Friday, January 20, 2017

Demonetization dissected: SBI Chairperson
January20, 2017 (C) Ravinder Singh

I don’t know why have to ‘Compulsorily Go DAVOS’ every year. They all shame India when they don’t honestly reply to questions and MISLEAD foreign leaders and businessmen.

Arunbhati Bhattacharya ‘She was unable to give a precise estimate amid uncertainty about how much of that money came from Indian businesses as opposed to individuals’ – World Can’t Digest Such Incompetence of India’s Biggest Banker ranked among Fortune500 Companies.

She is talking as if People’s Deposits with SBI are all idiots.

Savings Accounts of Persons and Current Accounts are RECORDED separately.

ET reported much before Demonetization on November08 – April-September2016 half year recorded 34% SLUMP in Mortgaged Based securitization to Rs.20,000 Cr against Rs.70,000 Cr annual figures a year ago. 

It is scandalous to assume Arundhati Bhattacharya can do anything with Peoples Deposits.

People keep ‘Money in Homes’ because of CORRUPT Banks who FUND SCAMSTERS and don’t FINANCE 95% of MSMEs – Only 5% Farmers get LONG TERM Loans when Value Additions is over 70%.   

Next > Gross NPA of AXIS BANK had Gone Up 6 Times in Less Than 3 Yrs of NDA rule.

Ravinder Singh, Inventor & Consultant, INNOVATIVE TECHNOLOGIES AND PROJECTS
Y-77, Hauz Khas, ND -110016, India. Ph: 091- 9871056471, 9718280435, 9650421857
Ravinder Singh* is a WIPO awarded inventor specializing in Power, Transportation,

SBI May Retain Up to 40% of Deposits: Chief Bhattacharya
DAVOS: Analysts scratching their heads over the impact on India's banks of the country's move to ban high-value notes have every right to be puzzled, as estimates offered by the chairman of State Bank of India indicate.

The bank could retain anything from 15% to 40% of the deposit boost it received after the government withdrew about four-fifths of the banknotes in circulation in November, Arundhati Bhattacharya said in an interview on Wednesday with Bloomberg Television's Erik Schatzker. She was unable to give a precise estimate amid uncertainty about how much of that money came from Indian businesses as opposed to individuals.

If much of the money that came was being used in business, “then much of it will get taken out because people will want to use it in their business again,” Bhattacharya, 60, said on the sidelines of the World Economic Forum in Davos, Switzerland.

“But if much of this money is from savings of people, which was sitting in their cupboards or wherever, then obviously it won't go out,” she said. “Once it's in the bank, it'll stay in the bank and therefore that's why we have a very wide kind of range.”

For weeks, investors have speculated over whether the surging bank deposits caused by the November 9 ban on high-value notes will ultimately benefit lenders. The S&P Bankex Index, which tracks 10 lenders, rose almost 4% following the move, before slumping 13% and has since clawed back much of that slump.

“Retaining more deposits means low cost funds that can be lend out to improve bottom line at banks,” Payal Pandya, a Mumbai-based analyst at Centrum Wealth Management Ltd., said by phone. “Lenders focus should shift to deploying the money as loans as soon as they can.”

Prime Minister Narendra Modi stunned the nation by banning old Rs.500 and Rs.1,000 notes, a move that dragged cash-intensive businesses to a standstill and had millions of Indians lining up at banks to deposit their now invalidated currencies or exchange them for new notes. The resulting liquidity surge brought funding costs down for lenders including State Bank of India, giving them scope to cut interest rates.

SBI's low-cost deposits had surged by 1.4 trillion rupees after the cash ban and the lender is seeing “unprecedented liquidity,” Bhattacharya told reporters on Jan. 2 after unveiling a rate cut. While the company's loan book had contracted after the ban, advances in the year to March 31 are expected to expand as much as 9%, compared with about 6.7% as of December 31, she said the same day.

Mortgage-based Securitisation Slows
SPEED BREAKERS: Housing fin cos slowed issue of securitised debt; banks were busy with cash management

Mortgage-backed securitisation, which accounts for almost half the entire deals where loans are bundled together and sold to investors, slowed after demonetisation, ratings firm Crisil said.

But a surge in such deals in the first half of 2016-17 means the year-end numbers would not be much different from last year, experts said. Housing finance companies slowed issuance of securitised debt, while banks, which invest in such products, were busy with cash management post demonetisation, affecting the securitisation market.

Mortgage-backed securitisation, or MBS, surged in the April-September period, or the first half of the fiscal year, to Rs.19,000-20,000 crore, after the government removed distribution tax on such deals for investors and as banks moved to quarterly assessment of the priority sector.

Small-ticket housing loans are considered priority lending. Investment in such pools allows banks to meet their priority lending requirement.

Crisil's senior director Krishnan Sitaraman told ET that housing finance companies were expected to be back in this market again in the fourth quarter. “Some slowdown was seen in mortgage-backed securitisation deals after demonetisation. But the volume for FY2017 may still be close to last year's level,” he said.

Volume of MBS, which includes residential loans and loans against property, was Rs.29,000-30,000 crore last fiscal year, capturing 42% of the market. The securitisation market as a whole was at an eight-year high in 2015-16, with volume touching Rs.70,000 crore.

The size of India's housing finance sector is Rs.5 lakh crore and just about 5-6% of the loans are being securitised. In contrast, about half of housing loans in the US is securitised.

Securitisation of loan pool can be done in two ways: direct assignment of loans by originators and via pass through certificates which are issued by trusts or special purpose vehicles. Around one-fifth of MBS was executed through the pass-through certificates route. MBS issuances in India have demonstrated high stability across economic cycles. According to Crisil, mortgage-backed pass-through certificates - due to their longer tenures and low delinquency - can attract long-term investors such as insurers and pension funds.

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