30.11.2020: Today's Banking / Financial News

30.11.2020: Today's Banking / Financial News at a Glance

🍒 RBI likely to maintain status quo for 3rd straight time on inflation concerns : The Reserve Bank is likely to keep the benchmark interest rates unchanged in its next monetary policy review in view of heightened retail inflation which has persistently remained above its comfort level, feel experts. However, with the economic growth continuing to remain in the negative territory for the second consecutive quarter ending September, the central bank is likely to continue with the accommodative monetary stance keeping the hope alive for a rate cut as and when needed. The six-member Monetary Policy Committee (MPC) headed by RBI Governor is scheduled to meet for two days starting December 2. The resolution of the sixth bi-monthly MPC meeting would be announced on December 4. - Business Line

🍒 RBI needs to be a super regulator if corporates are allowed to open banks : The key issue to monitor or prevent camouflaged or connected lending lies with the supervisory powers of the Reserve Bank of India (RBI). The current laws do not provide such powers to the regulator. As evident from the YES Bank case, there is nothing wrong in a bank lending to a particular entity so there is no way RBI inspectors could raise a flag. “The issue here is once you allow the conglomerates then only supervising the banks will not be sufficient,” said SS Mundra, former deputy governor of RBI. According to Mundra, supervision should be done at two levels – one on the non-operative financial holding company level and also on the group level.“You will have to supervise all the activities of the conglomerates. And for that you need a consolidated supervision. Consolidated supervision means if the group has an insurance arm or a broking business – various regulators should be together and there should be one lead regulator. There has to be a format, there has to be a system. That is one,” Mundra who was in-charge of supervision of banks and non-banks as deputy governor said. “The second is, since there will be a group involved, which may not be under the holding company, then supervisory capabilities are needed to know the flow of transactions, that is, from the bank whether it is going to related parties – not only in a direct way, sometimes these things happen indirectly also. So that kind of supervision will have to be maintained,” Mundra added. The existing laws need to be amended to provide those special powers to the Reserve Bank of India. The IGW has said that necessary amendments to the Banking Regulation Act, 1949 would be required, to prevent connected lending. - Deccan Herald

🍒 Madras HC tells DBS Bank to create reserve fund for LVB shareholders : The Madras High Court has asked DBS Bank India (DBIL) to create a reserve fund if it (the court) orders that the Lakshmi Vilas Bank (LVB) shareholders be compensated for the loss they have suffered in the process of amalgamation with DBIL. The court’s Division Bench, consisting of Justice Vineet Kothari and Justice M S Ramesh, on Friday passed an interim order on a writ petition filed by Kolkata-based AUM Capital Market.Senior Counsels P S Raman and Arvind Datar, representing the company, have asked for a stay on the amalgamation of LVB with DBIL. The amalgamation came into effect on November 27. AUM Capital holds a little less than 0.50 per cent in LVB. While refusing to give the stay, the Bench said no prejudicial action by DBIL should be taken against the shareholders of LVB without the court’s permission. - Business Standard.

🍒 ‘MPC likely to keep rates steady’ : The rate-setting Monetary Policy Committee (MPC) is likely to stand pat on the policy repo rate as retail inflation continues to remain sticky above its upper tolerance level of 6 per cent, even as the economy is showing signs of mending from the impact of Covid-19. The MPC, which is scheduled to meet from December 2 to December 4, left the policy repo rate unchanged at 4 per cent in its previous two meetings as retail inflation has been above the tolerance band for several months. Since the outbreak of the pandemic in India in March, the MPC has cut the repo rate cumulatively by 115 basis points in two tranches – from 5.15 per cent to 4.40 per cent on March 27 – and from 4.40 per cent to 4 per cent on May 22. - Business Line

🍒 RTGS payments to be available round the clock starting Dec 1. : In a bid to boost the adoption of digital payments, the Reserve Bank of India has allowed the transfer of funds through Real-Time Gross Settlement (RTGS) round-the-clock, 365 days a year from December 1. Under the current rules, the transfers can be made between 7 am and 6 pm on all working days except for the second and fourth Saturday of the month and on Sundays. - Timesnow.

🍒 Finance Ministry asks PSU general insurers to rationalise branches, other expenses: Sources : The Finance Ministry has asked public sector general insurance firms, especially National Insurance, Oriental Insurance and United India Insurance, to rationalise branches and cut down avoidable expenses to improve their financial health, sources said. Earlier this year, the Union Cabinet decided to halt the merger process of three state-owned general insurance companies due to their weak financial positions. Instead, the government approved fund infusion of ₹12,450 crore to meet regulatory parameters. The Finance Ministry has asked these companies to cut the flab by rationalising branches and rein in other avoidable expenses like guest houses, etc, sources said. Besides, sources said, they have been asked to expand their business through digital medium. - Business Line

🍒 NBFCs planning to seek CRR, SLR breather on net demand, time liabilities : Leading non-bank financial companies (NBFCs) have got cracking on their banking ambitions a week after the Reserve Bank of India’s (RBI’s) internal working group suggested that those with an asset size of Rs 50,000 crore or more may consider converting into a bank. A clutch of four large groups with shadow banks in their fold have held extensive internal consultations and are set to make a formal representation to the banking regulator (which sources said may well be within a fortnight) seeking the grandfathering of reserve norms – the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) in December on their net demand and time liabilities (NDTL). According to highly placed sources, these NBFCs plan to seek exemptions on the CRR and SLR front on their existing NDTL and that these be mandated on the fresh liabilities which would accrue upon conversion into a bank. If permitted, the move will benefit some of the large NBFCs such as HDFC Ltd, Bajaj Finance (held through Bajaj Finserv), Tata Capital, Shriram Capital (which is the holding company for Shriram Transport Finance and Shriram City Union Finance), and Mahindra & Mahindra Financial Services (subsidiary of automobile major, Mahindra & Mahindra). - Business Standard

🍒 IT Dept finds Rs 450 cr undisclosed income during search across four cities : A recent search conducted by the Income Tax (IT) Department's in 16 premises across Chennai, Mumbai, Hyderabad and Cuddalore, resulted in the detection of an undisclosed income of more than Rs 450 crore. The search was conducted in the case of an IT SEZ developer, its ex-director and a "prominent" stainless-steel supplier from Chennai. The Department did not disclose the names. According to the Department, an unaccounted assets worth Rs 100 crore accumulated by the ex-Director and his family members in the past three years were unearthed during the search. Besides, the IT SEZ developer claimed bogus work-in-progress expenses of about Rs 160 crore in an under-construction project, capital expenses of Rs 30 crore on account of bogus consultancy fees in an operational project and inadmissible interest expense of Rs 20 crore. - Business Standard

🍒 IndoStar Capital to exit corporate lending business by Mar 2022, to focus on retail segment : Alternative asset manager Brookfield and private equity player Everstone promoted non-banking finance company IndoStar Capital Finance is looking to fully exit from corporate lending business by March 2022, its executive vice-chairman and chief executive R. Sridhar said. The company has been reducing its corporate book over the last two years, and has brought down the portfolio by close to ₹3,500 crore. "From a portfolio size of ₹6,000 crore in 2018, the corporate book is down to ₹2,500 crore as of date, which is a reduction of around 60% (We have collected ₹3,500 crore). By March 2022, the wholesale and corporate book will become zero," Sridhar told PTI in an interaction. The company will continue to focus on and expand its retail segment, he said. - Live Mint

🍒 Indiabulls Housing Finance sells part of its stake in OakNorth Holdings, raises Rs 93 crore : Indiabulls Housing Finance Ltd (IHFL) on November 29 announced that it had raised approximately Rs 93 crore by selling a portion of its stake in OakNorth Holdings Ltd. "The sale proceeds will be accretive to the regulatory net worth and the CRAR of the company," the mortgage lender said in a regulatory filing. The firm has raised a total of Rs 2,670 crore as fresh equity in the month of September, October, and November 2020 - Rs 683 crore through QIP and Rs 1,987 crore through the sale of a stake in OakNorth - adding to the regulatory equity capital of the company, it added. - moneycontrol.

🍒 EPFO subscribers up 45 lakh in FY21, big indicator of job creation: Apurva Chandra, Labour Secretary : India could look at a minimum contribution of about Rs 1,000 annually from gig workers towards their social security with the balance to be contributed by the platform they are associated with, said labour secretary Apurva Chandra in an interview with ET. Chandra said there was net addition of over 45 lakh Employees Provident Fund Organisation (EPFO) subscribers in the fiscal year so far, an indicator of new employment generation. - economic times

🍒 Big relief for mid-scale companies, government postpones QR code requirements to March end next year : In what is set to give relief to several companies, the government has postponed the requirement of generating QR code under the Goods and Services Tax (GST) framework. The government on Sunday said that it is postponing the requirement to generate and then use QR code for all business to customer (B2C) transactions. Companies would now be required to be prepared with the QR code compliance by March end next year. Abhishek Jain, Tax Partner, EY said, “The Central government has provided the much required relaxation for the businesses by waiving the penalty for non-compliance with QR code requirement till March 2021 for B2C transactions. As many of the industry players were not ready, this waiver would give the requisite time for the industry to be ready for this compliance.” - economic times

29.11.2020: Today's Banking / Financial News

29.11.2020: Today's Banking / Financial News at a Glance

🍒 Government opposes further loan moratorium : The government on Friday cited constraints imposed by the country’s economic situation and the uncertainty over the Covid-19 pandemic to oppose any further Supreme Court relief by way of extending the loan moratorium scheme to other affected sectors. The government, through Solicitor General Tushar Mehta, told a bench led by Justice Ashok Bhushan that it had already extended the loan moratorium scheme for small borrowers and waived interest on interest. “Any such relief sector-wise would be a problem under Article 32,” he said. “There is already a mechanism (restructuring). Let them work out things under the mechanism,” the SG said. “Given the economic position of the country and the pandemic… no one knows when this situation will end,” he said. Further relief would be difficult to extend to all affected sectors, including big borrowers, he argued. Justice M R Shah wondered if the government was saying that there was a line that must not be crossed. Justice Bhushan insisted that the bench would take a call on this once it had heard out all the other petitioners in the court, including Credai, the power producers, mall owners and jewellery shop owners. - economic times

🍒 Bankers hope retail, SME segment will sustain credit offtake in H2 : Bankers are optimistic about tempo of credit offtake and some easing of risk of slippages in current fiscal on the back of the narrower GDP contraction in the second quarter. Ashwani Bhatia, Managing Director (MD), State Bank of India (SBI) said things do not look bad so far. "With the (Q2 GDP) numbers, the double-digit dip in FY21 may not be there and we could see positive growth. This would have a beneficial effect on the credit side. However, much of the credit growth will be seen retail (auto, housing and personal loans) and SME segment," he said. Bank credit grew by 5.7 per cent year-on-year till early November 2020, shows Reserve Bank of India data. "The risks of slippages are within control for now. Yet, we have to be watchful of some large exposures in airports and SME segment," Bhatia added. - Business Standard

🍒 Delhi High Court stays RBI's show cause notice to UVARCL :  The Delhi High Court on Friday stayed a Reserve Bank of India notice warning of possible cancellation of UV Asset Reconstruction Company Ltd’s (UVARCL) registration, over what the central bank termed an illegal bankruptcy resolution proposal moved by the ARC for telecom firm Aircel. Mere submission of a resolution plan cannot be held illegal, Justice Navin Chawla held on a petition filed by UVARCL, while seeking response from the RBI, Ministry of Corporate Affairs, Insolvency and Bankruptcy Board of India (IBBI) and the union government within 15 days.  The RBI had in a notice last week warned UVARCL that its certificate of registration could be cancelled unless it explained by this weekend why it did not inform the bankruptcy court that the regulator had rejected its resolution plan for Aircel. UVARCL approached the court against the show-cause notice this week.- economic times

