29.12.2020: Today's Banking / Financial News

29.12.2020: Today's Banking / Financial News at a Glance

🍒 PNB completes IT integration of all branches of Oriental Bank of Commerce and United Bank of India ; State-owned Punjab National Bank (PNB) on Monday said it has completed IT integration of all branches of erstwhile United Bank of India with itself. This is in continuation to the IT integration of all branches of erstwhile Oriental Bank of Commerce undertaken last month, PNB said in a statement. The amalgamation of Oriental Bank of Commerce and United Bank of India into PNB came into effect from April 1, 2020. “With this PNB has concluded the integration and migration of databases of both banks, which brings all the customers on the common platform and enable them to transact seamlessly across bank’s network as well as use PNB’s digital Banking platforms like Internet Banking and Mobile Banking,” it said. The entire migration has been completed without effecting any change in customer account numbers, debit cards or net banking credentials, the bank added. - financial express

🍒 Bank of Baroda launches digital lending platform : Bank of Baroda (BoB) has launched its Digital Lending Platform (DLP), which will allow prospective retail loan seekers to get loans digitally through a paperless process The Platform provides ‘in-principle approval’ for home, car and personal loans in 30 minutes without human intervention, the public sector bank said in a statement. The bank will also offer ‘Online Loan against Fixed Deposits’ via DLP. Prospective loan seekers can avail the DLP facility through multiple channels — website, mobile banking, internet banking and social media as well, it added. With the launch of DLP, BoB said personal loan disbursements will be completely digitised first, followed by MSME (micro, small and medium enterprises) and agriculture disbursements. The bank envisages that the digital share of disbursement in retail lending will grow to 74 per cent over five years. - Business LIne

🍒 SBI, PNB, other Indian banks see sharp fall in NPAs; these reasons to thank for improved asset quality : India’s largest PSU banks — State bank of India (SBI) and Punjab national bank (PNB) — saw a significant fall in non-performing assets in the fiscal’s second quarter. SBI, which accounts for the highest share of PSU Banks’ GNPAs at 20 per cent, reported the highest asset quality improvement in the second quarter. Its GNPA ratio fell to 5.3 per cent in September 2020, compared to 7.2 per cent in the same month last year. Another large PSU bank, PNB that accounts for 16 per cent share in overall PSU banks’ GNPAs, saw a fall in NPAs at 13.4 per cent in September 2020, compared to 16.8 per cent in the last year. The improvement in asset quality has majorly been due to recoveries and higher write-offs by the multiple banks. SBI alone had recoveries to the tune of Rs 4,038 crores and has written off loans worth Rs 5,617 crores, according to Care Ratings. Among other PSU banks, NPAs of Bank of India fell from 16.31 per cent to 13.79 per cent on year in Q2; Bank of Maharashtra (16.86 per cent to 8.81 per cent); Indian Overseas Bank (20 per cent to 13.04 per cent); and NPAs fof UCO Bank fell from 21.87 per cent to 11.62 per cent on-year in Q2. - financial express

🍒 Gross NPAs of banks may rise to 10.1-10.6% by March 2021: Icra : Banks' gross non-performing assets (NPAs) and net NPAs are expected to rise to 10.1-10.6 per cent and 3.1-3.2 per cent, respectively by March 2021, Icra said Monday. The agency also expects net NPA to decline to 2.4-2.6 per cent by March 2022. "As moratorium on loan repayments is over and though we await the Honourable Supreme Court directive on asset classification, the GNPAs and NNPAs for banks are likely to rise in near term to 10.1-10.6 per cent and 3.1-3.2 per cent, respectively by March 2021 from 7.9 per cent and 2.2 per cent, respectively as of September 2020," the rating agency said in a report. - economic times

🍒 2021 will witness lot of regulatory efforts channelled towards virtual assets: SBI official : The use of crowdfunding websites create additional risk and the year 2021 will see a lot of regulatory effort channelled towards virtual assets, a senior SBI official said on Monday. Addressing a virtual 'AML/CFT Conference 2020', Sujit Kumar Varma, SBI's Deputy Managing Director (Corporate Accounts Group) said that the trade-based money laundering remains a significant risk. " The use of crowdfunding websites, although not entirely new, create an additional risk as these are specially designed to solicit funding and can be misused for terror financing," he said. Varma also noted that crypto currencies and its potential means to finance terrorism is a significant threat especially when is anonymous in nature. "The year 2021 will see a lot of regulatory effort channelled towards virtual assets. The year 2021 will also likely witness the introduction of more rules and regulations for virtual assets service providers," he said. - economic times

🍒 Axis Bank prunes overseas presence as it consolidates local business : Axis Bank is pruning its overseas operation as part of a strategy of focusing Indian market. It closed branches in Shanghai and Colombo last month while it is in the process of winding up Hong Kong Branch, senior bank officials said. It is also looking to surrender its UK banking subsidiary license and close operations by April 2021. India’s third largest private sector lender is looking to optimize overseas operations in line with the overall corporate strategy. The plan is to consolidate the services related to corporate banking, trade finance, treasury and risk management solutions through its Dubai, Singapore and GIFT city branches. Axis also has representative offices in Dhaka, Abu Dhabi and Sharjah. Axis’ group executive for wholesale banking Ganesh Sankaran said that the bank is closing down branches where it does not have corresponding business opportunities. “We will only continue with our overseas branches and offices in a well thought manner where they have deep synergies with Indian operations and business goals," he said. - economic times

🍒 Break-even year for bleeding PSU banks : The economy has shrunk 15.7% in the first half, jobs have been lost, incomes have contracted and uncertainty hangs over high-contact services with the survival of many in doubt. India has the second-highest ratio of net non-performing assets (NPAs) among the G-20 nations. And this is expected to go up when the Supreme Court stay on NPA classification gets lifted. Given this setting, it may seem highly incongruous to expect NPAs in Indian banks to bottom out in the fourth quarter of 2020-21. Yet, this is what is likely to happen. It now appears that not only have banks dodged an explosion of bad loans, but they also solved some historical problems. For instance, NBFCs were facing a huge credit crunch in March and there were fears that they might default. The targeted long-term repo operations and other schemes enabled them to refinance loans that were coming up for repayment in the current fiscal. While none of the RBI or government relief measures were available for companies that had defaulted, these bad loans have been addressed through provisions. “After six years of losses, FY2021-22 may be the break-even year for public sector banks. This year, there is a possibility that they will make a loss if the stress will materialise according to our estimates,” said Anil Gupta, Icra VP and sector head. - economic times

🍒 PMC Bank money laundering case: ED summons Sanjay Raut's wife for questioning on December 29 : The ED has summoned Varsha Raut, wife of Shiv Sena MP Sanjay Raut, for questioning in the PMC Bank money laundering case on December 29, officials said on Sunday. Varsha Raut has been asked to appear before the federal agency in Mumbai. This is the third summons issued to her after she skipped the earlier two on health grounds, they said. The summons for questioning has been issued to her under the provisions of the Prevention of Money Laundering Act (PMLA). The ED wants to question Varsha Raut with regard to "receipt" of some funds that were allegedly siphoned from the bank, official sources claimed. The ED had filed a PMLA case to probe the alleged loan fraud in the Punjab and Maharashtra Co-operative (PMC) Bank in October last year against the Housing Development Infrastructure Ltd (HDIL), its promoters Rakesh Kumar Wadhawan and his son Sarang Wadhawan, its former chairman Waryam Singh and ex-managing director Joy Thomas.- economic times

🍒 Govt to soon initiate Bank Investment Company : The government is likely to set in motion the process of establishing a Bank Investment Company (BIC) to hold its stake in public sector banks (PSBs) following substantial consolidation in the public sector banking space and clean-up of banks’ balance sheet in the last couple of years. With the banking space seeing fast-paced changes vis-a-vis business models and technology, top bankers feel now is the right time to set up a BIC so that decisions can be taken quickly without the fear of the 3Cs — Central Vigilance Commission, Comptroller and Auditor General and Central Bureau of Investigation. BIC was mooted in 2014 by the Reserve Bank of India’s (RBI) PJ Nayak Committee Report to review governance of boards of banks. - Business Line

🍒 Flexible inflation targeting: “If it ain’t broke, don’t fix it”, say RBI officials : Maintaining the inflation target at 4 per cent is appropriate for India in the backdrop of the steady decline in trend inflation to 4.1- 4.3 per cent since 2014, according to Reserve Bank of India (RBI) working paper. The aforementioned observation assumes significance given that the flexible inflation targeting/ FIT (formally instituted in June 2016), which commits the RBI to a consumer price inflation (CPI) target of 4 per cent with an upper and lower tolerance band of +/- 2 per cent, has to be reviewed by end-March 2021. The paper’s authors — Harendra Kumar Behera, Director, and Michael Debabrata Patra, Deputy Governor, RBI — underscored that: “The credibility bonus accruing to monetary policy warrants smaller policy actions to achieve the target (FIT). This points to maintaining the inflation target at 4 per cent into the medium-term. If it ain’t broke, don’t fix it.” - Business Line

🍒 AU Small Finance, ICICI Pru Life tie up to offer life insurance solutions : AU Small Finance Bank on Monday announced a strategic partnership with ICICI Prudential Life Insurance to offer life insurance solutions. AU Banks said the tie-up aims to deliver "paperless, secure, and hassle-free life insurance" to over 1.8 million customers through digital platforms across 700 banking touchpoints in 13 states and 2 Union territories. “AU Bank has always worked with the core Dharma of ‘customer centricity’. Expanding our bouquet of financial services and customer value proposition, we wanted to associate with an additional life insurance partner to add value to our existing range of products & services while helping our customers to plan for better financial security," said Uttam Tibrewal, executive director of AU Small Finance Bank. - Business Standard

🍒 Asset quality pressure on banks to moderate by FY22-end, says Icra : Asset quality pressure on banks in India is likely to moderate with net non-performing assets (NPAs) declining to 2.5 per cent by March 2022 (FY22) from an estimated 3.1 per cent in March 2021, according to rating agency Icra. The loan restructuring volume is likely to be lower at 2.5-4.5 per cent of advances than initial estimates of 5-8 per cent of advances, it added. Icra said in a statement that moratorium on loan repayments is over, though the Supreme Court directive on asset classification is awaited. In this backdrop, the Gross NPAs are likely to rise to 10.1-10.6 per cent by March 2021 from 7.9 per cent in September 2020. The Net NPAs would also move up to 3.1-3.2 respectively by March 2021 from 2.2 per cent as of September 2020 on elevated credit provisions during H2FY21 as well. - Business Standard

🍒 Airlines seek easier Kamath panel's parameters on loan restructuring : Indian airlines, struggling with a pandemic-related demand slump, have sought from banks and the Reserve Bank of India (RBI) relaxations in the K V Kamath panel’s parameters on loan restructuring. Bank executives have said while they are sensitive to the requirements of the aviation sector, unless there are relaxations at a regulatory level, airlines may not find success in recasting loans. Sources said SpiceJet, GoAir, Vistara, and regional airline TruJet had approached lenders for restructuring their loans. SpiceJet and GoAir have also approached banks for fresh loans as working capital. Executives of private airlines have said while they have asked for relaxations in their negotiations with lenders, it has been conveyed to the RBI through the Ministry of Civil Aviation that the cash flow of airlines may remain under pressure for some more time and the eligibility criteria will be difficult to meet. They also want banks to be more amenable to giving fresh credit lines. “In our communication with lenders, we have pointed out that airlines will require at least one more year to come back to profitability. While the government has allowed opening up almost 80 per cent operations, this lean quarter of the post-holiday season (January-March) will stress profitability as there will be more capacity but fewer passengers,” said an executive of a private airline. - Business Standard

