Banks in India

Your EMIs have been deferred for 3 months, but here's the flip side
Some lenders fear a huge pause could actually worsen their liquidity position.
Sugata Ghosh, ET Bureau

Last Updated: Mar 31, 2020, 09.14 AM IST

Mumbai: How many borrowers will use the moratorium on loans? It’s a key question that many banks are grappling with.

Some lenders, particularly private sector institutions, fear that if a large number of borrowers refuse to service loans, Reserve Bank of India’s measures to soften the blow from Covid-19 could fall short of requirement. In such a situation the moratorium on interest and loan repayment will more than offset the benefits of extra liquidity.

Faced with such a situation, these banks would be reluctant to extend the moratorium to certain categories of borrowers such as government employees whose salaries have not been impacted or large companies with the wherewithal to tide over the crisis.

Last week, the monetary authority lowered cash reserve ratio (CRR) — the slice of customer deposits banks set aside as cash with the regulator — by one percentage point, and raised the accommodation under marginal standing facility (MSF), under which banks borrow from RBI against government securities.

Concerns for Banks with High Credit-Deposit Ratio
“If 50% or more borrowers opt for moratorium, then the additional liquidity made available through the RBI measures could be less than the amount that banks would not receive as interest payments and principal repayments from borrowers during the three-month moratorium. Since these banks will have to continue to pay depositors the interest and maturity amounts, such a situation could actually worsen the liquidity position of banks,” a senior banker told ET.

According to industry sources, banks have discussed the matter among themselves over the past few days. “This is an issue which concerns banks with high credit-deposit (CD) ratio... Under such circumstances, the central bank will have to consider opening a general line of credit to banks,” said another banker.

Consider a bank with a net demand and liabilities (or net deposits) of Rs 10 lakh crore and loan book of Rs 6 lakh crore. The CRR cut and MSF flexibility will release Rs 20,000 crore liquidity for the bank. Suppose the moratorium becomes effective on 50% of the loans having an average yield of 12% and average tenor of 5 years. A three per cent delay in interest (for the three months) would mean deferred interest inflow of Rs 10,500 crore. Along with the postponement in payment of loan principal, the bank’s receipt of interest and principal on loans would be well over Rs 20,000 crore. This could cause a liquidity crunch for the bank and impact its ability to lend.

After June, the bank may either raise the loan EMI or extend the tenor of the loan. This would depend on whether the borrower has the capacity to afford higher EMIs or is in a position to repay the loan over a longer tenor. According to an industry person, in case of stress loans which are yet to be categorised as non-performing assets, banks will consult RBI on the treatment of these `special mention assets’ and whether to stop applying interest on such loans or recovering instalments (known as freezing the clock in banking parlance).

आईसीआईसीआई बैंक में खाता है? जानिए क्‍या है ईएमआई रोकने का तरीका

दो किस्‍तें नहीं देने पर 10 महीने बढ़ सकती है आपके लोन की अवधि, जानिए कैसे

लोन की अवधि जितनी ज्‍यादा बची होगी, असर उतना अधिक पड़ेगा. कारण है कि शुरुआती सालों में ईएमआई में ब्‍याज का हिस्‍सा बहुत ज्‍यादा होता है.

Babar Zaidi


Super User
10 public sector banks to merge into 4 today; all you need to know

Apr 1, 2020 9:54 AM

Bank merger: The amalgamation of Syndicate Bank into Canara Bank will create the fourth-largest public sector bank with Rs 15.20 lakh crore business and a network of 10,324 branches

[https://res]Click to open high quality image >>

As per the latest merger- Oriental Bank of Commerce (OBC) and United Bank of India (UBI) will be merged with Punjab National Bank (PNB). The merged entity will become the second-largest state-run bank

The merger of ten government-run banks into four will come into force from April 1. The branches of the merging banks will operate as branches of the banks in which they have been merged. Customers of merging banks will also now be treated as customers of the banks in which these banks have been merged. The banks' merger was announced last year in August and the union cabinet gave the final approval on March 4. In the past, various other bank mergers have taken place. For instance, in 2017, the country's largest public lender - the State Bank of India took over five of its associates and Bharatiya Mahila Bank. Last year, Vijaya Bank and Dena Bank were merged with Bank of Baroda. Kotak Mahindra Bank and ING Vysya Bank merger and amalgamation of Centurion Bank of Punjab Ltd. with HDFC Bank took place in 2014 and 2008, respectively.

Here are a few aspects of the PSU bank merger:

1. As per the latest merger- Oriental Bank of Commerce (OBC) and United Bank of India (UBI) will be merged with Punjab National Bank (PNB). The merged entity will become the second-largest state-run bank. The new entity will have a business of Rs 17.95 lakh crore and 11,437 branches.

