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12 banks publicly disclosed their outstanding balance for real estate lending in the first nine months of 2023, with a total outstanding of 430,000 B VND, an increase of 144,000 B VND compared to the end of 2022. Only 12 out of the 27 listed banks provided detailed analysis of outstanding loans by business sector in the Q3 financial report. Among them, there are three banks that reduced their real estate lending compared to the end of 2022, including: Ngân hàng Bản Việt (BVBank) (reduced 381 B VND), PG Bank (reduced 220 B VND), and Vietnam International Bank (VIB) - Ngân Hàng Quốc Tế (reduced 300 B VND). The total outstanding loans for real estate lending of 9 banks including HDBank, MBBank, TPBank, #Vietbank, #MSB, #BVBank, #KienLongBank, #PGBank, and #VIB reached about 120,000 B VND, which is 40,000 B VND lower than Techcombank's real estate lending. As the largest disbursement bank for real estate lending, TCB also leads in terms of the proportion of real estate lending to total outstanding loans. With over 160,000 B VND in loans to corporate customers in the real estate sector, this figure accounts for 34.63% of TCB's total outstanding loans as of September 30th. (at the end of 2022, it was 109,000 B VND, accounting for 26.44%). ✔️The proportion of real estate lending at VPBank has also increased compared to the end of last year. The real estate lending volume for corporate customers reached 79,500 B VND, accounting for 17.71% of the total outstanding loans in the first 9 months of the year. (at the end of 2022, it was 52,000 B VND, accounting for 14.39%). ✔️At Ngân hàng SHB, the outstanding loans for real estate lending as of the end of September amounted to 66,580 B VND, accounting for 16.38% of the total outstanding loans. (at the end of 2022, it was 30,419 B VND, accounting for 8.33%). ✔️As for MBBank, the outstanding loans for real estate lending as of September 30th amounted to 34,500 B VND, accounting for 6.81% of the total outstanding loans to customers (at the end of 2022, it was 21,357 B VND, accounting for 4.91%). ✔️At TPBank, lending for real estate business activities reached over 13,600 B VND, accounting for 7.58% of the total outstanding loans. (at the end of 2022, it was 10,165 B VND, accounting for 6.31%). ✔️At MSB, the bank allocated 12,450 B VND (8.87% of the total outstanding loans) for real estate lending as of September 30th. (at the end of 2022, it was 10,386 B VND, accounting for 8.75%). ✔️VIB has the lowest real estate lending with only 1,697 B VND, equivalent to 0.69% of the total outstanding loans allocated for this sector. Interestingly, although only 1,697 B VND was allocated for real estate lending, the value of collateral assets for related real estate loans as of September 30th reached 353,000 B VND, including assets, valuable documents, collateral, and discounts. Read more: https://lnkd.in/gW8dmpNG

Given the increasing concerns voiced by RBI about the high growth in unsecured retail loans over the last few months, one would have expected that some regulatory tightening is on the way. From that perspective, the measures announced today by RBI is not really surprising. Essentially, these measures endeavour to address two concerns: 1. Excessive growth of unsecured consumer loans in the financial sector through higher risk weight of 125% in case of both banks and NBFCs; higher capital requirements is expected to moderate the growth of such loans 2. Spread of any such systemic risks in the banking sector through increased risk weight on lending to non-priority sector NBFCs (+25% for those with external rating at A and above) Apart from a moderation in the aggregate growth of unsecured loans, the impact of the measures can be seen through the following: 1. A material increase in the rates charged on unsecured loans by banks and NBFCs 2. Higher cost of borrowings for large and small NBFCs (including FinTechs) with a high proportion of unsecured retail loans in their AUM 3. Increased focus of NBFCs on diversification of funding from banks and higher issuances in both public and private bond markets with attractive yields 4. Higher mobilization of capital by NBFCs into unsecured lending to cater to the additional capital requirements 5. Sudden withdrawal of banks and NBFCs from the consumer loan market may also enhance delinquency risks in this category RBI has also urged the lenders to have an adequate risk management framework in place for unsecured retail loans with board approved sectoral exposure limits and segmental limits, as applicable. This will go a long way in mitigating the systemic risks from any aggressive growth in unsecured loan exposures. #NBFCs #RBI #unsecuredloans #personalloans Acuité Ratings & Research Limited Sankar Chakraborti Prosenjit Ghosh Antony Jose C