🍒 CAG writes to RBI on banks' status post-recap over the past 5 years : The Comptroller and Auditor General of India (CAG) has written to the Reserve Bank of India (RBI), seeking details of the performance of state-run banks after their recapitalisation (recap) over the past five years. The CAG has also requested it to share the details of a study, if any, with the government. “This (development) should be seen in the context of the opportunity cost of state-run banks’ recap, given the limited fiscal space available,” said a source, adding, “It’s probably part of the steps towards sizing the true value of these banks ahead of privatisation and bringing uniformity in the standards for recap.” The CAG’s communiqué to the RBI ahead of the 2021-22 Budget also puts the spotlight on the latter’s supervisory architecture. This is because of its linkage with the health of state-run banks, more so after the central bank’s asset quality reviews undertaken in recent years. As articulated by former RBI governor, Urjit Patel, the banking regulator holds that it has relatively less say in the governance of state-run banks. The CAG’s message to the RBI comes within a year of its Report on Trend and Progress of Banking in India (T&P: 2018-19), which noted that “the financial health of state-run banks should be assessed by their ability to access the capital markets rather than looking at the government as a recapitaliser of the first and last resort”. - Business Standard

🍒 Maintaining 4% inflation appropriate for India: RBI paper : Maintaining 4 per cent inflation is appropriate for India as targeting a lower rate could impart deflationary bias to the monetary policy, said a Reserve Bank paper. Under the current dispensation, the RBI has been mandated by the government to maintain retail inflation at 4 per cent with a margin of 2 per cent on either side. The paper, authored by RBI Deputy Governor Michael Debabrata Patra and another official Harendra Kumar Behera, has found a steady decline in trend inflation to 4.1-4.3 per cent since 2014. "A target set too below the trend imparts a deflationary bias to monetary policy because it will go into overkill relative to what the economy can intrinsically bear in order to achieve the target. - Live Mint

🍒 Debt recasts by banks to be lower than estimated at 2.5-4.5% of loans: Icra : Indian banks are expected to restructure loans of fewer borrowers than was originally estimated, with 2.5-4.5% of advances now likely to get recast, rating agency Icra said on Monday. It said that loan recast requests are much lower than previously estimated, supported by sharper-than-expected improvement in economic activities as well as liquidity support through emergency credit line guarantee scheme. Accordingly, Icra has revised the estimate downward to 2.5-4.5% of advances as against 5-8%, estimated earlier. Anil Gupta, sector head – financial sector ratings, Icra said, with expectations of sustained collections and lower restructuring, the asset quality is expected to improve further with net non-performing asset (NPA) declining to 2.4-2.6% by March 2022. “This will lead to lower credit provisions and better profitability in FY2022," said Gupta.- Live Mint

🍒 Lenders look to give mobile apps a facelift : Banks are upgrading their mobile applications to make it easier for customers to complete most transactions without having to visit branches with the apps emerging as the most preferred customer-interface for lenders after the pandemic. The Reserve Bank of India (RBI) has repeatedly nudged banks to strengthen their information technology infrastructure and recently took the unprecedented step of asking India’s largest private lender, HDFC Bank Ltd, to halt new digital banking initiatives till it fixes problems that have caused three outages in its e-banking services since 2018. State-run Bank of Baroda (BoB), for instance, is looking to redesign its mobile app, which had 11.43 million downloads on Google Play Store at the end of March. The bank is hiring an agency to identify the difficulties faced by customers before redesigning the app. - Live Mint

🍒 Take shareholders’ nod before appointing Shivan as MD & CEO, RBI tells Dhanlaxmi Bank : The Reserve Bank of India (RBI) has asked the Dhanlaxmi Bank Board to get shareholders’ approval before appointing JK Shivan as the next managing director and CEO of the bank. The move is considered somewhat unusual since typically, the board appoints the candidate recommended by the regulator as additional director and then seeks the shareholders approval at the next AGM . The board of Dhanlaxmi had sent a list of five candidates to RBI for its approval after the incumbent Sunil Gurbaxani was voted out by majority of shareholders. An independent director the bank told FE the RBI must be concerned that the shareholders voted out a person nominated by the RBI. Gurbaxani was voted out from the post of MD and CEO by more than 90% of the shareholders on October 1 at the first AGM held after he was appointed in February 2020. - financial express

🍒 Suryoday Small Finance Bank gets SEBI nod to float IPO : Markets regulator Securities and Exchanges Board of India (SEBI) has granted the go-ahead to small lender Suryoday Small Finance Bank to float its Initial Public Offering (IPO). This IPO comprises fresh issuance of 1,15,95,000 equity shares and an offer for sale of up to 84,66,796 equity scrips by existing shareholders, according to the draft papers filed with the regulator, PTI reported. Those offering shares through the Offer for sale (OFS) route include International Financial Corporation (IFC), Gaja Capital, HDFC Holdings, IDFC First Bank, Kotak Mahindra Life Insurance Company, DWM (International) Mauritius Ltd and Americorp Ventures. After filing its preliminary papers in October, the small lender got SEBI's observation on December 23, per an update on the regulator's portal. - moneycontrol.

🍒 ICICI Bank and Google Pay collaborate to bring digital registration of FASTag : ICICI Bank has announced that it is collaborating with Google to issue FASTag. It has become the first bank to join hands with Google Pay for the issuance of FASTag. Customers will now be able to order, track and recharge ICICI Bank FASTag via the Google Pay app. Sajith Sivanandan, Business Head, Google Pay said, “NETC FASTag is an important milestone in bringing the efficiencies of digital payments into transit and making interstate travel frictionless. We are very pleased to be joining hands with ICICI Bank to extend the facility of NETC FASTag purchase to millions of users across India through Google Pay. This is a great example of an entire ecosystem working in concert to bring ease and convenience to the lives of users in a very tangible way.” - moneycontrol.

🍒 Sensex, Nifty scale new heights on positive global cues : The BSE benchmark Sensex settled up by 380.21 points or 0.81 per cent at its all-time closing high of 47,353.75. The index also scaled its fresh record intra-day peak of 47,406.72. The NSE Nifty ended 123.95 points or 0.90 per cent up at new closing high of 13,873.20. It also touched its all-time intra-day high of 13,885.30. On the Sensex chart, Titan, SBI, L&T, IndusInd Bank, Ultratech Cement, HDFC Bank and Asian Paints were top gainers. While, HUL, Sun Pharma, Dr Reddy and Bajaj FinServ closed with losses. Of the Sensex constituents, 26 stocks settled with gains and 4 with losses.

🍒 Rupee ends 6 paise higher at 73.49 against US dollar : The rupee appreciated by 6 paise to close at 73.49 (provisional) against the US dollar on Monday, tracking weakness in the American currency and positive domestic equities. The sustained foreign fund inflows also supported the rupee, traders said. At the interbank forex market, the domestic unit opened at 73.52 against the US dollar and witnessed an intra-day high of 73.47 and a low of 73.61. The local unit finally settled at 73.49 against the American currency, registering a rise of 6 paise over its previous close.

🍒 Gold price rises by 1%, silver rate surges 3% : Gold and silver prices surged today in Indian markets tracking firm international prices. On MCX, February gold futures rose by 0.97% to ₹50,561 per 10 grams and silver prices went up by 3.14% to ₹69,578. Though gold has recovered from lows of below ₹48,000, it remains significantly lower than the August highs of ₹56,200. Similarly, silver had also almost touched ₹80,000 per kg in the same month. Gold closed at ₹50,073 on Thursday and silver closed at ₹67,509 on Wednesday on MCX..

28.12.2020: Today's Banking / Financial News

28.12.2020: Today's Banking / Financial News at a Glance

🍒 PNB puts 3 stressed accounts up for sale : State-run Punjab National Bank (PNB) has put up for sale three stressed accounts, including Birsa Institute of Technology (Trust), with total outstanding dues of nearly Rs 34.50 crore. "We intend to place three accounts for sale to ARCs/NBFCs/other banks/FIs etc, on the terms and conditions stipulated in the bank's policy, in line with the regulatory guidelines," PNB said in an auction notice. The three accounts are Mangalam Oil Industries with outstanding dues of Rs 10.77 crore, Alliance Fibres Ltd (Rs 18.31 crore) and Birsa Institute of Technology (Trust) (Rs 5.41 crore). Mangalam Oil Industries and Alliance Fibres are based out of Ahmedabad and the third one is based in Raipur. The sale process is being undertaken by bank's Stressed Assets Targeted Resolution Action (SASTRA) Division. The SASTRA division is tasked to enhance bank's recovery mechanism post the massive fraud caused by the jewellers duo Nirav Modi and Mehul Choksi, unearthed in early 2018. - economic times

🍒 PMC Bank money laundering case: ED summons Sanjay Raut's wife for questioning on December 29 : The ED has summoned Varsha Raut, wife of Shiv Sena MP Sanjay Raut, for questioning in the PMC Bank money laundering case on December 29, officials said on Sunday. Varsha Raut has been asked to appear before the federal agency in Mumbai. This is the third summons issued to her after she skipped the earlier two on health grounds, they said. The summons for questioning has been issued to her under the provisions of the Prevention of Money Laundering Act (PMLA). The ED wants to question Varsha Raut with regard to "receipt" of some funds that were allegedly siphoned from the bank, official sources claimed. The ED had filed a PMLA case to probe the alleged loan fraud in the Punjab and Maharashtra Co-operative (PMC) Bank in October last year against the Housing Development Infrastructure Ltd (HDIL), its promoters Rakesh Kumar Wadhawan and his son Sarang Wadhawan, its former chairman Waryam Singh and ex-managing director Joy Thomas. - economic times

🍒 Muthoottu Mini Financiers ties up with Exide Life Insurance to provide life insurance products : Muthoottu Mini Financiers Ltd has announced a strategic partnership with Exide Life Insurance Company Limited to provide life insurance products through its branches. The tie-up will enable Muthoottu Mini Financiers Ltd to expand offerings to its customers by becoming a ‘One Point Stop’ for all their financial needs. The Bengaluru-based Exide Life Insurance serves over 15 lakh customers, with a wide range of investments products. The partnership will enable Muthoottu Mini Financiers, which has a customer base of more than 30 lakh, to facilitate greater brand awareness for Exide Life Insurance. “We would be promoting business through our 806 branches across the country. With the strategic alliance now bringing in Exide Life Insurance Company’s offerings into our large bouquet of products, we are on the way to becoming a ‘One Point Stop’ for our esteemed customers for all their financial needs,” Mathew Muthoottu, Managing Director, said. - Business Line