2. The amalgamation of Syndicate Bank into Canara Bank will create the fourth-largest public sector bank with Rs 15.20 lakh crore business and a network of 10,324 branches.

3. Allahabad Bank branches will operate as those of the Indian Bank. The merger of Allahabad Bank with the Indian Bank will create the seventh-largest public sector bank with Rs 8.08 lakh crore business.

4. Branches of Andhra Bank and Corporation Bank will function as the branches of Union Bank of India. Andhra Bank and Corporation Bank's merger with Union Bank of India will create India's fifth-largest public sector bank with Rs 14.59 lakh crore business and 9,609 branches.

5. The government had front-loaded Rs 68,855 crore to take care of the bank-merger plan.

6. Punjab National Bank was given Rs 16,091 crore, Union Bank of India Rs 11,768 crore, Canara Bank Rs 6,571 crore and Indian Bank Rs 2,534 crore. Allahabad Bank was provided Rs 2,153 crore, United Bank of India Rs 1,666 crore, Andhra Bank Rs 200 crore, Indian Overseas Bank Rs 4,360 crore and UCO Bank Rs 2,142 crore

7. According to the government, the merger of the 10 banks will lead to the creation of stronger establishments. This merger would follow in the example of the amalgamation of Bank of Baroda, Vijaya Bank, and Dena Bank last year.

8. With this mega-bank mergers, the number of PSBs will get consolidated from 27 banks in 2017 to 12 banks in 2020.

9. The new 12 public sector banks will be -- six merged banks and six independent banks. State Bank of India, Bank of Baroda Punjab National Bank, Canara Bank, Union Bank of India, Indian Bank will be the six merged banks. And, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab and Sind Bank, which have a strong regional focus, will remain independent entities.

I request you to create the list of the Banks in India year wise, started and closed ever since 1800 or when we have a records.
This info I recommend will the first point, which you will keep editing based on inputs received by you.
Here are my thoughts
Example: Union Bank of India was formed with Merger of 3-4 banks and now other 2 banks have been added Andhra Bank and Corporation Bank. It could be as below:
Bank NameFirst BranchEstd YearActive TillMerged into
Canara BankMangalore
Continues to operate as Canara Bank
Corporation BankUdupi
Union Bank of India
Bank of BarodaBaroda
Continues to operate as Bank of Baroda
Sangli BankSangli
Andhra BankMachillipatnam
Union Bank of India
Syndicate BankManipal
Canara Bank
Vijaya BankMangalore
Bank of Baroda
Dena BankMumbai
Bank of Baroda
Bank of MaduraiMadurai
Bank of RajasthanUdaipur
ICICI BankMumbai / Baroda
Continues to operate as ICICI Bank

The Bank can be arranged by listing in ascending order of Estd Year. Thus it will be interesting note for people to undetstand. Do you agree?
Last edited:
HDFC Bank offers loan deferment option to customers
Source: PTI
April 02, 2020 09:12 IST

Its debit card holders can now withdraw cash from any ATM without charges till June 30.

HDFC Bank on Wednesday offered to defer EMIs in the wake of the coronavirus pandemic.

The bank in an email to its customers said the prevailing situation may pose a huge challenge for people at large.

"In line with the RBI guidelines and to show our solidarity, HDFC Bank is offering its customers EMI moratorium as a relief measure.

"You can defer your EMIs/loan installments and credit card dues up to 3 months," the bank said.
The bank said its debit card holders can now withdraw cash from any ATM without charges till June 30.
"There won't be any cap on the number of withdrawals or other transactions done at the ATM including declined transactions," it said.
"We will also waive the minimum monthly/quarterly balance requirements for the savings and current account holders for four months - from March to June 2020. These customers will be sent a separate communication," the lender added.
All the public sector lenders on Tuesday announced they will be extending the moratorium for three months, giving their customers a window to pay EMIs and interest on working capital loans by small businesses or MSMEs.

These measures are part of RBI's mega liquidity booster announced on Friday as the coronavirus lockdown has crippled almost every economic activity in the country.

HDFC Bank offers loan deferment option to customers
BIG headache awaits banks this September

Apr 21, 2020 8:56 AM

'We do not know when we will get to the business-as-usual mode.'
'Many borrowers may not be able to pay up.'
'The incidence of cheque bouncing has doubled or even trebled, some lenders say,' says Tamal Bandyopadhyay.


Illustration: Uttam Ghosh/

The Reserve Bank of India's December 2019 Financial Stability Report, a biannual health check for the banking industry, had predicted the gross non-performing assets rising from 9.3 per cent in September 2019 to 9.9 per cent by September 2020.