🍒 Write-off of Lakshmi Vilas Bank's debt to sting small lenders : India’s smaller banks will likely face higher funding costs and reduced investor appetite for their bonds just as non-performing loans spread, after the central bank moved to write off debt of an ailing lender. The Reserve Bank of India on late Thursday said Rs3.18 billion ($43 million) of Tier 2 bonds of Lakshmi Vilas Bank Ltd. will be fully written down as DBS Group Holdings Ltd. acquires the lender. The announcement comes as a surprise after the RBI-appointed administrator said last week DBS would take over all obligations, including bonds. “Financing costs may inch up and the appetite shall be lower especially for the lower-rated private and small finance banks," said Ajay Manglunia, managing director and head at JM Financial Products Ltd. “Such lenders will have to rely more on equity raise as investors shall be a bit more skeptical to take risk now." - Live Mint

🍒 EPFO extends deadline to submit life certificate by pensioners till February 28 : Retirement fund body EPFO has extended the deadline for submission of life certificates by pensioners till February 28, a move which would benefit over 35 lakh persons who could not submit the document by November due to coronavirus pandemic. The pensioners who could not submit their life certificates till November 30 deadline, would get pension every month till February. "In view of the ongoing COVID-19 pandemic and the vulnerability of elderly population to coronavirus, the Employees' Provident Fund Organisation (EPFO) has extended the time limit up to 28th February 2021 for submission of Life Certificate (Jeevan Pramaan Patra-JPP) in respect of the Pensioners drawing pension under EPS 1995 (Employees' Pension Scheme-1995) and whose Life certificate is due in any month till February 28, 2021," a labour ministry statement said. - economic times

🍒 Let us declare NPAs, banks to Supreme Court; govt pleads against sector-specific relief : The Indian Banks’ Association on Friday made a strong case for vacation of the Supreme Court order that restrained banks from classifying accounts as NPA. Senior counsel Harish Salve, appearing for IBA, vehemently urged a Bench led by justice Ashok Bhushan to vacate its order of September 3 that directed banks against declaring loan accounts that were not NPAs prior to August 31. Solicitor general Tushar Mehta, appearing for the Centre, urged the apex court not to delve into the issue of sector-specific loan repayment reliefs and the issue should be left to be resolved between lender banks and borrowers. The apex court had last week asked RBI to respond to the power producers’ demands for various benefits, including restructuring of their loans, under the recent central bank circular on debt recast. - financial expresss

🍒 Manappuram Finance mulls options to raise funds via borrowings : NBFC Manappuram Finance on Friday said it is considering various options for raising funds through borrowings for expansion of business. The Kerala-based lender has reported a good growth in its gold loan portfolio, with consolidated assets under management increasing 18.6% year-on-year to Rs 26,902.73 crore. The lender in a regulatory filing with the exchanges said the company may consider and approve issuances of debt securities during December. Based on the prevailing market conditions, the board of directors may consider and approve issuances of various debt securities in onshore or offshore securities market by public issue on a private placement basis, or through issuing commercial papers, the company said. Average borrowing costs for the standalone entity declined 26 basis points during the second quarter to 9.13%. The lender, which operates a home loan, microfinance and commercial vehicle leasing subsidiary, has reported a standalone net profit of Rs 405.56 crore in the gold loan business, compared with Rs 336.17 crore in the year-ago period. - financial express

🍒 Paytm to not charge any fee on wallet payments for merchants; move to benefit 1.70 crore users : In an effort to de-clutter the digital payments ecosystem and augment the use of online payments, Paytm has announced that merchants will now be allowed to receive unlimited payments through its Paytm Wallet at a 0% fee, along with UPI and Rupay Cards. “With this, we aim to benefit more than 17 million (1.7 crore) merchants who can enjoy a 0% fee on all their digital payments with direct settlement in their bank accounts,” paytm said in a blog on its website. Paytm is one of the largest payment solutions providers in the country with a large customer base. Of the 17 millions merchants that use Paytm, Goldman Sachs recently said, a massive 70% are active.  Paytm said that its move to allow merchants to receive unlimited payments through Paytm Wallet will provide them with a single point of reconciliation for all their payments, not requiring them to use multiple QRs codes. “All they need is Paytm ‘All-In-One QR’ to accept payments from Paytm wallet, Paytm UPI, or any other UPI app,” Paytm said. This All-in-one QR code will enable merchants to receive payments from any bank account or any rupay card, along with paytm wallets at zero fee charged by the company.- financial express

🍒 Rupee likely to trade in narrow range of 73.68-74.24 next week, deploy short Iron Butterfly : The United States Dollar/Indian Rupee (USD/INR) witnessed mild profit booking after hitting the stiff resistance zone of 74.50- 74.60 per US dollar and closed with the mild loss of approximately 10 paise on a week on week basis at 74 per US dollar. The currency pair failed to breakout and fall back in the previous trading range of 73.10 to 74.60 per US dollar. In an upcoming trading week, traders can expect the recent fall to get abated for the time being and the sideways move in a narrow range could be seen. The bullish 'Harami' candlestick pattern formed on November 26, suggesting that bears have booked profit at lower levels. The momentum indicators are locked in a sideways zone and no major move is expected in an upcoming truncated week. - moneycontrol.

🍒 Why traditional banks need to partner with fintech firms for delivering essential banking solutions : The gap between what customers expect and what traditional banks currently deliver has never been wider. Still, it now is the right time for banks to catch up from front to back-end to offer the best customer experience,” this is one of the key messages delivered in the World Fintech Report 2020 by Capgemini. The report urges a rethink of the execution of collaborations between incumbent finance players and the new up-and-coming players, both of which stand to benefit from collaboration. Capgemini’s Open X Readiness Index Report says that banks already leading in a revitalised approach to collaboration are those who have designated a dedicated and autonomous start-partnership team and who “demonstrate a fail-fast innovation approach” to determine the value and cut losses quickly. Frontrunners will also invest in emerging technologies and have little dependency on legacy systems, making FinTech integration easier. And to keep up with ever-changing customer expectations in today’s marketplace, incumbent banks must transform into Inventive Banks with collaborative support from qualified FinTech partners. To remain attractive and competitive, banks must shift to becoming customer-centric and inventive. - financial express.

28.11.2020 : Today's Banking / Financial News

28.11.2020 : Today's Banking / Financial News at a Glance

🍒 Lending institutions have returned Rs. 4300 crore in compound interest: SC on RBI loan moratorium case : The Supreme Court on Friday recorded in a judgment that lending institutions have returned over Rs. 4300 crore in compound interest collected from small borrowers during the moratorium period.  The ex-gratia payments have been made into 13.12 crore bank accounts across the country as of November 13, 2020, the court noted the submission made by Solicitor General Tushar Mehta for the government. The payments were made in compliance to a government pay-back scheme introduced on October 23 to waive the difference in the compound interest and simple interest charged between March 1 and August 31 (moratorium period) for eight categories of loans worth up to Rs. 2 crore. - Business Line

🍒 RBI has set precedence in LVB bond write-off, will hurt other banks: Report : The write-off of Rs 318-crore tier-II bonds by Lakshmi Vilas Bank (LVB) ahead of its merger with DBS Bank is a precedent set by the Reserve Bank of India (RBI) and will hurt the private sector lender's peers, according to a report. During the Yes Bank rescue earlier this year also, there was an over Rs 7,000-crore bond write-off, but that involved a different instrument called additional tier-I bonds. In the case of LVB, which is being merged with DBS in a scheme proposed by the RBI, investments of Rs 318.20 crore in bonds issued by LVB will be written-off, the lender informed the exchanges late Thursday night. "RBI has set a precedence with the proposed write-off as it's first time a tier-II bond is being written off," ratings agency ICRA said in the report on Friday. - Economic Times

🍒 Madras HC refuses to stay LVB-DBS Bank merger, adjourns AUM Capital plea : The Madras High Court has refused to stay the merger of Lakshmi Vilas Bank (LVB) with DBS Bank India. The court adjourned the plea moved by AUM Capital Market Pvt Ltd challenging the merger to January 21. It may be noted, on Thursday, the Bombay High Court refused to grant stay on the final scheme of amalgamation between DBS bank and Lakshmi Vilas Bank which will come into effect on Friday. Today, a division bench of the Madras High Court consisting of Justice Vineet Kothari and Justice M S Ramesh said "no blanket interim order can be granted against the merger as the scheme has already come to operation". They said the Centre and RBI are free to proceed further with the merger as per the scheme. The bench adjourned the hearing to January 21 and asked the Centre and the RBI to file counters, while rejecting RBI and DBS India request to keep in abeyance the order not to take any further actions prejudicial to the shareholders of LVB for three weeks.  - Business Standard

🍒 Court rejects ED intervention plea against closure report in MSC Bank case : A court here on Thursday rejected the Enforcement Directorate's plea seeking to intervene in the hearing on a closure report of Mumbai Police in the alleged Rs 25,000 crore Maharashtra State Co-operative Bank scam. Maharashtra Deputy Chief Minister Ajit Pawar had been named as an accused in the case. The Economic Offences Wing (EOW) of city police filed a closure report in September before the special Anti- Corruption Bureau (ACB) court. The EOW claimed that its special investigation team found no criminal aspect to the case. The ED contended that the probe was flawed, and sought to intervene in the hearing, demanding that the closure report be rejected. Special ACB judge Ajay Champaklal Daga, however, rejected the central probe agency's intervention plea. Hearing on the closure report will go on. - economic times

🍒 Adani tops DHFL bid, says its bid gives maximum to lenders; rivals want it out of race : Billionaire Gautam Adani's roads-to-mining group outbid US-based Oaktree with a Rs 33,000 crore bid for collapsed housing lender, DHFL, but rival bidders want it out of the race for allegedly missing the deadline - a charge Adani Group denies saying it followed due process and the "cartel" wants to prevent value maximisation. Four entities - Adani Group, Piramal Group, US-based asset management company Oaktree Capital Management and SC Lowy - submitted bids for DHFL in October, sources with DHFL lenders and industry said. But lenders, who are getting DHFL auctioned to recover unpaid loans, wanted suitors to revise their bids as original offers were low. - Economic Times

🍒 DHFL suitors get time till Dec 10 to submit bids : The lenders to troubled Dewan Housing Finance Corporation Ltd (DHFL) have extended the timeline for submission of bids to December 10 as they look to trim their losses. This comes even as a section of lenders to DHFL want to examine the Binani Cement resolution case where a late bid from Aditya Birla group was allowed since it was higher. The CoC of DHFL led by State Bank of India has called for revised bids after Adani Enterprises submitted a revised bid for the whole book of the housing finance company as against its earlier bid of just the wholesale and SRA portfolio, which led to a protest from Piramal Enterprises. - Business Line

🍒 Wadhawan moves NCLT against CoC, Administrator : DHFL’s erstwhile Director Kapil Wadhawan has moved the National Company Law Tribunal with a plea that it direct the housing finance company’s Administrator, the Committee of Creditors and the Reserve Bank of India to consider the draft resolution plan prepared by the company last year for its revival . In the alternative to the above, Wadhawan (Applicant), who is currently in judicial custody, has sought the Tribunal’s direction that DHFL’s resolution plan be submitted to an independent expert appointed by the Tribunal along with the bids received from the other Resolution Applicants. Further, he prayed that the expert be directed to submit a report giving opinion to the Tribunal with regard to the most appropriate plan to be considered in the interest of all stakeholders. - Business Line