🍒 Ahead of DHFL voting, Oaktree fires fresh salvo against Piramal bid : Ahead of the three week long voting starting Monday to decide on the new owner of Dewan Housing Finance Limited (DHFL), Oaktree has fired yet another salvo by attacking the bid of its nearest competitor Piramal Enterprises. In a letter sent on Sunday evening to members of the committee of creditors, the RBI appointed administrator, Oaktree has said it is concerned that despite its bid offering maximum value for all stakeholders, it appears “there is a consistent campaign to misrepresent information on Oaktree’s bid. Information is not only being presented in an incomplete and inaccurate manner but also in order to discredit Oaktree’s bid and favour the Second Highest Bidder.” - economic times

🍒 Centrum Microcredit raises $5.55 million from Singapore’s IIX : Centrum Microcredit Ltd, the micro-finance arm of diversified Centrum Group, has raised $5.55 million (about ₹41 crore) debt from Singapore-based impact investing and sustainability organisation Impact Investment Exchange (IIX). The micro-finance firm, which has presence across nine States, will use the funding to provide financial assistance to women entrepreneurs. “It is our vision to create a positive, social and economic impact in the lives of low-income household by improving access to finance to women entrepreneurs. This is our first international fund raise and the funds will be used to improve the livelihood of women in India,” Prashant Thakker, Centrum Microcredit Executive Director and Chief Executive Officer, told BusinessLine. - business line

🍒 Oaktree’s bid to ‘convince’ DHFL lenders : In a last-ditch effort to convince the lenders to DHFL, Oaktree Capital has sent a fresh letter to the CoC stating that evaluation of its offer based on incorrect information could be subject to judicial, administrative and investigative review. Sources said Oaktree has expressed concerns that its bid is being misrepresented despite offering maximum value to the stakeholders. Oaktree has highlighted that in terms of total recovery being offered to financial creditors as well as net present value, its financial proposal is clearly superior to all other PRAs. The total recovery for lenders according to Oaktree’s resolution plan is envisaged at ₹38,400 crore and the NPV could be about ₹36,418 crore. Sources said Oaktree has stated that the total cash amount that the CoC would receive immediately on the implementation of its resolution plan would be about ₹17,400 crore. - business line

🍒 Piramal highlights its bid for DHFL while responding to Oaktree's concerns : Responding to Oaktree Capital’s concerns on the DHFL resolution process, the Piramal Group highlighted its bid for the debt-ridden housing finance company. “The Piramal plan merges DHFL with a AA rated entity, offers over ₹10,000 crore of equity immediately, and provides clarity on quality and secondary market valuation of NCDs. The alternative plan is a highly leveraged structure with minimal equity,” said a Piramal spokesperson. - Business Line.

27.12.2020 : Today's Banking / Financial News

27.12.2020 : Today's Banking / Financial News at a Glance

🍒 Bad debt fear keeps private banks away from street vendor loans : Last week, a branch manager of a leading state-run bank in Madhya Pradesh wrote to the municipal commissioner seeking “cooperation” as several of the 160 street vendors, who were given loans under the PM SVANidhi scheme, had not paid a single instalment, turning them into non-performing assets (NPAs). While executives in the branch described it as routine communication, several bankers point to it to argue that their worst fears are coming true at a time when several state government officers are pushing for rapid disbursement of loans. Although banks have been reluctant to push the Rs 10,000-loan to street vendors, the finance ministry, which controls the fate of state-run bank chiefs, has got them to dole out loans. Not surprisingly, public sector players have disbursed 92% of the loans so far with private banks being less obliging. - economic times

🍒 Bounce rate of auto debit transactions remains high amid lenders’ claims of improved collection efficiencies : Is there rising financial stress amongst small and retail borrowers after the end of the loan moratorium, despite banks and NBFCs reporting collection efficiencies at about 90 per cent of pre-Covid levels? Anecdotal evidence as well as a quick search of social media indicate that many borrowers indeed continue to face headwinds due to job losses and salary cuts amid the ongoing Covid-led economic uncertainty. This also seems to be corroborated by data from the National Payments Corporation of India from its National Automated Clearing House (NACH) platform, which reflects the elevated number of unsuccessful auto debit requests. The bounce rate of auto debit transactions has been hovering over 40 per cent since June as against 31 per cent at the start of 2020 before the pandemic. In November, of the 8.69 crore auto debit transactions recorded on the NACH platform, 3.52 crore were unsuccessful. In comparison, just 2.4 crore transactions out of 7.77 crore requests were returned in January. - Business Line

🍒 SEBI names Krishnamurthy as ‘observer’ for Franklin e-voting : Market regulator SEBI on Saturday announced the appointment of TS Krishnamurthy as the observer for ‘e-voting’ on winding-up of six debt schemes of Franklin Templeton Mutual Fund (FTMF). SEBI’s announcement came several hours after the e-voting had commenced on Saturday morning. On December 9, the Supreme Court had directed SEBI to appoint an observer.

Krishnamurthy, age 76, is the former chief election commissioner of India and the ex-chairman of share depository company CDSL where he worked till 2019. SEBI said it had appointed the observer on December 18. But the announcement was made on Saturday after the Chennai Financial Markets and Accountability (CFMA), an investor lobby group, approached the Supreme Court seeking clarity over the observer. - Business Line

🍒 Dhanlaxmi Bank may appoint former SBI official J K Shivan as its MD & CEO : Dhanlaxmi Bank Limited is planning to appoint J K Shivan as the Managing Director & CEO of the Bank. Shareholders of Kerala-based Dhanlaxmi Bank had voted against former managing director and CEO Sunil Gurbaxani on September 30. He, however, alleged that directors put pressure on him to quit after he raised various governance issues. The Board of Directors of the bank recommended a panel of candidates to Reserve Bank of India for appointment as Managing Director & CEO. One of the candidates recommended by the Board was Shivan. The banking regulator has directed the Bank to submit a proposal before it after the appointment of Shivan is approved by the shareholders. Therefore, the Board of Directors have placed the proposal for the consent of the shareholders authorising the bank to appoint Shivan as Managing Director & CEO. Shivan has over 37 years of experience in SBI. - Business Standard

🍒 Gold prices fell 0.46% this week to Rs 50,064/10 gm, bias remains bullish for short term : Gold prices declined to settle at Rs 50,064 per 10 gram on December 24 as participants trimmed their position as seen by the open interest. The precious metal ended the week with a loss of Rs 231 or 0.46 percent. The yellow metal traded in the positive territory for two out of four sessions in a holiday-shortened week as markets were shut on Friday for Christmas and thin volume, but manage to close above the key psychological barrier of Rs 50,000/10 grams for second successive weeks tracking the general weakness in dollar and EU and the UK clinched a narrow Brexit deal. In the retail market, the bullion metal closed at Rs 49,995 per gram on Thursday up 0.29 percent on a weaker dollar and subdued global cues..

26.12.2020 : Today's Banking / Financial News

26.12.2020 : Today's Banking / Financial News at a Glance

🍒 Loan restructuring, other measures announced by govt to cushion PSBs from shock: DFS Secy : Loan restructuring and other measures announced by the government to help the industry hit by the coronavirus pandemic may save public sector banks from "shock" in the next year, a top finance ministry official said. Despite the pandemic, the lockdown and the consequent damage done to the economy, there are quick signs of recovery, Financial Services Secretary Debasish Panda told in an interview. "There is a steady uptick in the credit growth. Retail, home and agriculture loans are doing well, and MSMEs again, with the intervention of the government through the ECLGS and other similar schemes, have also picked up," he said. Panda added that with the window for restructuring now made available by the RBI through the COVID-19 resolution plan, which offers resolution for all kinds of loans, the impact may not be that severe as had been projected earlier. However, it is difficult to exactly predict the numbers, he said. - economic times

🍒 YES BANK retail loan process to become easier and faster as it joins hands with Salesforce : YES BANK has joined hands with Salesforce, a global leader in customer relationship management, to build a next generation technology platform to smoothen its retail lending business. The private lender is the first bank in the country to collaborate with Salesforce for loan origination and processing. This collaboration aims to engage customers with a unified experience and drive aggressive retail led growth for the lender, the bank said in a statement. The Salesforce loan origination system for retail banking will help the bank to provide "personalised solutions and connected banking experiences for consumers across segments". YES BANK's capacity to process higher volumes of loan applications through enhanced automation and progressive API integrations will be bolstered. The new system will be faster and easier than manual loan sanctioning process. The turnaround time for a loan application will be improved, the bank said. It will also enable the bank to launch a new range of innovative products and services to support the evolving needs of customers faster than before. - Live Mint

🍒 Forex reserves up by USD 2.56 bn to record USD 581.131 bn : The country's foreign exchange reserves surged by USD 2.563 billion to touch a record high of USD 581.131 billion in the week to December 18, RBI data showed. In the previous week, the reserves had declined by USD 778 million to USD 578.568 billion. In the reporting week, the increase in reserves was due to a rise in foreign currency assets (FCAs), a major component of the overall reserves. FCAs rose by USD 1.382 billion to USD 537.727 billion, the Reserve Bank of India's (RBI) weekly data showed. Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves. The gold reserves increased by USD 1.008 billion in the reporting week to USD 37.020 billion in the week ended December 18, the data showed. - economic times

🍒 Aavas Financiers to raise ?100 crore through NCDs : The Executive Committee of the Board of Jaipur-headquartered Aavas Financiers Ltd on Thursday approved the issuance of Non-Convertible Debentures (NCDs) aggregating up to an amount of ?100 crore on a private placement basis. The NCDs, having a face value of ?10 lakh each, are rated, listed, senior, secured, and redeemable, the company said in a regulatory filing. Aavas Financiers (formerly known as Au Housing Finance) is primarily engaged in providing housing loans to customers belonging to low and middle-income segments in semi-urban and rural areas. - Business Line

🍒 Chinese national kingpin in instant loan app fraud : A Singapore-based Chinese national is a mastermind behind the instant loan application fraud that lured several people in Telangana and elsewhere. The app firms are charging high-interest rates (up to 35 per cent) as they disbursed short-tenure loans. If a customer fails in repayment on time, they would harass them by sending messages to all. The Cyberabad police have so far registered eight cases in connection with the fraud. The Cyberabad police, who have deputed teams to different cities to investigate the fraud, have raided a call centre Cubevo Technology Private Limited in Hyderabad. The call centre is headed by a Chinese national, Zixia Zhang, who is currently absconding, Cyberabad Police Commissioner V C Sajjanar has said. - Business Line

🍒 Fintech: Digital payments got a Covid boost in 2020 : In contrast to the gloom cast by the Covid-19 pandemic and lockdown across the economy, digital payments and fintech was one sector, which witnessed record highs in 2020 as a large number of people preferred to stay at home and maintain social distancing. With concerns over contracting novel coronavirus infection from visiting bank branches and using currency notes, many people — not only in metros but also in smaller towns — have started using their smartphones for making payments and even taking loans for smooth banking services. Digital payments touched a record high in 2020 with all channels from the Unified Payments Interface to the Aadhar-enabled Payment System (AePS) registering stellar growth. - Business Line

🍒 3.97 crore ITRs filed for 2019-20 fiscal till December 24 : As many as 3.97 crore taxpayers have already filed their income tax returns for assessment year (AY) 2020-21 (fiscal year 2019-20) till December 24, the Income Tax Department said on Friday. "Over 3.97 crore Income Tax Returns have already been filed till 24th of December, 2020. Have you filed yours as yet? If not, please do it TODAY! File your Return of Income Tax & ....Relax!," the department tweeted. This includes 2.27 crore taxpayers filing ITR-1, 85.20 lakh filing ITR-4, 46.78 lakh ITR-3 and 28.74 lakh filing ITR-2. The deadline to file I-T returns by individual taxpayers for the 2019-20 fiscal (AY 2020-21) ends on December 31, 2020, while the same for taxpayers whose accounts require to be audited is January 31, 2021. The due date has been extended from July 31 and October 31, 2020, respectively in view of the COVID pandemic. - moneycontrol.