The contributing factors to the rise were a change in the macroeconomic scenario, a marginal increase in slippages and, of course, the denominator effect of declining credit growth.

In the financial year 2020 that ended in March, bank credit growth has been 6.1 per cent, less than half of 2019's 13.3 per cent.

I hate to play the role of a Cassandra, but the NPAs of the banking system will surely rise far higher -- by September it could be as much as 5 percentage points higher from the current level.

The villain of the piece is COVID-19.

The RBI has supplemented the government's modest fiscal package with a three-month moratorium on all loan repayments by the borrowers between March and May.

The idea is to mitigate the burden of debt servicing during the time of stress and disruptions in business.

Whether this is enough will depend on how long the fight continues to contain the pandemic and when normalcy returns.

For now, let's take a look at what will cause the sudden rise in bad loans.

If one had been in default before March, banks are allowed to extend the benefit of the moratorium to such a borrower for the March-May period but the overdues till February will attract the income recognition and asset classification (IRAC) norms.

What is that? When a borrower is not paying the due, the lenders must recognise the 'incipient stress' in the loan account.

Such accounts are classified as special mention accounts or SMAs.

Typically, all loan instalments are paid once a month.

For a delay of 1 to 30 days, the account is called SMA-0; 31-= to 60 days, SMA-1; and 61- to 90 days, SMA-2.

Such borrowers are 'defaulters', but the accounts remain standard till 89 days.

It turns into an NPA, if the instalment is not paid for 90 days.

There could be some habitual defaulters who take advantage of the system while others may end up delaying servicing their loans because of cash flow problems.

How will those borrowers, who are already under stress and had not paid their loan instalments on time till February 29, pay up after May?

If at all, their stress will only rise in the current economic scenario.

Let's take a look at the universe of such borrowers.

Data aggregated from banks, non-banking finance companies, housing finance companies and micro-finance companies with meticulous care show 7.8 million live commercial loan accounts at this point.

Micro loans (up to Rs 10 lakh) account for 27 per cent of them; 64 per cent are small loans (Rs 10 lakh to Rs 10 crore); 4 per cent medium loans (Rs 10 crore to Rs 50 crore); and 5 per cent are large loans (more than Rs 50 crore).

Roughly, 7 per cent of these accounts are stressed.

Now, look at their value and how much of it is stressed.

Here, the classification of categories is a bit different.

There is no change in micro and large loan definitions but small loans, for this purpose, are Rs 10 crore to Rs 15 crore; and medium, Rs 15 crore to Rs 50 crore.

In value terms, of the Rs 88,000 crore micro loans, Rs 19,000 crore or 21.59 per cent is stressed.

In small loans, out of Rs 12.35 trillion, Rs 40,000 crore or 3.24 per cent is stressed.

Of the Rs 4.51 trillion medium loans, Rs 15,000 crore or 3.33 per cent is stressed.

The least stress is in the large loans -- 2.57 per cent or Rs 1.2 trillion, out of Rs 46.72 trillion.

Overall, Rs 1.94 trillion or 3.01 per cent of the commercial loans is showing 'incipient stress'.

Let's focus on the retail loans -- mortgages, auto and two-wheeler loans, loans to buy consumer durables, personal loans, education loans, credit cards, et al.

Over the past few years, the amount of consumer loans, personal loans and credit cards have been swelling, signaling rise in consumption.

There are 236 million such live loans and 14.8 million of them are stressed.

The value of the entire retail portfolio in the system is Rs 53 trillion and the stress is far more than the commercial loans -- Rs 4.1 trillion or 7.74 per cent.

Overall, the credit kitty of the Indian financial system is Rs 117.46 trillion.

The RBI data show Rs 103.7 trillion bank credit in March 2020, but that captures the loans given by scheduled commercial banks while this pile includes loans of banks as well as all other financial intermediaries.

Of the Rs 117.46 trillion, Rs 6.04 trillion or 5.14 per cent represents stressed assets.

If we assume that all stressed borrowers will not be able to service their accounts in June (for those are in SME-0 category) or, latest by September (SME-2 accounts), the NPAs of the system will rise by 5.14 percentage points.

Does this sound scary? Yes, but it can get even worse.

The lockdown has brought economic activities to a halt and we do not know how long will it continue and when we will get to the business-as-usual mode.

The stress will intensify and many more borrowers may not be able to pay up.

The incidence of cheque bouncing (for those who are not opting for the moratorium) has doubled or even trebled, some lenders say.

Typically, many retail borrowers keep post-dated cheques with the lenders for instalment payments.

There will be a double whammy.

Banks will have to classify many accounts as bad and provide for them.

This will hit their profitability. Some of the NBFCs may even go belly up.

The government may have to infuse capital in some of the public sector banks, yet again.

