Just In from the Banking Sector!

Remember the good old times when people used to communicate only through letters? You might have seen it in the movies as well, that whenever a postman came to deliver the letter, a woman always started crying because she expected some bad news.

This was not the woman’s fault. Actually, the letters were most of the time written only to communicate some sad news. There’s a reason why we are telling you all this.

The Indian banking sector is experiencing something similar these days. Whenever news is reported about an Indian bank or the banking industry, the first line of thought in present circumstances is that ‘what has gone wrong now?’ Be it the PMC bank fraud or Yes Bank’s crisis, the recent news from the banking sector has moreover been negative.

But, in this edition, we will be talking about the recent developments in the banking sector that are important for you to know. Whether this news is positive or negative, we will leave it to you to decide.

What’s the News?

Since the last few days, news has been trending that Mr Uday Kotak is interested in acquiring Indusind Bank. On the other hand, Mr Aditya Puri, CEO of HDFC Bank, has retired. Also, after going through a roller coaster, Yes Bank has finally been able to generate profits in the second quarter.

All this has come from a sector that is still not being seen quite positively by the investors. If you’re thinking as to why we are saying so, have a look at the Bank Nifty index. It is still underperforming and not showing signs of improvement when the Sensex and Nifty have achieved almost the pre-Covid levels.

Getting into the Details

The banking sector in India has experienced a toil and pessimistic trend since the last year or so. The NPAs were already rising for the banks (mostly for public sector banks) and then the Covid-19 pandemic made it worse. Just imagine if you get hurt and you’re already bleeding and then, suddenly you get hit at that spot again. How would you feel? That’s the effect that the Coronavirus has probably had on the Indian banking sector.

Amidst the economic downturn, now there is news coming from this sector that may slightly change the course of development (In a positive or negative way, hard to say at this point). Let’s first talk about the retirement of HDFC Bank’s CEO Mr Aditya Puri. Why Mr Puri’s retirement is big news? 🤔

Because HDFC Bank has fared extremely well under the leadership of Mr Aditya Puri. Since the time the Bank has come into the inception, and Aditya Puri became the founding CEO, HDFC Bank has sailed through economic crises, downturns etc. with ease.

There wasn’t a time when this Bank was hit really hard or when the depositors lost faith in it. But, now that Mr Puri won’t be serving as the CEO anymore, investors might be cautious as to what would happen with the Bank now. The new CEO has taken over, and he has a huge responsibility to maintain the prowess with which HDFC has functioned till now. Although, due to the current circumstances of the sector, it doesn’t look that easy.

About the Indusind Bank’s acquisition, interestingly there’s only one media house that had reported it, and others followed suit. But, after that, the media has seemed quiet over the subject. In fact, there have been some memes floating around on the social media stating that every year Mr Uday Kotak goes out to acquire some bank, and this year it’s Indusind Bank.

So, on a lighter note, the news has turned out to be a rumour and nothing else. But, if the deal goes through, Indusind bank is likely to find itself in a better position as compared to now.

Lastly, after turning out to be a nightmare for the investors, Yes Bank after much struggle is slightly getting back on track. In the second quarter, the Bank has reported profits as much as 26%. The CEO of Yes Bank has said on these rising profits that now he’s able to have a good sleep at night. But, the question is, will Yes Bank be able to reclaim its position that it enjoyed a year and a half ago? Looks extremely difficult.

The Bottom Line

The news from the banking sector has turned heads as we stated at the beginning of this article that reception of news from the Indian banking sector has become synonymous with receiving a letter in the olden times.

But, with the coming of such news, now, it will be interesting to see whether the banking sector moves forward and breaks the shackles that it has been adorning since quite some time now? Or, it would continue on its way to sluggish growth or negative growth for that matter? This only time would tell.