25.12.2020 : Today's Banking / Financial News

25.12.2020 : Today's Banking / Financial News at a Glance

🍒 Central Bank of India to exit housing finance business; to sell JV stake for Rs 160 crore : State-owned Central Bank of India will exit housing finance joint venture by selling its entire stake of over 64 per cent to Centrum Housing Finance for Rs 160 crore. "This is to inform that the bank has entered into a binding agreement to divest its entire equity stake of 64.40 per cent i.e. 1,61,00,000 shares of face value of Rs 10 each in Cent Bank Home Finance Ltd (CBHFL), to Centrum Housing Finance, subject to approvals from regulatory authorities," Central Bank of India said in a BSE filing. According to a separate filing by Centrum Capital, the parent of Centrum Housing, the cost of acquisition is about Rs 160 crore on cash basis. "The company's subsidiary, Centrum Housing Finance has entered into a share purchase agreement with Central Bank of India for acquisition of bank's entire equity stake in CBHFL constituting 64.40 per cent of the share capital of CBHFL on a fully diluted basis, " Centrum Capital said in the filing. The target entity is in the same line of business as the subsidiary, hence this is a strategic acquisition, it added. - economic times

🍒 Banks will focus on cash flow-based lending in future: UCO Bank's Ajay Vyas : Moving on from ratings criteria for grant of loans, banks are likely to focus on cash flow-based lending in times to come, a top executive of UCO Bank has said. "Banks will focus on cash flow based lending in times to come and this has already been started by SBI," Ajay Vyas, Executive Director, UCO Bank said at a virtual panel discussion on Redefining Corporate Financing in New Normal organized by PHD Chamber on December 23, 2020. Various SBI officials have advocated for cash flow-based lending models over the traditional asset-based or ratings-based ones. In cash flow lending, a financial institution grants a loan that is backed by the recipient's past and future cash flows. Vyas further noted that the turn around time (TAT) for grant of loans need to come down and emphasized that it is important to move on from ratings criteria for grant of loans. According to Vyas, Artificial Intelligence, algorithms, prediction analysis are the future of lending norms for banks to follow.- economic times

🍒 RBI unlikely to extend Dec 31 loan rejig deadline : The December 31 deadline for banks to accept restructuring requests from Covid-hit businesses is unlikely to be extended. This was indicated by RBI governor Shaktikanta Das in his meeting with bankers. The governor on Wednesday concluded a two-day meeting with public sector and private sector banks, held through video conference. Days before banks closed their books for the third quarter, Das asked them to make enough provisions should loans go bad. He also asked banks to raise more capital to grow loans. In his meeting, the governor asked bank chiefs to remain vigilant and to take proactive measures to strengthen their resilience and lending capacity. He also sought an update from banks on the progress in the implementation of a resolution framework for Covid-related stressed assets. - economic times

🍒 Banks expect to recover Rs 12K cr from sale of Videocon's oil blocks in Brazil : Bankers are expecting to recover as much as Rs 12,000 crore or $1.6 billion from the sale of Videocon’s Brazil oil blocks after a spurt in oil prices resulted in a boost in the valuation of the assets, according to people in the know. This is at least 60% higher than what they had originally planned to recover from the sale of the assets when expressions of interest were first invited from potential bidders in September, according to these people. The revised valuation was discussed at a recent meeting of the bankers where they also accepted a request from potential bidders to extend the deadline for bids to the first week of January, these people said. The bidders sought an extension of the timeline to conduct physical due diligence in Brazil. “Oil prices are inching towards $50 a barrel. That changes the valuation of the assets because exploration has started. We expect to recover at least 50% of our dues now,” an executive familiar with deliberations between the bankers said. At least five bidders - US’s Murphy Oil, European oil giant Wintershall DEA (owned by BASF), PetroRio, Vedanta and a local consortium comprising Indian businessman - are amongst potential bidders for the stake, ET reported on September 21. - economic times

🍒 RBI cancels licence of Subhadra Local Area Bank, Kolhapur : The RBI on Thursday said it has cancelled the licence of Subhadra Local Area Bank, Kolhapur, as its affairs were conducted in a "manner detrimental" to the interests of its present and future depositors. The bank had breached the minimum net worth requirement for two quarters in the financial year 2019-20, the RBI said in a statement. However, Subhadra Local Area Bank has enough liquidity to pay all its depositors, it added. "Public interest would be adversely affected if it is allowed to continue to do the business in the manner in which it is functioning", the RBI said, adding that the general character of the management is considered prejudicial to the interest of the present and future depositors. The licence issued to Subhadra Local Area Bank stands cancelled to carry out banking business from the close of business on December 24, 2020.- economic times

🍒 Focus on raising cash: Das to banks : Reserve Bank of India (RBI) governor Shaktikanta Das asked top executives of commercial banks to raise capital to help strengthen their lending capacity and proactively set aside money to cover loan losses. “Most banks said that stress is under control," a banker who attended the meeting said. During the two-day meeting, governor Das, along with his deputy governors, discussed the economic situation with bank chiefs and emphasized the role of the banking sector in supporting the ongoing revival in economic activity. Das recounted the measures taken by RBI since the onset of the pandemic to stabilize the economy. - Live Mint

🍒 Credit-deposit ratio takes a hit in 2020: Loans disbursed by Indian banks as a percentage of deposits have constantly declined in 2020, underscoring the effects of excess liquidity and lack of credit demand. In calendar year 2020, the credit-deposit (CD) ratio has consistently declined from 75% levels in January to 71.3% on 4 December, with the hit becoming evident in the first months of the covid-19 pandemic as credit growth slumped. The fall in CD ratio is a consequence of the constant inflow of deposits, which have outpaced credit growth in the last several quarters as demand dropped along with lenders’ appetite for riskier assets. Under Reserve Bank of India rules, banks have to set aside 3% of deposits as cash reserve ratio (CRR) and another 18% in statutory liquidity ratio (SLR) compliant holdings. The rest, along with other resources, can be used for lending. - Live Mint

🍒 Axis MF changes multicap fund to flexicap : Axis Mutual Fund has renamed existing multi cap fund to the newly formed Flexi Cap category keeping in line with its current product positioning. The open ended dynamic equity scheme invests across large, mid, and small cap stocks to facilitate capital appreciation over medium to long term. The change in name will be effective from January 30, said the fund house. As part of scheme categorisationand make it true to label, Sebi had insisted that multicap funds should invest 25 per cent each in small, mid and large cap stocks. This has unsettled most multicap schemes as their învestments were tilted towards large cap stocks. - Business Line

🍒 RBI to conduct simultaneous purchase and sale of G-Secs on December 30 : The Reserve Bank of India on Thursday said it will conduct simultaneous purchase and sale of government securities (G-Secs) under Open Market Operations (OMO) for an aggregate amount of ₹10,000 crores each on December 30. The decision to conduct simultaneous purchase and sale of G-Secs under OMO was taken after a review of current liquidity and financial conditions, RBI said in a statement.- Business Line

🍒 All Central co-operative banks and States co-operative banks will follow new set of regulations as prescribed under Banking Regulations Amendment Act with effect from April 1, 2021. With this, the RBI will have more power to deal with State and Central co-operative banks. These regulations include issuance of shares and bonds, beside others. The Finance Ministry has issued a notification stating that from April 1, the provisions of Section 4 of the said Act shall come into force for State co-operative banks and Central co-operative banks. The new Act was assented on September 29, which replaced the ordinance promulgated on June 26. Section 4 is about amending Section 56 of original act of 1949, which deals with co-operative societies.- Business Line

🍒 Banking system liquidity on the slide due to advance tax outflow : The banking system liquidity has fallen substantially in recent weeks, but experts say that is largely because of advanced tax outflow and is not sudden activism on the part of the central bank even as it might have carefully started to drain the system without flustering the bond markets. As of Monday, the banking system liquidity was at a surplus of Rs 4.95 trillion, as against Rs 6.13 trillion a week earlier, on the eve of the deadline for the third instalment of advance tax. In both cases, however, the overall system liquidity was Rs 8.22 trillion. The overall system liquidity takes into account the banking system liquidity plus the government cash balances with the RBI. The liquidity overhang had figured in the discussions of the monetary policy committee (MPC), the minutes showed. The MPC discussed how huge liquidity could generalise the inflation in the coming days, and how the low interest rates could be benefiting only a few "oligopolistic" firms. New code for co-ops to kick in from April : Business Standard

🍒 Former PNB chief manager, two associates held in Delhi for loan fraud : A former chief manager of a public sector bank and his two associates were arrested in Delhi for allegedly misappropriating funds through a loan fraud, police said on Wednesday. The accused have been identified as Shailendra Kumar (63), a resident of Dwarka Sector-10, Ankit Sangwan (29), a resident of Vikaspuri and Sunil Sarki (31), a resident of Vikas Nagar, they said.Police said a complaint was made by the Punjab National Bank alleging that one Sarki Trading Company through its proprietor Sunil Sarki obtained a cash credit (CC) limit of Rs 2.50 crore on the basis of false credentials and documents in 2013. The company was shown having the business of clothes and garments. To secure the CC limit, forged documents of a property were mortgaged with the bank. The addresses of the borrower and the guarantor were not traceable and the account turned into a non-performing asset (NPA) in 2014, a senior police officer said. - Business Standard

🍒 S&P affirms Indian Bank's 'BBB-' rating, removes from CreditWatch : Rating agency Standard and Poor’s (S&P) has affirmed ratings for Indian Bank at “BBB-” on expectation of ability to absorb a moderate deterioration in its asset quality over the next 12 months. The Chennai-based public sector lender is expected to benefit from faster-than-expected economic recovery in India.Rating agency removed the ratings from CreditWatch, where they were placed with negative implications on June 26, 2020. Another public sector lender Allahabad Bank was merged with Indian Bank on April 01, 2020. Outlook on financial instrument is negative due to asset quality and capital risks. It reflects the view that the bank's capital and asset quality could deteriorate due to the Covid-19 fallout over the next 12-18 months. - Business Standard

🍒 Bankers' sentiment on lending improves; loan demand to rise: RBI survey : After a severe impact of the Coronavirus (Covid-19) pandemic during April-June 2020, bankers’ sentiments on lending conditions have shown a broad-based improvement. The demand for loans is expected to become better, according to RBI’s bank lending survey. Responses suggest that perceptions on retail/personal loans, which were most severely hit during the period, have bounced back. There is lower optimism for the infrastructure, mining and quarrying sectors when compared to other major sectors. The survey is part of RBI's December 2020 bulletin. The Covid-19 pandemic and the related lockdown led to significant contraction in loan demand across all sectors during April-June 2020, which severely dampened the sentiment among Indian lenders. - Business Line

