Latest News on South Indian Bank
South Indian Bank CEO Seshadri remains cautious about gold loans, even as demand surges amidst skyrocketing gold prices.
The South Indian Bank has seen a significant increase in demand for gold loans due to the rising prices of gold, with its gold loan portfolio growing by Rs 2,236 crore in Q2, a 13% rise from the same period last year. However, the bank is exercising caution and reassessing margins and loan-to-value ratios to manage risks from the rapid price increase.
According to the bank’s CEO and MD, PR Seshadri, the net interest margins (NIMs) declined by 23 basis points to 2.8% in Q2, but the bank believes this marks the bottom and margins should start improving from here. The bank’s loan mix is changing rapidly, with MSME and retail disbursements growing sharply, which should lead to higher NIMs.
The bank is also seeing strong growth in its CASA (current account and savings account) ratio, which has been steady in the 30-32% range. The bank aims to move its CASA ratio into the high-30s over the next two to three years.
In terms of demand for loans, the bank expects momentum to pick up in Q3, especially in auto loans. The bank is also open to financing mergers and acquisitions, but its capital base limits its single-borrower exposure.
The bank has estimated additional provisions under the proposed Expected Credit Loss (ECL) norms, but does not expect a significant increase in provisions. The bank’s provision coverage ratio is over 90%, which is quite robust.
Finally, the bank’s NRI deposits have grown strongly over the two quarters, and the bank expects this growth to accelerate due to the rupee’s depreciation against the dollar and attractive domestic rates. The bank is optimistic of achieving double-digit growth in this segment during the year.
Overall, the South Indian Bank is seeing strong growth in its gold loan portfolio and other segments, but is exercising caution to manage risks. The bank is also focusing on improving its NIMs and CASA ratio, and is open to new opportunities such as financing mergers and acquisitions.
The bank’s CEO, PR Seshadri, expressed optimism about the bank’s future prospects, citing the strong growth in MSME and retail disbursements, and the bank’s robust provision coverage ratio. However, he also noted that the bank needs to manage the risks associated with the rapid increase in gold prices, and is reassessing its margins and loan-to-value ratios accordingly.
The bank’s strong growth in NRI deposits is also a positive sign, and the bank is well-positioned to take advantage of the opportunities in this segment. Overall, the South Indian Bank is well-placed to achieve strong growth and improve its profitability in the coming quarters.
The bank’s ability to manage risks and seize new opportunities will be crucial in achieving its goals. The bank’s focus on improving its NIMs and CASA ratio, and its openness to new opportunities such as financing mergers and acquisitions, are all positive signs.
The bank’s strong provision coverage ratio and robust balance sheet also provide a solid foundation for growth. Overall, the South Indian Bank is a strong and well-managed bank that is well-positioned to achieve strong growth and improve its profitability in the coming quarters.
South Indian Bank Introduces UPI-Based GST Payment Facility
The Indian government has introduced two significant changes related to Goods and Services Tax (GST) that are expected to benefit taxpayers and policyholders. South Indian Bank has launched a UPI-based GST payment service, allowing taxpayers to pay their GST using the Unified Payments Interface (UPI). This service enables taxpayers to make secure and effortless payments from anywhere, either by scanning a QR code or inputting a Virtual Payment Address (VPA).
The bank, which is approved by the Reserve Bank of India (RBI) as an Agency Bank, was previously accepting GST payments through internet banking and at bank branches. The introduction of UPI-based payments is expected to make it easier for taxpayers to pay their GST, and the bank’s Head of Branch Banking, Biji SS, stated that UPI is the most preferred mode of payment today.
In addition to the new payment service, insurers are also working on methods to pass on the benefit of the recent GST cut on life and health insurance policies. The GST on premiums for individual life and health insurance policies has been reduced to zero, which means that insurers can no longer avail input tax credit. Insurers will need to adjust their pricing to align with the absence of input tax credit, and it is expected that the benefit of the GST cut will be passed on to consumers, although the extent of the benefit is still to be determined.
Edme Insurance Brokers Ltd. commented that the reduction of GST on premiums will likely lead to more people buying health and life insurance cover. The company’s Chief Human Resources Officer, Jonika Jain, stated that the GST cut will depend on how insurers adjust their pricing, and the entire benefit may not be passed on to consumers. However, the company is planning to expand its operations, including doubling its workforce to 1,000 in five years, and is also planning expansion in the UAE, UK, and Singapore.
Overall, these developments highlight the impact of the GST changes on businesses and consumers. The UPI facility from South Indian Bank provides easier tax payment options, while the GST reductions are expected to lead to increased demand for health and life insurance cover. As the insurance industry adjusts to the new GST rates, consumers can expect to see changes in pricing and potentially more affordable insurance options.
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