🍒 Small lenders to pay the price as RBI writes off debt of Lakshmi Vilas Bank : India’s smaller banks will likely face higher funding costs and reduced investor appetite for their bonds just as non-performing loans spread, after the central bank moved to write off debt of an ailing lender. The Reserve Bank of India on late Thursday said Rs 3.18 billion ($43 million) of Tier 2 bonds of Lakshmi Vilas Bank Ltd. will be fully written down as DBS Group Holdings Ltd. acquires the lender. The announcement comes as a surprise after the RBI-appointed administrator said last week DBS would take over all obligations, including bonds. b“Financing costs may inch up and the appetite shall be lower especially for the lower-rated private and small finance banks,” said Ajay Manglunia, managing director and head at JM Financial Products Ltd. “Such lenders will have to rely more on equity raise as investors shall be a bit more skeptical to take risk now.” ‘ - Business Line

🍒 Risk premiums for Tier-2 Bonds may go up for weaker private banks’ : Risk premiums for Basel-III complaint Tier-2 Bonds could go up for weaker private banks following the Reserve Bank of India’s (RBI) advice to  Lakshmi Vilas Bank (LVB) to write down these bonds aggregating ₹318.2 crore before its amalgamation with DBS India Ltd (DBIL) comes into effect. The amalgamation comes into force on the appointed date – November  27. All branches of the troubled LVB will function as branches of DBIL, which is awholly-owned subsidiary of DBS Bank, Singapore, with effect from Friday.  Anil Gupta Sector Head – Financial Sector Ratings, ICRA, said the RBI has set a precedence with the proposed write down as it is the first time that a Tier II bond is being written off. He opined that investors should factor in the risk in Basel III instruments, as these instruments can be completely written down in case a bank gets into trouble.- Business Line

🍒 Private banks’ average lending rate on new loans move up nearly 40 bps in October : With the RBI’s next policy meet around the corner and the market debating over the possibility of further rate cuts, the sudden jump in average lending rate of private banks may need some attention.  According to the latest data released by the RBI on banks’ lending rates, the weighted average lending rate on fresh loans for private banks have gone up by 36 bps in October to 9.02 per cent from 8.66 per cent in September. With the lending rates on new loans for foreign banks too moving up by about 30 bps, the overall weighted average lending rate on fresh loans for all banks has gone up by about 9 bps in October. The RBI had last cut its key policy repo rate in May by 40 bps to 4 per cent and since then held rates owing to rise in inflation. While banks’ tardiness to cut lending rates sharply may be understandable — as the RBI is expected to remain in a pause mode in the near term — lending rates moving up at a time when the economy is starting to recover could be worrisome. - Business Line

🍒 Bank credit to industry recorded negative growth in October: RBI : Non-food credit growth of scheduled commercial banks (SCBs) decelerated to 5.6 per cent in October from 8.3 per cent in October 2019, mainly due to contraction in credit to industry and deceleration in personal loans growth. Credit to industry contracted by 1.7 per cent as compared with 3.4 per cent growth in October 2019, according to Reserve Bank of India’s data on sectoral deployment of bank credit. This data has been collected from select 33 SCBs which account for about 90 per cent of the total non-food credit deployed by all SCBs. - Business Line

🍒 IRDAI okays Bharti AXA, ICICI Lombard deal : The Insurance Regulatory and Development Authority of India (IRDAI) has given in-principle approval to the acquisition of non-life insurance business of Bharti AXA by ICICI Lombard General Insurance. “IRDAI ... has granted in-principle approval under Section 35 to 37 of the Insurance Act, 1938 read with IRDA (Scheme of Amalgamation and Transfer of General Insurance Business) Regulations, 2011 with respect to the said transaction,” ICICI Lombard General Insurance said in a regulatory filing on Friday. The two companies had announced the proposed merger on August 21 this year. “ICICI Lombard is progressing applications for receipt of requisite approvals from other concerned regulators for the transaction,” the insurer said in the statement. - Business Line

🍒 NPCI expands its shareholding pie : Retail payments body National Payments Corporation of India (NPCI) has completed private placement of 4.63% of its equity shares worth ₹81.64 crore, allowing small finance and payment banks as well as fintechs to be shareholders in the entity, it said on Thursday. NPCI had made an offer for the private placement to 131 Reserve Bank of India (RBI) regulated entities, of which 19 showed interest and were allotted shares in NPCI. Small finance and payment banks such as AU Small Finance Bank Ltd, India Post Payments Bank Ltd, and digital payment fintechs including BillDesk, Amazon Pay, PayU India, PhonePe, Pine Labs and MobiKwik have thus joined NPCI’s shareholding with up to 0.44% each in the retail payment entity. There are a total of 67 shareholder entities for NPCI now.  - Live Mint

🍒 SC directs govt to ensure implementation of decision to forego interest during loan moratorium period : The Supreme Court Friday directed the government to ensure that all steps be taken to implement its decision to forego interest on eight specified categories of loans paid upto Rs two crore in view of the coronavirus pandemic. A bench headed by Justice Ashok Bhushan said the COVID-19 pandemic has not only caused serious threat to the health of the people but has also cast its shadow on the economic growth of the country as well as other countries in the entire world. The eight categories of loans are MSME (Micro, Small & Medium Enterprises), Education, Housing, Consumer durable, Credit card, Automobile, Personal and Consumption.  “Due to lockdown imposed by the Government of India in exercise of powers under the Disaster Management Act, 2005, there can be no denial that most of the businesses including private sector as well as public sector has been adversely affected.  - financial express           

🍒 Over Rs 10 lakh crore loans under Mudra Yojana created 51 lakh entrepreneurs between 2015-18: Irani : Union Minister Smriti Irani on Thursday said over Rs 10 lakh crore has been leveraged under the Pradhan Mantri Mudra Yojana, thereby creating 51 lakh new entrepreneurs in the country between 2015 and 2018. Addressing an awards ceremony virtually, the Minister for Women and Child Development and Textiles also thanked Covid warriors, many of whom died in the line of duty across the country. She said from 2016 till today, the government recognised start-ups stand at over 32,000 in the country.  “A country which has seen decades where the poor were disenfranchised to receive access to banking credit and facilities today celebrates the fact that under the MUDRA Yojana over Rs 10 lakh crore has been leveraged, thereby giving birth between the year 2015 to 2018 (to) 51 lakh new entrepreneurs,” Irani said.  - financial express

🍒 RBI has set precedence in LVB bond write-off, will hurt other banks: Report : The write-off of Rs 318-crore tier-II bonds by Lakshmi Vilas Bank (LVB) ahead of its merger with DBS Bank is a precedent set by the Reserve Bank of India (RBI) and will hurt the private sector lender’s peers, according to a report.  During the Yes Bank rescue earlier this year also, there was an over Rs 7,000-crore bond write-off, but that involved a different instrument called additional tier-I bonds. In the case of LVB, which is being merged with DBS in a scheme proposed by the RBI, investments of Rs 318.20 crore in bonds issued by LVB will be written-off, the lender informed the exchanges late Thursday night. “RBI has set a precedence with the proposed write-off as it’s first time a tier-II bond is being written off,” ratings agency ICRA said in the report on Friday. - financial express

🍒 Sensex drops 110 points; RIL, IT stocks weigh : Equity benchmark Sensex ended 110 points lower after a choppy session on Friday, dragged by losses in index majors Reliance Industries, Infosys and TCS despite a positive trend in global markets. The 30-share BSE index closed 110.02 points or 0.25 per cent lower at 44,149.72. The broader NSE Nifty slipped 18.05 points or 0.14 per cent to 12,968.95.PowerGrid was the top laggard in the Sensex pack, shedding over 2 per cent, followed by HCL Tech, ONGC, M&M, Axis Bank, TCS, Reliance Industries and Infosys.On the other hand, Asian Paints, Titan, Tata Steel, Bajaj Finance and Bajaj Auto were among the gainers. 

🍒 Forex reserves rise to $575.29 b : The country’s foreign exchange reserves rose by $2.518 billion to a new record high of $575.29 billion in the week ended November 20. Since March-end, the reserves jumped by $97.48 billion. “Past data indicate it was only in FY08 that RBI had accumulated forex reserves more than this amount. In FY08, forex reserves increased from $200 billion to $309 billion,”according to SBI’s research report ‘Ecowrap’.  - business line

🍒 Rupee trading with a positive bias : The rupee (INR), which rallied to mark an intraday high of 73.74 on Thursday, gave up the gains and ended the session almost on a flat note at 73.88. On Wednesday, it had closed at 73.91. Nevertheless, the local currency has closed above the key barrier of 74, opening the door for further strengthening. Following this, INR opened with a gap-up at 73.78 today, thereby crossing over the resistance of 73.85. Further appreciation from the current level can take the rupee to 73.7 – a resistance level. Above that level, it can advance to 73.5. But if the domestic currency weakens, it can find support at 74. Support below that level can be spotted at 74.3.

🍒 Gold prices today fall for fifth day in a row, silver rates drop : Gold and silver prices in India edged lower today amid weak global trend. On MCX, gold futures dipped 0.03% to ₹48,501 per 10 gram while silver futures fell 0.5% to ₹59,570 per kg. In the previous session, gold prices had slipped 0.11% while silver had ended flat. In five days, gold rates in India have dropped nearly ₹1,700 per 10 gram, in line with a similar fall in global rates. In global markets, gold prices edged 0.3% lower to $1,810.44 an ounce. For the week, gold remains down over 3% as progress in Covid-19 vaccine development and US President-elect Joe Biden's transition to the White House bolstered risk sentiment. Among other precious metals, silver today fell 0.9% to $23.25 per ounce, while Platinum fell 0.1% to $961.18 and palladium was up 0.3% at $2,391.19. - Live Mint.

