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Hong Kong regulator increases supervision on Allahabad Bank branch
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IANS | 13 Jun, 2018
State-run lender Allahabad Bank on Tuesday said the Hong Kong Monetary
Authority (HKMA) has enhanced supervisory arrangements on its Hong Kong
branch while "assessing implications of the capital positions" of the
lender.
"..we have to inform you that the Hong Kong Monitory
Authority while assessing the implications of capital position of our
bank as on march 31, 2018, has enhanced the supervisory arrangements on
our Hong Kong branch," it said in a regulatory filing.
In fact,
the bank's capital to risk-weighted assets ratio (CRAR) had declined to
8.69 per cent at the end of March quarter from 11.27 per cent at the end
of December quarter of 2017-18.
The HKMA, the de facto central bank of Hong Kong, is responsible for maintaining monetary and banking stability.
According
to the filing, the branch should maintain high quality liquid asset in
Hong Kong equivalent to 100 per cent of unpledged deposits.
"ALHBHK
(Allahabad Bank Hong Kong branch) should not proactively solicit
customer deposits in Hong Kong. However, transactional deposits such as
pledged deposits for commercial loans would be excluded from this
supervisory arrangement," the filing said.
According to
supervisory arrangements imposed by HKMA, the branch should maintain a
position of 'net due to' its head office, other branches and any direct
or indirect subsidiaries and associates of the bank.
"ALHBHK should not incur additional non-bank credit exposures," the filing added.
The
bank's latest annual report said its Hong Kong branch had earned
operating profit of Rs. 90.52 crore and net profit of Rs. 44.86 crore in
the financial year 2017-18.
In the last fiscal, the bank's
international business stood at Rs. 12,871 crore and recorded a negative
year-on-year growth of (-) 8.91 per cent on account of 12.82 per cent
year-on-year drop in overseas advances.
In fact, under the
capital adequacy guidelines stipulated by the Reserve Bank of India
(RBI), the lender is required to maintain a CRAR of 9 per cent with
minimum Common Equity Tier I (CET1) of 5.5 per cent as on March 31,
2019.
In fact, the RBI had last month imposed additional
restrictions on Allahabad Bank under prompt corrective action (PCA)
framework.
The lender was asked to restrict expansion of
risk-weighted assets (RWA), reduce exposure to high-risk loans and
restrict accessing or renewing wholesale deposits.
The lender had posted a net loss of Rs 3,509.63 crore in the March quarter of 2017-18.
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Customs Exchange Rates |
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