CO-LENDING BY BANKS AND NBFCs TO PRIORITY SECTOR offers win win situation. RBI vide Circular no. RBI/2020-21/63 (FIDD.CO.Plan.BC.No.8/04.09.01/2020-21 dated 05.11.2020) have issued guidelines on “Co-Lending Model” (CLM) by Banks and NBFCs. The objective is to improve the flow of credit to the unserved and underserved sector of the economy and make available funds to the ultimate beneficiary at an affordable cost, considering the lower cost of funds from Banks and greater reach of the NBFCs. In terms of the Co-lending Model (CLM), Bank is permitted to co-lend with all registered NBFCs (including HFCs) based on a prior agreement, named as Master Agreement (MA). The MA to be entered between the two shall inter-alia include, terms and conditions of the arrangement, the specific product lines and areas of operation, along with provisions related to segregation of responsibilities as well as customer interface and protection issues. NBFCs is required to retain a minimum of 20 per cent share of the individual loans on their books under Co-lending framework. The banks can claim priority sector status in respect of their share of credit while engaging in the CLM. A. Objective and Mutual Benefit of Co-lending by Banks and NBFCs Ø Creation of New Loan Book: The reach of the NBFCs among the local population helps them to assess their financial needs and can help in increasing the Bank’s loan portfolio in these areas. NBFCs has the ability to originate fresh loans in different loan categories in all segments for creation of priority sector assets as per a prior master agreement with the Bank. Ø Support in Follow-up & Recovery: NBFCs has the capability and resources to provide support in post sanction follow-up and recovery. It helps in increasing the Bank’s reach and business without increasing pressure on their branches, while keeping operating costs down. Ø Lower NPA Rates: With strong and effective recovery mechanism, NBFCs usually have low levels of NPAs for activities where the Banks have traditionally struggled with relatively higher NPAs in small ticket size loans. Ø Priority Sector Lending: This Co-lending arrangement is meant to co-lend loans for the exclusive creation of priority sector assets. The co-lending of loans enable the Bank to meet the PSL requirements in a convenient and more organised manner by sharing risks and rewards between the NBFCs and the Bank. Priority sector lending will be as defined by the extant RBI guidelines in force. B. Other Operational Aspects as per RBI Guidelines The co-lending Banks and NBFCs shall maintain each individual borrower’s account for their respective exposures. However, all transactions (disbursements/ repayments) between the banks and NBFCs relating to CLM shall be routed through an escrow account maintained with the banks, in order to avoid inter-mingling of funds. The co-lenders shall establish a framework for monitoring and recovery of the loan, as mutually agreed upon.

Rizal Commercial Banking Corporation (RCBC) posted a consolidated net income of P 12.22 billion in 2023. It hit a record-high profit as customer loans soared by 15% year-on-year, faster than the industry average. CASA deposits increased by 19%, likewise outpacing the industry's 3% growth.

How to strengthen Banking system Present time banking systems are backbone of any economy mostly governments use banks for loan distribution so this money create demand to help GDP growth but this systems big problem are NPA (Non performing assets). Banking lended which loan neither interest nor principle amount covered are NPA in normal language bad loans. Two types of NPA 1. Individuals lending 2. Corporate or Company lending Individuals lending NPA may cover by providing earning solutions to people. Corporate lending NPA needs many changes like management, financial cost, Sectoral market etc. For individuals earnings many initiatives taken by governments like skill development, professional course, new industrial opportunities etc. But present time covid-19 era is running so need a long term regular income method so individuals can free from debts. Corporate NPA solutions need two ways first earning increasing plan & second costing reducing plan. But today we discuss how banks reforms may reduce new NPA. Govt need now three measures 1. Finance for deficit & investment 2. Bank NPA resolution in time bound 3. Employment Generation 1.Need to change solutions of banking bad loans. Stressed companies 30% bank loan should convert in equity preferential shares this will reduce interest cost for stressed enterprises & chances of bad loan become very low, in future sell those preferential shares to private equity or investment firm thus bank can recover their principle amount many time that may be on premium or discount. 2. At the time of the auction of stressed enterprise need to use my method for maximum recovery in present and future. - After auction bidding remain amount convert in preferential shares so creaditors can sell their shares to other companies. 3. Use gold as side digital currency to boost currency . Accept deposit & lending in gold termology as 100 gm gold deposit interest 2% and lending interest 3%. Apply this method in banking system. For Gold term loan lending use GFIR (Gold fluctuations interest rate) so corporate and institutions can borrow on low interest near 4% - 5% annual rate. GFIR is a tool that cut the interest rate and risk of banking system. Present time only big businesses group borrow as ECB ( external commercial borrowing ) on 4% to 5% interest rate. Three ways to boost economy - First give cash in hands of people but government have no more fiscal space to do so. Second distribute loans to marginal people to boost expenditure but it's depend on borrowers to accept loan or not and after distribution cent percent recovery not possible. Third give tools of earning by increasing saving interest rate but this step will hurt corporate and increase government expenditure so not possible. But a new idea can provide extra regular income to households so need to use gold as side currency. Bank should accept deposit and lending in gold termology.