27.11.2020 : Today's Banking / Financial News

27.11.2020 : Today's Banking / Financial News at a Glance

🍒 RBI to keep rates on hold due to sticky inflation: Morgan Stanley : Even as India gradually picks up economic pace as hope of Covid vaccine increases, the central bank is set to stay away from tampering with the rates, Morgan Stanley said in a research report today. “We expect RBI to keep rates on hold as it continues to maintain its accommodative stance. This is on the back of a sticky inflation trend and sustained recovery across high frequency data which is in line with our expectation of positive economic growth from QE Dec,” the report said. After the Indian economy contracted by 23.9% in the first quarter of the financial year, the biggest crash in over 40 years, the country has gradually seen some revival. In October some of the indicators showed that the growth may be back in the economy. - economic times

🍒 Bombay HC refuses to stay merger of Lakshmi Vilas Bank, DBS : The Bombay High Court on Thursday refused to stay Lakshmi Vilas Bank's (LVB) merger with DBS Bank India Ltd which will be effective from November 27. A division bench of Justices Nitin Jamdar and Milind Jadhav was hearing petitions filed by a group of promoters of the ailing Lakshmi Vilas Bank and Indiabulls Housing Finance Ltd, one of its shareholders, challenging the merger. "We are refusing the interim relief sought by the petitioners to stay the amalgamation. The petitions shall be placed for hearing on December 14 when the respondents (Reserve Bank of India, LVB and DBS Bank India) shall file their affidavits in reply," the court said. - economic times

🍒 Govt notifies guaranteed loan scheme for stressed sector : The National Credit Guarantee Trustee Company Limited (NCGTC) on Thursday formally informed banks and non-banking financial companies (NBFC) about expanded Emergency Credit Line Guarantee Scheme (ECLGS) 2.0. This is a follow-up to Finance Minister Nirmala Sitharaman’s announcement on November 12.  While the first version of the scheme will remain, the new version will cover entities in 26 stressed sectors identified by the KV Kamath Committee plus the healthcare sector, with credit outstanding of above ?50 crore and up to ?500 crore as on February 29. In both the versions, 20 per cent of credit dues will be given as working capital without any collateral. - Business Line

🍒 Proposal to allow business houses into banking a good-looking step in bad direction: Kaushik Basu : The RBI working group's proposal to allow corporate houses to set up banks is a 'good-looking' step in a 'bad direction' and may lead to crony capitalism and eventual financial instability, former chief economist of World Bank Kaushik Basu said on Thursday. Basu further said that there is a good reason why all successful economies have a clear dividing line between industries and corporations on the one hand, and banks and lending organizations on the other. "The proposal from the recently set up Internal Working Group of the Reserve Bank of India, allowing Indian corporate houses to own and run banks is a good-looking step in a bad direction," he told .- Economic Times

🍒 Operations at PSU banks partially hit due to trade union strike; SBI, private banks functional : Banking operations in public sector banks across the country were partially affected on Thursday as some bank unions joined the one-day nationwide strike called by central trade unions. Cash transaction including deposits and withdrawal at branches, forex and government transactions have been impacted in many public sector banks where participating unions are strong. However, State Bank of India and private sector banks are functional. Ten central trade unions, except Bharatiya Mazdoor Sangh, are observing the nationwide general strike to protest against various policies of the central government. - Economic Times

🍒 YES Bank launches remote payment service for merchants : Private sector lender YES Bank has launched a special service that would enable merchants to accept contactless and remote payments from their customers. Called SMS Pay, the functionality on PoS terminals in partnership with Worldline, is aimed at shopkeepers and merchants, including local kirana stores and departmental stores, enabling them to request payments against invoices by simply entering the amount and customer contact details on their PoS machines. - Business Line

🍒 RBL Bank to hold virtual cyclothon to raise funds for girl child education : Amid COVID-19 crisis, private lender RBL Bank is flagging off a virtual cyclothon on Friday wherein 127 shortlisted cyclists will race to finish 1,000 km in 14 days as part of its CSR initiative to raise funds for supporting girl child education. This is for the seventh year it is organising the 'UMEED 1000 Cyclothon' but this year in challenging COVID-19 circumstances. However, the bank has reinvented the format of cyclothon by going virtual, keeping in mind the strict safety measures for cyclists, the lender said.  The funds raised from the event will go towards setting up a second Udbhav RBL School for girl child education. The first school was set up in Hyderabad from Rs 5.10 crore funds raised from last year's cyclothon. The bank aims to set up 10 such schools by 2030. - Economic Times

🍒 Downside risks to growth continue, says RBI chief : The sustainability of demand after festivals and a possible reassessment of market expectations surrounding the vaccine needs a close watch, according to Reserve Bank of India Governor Shaktikanta Das.  Even as the growth outlook has improved, downside risks to growth continue due to the recent surge in infections in advanced economies and parts of India, the Governor said in his address at the 4th Annual Day of Foreign Exchange Dealers’ Association of India (FEDAI)..- Business Line

🍒 RBI's culpability in Lakshmi Vilas Bank's failure needs to be looked into: AIBEA : Bank employees' union AIBEA has said that the Reserve Bank's culpability in the failure of the 94-year-old Lakshmi Vilas Bank needs to be looked into and that the proposed merger of the lender with DBS Bank India Ltd (DBIL) will provide a back-door entry for a foreign banking entity into the Indian market. In a letter to Finance Minister Nirmala Sitharaman on Wednesday, the All India Bank Employees Association (AIBEA) said the approach of merger of the Tamil Nadu-based lender with Indian subsidiary of a Singapore-based bank is opposite to the policy of Aatmanirbhar Bharat professed by the government. The 94-year-old Lakshmi Vilas Bank (LVB) was profitable for 90 years and that the bank has been incurring losses for the past three years only, the association said. - Economic Times

🍒 Fino Payments Bank Q2 net up at ?4.5 crore : Fino Payments Bank Ltd (FPBL) on Wednesday said it has recorded a net profit of ?4.5 crore in the second quarter (July-September) of FY21. The bank, in a statement, said this is the third consecutive quarter wherein it has registered profit growth. It recorded a net profit of ?1.3 crore in the fourth quarter (January-March) of FY20 and ?1.9 crore in the first quarter (April-June) FY21, as per the statement. Ketan Merchant, Chief Financial Officer, FPBL, said a lean variable cost ABC (alternate banking channel) model riding on digital platforms, increasing transactions and high margin products helped the Bank cut costs, increase revenue and achieve an operating profit of ?13 crore in Q2 FY21. - Business Line

🍒 ESAF Bank opens 500th branch in Ahmadabad : ESAF Small Finance Bank opened 500th branch on Thursday in Ahmadabad. “We believe this expansion is a manifestation of our vision to be India's leading social bank that offers equal opportunity for the whole society through universal access. The bank could expand its footprints further even during the pandemic with the support of robust growth and customers’ confidence invested in us,” said K Paul Thomas, Managing Director and CEO.- Business Line

🍒 Economy improved 'significantly': SBI chief predicts GDP growth to contract by 8-9% in FY21 : There has been a significant improvement in the economy during the second quarter, said Dinesh Khara, chairman, State Bank of India. Khara was speaking at the Hindustan Times Leadership Summit 2020. "I'll co-relate the improvement with the unlock situation. Unlocks lead to rise in demands, which leads to significant improvement," Khara said. The way Indian economy is reviving post lockdown is giving hopes to many," Khara added. Indian economy is projected to contract by a massive 10.3% this year, according to an IMF forecast. Even the Reserve Bank of India expects the economy to shrink by 9.5% in the current financial year. SBI chairman predicted 8-9% contraction for FY21, adding that "all of us are expecting lower contraction in Q2 than Q1." "Post-unlock, every day is a new day. The way economic revival is happening, it is giving hope to many. The evaluation matrix is seeing change, in corporate houses too. People will wait for demand revival," Dinesh Khara added. - Live Mint

🍒 NPCI allows payment banks and fintechs to be shareholders : Retail payments body National Payments Corporation of India (NPCI) on Thursday said that it has completed private placement of 4.63% of its equity shares worth ?81.64 crores, allowing small finance and payment banks, as well as fintechs to be shareholders in the organisation. NPCI had made an offer for the private placement to 131 Reserve Bank of India (RBI) regulated entities, of which 19 showed interest and were allotted shares in NPCI. With this small finance and payment banks such as AU Small Finance Bank Ltd., India Post Payments Bank Ltd., and digital payment fintechs including BillDesk, Amazon Pay, PayU India, PhonePe, Pine Labs and MobiKwik have joined NPCI’s shareholding and hold up to 0.44% each in the retail payments entity. The total shareholder entities for NPCI now stands at 67. - Live Mint

🍒 Reserve Bank Governor Shaktikanta Das exhorts stakeholders to ensure smooth transition from LIBOR : Reserve Bank Governor Shaktikanta Das on Thursday exhorted all the stakeholders to put in efforts for ensuring a smooth transition from LIBOR or the London Interbank Offered Rate to other borrowing benchmarks.  He said industry lobby Indian Banks Association (IBA) has been working closely with market participants to facilitate transition to alternate benchmarks and create consumer awareness. LIBOR, which is the global benchmark for borrowings, is expected to cease by the end of next year. The RBI has been planning to replace it with the Mumbai Interbank Forward Outright Rate (MIFOR).   India’s exposure to LIBOR-linked borrowings, bonds, deposits and derivative contracts is pegged at USD 331 billion.“Achieving a smooth transition from a benchmark entrenched in the financial system will require significant efforts from all stakeholders,” Das said at the annual day event of the Foreign Exchange Dealers’ Association of India (FEDAI). - financial express

🍒 Capital account convertibility a process, not an event: RBI governor : Reserve Bank of India (RBI) governor Shaktikanta Das on Thursday said capital account convertibility will be a continued process, rather than an event, even as the country has progressed quite considerably in its quest towards full convertibility and internationalisation of its financial markets. Speaking at the fourth annual meeting of the Foreign Exchange Dealers Association of India (FEDAI), governor Das also said the economic recovery is sharper than earlier anticipated, not just in India, but globally. “Over the last three decades, India has undergone a transformation from being a virtually closed economy to one that is globally connected and open to a much larger volume of international transactions and capital flows than before. Today, the capital account is convertible to a great extent," Governor Das said in his keynote address. - Business Standard

🍒 IRDAI releases norms on info for inspection of insurers : The insurance regulator has come out with new norms for insurers on minimum information they have to provide for inspection and investigation by the Authority.  As per the Insurance Regulatory and Development Authority of India (Minimum Information Required for Investigation & Inspection) Regulations 2020, the insurers should maintain a record of all proposals received for insurance with proposal number, date when the proposal was signed by the proposer, date of the receipt of the proposal, name and code of the insurance agent, staff or intermediary and data and amount of the insurance proposal deposit, among others. - Business Line                  

🍒 Caspian Debt set for next phase of growth : Caspian Debt, a strategic digital lender in select areas of sustainable projects/firms, is on to its next phase of growth, expanding its business portfolio by lending and providing equity. The 15-year-old Hyderabad-based impact investing fund, Caspian funds enterprises that are socially responsible and deliver both social and financial value. It is working closely with over 150 start-ups handholding them in their journey. The fund has helped these start-ups/firms through 327 loans at a total exposure of over ?1,600 crore, covering both debt and equity. - Business Line

🍒 Asset base, subscribers under NPS rising: PFRDA : The Pension Fund Regulatory Development Authority (PFRDA) on Thursday said that the asset base and the number of subscribers under the National Pension System (NPS) have been rising. PFRDA Chairman Supratim Bandyopadhyay said that even during the pandemic, there has been a steady growth of subscribers and the contributions have been stable. "The asset base under NPS, a defined pension scheme which started in 2004, has increased at a compounded growth rate of 35 per cent. Over last March, it has risen by 30 per cent taking the subscriber base to 38.7 million," he said at a webinar organised by ICC here. - economic times

🍒 Insurance premium paid between Oct 12-Mar 31 period eligible for reimbursement under LTC scheme : Premiums paid for insurance policies purchased between October 12 this year and March 31, 2021, will be covered under the leave travel concession (LTC) cash voucher scheme for central government employees, according to the finance ministry. The beneficiaries need not submit original bills of their purchases in order to avail reimbursement under the scheme and self-attested copies would do instead, it said. The clarification on the scheme came in the third set of frequently asked questions (FAQs) released by the finance ministry on Wednesday.- economic times

🍒 RBI advises Lakshmi Vilas Bank to fully write down tier-2 bonds before DBS merger : Lakshmi Vilas Bank on Thursday informed the exchanges that Reserve Bank of India (RBI) has advised the bank to fully write down ₹318 crore of its tier-2 bonds before the amalgamation with Singapore-based DBS Bank comes into effect on 27 November 2020. "The Reserve Bank of India, vide their letter dated 26th November 2020 has advised the need to fully write-down the Series VIII, Series IX and Series X Basel-III complaint Tier-2 Bonds before the amalgamation comes into effect from the Appointed date i.e., 27th November 2020," the bank said in a regulatory filing. Lakshmi Vilas bank, apart from Series VII Option B amounting to Rs.50.50 crore, has Series-VIII Series amounting to ₹78.10 crore, IX Series, amounting to 140.10 crore and X Series amounting to 100 outstanding Unsecured Non-convertible Redeemable Fully paid-up Basel-III complaint Tier-2 Bonds, the bank stated. Write down was triggered as per terms of Info Memorandum of Tier 2 bonds issued by LVB as the bank was deemed to be approaching non-viability, RBI stated. Lakshmi Vilas Bank will merge into DBS Bank on Friday, leading to removal of all restrictions, including withdrawal cap of ₹25,000, which the RBI had placed on the lender earlier this month. The RBI notified the effective date of merger soon after the Union Cabinet headed by Prime Minister Narendra Modi approved the Scheme of Amalgamation of LVB with DBS Bank India Ltd (DBIL). All the branches of LVB will function as branches of DBIL with effect from November 27, the Reserve Bank of India (RBI) said in a statement. - Live Mint

🍒 Gold prices today edge higher but down ?7,000 from record highs, silver gains : Gold and silver were higher in Indian markets though the gains were moderate. On MCX, gold futures rose 0.4% to ?48716 per 10 gram while silver advanced 0.34% to ?60,045 per kg. In the previous session, gold had slipped marginally while silver had edged 0.25% higher. A rally in equities after upbeat covid vaccine trial results from Pfizer, Moderna and AstraZeneca has weighed on gold prices. Gold prices in India are down ?1,600 per 10 gram so far this week. Earlier, in August, gold prices had hit a record high of ?56,200 and after the yellow metal has corrected sharply.

