased to ₹1,22,688 crore in the first quarter against ₹1,08,039 crore a year ago,” SBI said in a regulatory filing.

During the quarter, the bank earned an interest income of ₹1,11,526 crore compared to ₹95,975 crore in the year-ago period.

The bank’s gross non-performing assets (NPA) of the total advances declined to 2.21% in the first quarter from 2.76% at June-end last year.

Similarly, its net NPAs also eased to 0.57% in June 2024 from 0.71 % a year ago. On a consolidated basis, SBI’s net profit rose marginally to ₹19,325 crore against ₹18,537 crore in the same quarter of the previous fiscal.

At the same time, its total income increased to ₹1,52,125 crore compared to ₹1,32,333 crore in the corresponding period of the preceding financial year.

Besides approving the results, the board also cleared proposals for raising funds in Rupee or dollar by issuing Basel III compliant additional Tier 1 bonds and Tier 2 bonds of up to ₹25,000 crore to domestic and/or overseas investors during FY25.

“The fundraising would be subject to the approval of the Central government, wherever required,” the lender said.

State Bank of India (SBI) said it had raised ₹10,000 crore at a coupon rate of 7.36% through its fifth infrastructure bond issuance.

“The issue attracted overwhelming response from investors with bids in excess of ₹19,884 crore and was oversubscribed by around four times against the base issue size of ₹5,000 crore,” the bank said in a statement.

“The total number of bids received was 143 indicating wider participation with heterogeneity of bids. The investors were across provident funds, pension funds, insurance companies, mutual funds and corporates,” it added. 

The proceeds of bonds will be utilised in enhancing long-term resources for funding infrastructure and affordable housing segment.

“Based on the response, the bank has decided to accept ₹10,000 crore at a coupon rate of 7.36% payable annually. This represents a spread of 21 bps over the corresponding FBIL G-Sec par curve,” SBI said. 

With the current issuance, the total outstanding Long-Term Bonds issued by the Bank is at ₹49,718 crore.

SBI Chairman Dinesh Khara said that this issuance would help in developing a long-term bond curve and encourage other banks to issue bonds of longer tenor.

Twelve of the 20 new companies which bought electoral bonds were from Hyderabad.
| Photo Credit: Akash Dhage/Unsplash

Despite companies in existence for less than three years not being allowed to make political contributions — even through the electoral bonds route — data shows that at least 20 such newly incorporated firms purchased poll bonds worth about ₹103 crore (Table 1).

At the time when they purchased their first electoral bonds, five of these firms were in existence for less than a year, seven of them were a year old and the eight others had only completed two years. Notably, many of these firms were started in 2019 when the Indian economy went through recession or during the middle of the pandemic and bought electoral bonds worth crores of rupees just months after incorporation.

Also read: Electoral bonds data | Full list of donors and recipient political parties

The ban on companies making political contributions within three years from incorporation has been in existence for nearly four decades. In 1985, the Parliament amended Section 293A, lifting the ban on political contributions by firms subject to a few conditions. One of the conditions was that the firms should not be owned by the government and should not be less than three years old. This clause was retained under Section 182 of the Companies Act, 2013. When Section 154 of the Finance Act, 2017, amended Section 182, just before the introduction of electoral bonds, this clause was again retained. However, the amendment deleted the first proviso by which the amount donated by a company was capped at 7.5% of its average net profit during its previous three financial years. The prohibition on companies making donations to political parties in their first three years continued. According to Section 182 of the Companies Act 2013, if a firm makes a donation in contravention to the provisions, “the company shall be punishable with fine which may extend to five times the amount so contributed and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months and with fine which may extend to five times the amount so contributed”.

Table 1 | The table shows the names of the 20 firms which purchased the electoral bonds (EBs), within three years of their incorporation. The date of incorporation of these companies, the date on which they purchased their first poll bond, the difference between the two dates along with the total worth of bonds purchased by these firms is mentioned in the table. 

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Also read: Electoral bonds data | 55 firms’ purchase exceeded 7.5% cap in 2022-24, lion’s share went to BJP

12 of these 20 companies were headquartered in Hyderabad (Table 2). Together these 12 companies donated ₹37.5 crores, and close to 75% of which was encashed by the BRS, with the rest divided among the TDP, the Congress and the BJP. Two companies in Hyderabad — Tsharks Infra Developers Private Limited and Tsharks Overseas Education Consultancy Private Limited — both incorporated in 2023 — purchased ₹7.5 crore worth of bonds within months of getting incorporated and donated it to the BRS. Among the rest, HH Iron and Steel Private Limited, headquartered in Coimbatore, gave ₹15 crores to the BJP and five crores to the BJD. Their first electoral bond purchase was done just days short of turning three years old. Askus Logistics Private Limited, incorporated in November 2021, bought its first electoral bond within 1.5 years of its incorporation and donated ₹22 crores. This was encashed by the DMK, AITC and the RJD. Besseggen Infotech LLP, incorporated in May 2018, bought bonds worth ₹11.5 crores, with their first purchase done two years and ten months into their existence.

Table 2 | The table shows the city-wise split of the 20 companies.

Table 3 | The table shows the party-wise split of the encashments of the EBs purchased by the 20 companies.

Electoral bonds data | New firms bought crores of electoral bonds within months of formation

The three-year rule was retained to prevent shell companies from making political contributions. When the first proviso, which prescribed the 7.5% cap, was removed in 2017, the Election Commission of India had warned that this may lead to the use of “black money through shell companies”. The RBI had also flagged the possibility of firms misusing bearer bonds for money laundering.

