🍒 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.
No comments:
Post a Comment