🍒 Rupee advances above 74 : The rupee (INR) settled higher by nearly 10 paise yesterday against the dollar (USD). As a result, it closed at 73.91 i.e. above the important level of 74 – a positive indication for the domestic currency. Today, INR has opened with a gap-up at 73.82 and it is currently hovering around 73.85. A rally from here can take the rupee to 73.7 above which it can advance to 73.5. But if bulls lose traction and rupee slips below the support of 74, it can find support band between 74.2 and 74.3.

🍒 Sensex rallies 432 pts on F&O expiry; financial stocks shine : Equity benchmark Sensex rallied 432 points on Thursday, tracking gains in banking and financial stocks as the November series derivatives expired amid largely positive cues from global markets. After a volatile session, the 30-share BSE index ended 431.64 points or 0.98 per cent higher at 44,259.74. Similarly, the broader NSE Nifty surged 128.60 points or 1 per cent to 12,987. Tata Steel was the top gainer in the Sensex pack, rising around 5 per cent, followed by Bajaj Finance, Bajaj Auto, HDFC, HCL Tech and Titan. On the other hand, Maruti, ONGC, IndusInd Bank and Tech Mahindra were among the laggards.

24.11.2020: Today's Banking / Financial News

24.11.2020: Today's Banking / Financial News at a Glance

🍒 DIPAM proposes to appoint consultant for disinvestment in banks, insurance companies : The Department of Investment and Public Asset Management (DIPAM), under the Finance Ministry, has floated a Request for Proposal (RFP) to appoint a consultant for advising on various modes of disinvestment of banks and insurance companies. On October 30, in an interview to BusinessLine, Finance Minister Nirmala Sitharaman had said, “I would, probably in the later part of next year, focus on some more retail participation in ownership of banks.” Now, the step initiated by DIPAM appears to set the blueprint to achieve this. The initiative is also important as the Cabinet is expected to soon consider a policy on Public Sector Enterprises. It is proposed that in strategic sectors, at least one enterprise will remain in the public sector but private sector will also be allowed. The Government owns 12 public sector banks and 7 insurance companies. “The consultant is expected to be not only conversant with the subject matter but should understand, appreciate and advise on all aspects of disinvestment particularly with reference to banking and insurance sector,” the RFP said. The Government has set a disinvestment target of ₹2.10 lakh crore for the current fiscal, out of which disinvestment of government stake in public sector banks and financial institutions (including LIC and IDBI Bank) is ₹90,000 crore while the remaining will come through sale of stake in Central Public Sector Enterprises. Sale of residual stake in IDBI Bank is yet to take place while pre-IPO formalities for LIC have not been completed. - Business Line

🍒 Raghuram Rajan, Viral Acharya slam RBI panel’s suggestion to allow corporates in banking : Former Reserve Bank of India (RBI) Governor Raghuram Rajan and former Deputy Governor Viral Acharya have stoutly opposed a RBI panel’s recommendation that large corporate/industrial houses be allowed as promoters of banks. Corporate entry into banking could lead to connected lending and exacerbate the concentration of economic (and political) power in certain business houses, they warned in an article posted by Rajan on LinkedIn. The main recommendation — to allow Indian corporate houses into banking — of the RBI’s “Internal Working Group (IWG) to Review Extant Ownership Guidelines and Corporate Structure for Indian Private Sector Banks”is best left on the shelf,” said Rajan and Acharya. The authors said couched amidst a number of largely technical regulatory rationalisations, is a bombshell: it proposes to allow Indian corporate houses into banking. “While the proposal is tempered with many caveats, it raises an important question: Why now? Have we learnt something that allows us to override all the prior cautions on allowing industrial houses into banking? We would argue no,” they opined. - Business Line

🍒 Proposed corporate ownership of Indian banks poses high risks, says S&P : Standard & Poors’ Global Ratings (S&P) said on Monday that the Reserve Bank of India's (RBI) working group recommendations on awarding new licenses to well-managed Indian non-banking financial companies (NBFCs) could improve financial stability. “We are, however, skeptical of allowing corporate ownership in banks given India's weak corporate governance record amid large corporate defaults over the past few years”, S&P said in statement. Moreover, RBI will face challenges in supervising non-financial sector entities and supervisory resources could be further strained at a time when the health of India's financial sector is weak.

Pointing to the upside from proposed norms, the rating agency said the recommendation to harmonise licensing guidelines for all banks, new and old, will help restore a level playing field for all the players. The RBI's proposal to raise the minimum net worth for all universal banks to Rs 1,000 crore (Rs 10 billion) will also ensure better capitalisation. It would also ensure that only promoters with deep pockets can enter the banking sector. - Business Standard

🍒 HDFC Bank rolls out ‘Mouth Shut’ campaign against cyber frauds : The bank plans to conduct Secure Banking workshops, numbering about a hundred across the State in the next four months. The workshops have been planned in Chennai, Coimbatore, Madurai, Salem, Tiruchirappalli, Tirunelveli and Vellore among other cities in the State. The campaign, initially launched to fight Covid-19, has now been extended to fight cyber frauds. The campaign aims to sensitise people against sharing card details, CVV, OTP, Net and mobile banking login details and password and more. - Business Line

🍒 Early implementation of RBI panel proposals will give us time to list: SFBs : Early implementation of the Reserve Bank of India panel’s recommendation on small finance banks (SFBs) will give more time to list shares on exchanges. It will also provide breather to get business hit by the Covid-19 pandemic back on track, SFBs executives said. The steps mooted by the RBI’s internal working group headed by P K Mohanty may not impact regulations concerning SFBs in the short term. Banks have to assume current guidelines are operational and work according to them. It is not clear how quickly these recommendations will be implemented. The time lines for listing are very close for most of SFBs. The Mohanty panel said existing SFBs and payments banks should be listed within six years from the date of reaching net worth of Rs 500 crore or 10 years from the date of commencement of operations, whichever is earlier. The RBI guidelines of prescribe mandatory listing for SFBs within three years of reaching with net worth of Rs 500 crore. They could voluntary list for even before when net worth is less than Rs 500 crore. Most of SFBs are governed by these rules. - Business Standard

🍒 Tata, Birla, Bajaj, and Piramal Group may lead race for bank licence : Top Indian conglomerates led by Tata, Birla, Piramal, and Bajaj will seek a banking licence provided the norms for conversion of non-banking finance companies (NBFCs) are made easier and comprehensive regulation does not apply to rest of the group firms, sources said. A top Tata group official said the group is really interested in getting into banking but it is too early to elaborate as only recommendations are out and work is in nascent stage. “We will look at it when financial rules are framed,” the official said while asking not to be quoted. A Tata insider said that in 2012, when the Reserve Bank last sought banking licence applications, several firms including theirs “had to send documents of all group companies in huge trunks as requirements were so large”. Tatas withdrew the application by November 2013, as the RBI norms were too restrictive. Later, the RBI did not give a licence to any industrial house. - Business Standard

🍒 RBI asks banks not to approve proposals of foreign law firms to open branch office in India : The RBI on Monday asked banks not to approve any proposal of foreign law firms to open a branch office, project office or liaison office in the country under FEMA for the purpose of practicing legal profession. The RBI has issued a circular in this regard in view of a Supreme Court order wherein the apex court held that advocates enrolled under the Advocates Act, 1961 alone are entitled to practice law in India and foreign law firms or foreign lawyers cannot practice the profession of law. “… banks are directed not to grant any approval to any branch office, project office, liaison office or other place of business in India under FEMA for the purpose of practicing legal profession in India,” the RBI said. Further, “they shall bring to the notice of the Reserve Bank in case any such violation of the provisions of the Advocates Act comes to their notice”, it added. - financial express

🍒 HDFC Bank outage: RBI seeks details : The Reserve Bank of India (RBI) has sought an explanation from HDFC Bank about an interruption in digital services from Saturday evening to early Sunday morning, said people aware of the communication. This is the third disruption of digital services that HDFC Bank customers have faced in the past two years, causing many of them to vent on social media. The regulator has sought details behind the data centre outage that meant services on the Unified Payments Interface (UPI), ATMs and card channels were unavailable for several hours. - economic times

🍒 Lakshmi Vilas Bank aims to recover Rs 500 crore over the next 4-5 months : Lakshmi Vilas Bank (LVB), which is addressing its capital issue through merger with DBS Bank India, aims to recover Rs 400-500 crore over the next 4-5 months, said a senior official of the bank. It will largely be through one-time settlement and recovery, said the official. The bank’s asset quality deteriorated as the gross non-performing assets (NPAs) moved up at 24.45 per cent of the gross advances by the end of Q2 FY21, against 21.25 per cent a year ago. Sequentially, it improved from 25.40 per cent by the end of June 2020 quarter. Gross NPAs were at Rs 4,063.27 crore as of September 2020, against Rs 4,091.05 crore by the year-ago month. On the other hand, net NPAs or bad loans showed improvement at 7.01 per cent (accounting for Rs 946.72 crore) from 10.47 per cent (Rs 1,772.67 crore). - Business Standard

🍒 CPI objects to LVB merger with DBS Bank, asks what's the tearing hurry : Communist Party of India (CPI) General Secretary D Raja today voiced his opinion against proposed Lakshmi Vilas Bank (LVB) merger with DBS Bank India. “Why (there is) such a hurry is not clear to anyone. The government should thoroughly enquire into the matter and stop the handing over of LVB to DBS Bank,” Raja asserted. Lakshmi Vilas Bank, the 94-year-old Tamil Nadu-based private lender, has been making losses for the past few years due to mismanagement and bad loans given to known defaulters such as Jet Airways, Religare, Cox and Kings, Coffee Day, Nirav Modi and Reliance Housing Finance. Instead of taking action on the erring top officials, the Reserve Bank has announced that the bank will be handed over to DBS Bank of Singapore, Raja said. - Business Standard

