Banking News

ED Raids 10 Locations in Rs 988 Cr Loan Fraud Probe Involving Shilpi Cables

The Enforcement Directorate (ED) has searched 10 locations in Delhi-NCR and one in Ludhiana in connection with a Rs 988 crore bank loan fraud involving Shilpi Cables Technologies Ltd (SCTL), as part of a probe based on a CBI FIR. SCTL’s promoters, including MD Manish Goel, are accused of defrauding IDBI Bank and a consortium of lenders through manipulated letters of credit and routing funds abroad via fictitious trade deals.

The ED is probing Goel and entities linked to him, including dummy firms used for fund rotation and illicit cash infusion. Investigators claim Goel infused illicit funds into businesses he beneficially owned to launder and legitimise the proceeds of crime.

Separately, the ED is also conducting searches in Mumbai, Surat, and Ahmedabad in a Rs 100 crore cybercrime case involving fake USDT trading and digital arrest scams, where funds were transferred abroad via cryptocurrency and hawala routes.

Union Bank of India to Raise Rs 6,000 Crore via Equity and Debt for Growth

Union Bank of India has announced plans to raise Rs 6,000 crore through a combination of equity and debt instruments to support its business expansion. The public sector lender stated in a regulatory filing that the decision was approved at its recent board meeting.

Of the total amount, up to Rs 3,000 crore will be mobilised through equity issuance in one or more tranches via public issue, rights issue, private placements including Qualified Institutional Placements (QIPs), or a combination thereof. This fundraising is contingent on approvals from the government, regulators, and shareholders.

In addition, the bank’s board cleared the issuance of Basel-III compliant bonds, comprising up to Rs 2,000 crore in Additional Tier-1 (AT-1) bonds and up to Rs 1,000 crore in Tier-2 bonds, which may include foreign currency denominated options. The fundraising move reflects the bank’s aim to strengthen its capital base and support future growth.

SBI Begins Recruitment for 541 Probationary Officers

The State Bank of India (SBI) has initiated recruitment for 541 Probationary Officer (PO) posts, with online applications open from June 24 to July 14, 2025. This marks a return to PO hiring after a gap, as no notification was issued in 2024. The last PO recruitment occurred in 2023, when 2,000 positions were announced.

This new recruitment follows SBI’s major hiring drive in December 2024, when it announced 13,735 clerical vacancies—up from 8,283 in 2023 and 7,820 in 2020. Notably, SBI continues to enforce its credit discipline clause, which bars applicants who have defaulted on loans with banks, NBFCs, or financial institutions.

Candidates must have a clean CIBIL record to be eligible for the PO role. The fresh recruitment is expected to attract thousands of applicants as SBI remains one of the most sought-after employers in the banking sector, offering long-term career stability and growth across India.

SBI Declares RCom Loan Account Fraudulent, Targets Anil Ambani

The State Bank of India (SBI) has declared Reliance Communications’ (RCom) loan account as “fraud” due to alleged fund diversion, misuse of sanctioned loans, and irregular inter-company transactions. In a letter shared on the stock exchanges, SBI said funds were diverted to connected parties, misused for investments, and routed via manipulated sales invoices.

The bank also revealed plans to report RCom and its former promoter-director, Anil Ambani, to the Reserve Bank of India (RBI) for further regulatory action. The move signals stringent measures by public sector banks to address large-scale non-performing assets (NPAs) and hold defaulters accountable.

This development adds to RCom’s ongoing financial troubles, as the company continues to navigate insolvency proceedings. The classification as fraud is likely to escalate legal scrutiny and could impact the promoter’s future business engagements. SBI’s action highlights increasing regulatory focus on corporate governance and financial transparency in high-value loan exposures.

SBI Plans Record Rs. 25,000 Crore Share Sale via QIP

The State Bank of India (SBI) is preparing to raise up to Rs. 25,000 crore ($2.9 billion) through a qualified institutional placement (QIP), potentially launching the sale next week, sources revealed. If fully subscribed, this would become India’s largest-ever QIP, surpassing Coal India’s Rs. 22,560 crore issue in 2015.

The sale, approved by SBI’s board in May, is intended to bolster the bank’s capital base, support future loan growth, and meet regulatory norms. It marks SBI’s return to the equity markets after eight years, with the last QIP conducted in 2017.

SBI has shortlisted six investment banks to manage the offering: Citigroup India, HSBC India, ICICI Securities, Kotak Investment Banking, Morgan Stanley India, and SBI Capital Markets. While the deal structure is yet to be finalised, it reflects the bank’s strategic focus on enhancing financial strength amid expanding credit demand.

SBI, the country’s largest lender, is majority-owned by the Indian government.