🍒 SBI Life acquires 9% stake in Paisalo Digital for Rs 186.20 cr : SBI Life Insurance Company on Thursday said it has acquired nearly 9 per cent stake in non-banking finance company Paisalo Digital for about Rs 186.20 crore through the open market. SBI Life has acquired a total of38,00,000 equity shares equivalent to 8.99 per cent at Rs489.99 per share for a cash consideration as an ordinary course of business on the stock exchange on December 24, it said in a regulatory filing.It is not a related party transaction, the insurer added.Paisalo Digital has a market capitalisation of Rs 2,204.69 crore as on December 24, 2020. The company's turnover as of March 31, 2020, was Rs337.45 crore. - Business Line

🍒 Fintechs show interest in becoming SFBs, but transitions involve risks : On Wednesday, the Reserve Bank of India (RBI) said digital lending platforms used on behalf of banks and non-banking finance companies (NBFCs) should disclose the names of such lenders to customers. This may be the first sign of a tightening regulatory regime for digital, or fintech, companies. Perhaps in anticipation of a faster compression in the regulatory arbitrage between payments banks (the most popular fintech model) and traditional ones, the RBI’s internal working committee suggested that the term of conversion to small finance banks (SFBs) be reduced from five to three years for payments banks (that is, banks that can accept deposits but cannot lend or issue credit cards), and such SFBs must be listed within six years of conversion against three years specified earlier. - Business Standard

🍒 Sensex soars 529 points as RIL, HDFC twins shine : The 30-share BSE Sensex surged 529.36 points or 1.14 per cent to close at 46,973.54. The broader NSE Nifty zoomed 148.15 points or 1.09 per cent to 13,749.25. Axis Bank topped the Sensex gainers chart, spurting 3.04 per cent, followed by Sun Pharma, ONGC, Reliance Industries (RIL), HDFC, ICICI Bank, Bharti Airtel, Bajaj Finance and Kotak Bank.Index heavyweights RIL, HDFC and HDFC Bank accounted for over half of the Sensex''s gains.On the other hand, Infosys, Nestle India, IndusInd Bank, Dr Reddy's, HCL Tech and Bajaj Finserv were among the main laggards, dropping up to 1.32 per cent.

🍒 Rupee rallies 21 paise to 73.55 per US dollar : Climbing for the second straight session, the rupee darted up 21 paise to end at 73.55 against the US dollar on Thursday amid sustained foreign fund inflows and positive domestic equities. At the interbank forex market, the rupee opened at 73.66 against the US dollar and witnessed an intra-day high of 73.54 and a low of 73.66. The domestic unit finally finished at 73.55, registering a rise of 21 paise over its previous close.

🍒 Gold prices fall for third consecutive day : Gold prices edged lower in Indian markets today, while silver prices went up. On MCX, February gold futures edged 0.16% lower to ₹50,070 per 10 gram. The yellow metal declined for the fourth time in the last five days. Silver is up 0.1% to ₹67,641 per kg. Though gold has recovered from lows of below ₹48,000, it remains significantly lower than the August highs of ₹56,200. Similarly, silver had also almost touched ₹80,000 per kg in the same month. Gold closed at ₹50,149 and silver closed at ₹67,576 on Wednesday on MCX. - Live Mint

24.12.2020: Today's Banking / Financial News

Economic Times:

1) Overseas corporate bond sales, which nearly halved through 2020 despite global yields slumping to the floor, could revive next year as Indian companies regain sufficient confidence in the broader reconstruction to seek debt capital at global financial hubs that are facing a liquidity glut.

2) The pandemic has led to a surge in the adoption of cash withdrawals through Aadhaar enabled Payment Systems (AePS) that have doubled since last year, replacing the age-old dependence on teller machines where transactions halved in the same period.In November, 68.4 million withdrawals worth ₹18,820 crore were processed through AePS channels against 39 million worth ₹9,778 crore in the same period last year.

3) DEBT RESOLUTION:IL&FS to Sell China Road JV to PingAn for ₹2,074 cr.The group has also received approval from Supreme Court Justice (Retd) DK Jain to sell its Chinese JV Road Asset Chongqing Yuhe Expressway Co Ltd (CYEC) to PingAn.

4)RBI Wednesday issued a note of caution to the public against the use of “unauthorized” lending apps, citing recent media reports on unethical collection practices at some financiers and the arbitrary interest rates being levied by a section of these lenders.

Financial Express:

1) The governor of RBI held meetings with the chiefs of public sector banks and some private banks on Tuesday and Wednesday, respectively, through video conference.At the meetings, governor asked banks to strengthen their capital and provisioning positions, as also their ability to lend and contribute to financial stability.

2) A consortium of lenders led by Union Bank of India sought bids to replace the concessionaire in the four-laning of a road project in Maharashtra.The current concessionaire is Supreme Manor Wada Bhiwandi Infrastructure, which has defaulted on loans worth Rs 164 crore to UBI.

3) HDFC, which on Wednesday signed a pact with the Indian Green Building Council (IGBC), said its green housing retail loan book has crossed the Rs 14,000-crore-mark across 310 certified green buildings.

4) State Bank of India is offering trade finance solutions and services to Israeli corporates to help them tap business potential arising out of recent Abraham accords leading to normalisation of ties between Israel and Arab states.

BusinessLine:

1) RBI’s latest draft on the declaration of dividends by NBFCs may help them in strengthening their balance sheet by improving leverage ratios and creating a buffer and surplus for fresh lending. RBI’s move will also help NBFCs in creating better provisioning against the delinquent assets.

2) Race for DHFL heats up.While Oaktree Capital’s bid of about ₹36,700 crore seems to be higher in terms of net present value, Piramal Capital and Housing Finance Ltd is offering higher upfront cash of ₹13,000 crore.

3) Retro tax flare-up: India loses Cairn case.FinMin says all options against $1.2-b arbitration award to be considered.

4) NHA to take a relook at health packages under Ayushman Bharat programme.It is studying ways to extend affordable health insurance to the middle income group.

BusinessStandard:

1) The confidence level of chief financial officers over the overall financial and macro-economic conditions in the country reached an all-time low for the October-December quarter, says a report.

2) Direct tax professionals have sought extension for tax audit report, income tax returns for audit cases and time limit for AGMs in the wake of the ongoing pandemic scenario.

3) Union Minister Nitin Gadkari will on Thursday inaugurate and lay foundation stones for highway projects worth Rs 8,341 crore in Rajasthan.These projects are for a total length of 1,127 kms.

4) Demand for retail credit makes a comeback in November: CIBIL report.Although year-on-year growth across key metrics has yet to reach pre-pandemic levels, there has been positive momentum for credit demand.

Live Mint:

1) Banking system liquidity on the slide due to advance tax outflow.As of Monday, the banking system liquidity was at a surplus of Rs 4.95 trillion, as against Rs 6.13 trillion a week earlier, on the eve of the deadline for the third instalment of advance tax.

2) India has proposed to help the World Food Programme (WFP) replenish its foodgrain stock from overflowing state-owned granaries to assist the organization’s efforts in providing food to the most vulnerable global population.

3) Lenders to Future group have agreed to recast its loans under the RBI’s one-time restructuring scheme as the deal with Reliance Industries Ltd remains mired in a legal spat.The lenders led by SBI have already invoked the debt recast scheme well within 31 Dec.

4) Govt to release next deposits of PM-KISAN on 25 December amid farmers' protest.The govt will transfer more than ₹18,000 crores to over 9 crores beneficiary farmer families on 25 December

23.12.2020: Today's Banking / Financial News

23.12.2020: Today's Banking / Financial News at a Glance

🍒 Indian Army, Bank of Baroda sign MoU for ‘Baroda Military Salary Package’ : Indian Army and Bank of Baroda have entered into a Memorandum of Understanding (MoU) for ‘Baroda Military Salary Package’. The MoU was signed by Lt Gen Ravin Khosla, DG(MP&PS) and Vikramaditya Singh Khichi, Executive Director, Bank of Baroda in presence of Lt Gen Harsha Gupta, Adjutant General, Indian Army who also chaired the meeting. The MoU lays don the basis on which banking services would be provided by Bank of Baroda to serving and retired personnel of Indian Army. Services under ‘Baroda Military Salary Package’ will be offered to serving and retired personnel of Indian Army through the Bank’s network of over 8,200 domestic branches and around 20,000 business correspondent touchpoints, an official release said. - Business Line

🍒 ICICI Bank launches online platform for foreign companies setting up shop in India : Private sector lender ICICI Bank has launched an online platform for foreign companies that plan to set up business in the country. “Called ‘Infinite India’, the platform offers them banking solutions as well as value-added services such as incorporation of a business entity, corporate filings, licences and registrations, HR services, compliances and taxation among others,” ICICI Bank said in a statement on Tuesday. This will help foreign companies, as it eliminates the need for coordinating with multiple touchpoints, leading to a hassle-free experience of doing business in India, it added. - Business Line

🍒 ICICI Bank seeks to gain market share in MNC banking : ICICI Bank is opening a new comprehensive online window for multinational companies (MNCs) wanting to establish or expand in India as it seeks to take advantage of the country's potential as an alternative to China and benefit from the challenges foreign banks face after the Reserve Bank of India's (RBI) recent restrictions on opening of current accounts. Executive director Vishakha Mulye said strong foreign direct investment (FDI) into India, the nation's young demographic profile and government measures to push India as an attractive destination for foreign investment will help the bank gain market share from foreign banks. "India along with China is one of the fastest growing markets in the world but recently the attractiveness of China has been going down. Added to that is the digital ecosystem that has been developed in India which will help improve governance and standards in the long run," Mulye said. - economic times

🍒 SBI Life and Apollo join the race for RCap assets : Reliance Capital's (RCAP) expression of interest (EOI) for asset monetisation garnered mega response with 60 bids being received. SBI Life and Apollo are among the 10 new bidders who have submitted expressions of interest for Reliance Capital's assets, taking the total number of bids to 60. December 1 was earlier the deadline for the submission of EOIs. Over 60 different bids have been received with SBI Capital Markets Limited and JM Financial Services Limited, the advisors to the lenders. Later the date for submitting the bids was extended to December 17. Over eight bidders have bid for entire RCAP assets on as-is-where-is basis. The prominent among them are Oaktree, J.C. Flower and multiple ARCs. - economic times

🍒 Industry bodies to press for holding back new wage definition in meeting with govt on Dec 24 : Representatives of industry bodies, including from CII and FICCI, will hold a meeting with the labour ministry top brass on Thursday to make a case for holding back implementation of new definition of wages, which would increase social security deductions and reduce take-home pay of workers. "The representatives of CII and FICCI among other industry bodies would meet union labour ministry top brass on December 24, 2020 to discuss the new definition of wages which is likely to be implemented by April 1, 2021," an industry source said. The new definition provides that the allowance of an employee cannot be more than 50 per cent of the total salary. This would increase the social security deductions like provident fund. - economic times