🍒 BharatPe bullish about growth prospects : BharatPe has announced the roll out of its fintech services in Coimbatore. This is in line with its expansion strategy and is aimed at emerging as the preferred financial services partner for SME merchants in the country. The company, with an existing network of 5 million+ merchants across 35 cities, plans to add one lakh merchants from Coimbatore to its existing list in the next six months. (BharatPe’s existing user base across 18 cities in the South is 20 lakh+). A company release said that transactions worth $7 billion are processed annually and monthly advances is over ₹150 crore. The company is planning roll out loan products for small and medium businesses in the city. - Business Line

🍒 Saraswat Co-operative Bank to mop up more PSLCs to meet revised target : Saraswat Co-operative Bank may step up purchase of priority sector lending certificates (PSLC) in FY2021 to meet the revised priority sector lending (PSL) target prescribed by the Reserve Bank of India for urban co-operative banks (UCBs). In March 2020, the central bank directed UCBs to achieve PSL target of 75 per cent of their total advances in four stages by March-end 2024, against the earlier target of 40 per cent. The milestones for achieving PSL target are — 45 per cent by March 2021, 50 per cent by March 2022, 60 per cent by March 2023 and 75 per cent by March 2024. PSL portfolio of India’s largest UCB, which had total business (deposits plus advances) of ₹63,422 crore as at March-end 2020, had declined to 42.30 per cent in FY20 (45.21 per cent FY19), as per the bank’s latest annual report. - Business Line

🍒 Muthoot Finance, Bajaj Allianz in tie-up for gold jewellery insurance : Muthoot Finance has tied up with Bajaj Allianz General Insurance to provide insurance on gold jewellery as part of their new initiative, Muthoot Gold Shield, which is backed and powered by Group Affinity All Risk policy of Bajaj Allianz General Insurance. The policy provides insurance coverage of gold jewellery for individuals. This is designed to provide insurance coverage of gold jewellery articles for customers of the company at the time of closure of gold loans and release of gold ornaments. It will provide insurance coverage to the customers of Muthoot Finance as a loyalty product. George Alexander Muthoot, Managing Director, said: “As part of our ongoing customer loyalty programme and social commitment, we are providing customers insurance coverage with an objective to build confidence and help move ahead in life without any fear.” - Business Line

🍒 Seeing a mix of pent-up and festive demand, says Sumit Bali of Axis Bank : Private sector lender Axis Bank, which has witnessed robust retail spends and demand ― higher than pre-Covid-19 levels in many segments ― believes that the trend will continue until the year end, following which much would depend on the news on the vaccine development front. “Right now, we are seeing a mix of pent-up and festive demand. In December again, we will see a lot of people travelling and going on holidays. If the news flow on the vaccine continues to be positive and availability is there in reasonable sight... that would give comfort to people to go out and spend,” said Sumit Bali, President and Head, Retail Lending and Payment, Axis Bank. - Business Line

🍒 NBFCs have an edge in banking licence race : Large non-bank lenders stand to gain the most from the Reserve Bank of India (RBI) panel’s proposal to allow large companies and shadow lenders into banking services, experts said. According to the recommendations of an internal working group of RBI released on 20 November, non-bank lenders with asset sizes of more than ₹50,000 crore should be allowed to convert into banks, provided they have completed 10 years of operation. The move would be in line with the regulator’s aim to widen the availability of banking services in the country, which has one of the largest unbanked populations in the world. More importantly, it would allow RBI to increase regulatory oversight over some of the large shadow lenders, particularly after the collapse of Infrastructure Leasing & Financial Services Ltd (IL&FS) and Dewan Housing Finance Corp. Ltd (DHFL). A failure in a systemically important lender may trigger another crisis in India’s banking system. The willingness to convert into a full-service bank will depend on the benefits the move may bring, and whether this will address the risks around financial stability, the experts said. “I don’t see universal bank licences as the answer to everything. We don’t want entities called NBFCs becoming too large because from a liability perspective, they are dependent on wholesale liability, and one disaster like DHFL could make people nervous," said the head of a non-bank lender who declined to be identified. - Live Mint

🍒 Asset quality of Indiabulls Housing Finance, IIFL Finance vulnerable: Moody’s : Asset quality at non-bank lenders IIFL Finance and Indiabulls Housing Finance is “vulnerable” due to the economic contraction, global ratings agency Moody’s Investors Service said on Monday. The agency said Muthoot Finance – the third non-bank finance company it rates – is better positioned because of its focus on the gold loans business. Loan collections have shown an improvement for all the three NBFCs despite the six-month loan repayments moratorium ending in August on a pick-up in economic activity, but “asset quality at IIFL Finance and Indiabulls is vulnerable to economic contraction”, it added. Till now, various types of support measures for borrowers from authorities have prevented a sharp deterioration of asset quality at the lenders, it added. “However, we expect delinquencies will eventually increase at IIFL Finance and Indiabulls once the support programs end given the severity of the pandemic’s impact on India’s economy,” the agency said. - financial express

🍒 Hitachi Payments on expansion spree, to nearly double white label ATMs by March : Hitachi Payment Services, a leading operator of white-label ATMs, plans to nearly double its machine deployments by March to 5,000 units, having already installed new 1,340 machines by October this year, a senior company official has said. Hitachi’s aggressive expansion is interesting as the white label ATM business has been in losses since the beginning primarily because of the lower inter-change charges which the banking industry and the regulator has not been able to revise to a profitable level for the operators, forcing many of them to withdraw from the business. It entered the white-label ATM (WLA) space way back in 2014. The Reserve Bank has in 2013 allowed any interested party to install white label ATMs under own brand names. Accordingly, players like the Tatas offer it under Indicash, Hitachi calls its Money Spot among others. New additions will take the total WLA installations of the country’s fourth largest WLA operator to 5,000 by March as it plans to install 1,000 more machines between now and March, Rustom Irani, the managing director and chief executive of Hitachi Payment Services, told PTI on Monday. - Financial Express

🍒 Srei Infrastructure Finance stock sinks on RBI’s special audit order of subsidiary : The stock of Srei Infrastructure Finance Ltd (SIFL) took a beating on the bourses in Monday’s trade in the backdrop of the Reserve Bank of India (RBI) engaging an auditor to conduct a special audit of the company and its subsidiary Srei Equipment Finance Ltd (SEFL). Further, Brickwork Ratings (BWR) has downgraded the long-term ratings on the innovative perpetual debt instrument (IDPI) issue of SREI to ‘BB’ from ‘BBB-’ while placing the ratings under credit watch with negative implications. - Business Line

🍒 Rupee likely to weaken versus dollar : The rupee (INR) settled nearly 50 paise higher against the dollar (USD) last week as it wrapped up the week at 74.14. With that the year-to-date loss of INR versus USD is about 4 per cent. Today, the local currency opened at 74.11 and so it remains below the important level of 74. If the rupee depreciates from the current level, it can find support at 74.3. A break below this level can drag it to 74.5. But if INR appreciates and rally above 74, it can find resistance at 73.85. Subsequent resistance is at 73.7. 

🍒 Gold prices today fall on vaccine optimism, silver rates edge lower : Gold and silver prices dipped today in Indian markets as fresh optimism over covid vaccine dented the safe-haven appeal of gold. On MCX, gold futures slid 0.2% to ₹50095 per 10 gram while silver futures edged 1% lower to ₹61479 per kg. In the previous session, gold had finished 0.54% higher while silver had risen 1.2%. But on a weekly basis, gold had dropped ₹700 per 10 gram, its second straight weekly loss as optimism about covid vaccines hurt the safe haven appeal of gold. In August, gold had hit a record high of ₹56,200 per 10 gram. 

🍒 Rupee extends gains by 5 paise to end at over 2-week high against dollar : The Rupee appreciated by five paise to settle at more than two-week high of 74.11 against the US dollar on Monday tracking positive domestic equities and weak American currency. At the interbank forex market, the domestic unit traded in a narrow range as rising COVID-19 cases offset positive sentiments surrounding the progress on the vaccine front. The Rupee opened at 74.12 against the US dollar and touched a high of 74.04 and a low of 74.22 in day trade.

🍒 Sensex ends 195 points higher; Nifty tops 12,900 : After touching a record intra-day high of 44,271.15, the 30-share BSE index ended 194.90 points or 0.44 per cent higher at 44,077.15. Similarly, the broader NSE Nifty rose 67.40 points or 0.52 per cent to close at 12,926.45. ONGC was the top gainer in the Sensex pack, surging around 7 per cent, followed by IndusInd Bank, Infosys, Tech Mahindra, Reliance Industries, HCL Tech and TCS. On the other hand, HDFC, ICICI Bank, Axis Bank, SBI and M&M were among the laggards.

23.11.2020: Today's Banking / Financial News

 23.11.2020: Today's Banking / Financial News at a Glance

🍒 With over 1 million followers on Twitter, RBI creates a world record : In a first among central banks, the Reserve Bank of India (RBI) has become the first monetary authority in the world to have more than 1 million followers on its official Twitter handle. Despite much less monetary firepower, the Reserve Bank of India (RBI) has beaten the world’s most powerful central banks -- the US Federal Reserve and the European Central Bank -- on Twitter by a wide margin, emerging as the most popular central bank on the microblogging site with over 1 million followers. As of Sunday, the RBI handle is followed by as many as 10,00,513 people around the world. The achievement is impressive as the 85-year-old Reserve Bank was also a latecomer to the world of Twitter as it created the account only in January 2012.According to the latest information available on the RBI’s Twitter handle ‘@RBI’, the number of followers has increased from 9.66 lakh on September 27, 2020 to over 10 lakh as of Sunday. “RBI Twitter account reaches 1 million followers today. A new milestone. Congratulations to all my colleagues in RBI,” Governor Shaktikanta Das Tweeted on Sunday. - Business Line

🍒 Only Rs 1,000-1,500 cr of loan book to be restructured: Bank of Maharashtra chief : State-run Bank of Maharashtra is expecting only ₹1,000 to ₹1,500 crore of its total advances to come up for one-time restructuring under the Reserve Bank of India’s scheme before December 31, its managing director and CEO AS Rajeev said. The lender had earlier estimated around ₹3,000-4,000 crore from its moratorium book to come under one-time restructuring. However, over a period of time the moratorium book itself came down drastically from 27 per cent in March to 15-16 per cent (₹14,000-15,000 crore) as of end August, he said. “We had earlier expected that 15-20 per cent of the total moratorium book will go for restructuring. But now we think only ₹1,000-1,500 crore from our total advances will come up for restructuring,” Rajeev told PTI. The bank’s total advances stood at ₹1,03,408 crore as on September 30, 2020. - Business Line

🍒 HDFC Bank restores digital payment services after outage : Private sector lender HDFC Bank on Sunday said its services have been restored after a sudden outage at one of its data centres impacted its digital and mobile banking and ATM and payment services on Saturday evening. “The services impacted following the outage have been restored. While you may face intermittent issues as the system stabilises there is no reason to worry now,” the bank said in a tweet on Sunday. HDFC Bank had earlier attributed the problem to an unexpected outage at one of its data centres. “An unexpected outage at one of our data centres has impacted some of our services. We are working towards the restoration of services…,” the lender had tweeted late on Saturday evening. A large number of customers had complained that they were unable to make payments through HDFC Bank credit cards and UPI, use ATM services, and access their internet and mobile banking services.- Business Line