The list of 20 firms is not exhaustive as it does not include the firms which were newly incorporated after mergers and amalgamations. The list also does not include firms that are not in the MCA

With inputs from Rebecca Rose Varghese

Watch our Data video:Electoral bonds banned: Which party benefitted the most while it existed?

UBS has turned “neutral” on the banking sector and sees a higher probability of regulatory tightening on unsecured loans.
| Photo Credit: ADNAN ABIDI

The risk of Indian banks’ unsecured retail loans turning sour is rising as lending to borrowers with overdue debt has increased, UBS said in a note.

In recent months, lenders in Asia’s third-largest economy have boosted their unsecured lending portfolios as the pandemic-induced stress on household finances has eased.

Last week, the country’s central bank said it is closely monitoring the segment for signs of nascent stress.

UBS has turned “neutral” on the banking sector and sees a higher probability of regulatory tightening on unsecured loans.

“The share of loans to borrowers with weaker risk profiles has risen along with an increase in retail borrowers’ leverage,” UBS said on Oct. 12, citing a study it conducted.

Banks’ outstanding receipts from credit cards rose to ₹2.18 trillion ($26.19 billion) as of August 25, from ₹1.68 trillion a year earlier, central bank data showed. Outstanding personal loans rose 26% in the same period.

The share of lending to borrowers with overdue loans rose to 23% in fiscal year 2022-23 from 12% in fiscal 2018-19, UBS said.

The number of borrowers with multiple retail loans rose to 9.3% in fiscal 2022-23 from 3.9% in fiscal 2017-18, it added.

UBS has raised its credit cost forecasts for Indian banks under its coverage by 5-10 basis points for the fiscal year ending March.

The brokerage has cut its rating on State Bank of India and Axis Bank to “sell” and “neutral,” respectively, from “buy,” on rising credit costs.

It has also lowered the price target for SBI to ₹530 from ₹740 and that for Axis Bank to ₹1,100 from ₹1,150.

Unsecured loans as a percentage of total loans rose to 11.1% for SBI and 10.7% for Axis Bank in June 2023, UBS said.

The brokerage prefers HDFC Bank and IndusInd Bank.

Mumbai:

The nation’s largest lender State Bank of India is adopting a novel way to ensure timely repayments, especially by its retail borrowers, by greeting those likely to default on monthly installments with a pack of chocolates.

According to the bank, it has been found that a borrower who is planning to default will not answer a reminder call from the bank. So the best way is to meet them at their homes unannounced.

The move, aimed at ensuring better collections, comes amidst rising level of retail lending in the system coupled with increasing delinquency levels on the back of the upward movement in the interest rates.

SBI’s retail loan book grew over 16.46 per cent to Rs 12,04,279 crore in the June 2023 quarter from Rs 10,34,111 crore in the year-ago period, making it the largest asset class for the lender whose total book stood at Rs 33,03,731 crore, growing at 13.9 per cent on-year.

In fact for the entire system, the double-digit loan growth of around 16 per cent has been led by retail loans only.

“With two fintechs which use artificial intelligence, we are piloting a novel way of reminding our retail borrowers of their repayment obligations. While one is doing conciliation with borrowers, the other is alerting us on the propensity of a borrower to default. And to such borrowers who are likely to default, the representatives from this fintech will visit them, carrying a pack of chocolates for each of them, and remind them of the forthcoming EMIs,” Ashwini Kumar Tewari, managing director in-charge of risk, compliance and stressed assets at SBI, said over the weekend.

According to Tewari, this novel method of carrying a pack of chocolates and personally visiting them is adopted because it has been found that a borrower who is planning to default will not answer a reminder call from the bank. So the best way is to meet them at their own homes unannounced and surprise them. And so far, the success rate has been overwhelming, he said.

Tewari refused to name the fintechs saying the move is just at the pilot stage and has been put into place just about 15 days back and “if successful, we will formally announce it”.

“We are also talking to a few other fintechs to improve our collection efficiencies and hopefully by the end of the year, we will have formally tied up with at least half of them,” he said, adding, “we want to continue the pilot for at least four to five months.” SBI’s over Rs 12 lakh crore of retail book consists of personal, auto, home and education loans. With a home loan book of over Rs 6.3 lakh crore as of June, SBI is the largest mortgage lender too.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

New Delhi:

The State Bank of India (SBI) on Monday said it has implemented UPI interoperability in its digital rupee, called Central Bank Digital Currency (CBDC).

With this move, the bank aims to deliver unprecedented convenience and accessibility to its customers, SBI said in a statement.

This cutting-edge feature, accessible through the ‘eRupee by SBI’ application will empower SBI CBDC users to effortlessly scan any merchant UPI QR code for swift and secure transactions, it said.

SBI was among the first few banks to participate in the RBI’s retail digital e-rupee project in December 2022.

“The seamless integration of CBDC with UPI marks a significant leap for the bank, enhancing the acceptance and utilization of digital currencies in everyday transactions,” it said.

This integration will be a game changer for the digital currency ecosystem, it said, adding, the move is the outcome of our unwavering commitment to pushing the boundaries of digital innovation to accelerate the transition to a more cashless economy.

SBI remains dedicated to providing secure, efficient, and user-friendly solutions that reshape conducting transactions.

By bridging the gap between CBDC and the extensively used UPI platform, SBI aims to revolutionize payments made in India. With this move in the realm of digital payments, it said, the future of CBDC integration appears promising.