🍒 Distress funds are betting on rise in NPAs in India in the coming months due to Covid pandemic : Non performing assets (NPA) in the banking system is set to see a jump in the coming months and some of the distress funds or special purpose funds are betting big on that. Most banks have managed to keep their NPA under control as companies availed moratoriums or were allowed to delay repaying loans for some months due to Covid pandemic. Industry trackers now expect that this number will jump in the coming months. Some of the funds that bet on distressed companies are hoping that they could invest in these in the coming months. These funds had put their investments on hold even as the government postponed the IBC (Insolvency and Bankruptcy Code) process. - economic times

🍒 Covid claims: Insurers paying 100-150% more than the premium collected : Insurance companies have already paid claims that are 100-150 per cent more than the premium they received on corona-specific policies, according to industry experts. As mandated by the Insurance Regulatory and Development Authority of India (IRDAI), there are two corona-specific policies — Corona Kavach and Corona Rakshak. These policies have been brought in as standard covers, while the pandemic was at its fastest spread early this year. “Most of the companies have paid much more than what they had received. For Corona Kavach, we have paid 150 per cent than what we have received,’’ S Prakash, Managing Director, Star Health & Allied Insurance told BusinessLine. - Business Line

🍒 PhonePe introduces voice notification feature for Business app : India-based fintech platform PhonePe on Tuesday announced the launch of its new voice notification feature in vernacular languages on the PhonePe for Business app. The platform has introduced voice notifications in over nine vernacular languages on the PhonePe for Business app. “The voice confirmation helps merchants during peak business hours with a voice message announcing the amount received from a customer without the merchant having to check the customer’s phone screen, or waiting for a bank SMS,” PhonePe explained in an official release. - Business Line

🍒 Reliance Capital: 10 more bids submitted : Another 10 bids have been submitted for the assets of Reliance Capital. Sources said these include a bid by Apollo, which has submitted an expression of interest for Reliance Capital on an as is where is basis. SBI Life Insurance is also understood to have submitted a bid for Reliance Nippon Life Insurance. The Committee of Debenture Holders of Reliance Capital had on December 7 decided to extend the deadline for bids for certain subsidiaries of the debt ridden group to December 17. Reliance Capital had floated an expression of interest for selling stake in its subsidiaries as part of the process to pay off its dues to creditors. The initial deadline had been set as December 1. - Business Line

🍒 IOB loan fraud : ED says accused who defrauded Indian Overseas Bank paid managers' flight, hotel bills : Probing a Rs 299-crore Indian Overseas Bank loan fraud case, similar to the alleged USD 2 billion worth PNB swindle, the Enforcement Directorate has found that the accused "paid" for the air travel and hotel stay of a senior bank manager and his family as kickbacks. The central probe agency said "lapses" were also detected on the part of at least three managers — Anil Kumar, P C Rana and N Chokalingam — of the IOB branch in Chandigarh, "as well as the concurrent auditors." The ED case is related to its criminal money laundering investigation "in a case related to buyers credit fraud of Rs 299.14 crore at the IOB, Chandigarh". The agency took congnisance of an FIR filed by the Central Bureau of Investigation (CBI), to file a case under various sections of the Prevention of Money Laundering Act (PMLA) against IOB Assistant Manager Ashu Mehra, properitor of heights international company Amanpreet Singh Sodhi, owner of vision procon company Dinesh Kumar and directors of a firm saibhakti impex Pvt ltd — Gaurav Kirpal and Aman Kirpal. - moneycontrol.

🍒 Securitisation volumes to get back on growth track in FY22: Icra : The securitisation volumes especially in retail loans of finance companies and mortgage lenders will see healthy growth in 2021-22 (FY22), after experiencing contraction in Fy21 so far, according to Icra. Also, the credit quality of the rated pass-through certificates (PTCs) should remain ‘Stable’ during FY2022. Even though collections may not have reached pre-Covid levels, the credit enhancement available in the transactions has further built-up on amortisation of the pools supporting their credit quality. The rating agency said increase in securitisation volumes for the rest of FY21 an in FY2022 would be supported mainly by growing investor confidence in asset quality due to improving collections. Higher funding requirement of originators on account of rising disbursements and improving business activity post end of lockdown and moratorium period would give a push to activity. “Collections across all asset classes have bounced back sharply since the dip in April 2020 following the nationwide lockdown," said Abhishek Dafria, Vice President and Group Head - Structured Finance Ratings at Icra. - Business Line

🍒 Govt has received 120-130 FDI proposals from China since April: Report : The government has received over 120 foreign direct investment (FDI) proposals worth about Rs 12,000 crore from China since April, when it was made mandatory for a company from countries sharing land border with India to invest in any sector only after getting government approval, sources said. As per that decision, FDI proposals from China need government approval for investments in India in any sector.An inter-ministerial committee has been formed by the government to scrutinise these proposals, they said adding most of the investments are for brownfield projects (means in existing Indian companies). In April this year, the Department for Promotion of Industry and Internal Trade (DPIIT) came out with a press note stating that a company or an individual from a country that shares land border with India can invest in any sector here only after getting government approval. The decision was taken to curb opportunistic takeovers or acquisitions of domestic firms due to the current COVID-19 pandemic. - Business Standard

🍒 Banks line up ARC sales as 2020 draws to close : The distressed asset market, which had gone into a deep freeze after the outbreak of Covid-19, has started to recover in Q3. Large banks have lined up a string of legacy non-performing assets (NPAs) for sale to asset reconstruction companies (ARCs). The deterioration of household incomes has also led banks to consider the ARC route for retail assets and the activity in this segment is now 30-40% higher than pre-pandemic levels. On Monday, State Bank of India (SBI) and ICICI Bank put out notices for the sale of their exposures to Action Ispat & Power (Rs 540 crore) and Gammon India, respectively. A consortium of lenders to Jindal India Thermal Power (JITPL), led by Punjab National Bank (PNB), has also sought bids for the project. Earlier, Bank of Baroda (BoB), Axis Bank and IDBI Bank have also run processes for NPA sales, according to sources. - financial express

🍒 Govt plans to set up a development finance institution in 3-4 months: DFS Secy : The government plans to set up a Development Finance Institution (DFI) in the next three to four months with a view to mobilise Rs 111 lakh crore required for funding of the ambitious national infrastructure pipeline, according to Financial Services Secretary Debasish Panda. “We need a development financial institution as infra financing needs patient capital, and banks are currently not suited for lending for long term projects which do not generate any cash for years,” he told PTI in an interview. Even deepening the bond market with regard to infrastructure financing is a matter which is receiving attention of the government and there is a need to do something more in order to have a robust bond market for infrastructure financing, he said. “To provide funding, to enhance credit rating of projects, a DFI is needed, and we are actively working on it, and soon such an institution will be in place. We are in the process of finalising details such as shareholding of the government and whether such a body will be formed through a statute. - financial express

🍒 SBI Card raises Rs 450 crore through non-convertible debentures : SBI Cards and Payment Services Ltd (SBI Card) has raised Rs 450 crore by issuing bonds on a private placement basis, the company said on Tuesday. The stakeholder relationship committee of the company has approved the allotment of 4,500 fixed rate, unsecured, rated, taxable, redeemable, senior, non-convertible debentures (NCDs) of the face value of Rs 10 lakh each aggregating to Rs 450 crore on a private placement basis, SBI Card said in a regulatory filing.The tenure of the debt instruments is five years with the date of maturity as December 22, 2025.The bonds bear coupon rate of 6 percent per annum, SBI Card said.The bonds will be listed on the Wholesale Debt Market Segment of BSE. Stock of SBI Card closed at Rs 822 apiece on BSE, up 0.78 percent over previous close. - moneycontrol.

🍒 Manappuram Finance raises Rs 400 crore via by issuing bonds : Manappuram Finance on Tuesday said it has raised Rs 400 crore by issuing bonds on private placement basis. The Financial Resources and Management Committee of the board of directors of the company has approved the allotment of 4,000 rated, secured, redeemable non-convertible debentures aggregating to Rs 400 crore, Manappuram Finance said in a regulatory filing. These bonds will mature in three years and carry a coupon rate of 7.45 percent per annum. Shares of Manappuram Finance were trading 1.79 percent lower at Rs 159.25 apiece on the BSE. - Business Line

🍒 Paytm Payments Bank outperforms all important banks in terms of UPI payments: NPCI report : Paytm Payments Bank (PPBL) outperformed all important banks in India in terms of the success rate of UPI transactions yet again. PPBL has the lowest technical decline rate at 0.02 percent among all UPI remitter banks and 0.04 percent among all UPI beneficiary banks, according to the latest report by the National Payments Corporation of India (NPCI). The technical decline rate is around 1 percent for all other major banks. “Our performance in the latest NPCI report is a testament of the hard work that the team puts in to provide the best technology infrastructure in the global banking space. We are well ahead of others when it comes to leveraging AI and Big Data to offer innovative products & services to our customers across the country. Our tech team which comprises of the best minds in the business, work round the clock to provide a seamless and efficient experience. This has helped us build a trusted & long-lasting relationship with our partners (sic)" Satish Gupta, MD & CEO of Paytm Payments Bank Ltd, said in a statement. - moneycontrol.

🍒 Rs 7,000-crore fraud: Ex-MP faked companies in name of maids, drivers, says CBI : The Central Bureau of Investigation (CBI) has said that Hyderabad-based Transstroy India Private Limited, which is embroiled in one of the biggest banking frauds in the country worth Rs 7,296 crore, had created fictitious companies in the name of maids, sweepers and drivers and made them directors to divert funds. Transstroy is owned by former TDP MP Rayapati Sambasiva Rao. In its FIR, CBI alleged that Padmavati Enterprises, Unique Engineers, Balaji Enterprises and Ruthwik Associates swindled Rs 6,643 crore. “Nine are non-existing companies, which have been created to run fraudulent operations with the assistance of employees,” the CBI alleged. A KPMG forensic audit revealed that the accused had borrowed Rs 9,394 crore from Canara Bank and 13 other banks. - Times of India.

🍒 Rupee widens losses by 5 paise at 73.84 against dollar : The rupee furthered its losses by another 5 paise to close at 73.84 against the US dollar on Tuesday in line with weaker Asian peers amid concerns over a new coronavirus strain. At the interbank forex market, the domestic unit opened at 73.95 against the US dollar and witnessed an intra-day high of 73.82 and a low of 73.95. The local unit finally closed at 73.84 against the American currency, registering a fall of 5 paise over its previous close.

🍒 Sensex, Nifty rebound : Nifty IT index gained over 3 per cent to 23,611 points India's benchmark stock indices Sensex and Nifty bounced back by more than 1 per cent in Tuesday's trading sessions after an over 3 per cent fall on Monday. Sensex rose by 452 points or 1 per cent to close at 46,006. The Nifty index gained 137 points or 1.03 per cent at 13,466 points.