🍒 IOB expects resolution of NPAs worth Rs 18,000 crore in 2nd half of FY21 : State-owned Indian Overseas Bank (IOB) expects resolution of about Rs 18,000 crore of non-performing assets (NPAs) under the insolvency and bankruptcy process during the second half of the current fiscal, a move that will boost its bottomline. Besides, the Chennai-based bank is hoping to come out of the prompt corrective action (PCA) framework of the Reserve Bank of India (RBI) next fiscal. “We are hoping resolution of NPA cases worth about Rs 18,000 crore pending before NCLT (National Company Law Tribunal) in the second half...In the last quarter, resolution of some big account at NCLT will further strengthen the balance sheet,” IOB Managing Director P P Sengupta told PTI. On the back of resolution and pick up in advances, the bank aims to bring down the gross NPAs below 10 per cent mark by March.- Business Line

🍒 Operation of some banks temporarily halted due to power issue at data centre on Saturday : Operation of some banks including HDFC Bank were temporarily impacted on Saturday due to power outage at Dhirubhai Ambani Knowledge CITY (DAKC), in Navi Mumbai which has data centres of several companies. However, power was later restored and banking services were functioning normally, sources said. According to sources, banking operations are now up and running. - Eononomic Times

🍒 Existing players, analysts welcome RBI report on ‘ownership norms’ for private banks : The RBI Internal Working Group’s report on ownership guidelines and corporate structure for private banks could help existing players such as IndusInd Bank, and analysts said it would also encourage others to work towards acquiring a banking licence. “The report rightfully puts a greater onus on the promoter-shareholders to exercise oversight through a higher shareholding limit of 26 per cent, with commensurate voting rights. It helps strengthen the institutional framework by ensuring promoter responsibility with more skin in the game, a supervisory stance for large conglomerates, including consolidated supervision will ensure the necessary checks and balances in the system,” Ashok Hinduja, Chairman of the Hinduja Group of Companies (India) said in a statement on Sunday.- Business Line

🍒 Small towns account for 16% of MF asset base; Maharashtra biggest contributor among states : The contribution of small towns or B30 cities to mutual fund industry's average assets under management of over Rs 28 lakh crore stood at 16 per cent as of October-end, while state-wise Maharashtra remained the biggest contributor to the assets base, industry body Amfi said. Since last few years, markets regulator Sebi has been pushing asset management companies to reach out to small towns for increasing their assets base. B30 (beyond top 30 cities) accounted for 16 per cent of the total industry Average Assets Under Management (AAUM) in October this year, and the balance was contributed by T30 cities, or the top 30 locations in India, the Association of Mutual Fund Industry (Amfi) said.- Eononomic Times

🍒 RBI panel's suggestion 'rightfully' puts greater onus on promoters: Hinduja : Applauding the recommendation of the Reserve Bank of India (RBI) to increase the shareholding of bank's promoters in the bank, Ashok Hinduja, Chairman of the Hinduja Group of Companies (India), said that the report rightfully puts a greater onus on the promoter-shareholders to exercise oversight through a higher shareholding limit. In its report released on Friday, the report by the RBI committee said that suggested that while the initial five-year lock-in period for promoter shareholding in banks with a minimum holding of 40 per cent per cent of the paid-up voting equity share capital may continue, the cap on promoters' stake in long run of 15 years may be raised from the current levels of 15 per cent to 26 per cent. "The report rightfully puts a greater onus on the promoter-shareholders to exercise oversight through a higher shareholding limit of 26 per cent with commensurate voting rights," Hinduja said in a statement on Sunday. "It helps strengthen the institutional framework by ensuring the promoter responsibility with more skin in the game, supervisory stance for large conglomerates, including consolidated supervision will ensure the necessary check and balance in the system." - Business Standard

🍒 Indiabulls Housing Finance appoints ex-BoI CEO as independent director : The board of Indiabulls Housing Finance has approved the appointment of Dinabandhu Mohapatra as an Independent Director (Additional Director), on the Board of Directors of the Company. The appointment has been made pursuant to the applicable provisions of the SEBI regulations by the board on the recommendation of the Nomination and Remuneration Committee of Directors.Mohapatra has been appointed for a period of three years, with effect from November 23, 2020. The appointment is subject to the approval of the members of the company. Mohapatra is former MD & CEO, Bank of India and is a seasoned banker, with a career spanning over three decades, during which he held various high level positions, including Executive Director of Canara Bank and Chief Executive Officer of Hong Kong and Singapore Centres of Bank of India.- Business Standard

🍒 Forex reserves increase by over $100 billion since March lockdown; hit lifetime high at $572 billion : Amid a severe hit to the Indian economy by the Covid pandemic in the past eight months, the country’s foreign exchange reserves increased by more than $100 billion since the Covid-induced lockdown was enforced in March-end. From $469.9 billion in the week ended March 20, 2020, the forex reserves jumped by $102.8 billion to a lifetime high of $572.7 billion in the week ended November 13, 2020, according to the data released by the Reserve Bank of India. Importantly, the reserves grew by $4.277 billion from the week ended November 6, 2020. The jump was on account of Foreign Currency Assets (FCA), a major component of the country’s reserves, that increased by $5.526 billion to $530.2 billion from $524.7 billion in the preceding week. However, the gold reserves reduced by $1.233 billion from $37.587 billion to $36.354 billion in the week. On the other hand, the special drawing rights with the International Monetary Fund (IMF) were unchanged from the preceding week at $1.488 billion, the data showed. - financial express

🍒 Five of top-10 cos lose Rs 1,07,160 crore in m-cap : Five of the 10 most valued domestic firms suffered a combined loss of Rs 1,07,160 crore in market valuation last week, with Reliance Industries Ltd (RIL) emerging as the biggest loser. Tata Consultancy Services Ltd (TCS), HUL, Infosys Ltd and ICICI Bank Ltd were the other bluechip firms that witnessed a drop in their market capitalisation (m-cap) last week. However, HDFC Bank, HDFC Ltd, Bajaj Finance Ltd and Bharti Airtel finished with gains.RIL's valuation tumbled Rs 69,378.51 crore to Rs 12,84,246.18 crore. The m-cap of TCS plummeted Rs 4,165.14 crore to Rs 9,97,984.24 crore and that of Hindustan Unilever Ltd (HUL) dropped by Rs 16,211.94 crore to Rs 4,98,011.94 crore. - Moneycontrol.com

🍒 Gold, silver prices in India drop for second week in a row : Gold prices in India fell for the second week in a row as optimism about covid vaccine and uncertainty over US stimulus package dented global rates. On Friday, gold futures on MCX ended 0.5% higher to ₹50,260 per 10 gram while silver settled 1.2% higher at ₹62,260 per kg. However, for the week, gold prices ended about ₹700 per 10 gram lower in Indian markets while silver fell ₹1,500 per kg. The price correction helped boost buying in India's retail gold market this week, Reuters reported, though premiums eased slightly from a week ago. Dealers charged premiums of about $2 an ounce over official domestic prices, down from $4 last week. Gold prices in India include 12.5% import and 3% GST. - Live Mint.

21.11.2020: Today's Banking / Financial News

21.11.2020: Today's Banking / Financial News at a Glance

🍒 Bank credit rises by 5.67%, deposits up 10.63%: RBI data : Bank credit grew by 5.67 per cent to ₹104.04 lakh crore, while deposits increased by 10.63 per cent to ₹143.80 lakh crore in the fortnight ended November 6, according to RBI data. In the fortnight ended November 8, 2019, bank credit stood at ₹98.46 lakh crore and deposits at ₹129.98 lakh crore. In the previous fortnight ended October 23, 2020, bank credit had risen by 5.06 per cent and deposits by 10.12 per cent. On a year-on-year basis, non-food bank credit growth decelerated to 5.8 per cent in September 2020 from 8.1 per cent in the same month of the previous year, according to the central bank data. Credit to industry recorded ‘nil’ growth in September 2020 as compared to 2.7 per cent rise in September 2019. Credit to agriculture and allied activities rose by 5.9 per cent during the reporting month, as against a growth of 7 per cent in the same month last year. - Business Line.

🍒 RBI internal working group recommends promoters to hold higher stake in private banks : The Reserve Bank of India’s internal working group constituted to review ownership in Indian private banks has recommended allowing promoters to hold 26% in banks over a period of 15 years. The working group in its proposal has also favourably looked at allowing industrial houses as bank promoters only after making legislative changes to the banking regulation act. It has also recommended increasing cap on non-promoter holding to 15% so as to bring a uniformity among all types of shareholders.RBI will now seek stakeholder comments on the report till January 15, 2021, after which it will examine the comments and suggestions before taking a view in the matter. “The cap on promoters’ stake in the long run (15 years) may be raised from the current level of 15% to 26% of the paid-up voting equity share capital of the bank,” the RBI said while releasing the recommendations of the internal working group. it’s internal group. - economic times

🍒 Large corporates may be allowed as promoters of banks: RBI Internal Working Group : An internal working group constituted by the RBI has recommended that large industrial houses be allowed as promoters of banks. The Internal Working Group (IWG) was constituted on June 12, 2020 to review extant ownership guidelines and corporate structure for Indian private sector banks. "Large corporate/industrial houses may be allowed as promoters of banks only after necessary amendments to the Banking Regulation Act, 1949 (to prevent connected lending and exposures between the banks and other financial and non-financial group entities); and strengthening of the supervisory mechanism for large conglomerates, including consolidated supervision," the working group recommended. It also recommended that well run large NBFCs with asset size of over Rs 50,000 crore be considered for conversion into banks subject to completion of 10 years of operation.- economic times

🍒 Bajaj Finance, M&M Financial may be front runners to become banks if RBI accepts suggestions : Bajaj Finance, Mahindra & Mahindra Financial, Shriram Transport Finance may become prime candidates for conversion into banks despite their strong corporate lineage if Reserve Bank of India accepts the suggestions by its internal working group which called for relaxing the first-level entry barrier. “Well run large NBFCs, with an asset size of Rs 50,000 crore and above, including those which are owned by a corporate house, may be permitted to convert to banks provided they have completed 10 years of operations,” the working group proposed. It has built a case for relaxing the first-level entry filter and encouraging large non-banking finance companies to become a bank with an aim to “reduce chances of regulatory arbitrage”. The group suggested that they should be given a glide path for compliance with norms as applicable to banks. - economic times

🍒 ED assures SC of no coercive action against former ICICI Bank CEO Chanda Kochhar in PMLA case : The Enforcement Directorate (ED) Friday assured the Supreme Court that it would not take any coercive action against former ICICI Bank CEO and MD Chanda Kochhar in a money laundering case. A bench headed by Justice S K Kaul was informed by Solicitor General Tushar Mehta that the agency would not take any coercive step in pursuance of the ECIR registered in ICICI Bank-Videocon Group loan case. The bench, also comprising Justices Dinesh Maheshwari and Hrishikesh Roy, said it would hear later the two other petitions filed by Chanda Kochhar challenging the arrest of her husband Deepak Kochhar in the case.The ED has recently filed a charge sheet against Kochhar, Deepak Kochhar and Videocon Group promoter Venugopal Dhoot on money laundering charges. Kochhar's, Dhoot and others have denied the allegations, official sources had said earlier. - economic times

🍒 RBI should've called for bids from interested parties: Lakshmi Vilas Bank promoter : Advocating proper valuation of Lakshmi Vilas Bank (LVB), its promoter has said that Singapore-based DBS Bank was willing to acquire 50 per cent stake in the 94-year-old Karur-based LVB in 2018 at over Rs 100 per share. He said the RBI should have called for bids from interested parties. The Reserve Bank of India ( RBI) is now offering the 563 branches (many branches, head office, corporate office-owned building) LVB and other real estate free of cost to DBS Bank India Ltd, a subsidiary of DBS Bank, Singapore. "Logically, the RBI should have called for bids from interested parties. Or, if it wanted to give LVB to only DBS Bank India, it could have asked it to talk with the former to give their valuation," KR Pradeep, LVB promoter, told IANS.- economic times

🍒 RBI imposes monetary penalty on six entities : The Reserve Bank of India has imposed monetary penalty on six entities, including Sodexo SVC India, Muthoot Vehicle and Asset Finance, QwikCilver Solutions, Phonepe, Delhi Metro Rail Corporation, and Punjab National Bank. In exercise of powers vested under Section 30 of the Payment and Settlement Systems Act 2007, the RBI has imposed monetary penalty on the entities for non-compliance of regulatory guidelines, it said in a statement on Friday. - Business Line. 

