Money & Banking
Interest coverage ratio witnessed recovery in FY2017, says report

Banks are currently dealing with a challenging problem of stressed assets that has adversely impacted their profitability. As a precautionary measure, the Reserve Bank of India (RBI) wants banks to be prudent in their assessment of possible future stress in their asset portfolio, for which provisions needs to be made. In this regard, the RBI recently directed the banks to review various financial parameters of borrowers with the objective of framing policy for making provisions for standard assets. One such suggested parameter to be looked at closely is interest coverage ratio (ICR) that help understand and evaluate present and potential risks of borrowers. In general, the ICR witnessed a recovery in FY2017 after a continuous decline in the earlier period, says a research note.

In the report, CARE Ratings Ltd, says, "With regard to classification based on net sales, companies in the lower turnover bracket (net sales < Rs100 crore) had low interest cover and vice-versa. The classification of companies on their debt levels indicated that companies with higher debt (> Rs10,000 crore) were witnessed to have deteriorating debt servicing capabilities, which is a concern. Sectors like FMCG, automobile and ancillaries, pharmaceuticals and drugs, chemicals, consumer durables, construction material are better placed with regard to debt servicing capabilities."

In its analysis of 2,183 companies across industries excluding banks, oil exploration and refineries, finance and IT firms, the ratings agency found that interest payment capabilities did come down till FY2016, but improved marginally in FY2017. "For all years, the ICR is above 3 indicating comfortable debt servicing capability of the corporates in these years. However the interest coverage ratio declined considerably from 4.47 in FY2013 to 3.68 in FY2016, improved marginally to 3.84 in FY2017," it says.

According to the ratings agency, the recovery may be attributed to a combination factors. It says, "First interest rates have come down in FY17 which has lowered the outflow on this score. Also companies have been substituting cheaper credit points (CPs) with bank credit to take advantage of lower market rates compared with bank MCLRs. Second, overall borrowing by the corporate sector has been subdued due to a drop in investment. Third, as per CARE’s study on corporate results for FY2017, growth in profits also improved for a select set of companies relative to FY2016."

 

 

 

 

 

 

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Under pressure from consumers on high charges, SBI reduces NEFT, RTGS charges by up to 75%
Following baby steps by Reserve Bank of India (RBI), state-run State Bank of India (SBI) too is slowly waking up to public anger about rising bank charges. On Thursday, the state-run lender decided to reduce charges by up to 75% on national electronic funds transfer (NEFT) and real time gross settlement system (RTGS), while waiving charges on interbank mobile or immediate payment service (IMPS) for transfers of up to Rs1,000.
 
In a release, SBI says, "The reduced charges will be applicable from 15 July 2017 on the transactions done through internet banking (INB) and mobile banking (MB) services offered by the bank."
 
As on 31 March 2017, SBI had 3.27 crore customers using internet banking and nearly 2 crore customers using mobile banking. Along with customer convenience, the reduction in charges will attract more customers towards transacting digitally, the bank says.
 
Here are new reduced charges of SBI on NEFT and RTGS...
 
 
 
Last week, following Moneylife Foundation's persistent battle in support of bank customers, the RBI issued a circular to reduce liability of customers in unauthorised electronic banking transactions. The circular also asks banks to put in place a mechanism to record and address customer grievances or pay compensation in a systematic and timely manner.
 
RBI’s action comes two days after a unique #TweetMorcha, which appealed to Prime Minister Narendra Modi with the hashtag #BankSeBachao. This was preceded by a two-month campaign, including an online petition that garnered over 2.14 lakh signatures, several complaints from customers, letters and memorandums. 
 
Moneylife Foundation has been at the forefront of speaking up for bank customers. Earlier, on 4th July, thousands of people joined the unique #TweetMorcha against arbitrary bank charges, with the hashtag #BankSeBachao trending at top spot in India and also featuring in worldwide trends that afternoon. People from across the globe sent tweets to @NarendraModi and @ArunJaitley with the hashtags of #BankSeBachao and #TweetMorcha. 
 
An online petition launched by us on Change.org has garnered more than two lakh signatures. (Sign the Petition).
 
The group, including well known NGOs, trade unions, finance editors and experts, had on 12 May 2017 presented a 1,100 page printout of over 100,000 signatures to an online petition at Change.org to M Veerappa Moily, Chairman of Parliamentary Standing Committee on Finance.
 
The Moneylife Foundation Campaign has certainly ruffled several feathers at the Reserve Bank as  can be seen by some decisions taken by the regulator. This includes limiting customer liability, asking banks to share details of transactions in passbook or statements, expanding the role of the Banking Ombudsman. However, there is so much more that the Reserve Bank needs to do, like making its Consumer Charter more effective and effectively curtailing the practice of mis-selling and unfair service charges.

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COMMENTS

manoharlalsharma

1 week ago

Nice tweeter idea i would like to suggest to repeat to oppose INCOME-TAX as activation of GST and for hotel should be charge GST above Rs/-1000/- but I found ordinary hotel are charging 18% also to be taken as subject to oppose./thanks

kirtida t ved

1 week ago

As the country moves towards digitisation, there should be no charges if electronic media is used for funds transfer. Such services should be free from GST and other bank charges. GST @ 18% is too costly as electronic media is a necessity.