🍒 Gold prices today fall for second time in three days, silver rates drop : Gold and silver prices edged lower in Indian markets mirroring similar trend in international markets. On MCX, gold futures edged 0.5% lower to ₹50,180 per 10 gram in second decline in three days while silver fell 2% to ₹67,660 per kg. In the previous session, gold prices had edged 0.2% higher while silver rose 1.5%. Though gold has recovered from lows of below ₹48,000, it remains significantly lower than the August highs of ₹56,200. Similarly, silver had also almost touched ₹80,000 per kg in the same month..

22.12.2020: Today's Banking / Financial News

22.12.2020: Today's Banking / Financial News at a Glance

🍒 Central Bank of India launches Rupay Select Debit Card : Central Bank of India on Monday launched a variant of contactless Debit Card – ‘RuPay Select’. Launched in association with the National Payments Corporation of India on the occasion of the bank’s 110th foundation day, the RuPay Debit Select Card will focus on customers’ lifestyle, fitness, rejuvenation, nutrition and personal care, the public sector bank said in a statement. Pallav Mohapatra, MD and CEO, Central Bank of India, said: “Customers with select card will enjoy benefits such as complimentary health check-ups, and lounge access at selected centres besides accidental cover of ₹10 lakh at no extra cost.” They would also be entitled for discounted health check-ups with the this National Common Mobility Debit Card (NCMC) which also facilitates offline transactions in both transit and as well as retail purchases. The Bank also launched FASTAG (for electronic toll collection) in association with OSTA. “Customers using the bBank’s FASTAG will not lose any interest by transmitting the funds into FASTAG account, instead, the customer will cross the tToll pPlaza with Central Bank of India FASTAG based on recharge amount blocked in his Ssavings account and the account will be debited on next day of transaction unlike other players having such product where the fund is transferred to a wallet by debiting account of the customer,” Mohapatra said. - Business Line

🍒 Canara Bank has exposure of ₹678 crore to Transstroy : Canara Bank has clarified that it has an exposure of ₹678.28 crore to Transstroy India Ltd which allegedly committed a bank fraud and is under liquidation. In a notice to the BSE, Canara Bank said that it has already made 100 per cent provision for the account in its books. Transstroy, a construction company, and its directors were booked by the CBI last week for an alleged fraud of ₹7,926 crore affecting a consortium of banks led by Canara Bank. The company was declared as willful defaulter by Canara Bank in December 2018. Canara Bank’s exchange notification said that Transstroy was enjoying limits from various Banks under Multiple Banking Arrangement from 2001. Subsequently, a consortium with Canara Bank as leader with 13 other banks was formed in 2013 and the total limit sanctioned was ₹4,765.70 crore and the share of Canara Bank is ₹678.28 crore. The account was declared as fraud and reported to RBI on February 10 this year. - Business Line

🍒 HDFC, ICICI, and SBI top three banks of 2020, says report : The BFSI Movers and Shakers 2020 Report by Wizikey, a PR- SAAS start-up, highlighted the top 100 banks in India and emerging BFSI models such as Wallets and UPI, Neobanks, NBFCs, Small Finance Bank, Payments Banks, among others, that have found acceptance and their respective sectoral leaders this year. Beyond the banking counterparts, one of the most muted sectors – insurance – also saw a massive shift in gears this year, considering their rise in popularity due to the after-effects of the pandemic, the report noted. According to the report, HDFC, ICICI, and SBI were the top three banks of 2020 (mentioned according to rank). The three banks that transformed themselves almost overnight to serve the Indian consumers and have also trumped their newer counterparts including Axis and Kotak Mahindra in both quantity and quality of news are ICICI, HDFC, and SBI. - Business Line

🍒 SC stay on loan accounts: FinMin says tough to assess recap of banks : The Finance Ministry has said it is finding it difficult to finalise the recapitalisation programme for public sector banks due to the Supreme Court stay on classification of loan accounts as non-performing assets. “Any amount can be thought of, if there is estimation of NPA. On account of the Supreme Court’s interim order, it is not possible as of now,” a senior government official told BusinessLine. In its order dated September 3, the apex court had said that the accounts that were not declared NPA till August 31, 2020 shall not be declared NPA till further orders. The six months loan moratorium period ended on August 31, under which borrowers were given the option to defer their EMI (equated monthly instalment). - Business Line

🍒 Banks ramp up cross-selling, aim to gain bigger share of customer's wallet : What you sell matters; how you do it matters even more. More than 80 per cent of Axis Bank’s retail assets are sourced from existing customers. And yet, last year, the bank made a fresh start with “Aarambh”, to enhance product personalisation and cross-selling. “It’s a first-of-its-kind initiative that provides both existing and potential customers with customised products using in-house proprietary algorithms involving multiple data sources,” explains Praveen Bhatt, executive vice-president and head (retail liabilities and direct banking channel) at Axis Bank. The focus at State Bank of India (SBI), too, is to ensure that the products being sold are aligned with the appetites of customers. SBI Chairman Dinesh Khara explains: “The income from cross-selling has grown 30 per cent year-on-year for the last three years. There is a separate customer value enhancement unit for this activity. The potential is huge and the ramp-up is significant.” - Business Standard

🍒 Insolvency and bankruptcy code (IBC) suspension extended till March 31 : Suspension of the insolvency and bankruptcy code (IBC) is being extended till March 31, 2021, finance minister Nirmala Sitharaman said at the Bangalore Chamber of Industry and Commerce virtual conference Monday. “Even the suspension of the IBC has been postponed even further from 25th of December… we've moved to say that it can be up to 31st March 2021,” she said.Sitharaman backed the suspension of IBC for nearly the full year since every industry had gone through major stress because of the pandemic. “So the entire year has had the IBC suspended, and rightly so, because every industry has gone through major stress because of the pandemic and nobody could be drawn the words insolvency which may have occurred during the pandemic,” Sitharaman said at the session with the industry in the preparations to the Union Budget. - economic times

🍒 Paytm Payments Bank has best tech for UPI payments, confirms NPCI report : Paytm Payments Bank Ltd (PPBL) has once again outperformed all major banks in India in terms of the success rate of UPI transactions. According to the latest report by the National Payments Corporation of India (NPCI), PPBL has the lowest technical decline rate at 0.02 per cent among all UPI remitter banks and 0.04 per cent among all UPI beneficiary banks. All other major banks have a way higher technical decline rate of around 1 per cent. This confirms the superiority of the in-house technology-infrastructure at Paytm Payments Bank and has been the key reason for its success. - Business Line

🍒 Domestic money transfer: BCFI wants govt to do away with GST : The Business Correspondent Federation of India (BCFI) wants the government to do away with the Goods and Service Tax (GST) imposed on senders, predominantly migrant workers, when they make a domestic money transfer to a rural area through Business Correspondents (BCs). Currently, BCs charge the senders 1 per cent of the money to be transferred as transaction charge. This includes 18 per cent GST. Sunil Kulkarni, CEO & Head, BCFI, said on the one hand one segment of the population is fully banked, with the tech-savvy among them accessing online funds transfer services such as the National Electronic Funds Transfer (NEFT) free of charge, but on the other hand, migrant labour in cities/ urban areas have to pay GST for sending money through BCs to their families in rural areas. - Business Line

🍒 RIL, PFC are top overseas borrowers: RBI data : Lured by higher liquidity and lower rates, and with the RBI relaxing the norms, Indian corporates have increasingly turned to overseas borrowings. Reliance Industries Ltd (RIL) and its arms been at the forefront in raising external commercial borrowings (ECBs) over the past few years. According to RBI data, the oils-to-telecom group collectively raised about $23.48 billion through ECBs between FY17 and September FY21. Based on the RBI’s monthly USD-INR exchange rate at the end of the respective financial years, the total borrowing in rupee terms comes to about ₹1.65-lakh crore. Of the total borrowing by the group, the share of holding company RIL alone stood at $17.27 billion, followed by Reliance Jio Infocomm ($5.25 billion), Reliance Sibur ($669 million) and Reliance Utilities & Power ($300 million). - Business Line

🍒 Kapil Wadhwan tells DHFL administrator his offer is higher than revised bids : Kapil Wadhawan, the former promoter of Dewan Housing Finance Corporation Ltd (DHFL), has sent a fresh missive to the administrator of the troubled mortgage financier, underlining that his proposal to fully repay all creditors is the best compared to the revised bids submitted for the resolution, and that it should be considered. “My settlement proposal dated December 13, 2020 provides for repayment of ₹91,158 crore to all the lenders as opposed to the next highest bid of only a sum of ₹36,646 crore,” he has written in a December 19 letter to DHFL administrator R Subramaniakumar, pointing out that the objective of the Insolvency and Bankruptcy Code (IBC) is maximisation of value for all stakeholders. - Business Line

🍒 ICICI Pru MF to launch Business Cycle Fund NFO : ICICI Prudential Mutual Fund has launched a open-ended equity scheme Business Cycle Fund, which will invest in equity and equity-related securities, with a focus on riding business cycles through dynamic allocation across sectors and stocks. The New Fund Offer opens on December 29 and closes on January 12. The fund will follow a top down approach right from monitoring macro indicators (global and domestic), identifying business cycle followed by determining suitable sectors, and selecting the stocks within these sectors. An ongoing business cycle may extend or shorten depending on the macroeconomic conditions and the fiscal and monetary policy response by the government and central banks during a business cycle. Such times can often provide appropriate opportunities for investment. - Business Line

🍒 Fundraising via bonds hits a peak at ₹7.45-lakh crore : Riding on low-interest rates and policy reforms by the Reserve Bank of India (RBI), Indian corporates have raised the highest-ever sum of 7.45-lakh crore through rupee bonds this year. This is 8.3 per cent higher than ₹6.87-lakh crore raised in 2019. A total of 5.12 lakh crore raised in 2018. With another 10 days for the year to end, companies are expected to raise another ₹20,000-25,000 crore. “Covid-19 had an impact in March and April, when the companies had restrained from raising funds through bonds, but then there was a sharp recovery in May. The reasons included an ample liquidity in the system, lower interest rates and RBI’s introduction of Targeted Long-Term Repo Operations (TLTRO), which helped a lot in terms of corporates to issue more bonds,” said Ajay Manglunia, Managing Director and head institutional fixed income at JM Financial. - Business Line

🍒 ADB, Northern Arc sign $40-million loan pact : The Asian Development Bank (ADB) on Monday announced that it has signed a $40-million loan (in Indian rupee equivalent) with Northern Arc Capital (NACL) to support the livelihoods of microfinance borrowers and micro, small, and medium-sized enterprises (MSMEs) in India. In a press release, the Manila-headquartered multilateral funding agency said that the loan is disbursed to Northern Arc as part of its ongoing Covid-19 response. The Chennai-based NBFC will use the loan proceeds to on-lend and provide guarantees to financial institutions and individual borrowers. It will also on-lend to affordable housing finance companies, the statement said. - Business Line

🍒 Centrum-BharatPe, Liberty group in race for beleaguered PMC Bank : Steel baron Sanjeev Gupta’s Liberty Group of the UK, the Jaspal Singh Bindra-led Centrum group and BharatPe combine, and two business families from Mumbai and Hyderabad have expressed interest for beleaguered Punjab and Maharashtra Co-operative Bank (PMC Bank). This is the first time that corporates, non-banking financial companies, and high-net-worth individuals have shown eagerness in taking over an urban-cooperative bank (UCB). The development comes a month after a Reserve Bank of India’s Internal Working Group report made a case for corporate ownership of banks. The winner for PMC Bank will continue to run it as an UCB. Automatic conversion of the UCB licence to that of an universal bank is ruled out,” said a source. Suitors for the bank comes as a relief for its depositors. - Business Standard