🍒 South Indian Bank to acquire 6.67% stake in IBBIC Pvt Ltd for Rs 5 lakh : The South Indian Bank has become one of the initial subscribers to the Memorandum and Articles of Association of IBBIC Private Limited (IBBIC) for a cash consideration of Rs 5 lakh. Earlier on Friday, Axis Bank also announced that it will acquire a 6.67 per cent stake in IBBIC for Rs 5 lakh.The South Indian Bank Limited will hold 6.67 per cent shareholding in IBBIC through acquisition of 50,000 equity shares with face value Rs 10 each. IBBIC is proposed to be incorporated as a financial technology company with the objective of providing a platform for exploring, building and implementing distributed ledger technology solutions for the financial services sector. - Business Standard

🍒 TMB Q2 net profit up 60% at ₹241 crore : hoothukudi-headquartered Tamilnad Mercantile Bank is taking all steps to carve a niche for itself in the NextGen banking space. “The business opportunity is huge in new emerging areas such as pharma (which we had not tapped so far in this journey) and towards transforming ourselves digitally,” said KV Rama Moorthy, Managing Director, TMB. The journey has not been smooth for this bank, which is marching towards its 100th year of existence. “Our strength, nevertheless, lies in providing excellent customer service, strong connect and loyalty,” said the TMB MD. - Business Line

🍒 DBS offered to buy 50% of Lakshmi Vilas Bank in 2018, but RBI rejected: Promoter : K R Pradeep, the single largest promoter of the crippled Lakshmi Vilas Bank with a 4.8 per cent shareholding, has said that Singapore’s DBS was keen to acquire 50 per cent stake in the lender for a high valuation in 2018 but the Reserve Bank did not allow the deal to go through. With the Reserve Bank of India (RBI) superseding Lakshmi Vilas Bank’s board and mooting its merger with DBS Bank India, Pradeep also said he was confident that the central bank will be kind enough to listen to all the shareholders and promoters, and will not let them go empty handed. - moneycontrol.

🍒 RBI may not allow corporate houses to own banks despite working group recommendations: Macquarie Capital : The Reserve Bank of India may not allow corporate houses to own banks, despite its internal working group suggesting to adopt a liberal stance, Macquarie Capital said on Friday. The brokerage house has also said that given rise in bank failures the regulator may not distribute bank licenses liberally. “We expect RBI to exercise caution in this regard and hence some of the recommendations may not see the light of the day,” said Suresh Ganapathy, Associate Director, Macquarie Capital. “We don’t believe, industrial houses, even if they own NBFCs, will be allowed to open a bank or convert into a bank. The experience of allowing corporate houses to run banks has been pretty bad for RBI and hence in our view, RBI won’t be allowing corporate houses. Even today, on-tap licensing is available, but no one has got a license from RBI.”- economic times

🍒 EPFO adds 14.9 lakh net new subscribers in September; quarterly addition at pre-Covid levels : The retirement fund body Employees’ Provident Fund Organisation said its net new enrollment rose to 14.90 lakh in September, 49 per cent jump compared to September last year when 10.00 lakh net subscribers were added, indicating more formal jobs being created as economic recovery gathers momentum. Net enrollments under EPFO in August stood at 10.05 lakh. The net payroll addition for the second quarter of FY’21 stood at 30.34 lakh, which is approximately equal to payroll figures of second quarter of FY’20. “This indicates a robust recovery to pre Covid-19 levels,” it said on Friday. “The payroll data is provisional since updating of employee records is a continuous process and accordingly gets updated on a month on month basis,” it added. - economic times

🍒 SBI revises Q2 GDP estimates to -10.7 per cent from -12.5 per cent earlier : Citing continuous revisions in India's GDP estimates as the current norm, State Bank of India (SBI) revised their second-quarter (Q2) GDP to -10.7 per cent from -12.5 per cent with a positive bias, in a research report from SBI Ecowrap on Friday. The report titled, "Positive events improve India's Q2 GDP projections: Losses reduced but reasons to remain cautious remain," was authored by Dr Soumya Kanti Ghosh, SBI's Chief Economic Adviser. "We are revising our Q2 GDP growth to -10.7 per cent (earlier -12.5 per cent) with a positive bias, based on our nowcasting model with 41 high-frequency indicators, associated with industry activity, service activity, and global economy. Our estimate of Q2 Financial Year (FY) 2021 (or Q3 2020) is aligned with the economic growth seen by various economies in Q3 2020. The GDP contraction halved in Q3 2020 compared to Q2 2020 for select 18 economies," stated the report. - economic times

🍒 LIC launches digital application tool for agents : Life Insurance Corporation of India has launched a digital application for agents for onboarding to get a life insurance policy. The Digital Application is called “ANANDA”, which is an acronym for Atma Nirbhar Agents NewBusiness Digital Application. “The Digital application is a tool for the onboarding process to get the life insurance policy through a paperless module with the help of the agent or intermediary,” LIC said in a statement on Friday, adding that it is built on paperless KYC process using Aadhaar-based e-authentication of the life proposed. - Business Line

🍒 RBI imposes penalty on Muthoot Finance, Manappuram Finance for non-compliance with gold loan norms : The Reserve Bank of India (RBI) has imposed a penalty of ₹10 lakh on Muthoot Finance Ltd, Ernakulam, and ₹5 lakh on Manappuram Finance Ltd, Thrissur, for non-compliance with its directions. In the case of Muthoot Finance, RBI said the penalty is for non-compliance with directions on maintenance of Loan to Value (LTV) ratio in gold loans and on obtaining copy of PAN (Permanent Account Number) card of the borrower while granting loans in excess of ₹5 lakh. - Business Line

🍒 Reducing promoter stake in private banks: RBI panel for nuanced approach : A Reserve Bank of India committee has recommended doing away with one size fits all approach to ownership in private sector banks. Instead of the current bank licensing rules which make it mandatory for promoters of private bank to reduce their ownership to 40 per cent within three years and to settle at 15 per cent in 15 years, the committee headed by RBI executive director PK Mohanty has suggested a more nuanced approach. The report of the committee is to be made public soon. It has also suggested a rereading of the fit and proper criteria for entities that wish to set up or acquire banks. A top government official had recently told Business Standard the existing criteria made it almost impossible to nurse a sick bank to a healthy position, because of the guidelines that effectively precludes any business group from entering the banking space. The committee is learnt to have supported larger non-banking financial companies to enter the banking space. The argument goes that some of them are far larger than some of the existing banks, yet while the banks are tightly regulated the NBFCs have soft regulations, something that RBI deputy governor Rajeshwar Rao had recently pointed out. - Business Standard

🍒 Bitcoin rises to 3-year peak, all-time high in sight : Bitcoin rose to a three-year high of $18,600 on Friday, up 4.5 per cent on the day and close to its all-time high of just under $20,000. Bitcoin has gained over 16 per cent so far this week - its biggest weekly gain since June 2019 - and is up over 160 per cent this year. - Business Standard

🍒 Modi, Tshering launch phase-2 of RuPay card in Bhutan : Prime Minister Narendra Modi and his Bhutanese counterpart Lotay Tshering have jointly launched the phase-two of the RuPay card in Bhutan – this will allow travellers from the country access RuPay networks in India. The Indian PM also welcomed Bhutan as a full partner in the RuPay network, and said that this would also encourage the growth of digital transactions in the neighbouring country. - Business Line

🍒 Mitsui Sumitomo’s Max Life stake swap with Max Financial Services gets FinMin nod : Max Financial Services Limited (MFSL) has received the Finance Ministry’s approval for Tokyo-headquartered Mitsui Sumitomo Insurance Company (MSI) to pick up 21.87 per cent stake in the listed company. For this purpose, MFSL will issue and allot 7,54,58,088 equity shares of ₹2 each to MSI. This preferential issuance is in consideration for the transfer of equity shares constituting 20.57 per cent of the paid-up share capital of Max life Insurance Company Limited held by MSI to MFSL as part of the share swap transaction. - Business Line

🍒 CARE Ratings revises LVB's ratings from 'BB- ' to 'BB-' under credit watch : CARE Ratings on Friday revised its rating of Lakshmi Vilas Bank (LVB) from "BB-" Negative to "BB-" under credit watch with developing implications. The development comes after the government imposed a moratorium on LVB after considering an application filed by the RBI. RBl's action comes against the backdrop of deterioration in the financial risk profile of the bank with weakened capitalisation levels and in the absence of a credible revival plan. The RBI has superseded the board of directors of the bank and appointed T N Manoharan, former non-executive chairman of Canara bank, as the administrator and on November 17, 2020. RBI has also published a draft scheme for the amalgamation of LVB w ith DBS Bank India Limited (DBS). - Business Standard

🍒 Rupee settles 11 paise higher at 74.16 against USD : The rupee appreciated by 11 paise to settle at 74.16 (provisional) against the US dollar on Friday, supported by positive domestic equities and sustained foreign fund inflows. At the interbank forex market, the domestic unit opened at 74.15 against the US dollar and touched an intra-day high of 74.09 and a low of 74.21. It finally settled at 74.16 against the greenback, registering an increase of 11 paise over its previous close

🍒 Sensex jumps 282 points, Nifty ends above 12,850 : Equity benchmark Sensex surged 282 points on Friday, tracking gains in HDFC Bank, Kotak Bank and Bajaj Finance amid positive cues from global markets and sustained foreign fund inflows. After a highly volatile session, the 30-share BSE index ended 282.29 points or 0.65 per cent higher at 43,882.25. Similarly, the broader NSE Nifty rose 87.35 points or 0.68 per cent to 12,859.05. Bajaj Finserv was the top gainer in the Sensex pack, rallying over 9 per cent, followed by Titan, Bajaj Finance, Kotak Bank, Bharti Airtel, Nestle India and NTPC. On the other hand, Reliance Industries, IndusInd Bank, Sun Pharma, Axis Bank, ONGC and HUL were among the laggards. “The BSE Sensex is closing higher by about 1 per cent in this Diwali week,” said Sanjeev Zarbade, VP PCG Research, Kotak Securities.

🍒 Gold prices today struggle for 5th day in a row, silver rates edge higher : Gold prices continued to struggle in Indian markets for fifth day in a row amid weak global cues. On MCX, gold edged up 0.11% to ₹50,029 per 10 gram after suffering losses in the previous four sessions. Silver futures rose 0.3% to ₹61690. In the previous session, gold prices had fallen 0.7% or ₹350 per 10 gram while silver had declined ₹1,000 or 1.63% per kg. In global markets, gold prices edged lower today amid uncertainty over more US stimulus measures. Spot gold fell 0.2% to $1,863.21 per ounce. Among other precious metals, silver fell 0.1% to $24.06 per ounce while platinum was down 0.2% to $949.88 per ounce..