IDFC First Bank CEO Regrets Uninsured MFI Portfolio Amid Sharp Profit Drop

IDFC First Bank CEO V Vaidyanathan expressed regret for not insuring the bank’s microfinance (MFI) portfolio earlier, as the sector continues to face cyclical stress every 5–8 years. In the bank’s FY25 annual report, he said insurance could have cushioned nearly 72% of recent losses caused by defaults.

“Events like those in Andhra Pradesh, Assam, or Tamil Nadu floods repeatedly impact this segment. Going forward, we will fully insure the portfolio and monitor it more closely,” Vaidyanathan stated.

From January 2024, the bank began covering its MFI disbursements under the Credit Guarantee Fund for Micro Units (CGFMU). Currently, 66% of the MFI portfolio is insured. However, the bank reported a steep 48% drop in net profit to Rs. 1,525 crore in FY25 due to elevated provisions of Rs. 5,515 crore, mainly from MFI stress.

Overleveraging in the sector has triggered rising defaults and curbed disbursements. Consequently, IDFC First’s MFI book shrank 28% year-on-year to Rs. 9,571 crore.

CICs Urged to Move Toward Real-Time Credit Reporting

Reserve Bank of India Deputy Governor M Rajeshwar Rao has called on Credit Information Companies (CICs) to upgrade their systems for real-time or near real-time credit data updates, moving beyond the current fortnightly cycle. Speaking at TransUnion CIBIL’s Credit Conference in Mumbai, Rao stressed that this transformation would enhance underwriting accuracy, allow timely reflection of borrower activities like repayments and closures, and improve the overall consumer experience. Achieving this goal would require significant investment in technology, operational restructuring, and change management, but the benefits — improved transparency, efficiency, and trust — outweigh the costs. Rao also emphasized the critical role of data quality in responsible lending and noted that CICs are now required to issue a monthly data quality index score to Credit Institutions (CIs). This index will serve as a benchmark for institutions to improve the reliability of the credit data they submit. These changes form part of a broader effort to strengthen the foundation of India’s lending ecosystem.

SBI Celebrates 70 Years as India’s Most Profitable Bank

As it marks 70 years of operations, the State Bank of India (SBI) continues to top the charts as the most profitable Indian company for the third consecutive year. According to SBI Research, the bank’s profits surged from Rs 1.36 crore in 1955 to Rs 70,901 crore in FY25 — a staggering 52,000-fold increase. Over the same period, deposits grew 25,000 times to Rs 53.82 lakh crore, and advances rose 35,800 times to Rs 41.63 lakh crore. The number of employees grew 16.4 times to 2.36 lakh, while profit per employee jumped 33 times to Rs 29.91 lakh. SBI now contributes 1.1% to global GDP growth and 16% to India’s GDP, with a balance sheet larger than the GDP of 175 countries. It currently holds 22.5% of India’s scheduled commercial bank deposits and 19.4% of the credit. SBI operates 22,937 domestic branches and 244 overseas offices, and 27.6% of its workforce is women.

PSBs Waive AMB Penalties Amid Falling Interest Rates

Public Sector Banks (PSBs) have begun waiving penalties for non-maintenance of average monthly balance (AMB) in savings accounts, aiming to retain customers amid falling interest rates and rising competition from alternative investments. With the RBI having cut the repo rate by 100 basis points, banks are reducing both savings and fixed deposit rates. As of June 20, 2025, the average savings account rate has dropped to 2.50–2.75% from 2.70–3% a year ago, while one-year term deposit rates now range between 5.85–6.70%. Banks such as Canara Bank, Punjab National Bank, and Indian Bank have recently waived AMB penalties; SBI did so back in 2020. While this move may reduce fee income, it helps banks retain CASA (Current Account and Savings Account) deposits and ease interest costs. Experts warn, however, that this could lead to a rise in dormant accounts. Karur Vysya Bank’s treasury head noted that banks are compensating with added non-monetary benefits to retain customer engagement.

Banking System Liquidity Surplus Crosses Rs. 4 Trillion Mark

The banking system’s liquidity surplus has soared to Rs. 4.04 trillion, the highest since May 19, 2022, as per data from the Reserve Bank of India’s (RBI) Liquidity Adjustment Facility (LAF). This sharp rise is attributed primarily to increased government expenditure following the RBI’s record Rs. 2.69 trillion surplus transfer in May.

During the recent seven-day Variable Rate Reverse Repo (VRRR) auction, the RBI received bids worth approximately Rs. 1.7 trillion, significantly exceeding the notified Rs. 1 trillion. Ultimately, the RBI accepted Rs. 1 trillion at a cut-off rate of 5.47%. This contrasts with the previous week’s auction, which attracted bids of just Rs. 84.98 crore due to the quarter-end timing, which typically affects liquidity availability.

Commenting on the trend, V R Reddy, Head of Treasury at Karur Vysya Bank, noted that the current liquidity environment is more favorable and that surplus levels are expected to remain above Rs. 4 trillion in the near term, supported by continued fiscal activity and robust capital flows.