Bank Stocks Outlook For The Week: 26.02.2018 to 01.03.2018

Bank Stocks Outlook For The Week: 26.02.2018 to 01.03.2018

             Equity Cash/Futures/Options Segment 

More than a week since the $1.77-bln fraud at Punjab National Bank unfolded, the impact on other related banks and the capacity of PNB to honour the bonafide commitments still remain unclear, and may weigh on most state-owned banks and private banks. The state-owned bank has reiterated that it has enough assets to meet any liability decided as per law. Ever since, banks have been disclosing their exposure or non-exposure to the fraudulent letters of undertaking or to the companies involved in the fraud. Another alleged credit misappropriation case surfaced during the week, by Rotomac group companies. A consortium of seven banks--Bank of India, Oriental Bank of Commerce, Bank of Baroda, Allahabad Bank, Bank of Maharashtra, Union Bank of India, and Indian Overseas Bank--led
by Bank of India currently has an exposure of 29.19 bln rupees to Rotomac group companies. With such frauds being unfolded, the Reserve Bank of India cracked the whip and mandated all banks to
align their core banking solution systems with SWIFT by Apr 30. After such a mandate in place, banks are said to have already contacted software vendors asking for bids, which could add to the
cost of the banks that are already grappling with higher provisions and change in bad loan resolution norms that could increase credit costs and undermine earnings in the near term.

Source : Cogencis Information Services Ltd.

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