TPHCM January 2024 Credit Decreases by 0.93% Mr. Nguyen Duc Lenh – Deputy Director of the State Bank of Vietnam (SBV) Ho Chi Minh City branch stated that, besides factors related to credit activities (such as customers’ capital needs, socio-economic situation, and absorptive capacity of capital…), technical factors associated with the traditional lunar New Year holiday and seasonal nature are the main factors affecting credit growth in January 2024. Accordingly, the capital needs (mainly short-term capital) increased sharply in the last months of 2023 (October, November, and December) to prepare for production, business, and service activities for the Lunar New Year and this credit balance will decrease according to the loan term and repayment period during the holiday, aiming to not only effectively exploit loan capital but also limit interest payments during the holiday. This was clearly reflected when short-term credit balances in the area decreased by 2.32% in January 2024, while medium and long-term debts increased by 0.35% compared to the previous month. With these developments, to promote credit growth and contribute to economic growth in line with the directions of the Government and the SBV, general credit expansion and growth solutions should be considered for focus implementation in Ho Chi Minh City: Firstly, exploit and use capital effectively, create the best conditions for existing customers to use loan capital effectively; support customers by meeting their capital needs and banking services. Continue to consider adjusting interest rates for reasonable loans, in line with the financial capacity and trend of reducing the average interest rate of each credit institution, with the spirit of sharing, accompanying to develop together. Secondly, continue to focus and implement credit growth solutions in industries that are economic growth drivers; industries that are showing positive growth trends; good customers for better operations, creating positive growth effects and consolidating the bank-customer relationship. Positive signals in production and business activities in some industries in the early days of the new year, such as having production orders; workers returning to work with a high rate, and many recruitment information… continue to implement well to access and support businesses with capital, banking services to maintain and promote growth momentum. Thirdly, implement solutions related to stimulating production and business; stimulate loan demand. In addition to favorable factors such as interest rates, monetary market, credit limits…, it is necessary to organize the implementation of preferential credit packages, flexible and attractive credit products for customers and businesses to stimulate investment, capital expansion, and business development. In this process, continue to implement administrative reform activities well and practically, bringing convenience and satisfaction to customers, not only fa...

Earmark and Lien Amount (in Banking and Finance World) Today we will discuss one of the interesting topic (and indeed quite confusing), "Earmark and Lien Amount". NOTE : I am really not sure whether collating these two terms make sense but i found that the use of these two terms are quite similar (i.e.. holding or reserving funds). Let's understand in details In Banking , Earmark refers to the process of reserving a portion of customer's fund for specific purpose so that it can't be used or available for any other transaction. Earmark can be used in various context. We will understand it with one example. Let say customer initiated "$1000 " transaction through FedNow scheme. When a customer initiates transaction, the bank earmarks the "$1000" amount from the customer's account. This earmarked amount ensures that the funds are reserved and cannot be used for other transactions or purposes. The bank uses the earmarked funds to process the payment through the FedNow system. The FedNow service facilitates immediate settlement between the financial institutions. The FedNow system ensures instant transfer of funds from the payer’s bank to the payee’s bank. Once settlement done customer’s account balance is updated to reflect the transaction (with the earmarked funds now reduced by the payment amount). On the other hand, a "Lien Amount" in banking refers to funds that are held as security for a debt or obligation. The bank places a lien on these funds, meaning they are frozen and cannot be used by the account holder until the debt is settled. To understand this, let's take an example where you take out a personal loan of ₹5,000 from your bank. The bank may place a lien on ₹5,000 of your savings account as collateral. This means that while your account balance may show ₹10,000, you can only access ₹5,000. The remaining ₹5,000 is under lien and cannot be withdrawn or used until you repay the loan. If you default on the loan, the bank can seize the ₹5,000 held under the lien to cover the debt. Feel free to share your views on this.

Bank Lending Survey for Q4:2023-24 Reserve Bank released the results of 27 th round of its quarterly Bank Lending Survey, which captures qualitative assessment and expectations of major scheduled commercial banks on credit parameters (viz., loan demand as well as terms and conditions of loans) for major economic sectors A. Assessment for Q4:2023-24 1. Bankers assessed sustained loan demand across major sectors during Q4 2023-24. 2. Respondents reported a continuation of easy loan terms and conditions in Q4:2023-24, though they assessed relative prudence for retail/personal loans B. Expectations for Q1:2024-25 1. Bankers expressed continued optimism on overall loan demand conditions during Q1:2024-25, albeit a tad below that in the previous quarter, which was a seasonal peak. 2. Overall, easy loan terms and conditions are expected to prevail during the quarter. C. Expectations for Q2 and Q3:2024-25 1. Bankers remain upbeat on loan demand across major sectors up to the end of 2024. 2. On a net basis, easy terms and conditions for loans are expected to continue over the next three quarters, with a majority of bankers anticipating ‘no change’

RBI rings the alarm bells 🚨 for personal loan lending by Fintech!! RBI in it's Financial Stability report says "Delinquency levels among borrowers with personal loans below Rs 50,000 remain high. In particular, NBFC-Fintech lenders, which have the highest share in sanctioned and outstanding amounts, also have the second highest delinquency levels, only below that of small finance banks" Vintage delinquency, which is a measure of slippage, remained relatively high in personal loans at 8.2%. Little more than a half of the borrowers in this segment have three live loans at the time of origination and more than one-third of the borrowers have availed more than three loans in the last six months. The RBI noted that certain segments of consumer credit, esp. personal loans and credit cards pulled down the rate of growth in overall consumer credit. During April 2022 and March 2024, bank lending to the retail sector grew at a CAGR of 25.2% and lending to services - which includes bank lending to NBFCs - grew at 22.4%, far exceeding overall credit growth of 16.4%. The report elaborated on the red flags - rising stress in retail loans in private sector lenders.