🍒 The pandemic bill for banks: Severe credit losses, operation turbulence : The 10th edition of McKinsey’s Global Banking Annual Review says the pandemic will present a two-stage problem for banks — first, severe credit losses, likely through late 2021, which almost all banks and banking systems are expected to survive; then, amid a muted global recovery, banks will face a profound challenge to ongoing operations that may persist beyond 2024. Depending on the scenario, $1.5 trillion to $4.7 trillion in cumulative revenue could be forgone between 2020 and 2024. - Business Standard

🍒 CMS Info Systems plans to invest upto Rs 1,300 crore on ATM ramp-up : Baring Private Equity-backed CMS Info Systems (CMS), plans invest upto Rs 1,300 crore to scale up its managed ATM business and cash management business in India. Rajiv Kaul, vice-chairman and wholetime director, CMS Info System, said that starting with a capital expenditure of Rs 180-200 crore, the company expects to create 2,000 jobs. Out of them, 70 per cent of will be blue-collar job opportunities, and the balance 30 per cent white-collar ones. The investment will be funded through internal accrual and debt. The span for investment would be over seven years, Kaul said. For the time being, the firm does not envisage specific investment from its owner Baring for these plans, he added. Sion Investment Holdings, an affiliate of Baring Private Equity Asia, holds 100 per cent in the company. - Business Standard

🍒 Gold prices edge higher for fifth day to Rs 50,308 per 10 gm; silver jumps Rs 673 a kg : Gold prices continued their northward march for the fifth straight day by Rs 200 to Rs 50,308 per 10 gram in the Mumbai retail market on rupee depreciation and volatile global cues. The precious metal price pared earlier gains tracking rebounding dollar on safe-haven appeal as a new coronavirus strain in Britain led to sell-off in most assets class. The rate of 10 gram 22-carat gold in Mumbai was Rs 46,082 plus 3 percent GST, while 24-carat 10 gram was Rs 50,308 plus GST. The 18-carat gold quoted at Rs 37,731 plus GST in the retail market. Silver prices climbed by Rs 673 to Rs 67,192 per kg from its closing on December 18.

🍒 Markets crash on mutant virus fears : News reports of a fast-spreading virus strain in the UK stopped the bulls in their tracks on Monday. In the last hour of the trading session, the Sensex fell by 1,406 points or 3 per cent to close at 45,553. The Nifty index declined by 432 points to close at 13,328. It was the worst crash in the indices in seven months. Reliance Industries, ICICI Bank, HDFC Bank and HDFC were the biggest drags on the Sensex that led the index to fall over 500 points. The Bank Nifty index fell by 1,258 points or 4.1 per cent at 29,456. 

🍒 Rupee slips 17 paise to 73.73 against US dollar : The rupee declined 17 paise to 73.73 against the US dollar in opening trade on Monday amid weak domestic equities and strengthening American currency in the overseas market. However, unabated foreign fund inflows and lower crude prices supported the rupee and restricted the fall, forex traders said. At the interbank forex market, the local unit opened sharply lower at 73.74 against the greenback. It was trading 17 paise down at 73.73 in early deals. In the previous session, the rupee strengthened by 3 paise to close at 73.56 against the US dollar. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading up 0.46 per cent at 90.37.

21.12.2020: Today's Banking / Financial News

21.12.2020: Today's Banking / Financial News at a Glance

🍒 Bank of Baroda completes integration of erstwhile Dena, Vijaya banks with itself : State-run Bank of Baroda on Sunday said it has completed integration of 3,898 branches of erstwhile Vijaya Bank and Dena Bank with itself. In a first three-way amalgamation, Vijaya Bank and Dena Bank were merged with Bank of Baroda from April 1, 2019. The bank has completed the integration of 1,770 erstwhile Dena Bank branches in December 2020, and had earlier completed the integration of 2,128 erstwhile Vijaya Bank branches in September 2020, the lender said in a release. "We have successfully completed integration of erstwhile banks with Bank of Baroda amidst the challenges faced under the COVID environment. We are happy to once again welcome all our esteemed customers and request them to avail full suite of Bank of Baroda's products and digital solutions," the bank's managing director and CEO Sanjiv Chadha said in the release. - economic times

🍒 PSU banks to raise Rs 25,000 crore in next 3 months: DFS Secy : Public sector banks (PSBs) are planning to raise about Rs 25,000 crore through a mix of equity and debt in the next three months to support credit pick up and meet regulatory requirement. In the last few months lenders including State Bank of India, Canara Bank and Punjab National Bank (PNB) have raised about Rs 40,000 crore from the market, Financial Services Secretary Debasish Panda told in an interview. "Banks have been able to raise a lot of money from the markets. About Rs 40,000 crores have been raised by the public sector banks both in the form equity and also AT1 and Tier II bonds. We will expect another 20,000-25,000 during the remaining part of the financial year," he said. Earlier this month, Canara Bank raised Rs 2,000 crore while Punjab National Bank (PNB) raised Rs 3,788.04 crore through qualified institutional placement (QIP). RBI Governor Shaktikanta Das has been advising banks to proactively raise capital and not wait for a difficult situation to arise due to the ongoing COVID-19 crisis. - economic times

🍒 India needs multiple bad banks to clean balance sheets of lenders, get credit growth back : Industry body CII on Sunday said it has urged the government to consider creation of multiple bad banks to address the adverse impact of non-performing assets (NPAs) accumulated by public sector banks in the recent past, that got further accentuated during the pandemic. The Confederation of Indian Industry (CII) in its pre-budget memorandum recommended that the government consider enabling Foreign Portfolio Investors (FPIs) and Alternative Investment Funds (AIFs) to purchase NPAs. "In the aftermath of Covid, it is important to find a resolution mechanism through a market determined price discovery. With huge liquidity both globally and domestically, multiple bad banks can address this issue in a transparent manner and get the credit cycle back in action," CII President Uday Kotak said. - economic times

🍒 Gold imports dip 40% in Apr-Nov to $12.3 bn : Gold imports, which have a bearing on the current account deficit, fell 40 per cent to $12.3 billion during April-November due to fall in demand in the wake of the COVID-19 pandemic, according to data from the commerce ministry. Imports of the yellow metal stood at $20.6 billion in the corresponding period of 2019-20. The imports, however, recorded a year-on-year growth of 2.65 per cent in November to $3 billion. Silver imports during April-November 2020 too dipped 65.7 per cent to about $752 million. The decline in gold and silver imports has helped in narrowing the country's trade deficit, difference between imports and exports, to USD 42 billion during April-November 2020-21 as against USD 113.42 billion in the year-ago period. - economic times

🍒 FPIs invest Rs 54,980 cr in Indian equities in Dec so far : Foreign portfolio investors (FPI) pumped in Rs 54,980 crore in Indian markets in December so far amidst availability of excess liquidity in global markets and expectation of fresh stimulus package by various central banks, among others. As per the depositories' data, FPIs invested a net Rs 48,858 crore into equities and Rs 6,122 crore into debt segment between December 1 and 18.This took the total net investment to Rs 54,980 crore during the period under review.In November, the total net investment of FPIs stood at Rs 62,951 crore. Himanshu Srivastava, associate director - manager research, Morningstar India said, "availability of excess liquidity in global markets and low interest rates diverted foreign flows into emerging markets like India." - economic times

🍒 EPFO net new enrolments rises 56% to 11.55 lakh in October : Net new enrolments with retirement fund body EPFO rose by 56 per cent to 11.55 lakh in October compared to 7.39 lakh in the same month last year, according to its latest payroll data, providing a perspective on formal sector employment amid the coronavirus pandemic. The net payroll additions, however, have registered a slight dip in October compared to 14.19 lakh in September this year, according to a statement by the Labour Ministry. Provisional payroll data released by the EPFO last month had shown that net new enrolments stood at 14.9 lakh in September this year. - economic times

🍒 PayPal faces Rs 96 lakh penalty for violating India's anti-money laundering processes : American online payment gateway giant PayPal has been imposed a Rs 96 lakh penalty by the FIU for alleged contravention of the anti-money laundering law and accused of "concealing" suspect financial transactions and abetting "disintegration" of India's financial system. PayPal, which began India operations in November 2017, said it was fully committed to follow due processes and is "carefully reviewing the matter". The company has also been charged with "defeating and frustrating" the tenets of public interest and the provisions of the Prevention of Money Laundering Act (PMLA), which aims to keep the country's financial system safe from economic crimes, terrorist financing and black money transactions. Calling the contraventions as "deliberate and wilful", the Financial Intelligence Unit (FIU) in a scathing 27-page order issued on December 17 held the company guilty on three broad counts, the fundamental being its failure to register itself as a "reporting entity" with the federal agency as mandated under the PMLA.- economic times

🍒 Corporate Insolvency: IBBI may rein in engagement of third party consultants : Insolvency professionals appointed under the Insolvency and Bankruptcy Code (IBC) may not find it all that easy to contract out their duties to third party consultants or advisors (including non Insolvency Professional Entity) during corporate insolvency resolution process (CIRP) if the latest IBBI discussion paper is anything to go by. The Insolvency and Bankruptcy Board of India (IBBI), which has released the discussion paper on ‘Engagement of “professionals” in a corporate Insolvency Resolution Process’, has invited public comments on several questions including whether only a person having an authorisation from the regulator of a profession to practice the profession may be appointed as a “professional” by an IP in a CIRP. - Business Line

🍒 Pensioners can submit life certificates till February 28: Union Minister Jitendra Singh : In a major relief to central government pensioners amid the COVID-19 pandemic, the date for submission of life certificate has been extended up to February 28 next year, Union Minister Jitendra Singh said on Sunday. "This decision has been taken considering all the sensitivities to avoid pandemic risk emanating from gathering of crowds at the pension disbursing banks," said Singh, the Minister of State for Personnel. In addition to this, he said, the pensioners above the age of 80 years were given an exclusive window from October 1 onward to submit their life certificate so as to avoid rush likely to happen from the opening date of November 1. - financial express

🍒 M-cap of eight of top-10 most valued companies zoom, HDFC, TCS lead gainers : Eight of the top-10 most valued domestic companies together added Rs 1,25,229.25 crore in market valuation past week in-line with a bullish broader market trend, with HDFC, TCS and Bajaj Finance emerging as the biggest gainers. Over the past week, the BSE benchmark gained 861.68 points or 1.86 per cent. Only Reliance Industries Limited and Hindustan Unilever Limited witnessed erosion from their market valuation, rest eight companies including HDFC Bank and Infosys made gains. HDFC’s valuation zoomed Rs 32,992.86 crore to Rs 4,46,174.05 crore, making it the biggest gainer. The market capitalisation of Tata Consultancy Services (TCS) jumped Rs 29,700.13 crore to Rs 10,74,157.65 crore. Bajaj Finance added Rs 24,642.81 crore to Rs 3,16,481.88 crore to its valuation. - Business Line.