Once a bank classifies an account as NPA, the borrower will not be able to raise funds from any other lender.

Essentially, many businesses, particularly in the micro, small and medium segments, will have to close down, leading to millions in job losses.

The only way to save the economy and the financial system seems to be a relaxation of the IRAC norms by the regulator -- extending the 90-day schedule to 180 days.

The RBI can relax this with a clear road map of returning to the current norm over a period of, say, three to two years in a staggered way -- from 180 days to 150 days, 120 days to 90 days.

If it is not done, both banks and industry will have nightmares, beginning September.

RBI is going to issue electronic card soon, know what will be special

Apr 24, 2020 6:26 PM


New Delhi: If you have an account with the bank, then there can be good news for you. The Reserve Bank of India (RBI) has given green signal to a new scheme. The RBI has said in its announcement that in the coming time, electronic cards will be issued to the account holders on behalf of banks.

RBI has given concession in the rules for this. According to this, customers holding overdraft accounts in banks have been allowed to issue electronic cards. This facility is for those overdraft accounts which are like personal loans. Giving information, RBI has said that according to the guidelines of July 2015, banks have been allowed to issue debit cards to savings bank and current account customers.

Credit and loan account holders will not get the benefit of this facility. This benefit will only be given to the customers having bank overdraft accounts. RBI has also clarified that the electronic card will not be issued for a period longer than the validity of the overdraft facility given to the customer. This electronic card will be for transactions in the country only.

One call and your account will be empty! SBI issued alert for its customers

By Shivani Gite

Apr 24 2020 05:01 PM

New Delhi: At a time when people are fearing going out, fraudsters are trying more to clear their account. Fake calls and messages are getting flooded amidst the ongoing lockdowns across the country. In view of this danger, State Bank of India (SBI) has warned its customers.

Cyber thieves can empty your bank account by tricking you into a public-pleasing reward. SBI has sent messages to its customers and told them the numbers, from which such fake calls can come to you. State Bank of India (SBI) has said in its SMS that if you get a call from a number starting from 1800 or 1860, do not share any details of your credit card.

SBI has given information in this regard by tweeting. According to the information given by the media, the State Bank of India has said that before answering the Corona virus-related e-mail or social media posts, confirm whether the link or post is authentic or not. Also, do not share the details of your personal and financial information with anyone.

Are you aware of these new cash withdrawal rules?

ET Now Digital

Updated May 05, 2020 | 14:36 IST

As a large number of people formed a queue in front of the banks to withdraw money and social distancing could not be followed, IBA decided to introduce new rules for withdrawing cash from banks.

New Delhi:

In order to reduce the number of people visiting banks amid the pandemic, the Indian Banks' Association (IBA) recently introduced new rules for withdrawing cash from banks. These new rules will be applicable till May 11 during the nationwide lockdown. Under the new rules, IBA has specified dates to withdraw money so that there is no crowd outside bank branches.

New cash withdrawal rules, schedule:
1. Withdrawals are now allowed on specific days bases on the last digit of a customer's bank account number.
2. People having 0 and 1 as the last digit of their account numbers will be allowed to withdraw money on May 4.
3. Those with 2 and 3 as the last digit of account numbers can withdraw money from on May 5 (Tuesday).
4. Those with 4 and 5 as last digits can withdraw on May 6 (Wednesday).
5. Customers having 6 and 7 as the last digits of their account numbers can withdraw on May 8.
6. Those with 8 and 9 as last digits can withdraw the amount on May 11.
Validity of new withdrawal rules:
Note that according to IBA, this arrangement is only applicable till May 11. After May 11, these restrictions will be lifted meaning anyone can withdraw money on any day. As a large number of people formed a queue in front of the banks to withdraw money and social distancing could not be followed, IBA decided to introduce these new rules.

No restriction for cash withdrawal from ATM:
Customers can withdraw money from any ATM anytime as there will be no charge for it, IBA said.
Withdrawal schedule for women Jan Dhan account-holders:
It is worth mentioning that IBA prepared this withdrawal schedule from May 4-11, for women Jan Dhan Yojana account-holders to withdraw the second installment of Rs 500 which is to be deposited by the government in May. Under the Pradhan Mantri Garib Kalyan Yojana (PMGKY), the government will deposit Rs 500 per month, during the April-June period, in the accounts of women Jan Dhan Yojana account-holders.
The Association said in a statement, "This has been done to maintain social distancing. We request beneficiaries to use the neighbourhood ATMs, at bank branches, bank Mitras/ customer service points for making withdrawals and for cash at PoS up to Rs 2,000 as far as possible, to avoid crowding at bank branches.” Note that at present, there are no charges for withdrawing money from any bank’s ATM till June 30, 2020.