Trivendra

1 week ago

It is pinch of salt. Big hole penalty for minimum monthly balance rs 115/-. Two ATM machines kept in same location, one metro another non metro, classification on what grounds?

Beena Kothari

2 weeks ago

But there are certain charges which defies logic and cant be justified under any circumstances. I wish the situation changes completely and it shall happen as long as customers are educated, demanding return for their money and united..

Gurudutt Mundkur

2 weeks ago

Congratulations to Moneylife Foundation!
However, where NO Bank employee MANUAL INTVERVENTION is required, I firmly believe the charges must be nil.

SuchindranathAiyerS

2 weeks ago

Since inception of Modern Banking, it is the obligation of the Banker to provide a statement of Account to the customer to ensure his confirmation of account activity.SBI charges Rs 115/-plus GST per forty transactions on the very first statement of account. I was charged a fortune for my annual statement of account. Ombudsman in Bangalore made a laughable format rejection while the Chairman bounced my complaint to the Local Head Office who have done nothing about it.

Vijayakumar Gaari Abbaayi Karthik

2 weeks ago

The table above.. To whom it is helping? Middle class? Rs 2 to 1

Nifty, Sensex Make a New All-time High – Thursday closing report
We had mentioned in Thursday’s closing report that Nifty, Sensex were in an uptrend again. The major indices of the Indian stock markets rallied on Thursday and closed with gains over Wednesday’s close. The trends of the major indices are given in the table below:
 
 
The key domestic equity indices -- S&P BSE Sensex and NSE Nifty -- on Thursday scaled record highs on the back of positive global cues and hopes of an easing of the monetary policy. Global equities traded higher after US Federal Reserve Chair Janet Yellen, hinted at more gradual tapering programme at her testimony before the US Congress, pointed out market analysts. India's retail inflation hit a record low of 1.54% in June, lowest since 1999, raising hopes of an interest rate cut by RBI (Reserve Bank of India) ahead of monetary policy next month (in August).
 
Global IT spending is projected to reach $3.5 trillion in 2017 -- a 2.4 per cent increase from 2016, market research firm Gartner said on Thursday. Global spending on devices which include PCs, tablets and mobile phones is projected to grow 3.8% in 2017 to reach $654 billion -- an increase of 1.7% from previous quarter's forecast. The mobile phone growth will be driven by increased average selling prices (ASPs) for premium phones in mature markets due to the 10th anniversary of the iPhone while the tablet market may continue to decline. "Digital business is having a profound effect on the way business is done and how it is supported," said John-David Lovelock, Vice President, Gartner, in a statement. The growth rate is up from the previous quarter's forecast of 1.4 per cent owing to decline of the US dollar against many foreign currencies. According to Gartner, the worldwide enterprise software market is forecast to grow 7.6% in 2017. The S & P BSE Information Technology Index closed at 10,148.28, up 0.23% on the BSE.
 
Reliance Capital Ltd on Thursday said it has received Rs378 crore from Nippon Life Insurance on the completion of increasing its stake to 49% in Reliance Nippon Life Asset Management Ltd (RNAM). In a statement here, Reliance Capital said it will book capital gains on this final transaction during the third quarter ending September 30, 2017. RNAM is the largest asset manager in India in terms of assets under management (AUM), managing Rs3,58,059 crore as of March 31, across mutual funds, pension funds, managed accounts and offshore funds. Nippon Life Insurance is already a strategic partner in RNAM. Nippon Life Insurance acquired 26% stake in RNAM (formerly known as Reliance Capital Asset Management) in 2012. Thereafter, Nippon Life has increased its stake to 49% in various tranches, reflecting the success of the partnership. Nippon Life Insurance is an over 125 years old insurer and a Global Fortune 500 company that manages over $530 billion in assets - amongst the largest total assets in the world for any life insurer. The company is one of the largest life insurers in the world. Reliance Capital shares closed at Rs663.30, up 0.74% on the BSE.
 
After lowering the Immediate Payment Service (IMPS) charges, the State Bank of India (SBI) on Thursday reduced charges for National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS) transactions upto 75% effective July 15. The reduced charges will be applicable on the transactions done through internet banking and mobile banking services offered by the bank, the bank said in an official statement here on Thursday. State Bank of India shares closed at Rs288.60, up 0.42% on the BSE.
 
With the retail inflation easing to a record low of 1.54 per cent in June, the government's Chief Economic Adviser Arvind Subramanian on Wednesday said it reflects a paradigm shift in the process to low levels of inflation, which has been missed in the large systematic inflation forecasts made. "This low, heartening number is consistent with our analysis for some time now -- and which will be fully elaborated in the forthcoming Economic Survey -- of a paradigm shift in the inflationary process to low levels of inflation, a shift that I think has been missed by all reflected in the large, one-sided, and systematic inflation forecast errors that have been made," Subramanian told reporters here. As per the Central Statistics Office (CSO) data on Consumer Price Index (CPI), retail inflation was dragged lower to 1.54 per cent in June due to a sharp fall in the prices of food items like pulses, vegetables, and other perishables. The current inflation rate is the lowest since the series began in 2012. With low inflation, interest rates are likely to soften, giving a boost to business and stock markets in India.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 

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