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..

20.11.2020: Today's Banking / Financial News

20.11.2020: Today's Banking / Financial News at a Glance

🍒 PNB seeks consultants to sell bank’s real estate assets : Punjab National Bank (PNB) is looking to appoint consultants who will help identify the bank’s real estate assets for sale and carry out the sale process. Sources close to the development said properties for sale – both land and buildings – are being identified on an ongoing basis. PNB was one of the anchor banks which amalgamated smaller banks in the last round of mergers. Effective April 1, Oriental Bank of Commerce (OBC) and United Bank of India stand merged with PNB and the sale exercise may be aimed at better management of the real estate portfolio of the merged entity. The sale will be carried out for two categories of assets. Category A will consist of properties priced between Rs 25 crore and Rs 150 crore while Category B will comprise assets worth more than Rs 150 crore. - financial express

🍒 Bank of Baroda: With loan recast hazy, strong re-rating few quarters away : If State Bank of India’s September quarter (Q2) results stunned the Street, Bank of Baroda’s (BoB) performance was no less. With over five per cent loan growth and 15 per cent growth in retail credit, thus aiding 128 per cent year-on-year increase in net profit, the good show has helped the stock gain over 11 per cent post Q2 results. The interesting aspect lately playing out is that with loan book size of Rs 6.69 trillion as on September 30, 2020, BoB has displaced Punjab National Bank (PNB; Rs 6.53 trillion) on this parameter. What’s noteworthy is that last year, when the mega consolidation of public-sector banks (PSBs) happened, PNB retained its number two slot in terms of loan book, while BoB took the third position. While both banks owing to the merger and ageing provisions of legacy bad loans have written off a reasonable portion of their troubled assets, the present change in the pecking order of loan book positions BoB favourably. - Business Stanard.

🍒 Indian Overseas Bank Recovers Just 0.5% Out of Rs17,821 Crore Written Off Debt from 66 Big Defaulters, Including Bhushan Steel, Lanco group, Frost International, ABG Shipyard, Rotomac and IVRCL : While common borrowers are harassed for recovery of smaller loan amounts, when it comes to big borrowers, banks are often found giving preferential treatment to these defaulters. Nor are the banks willing to part with information regarding these write-offs. In fact, of the 10 public sector banks (PSBs) about which Moneylife wrote, only one lender, namely the State Bank of India (SBI), had revealed names of big defaulters whose bad debt was written off and not too impressive efforts were taken to recover the dues.

Get Moneylife's. Indian Overseas Bank (IOB) has now shared the list of its big defaulters, who have borrowed Rs100 crore and more, which were written off from its books. - moneylife.

🍒 Proposed LVB-DBS merger a remarkable job: RBI board member : RBI board member Manish Sabharwal on Thursday praised the central bank on its proposal to merge Lakshmi Vilas Bank (LVB) with the Indian arm of Singapore-based DBS Bank, saying the scheme is a new template where a distressed private sector entity is rescued by another private player. On Tuesday, the government imposed a 30-day moratorium on Lakshmi Vilas Bank (LVB), restricting cash withdrawals at Rs 25,000 per depositor, and simultaneously announced a scheme to merge the cash-strapped lender with DBS Bank India. - economic times

🍒 With Lakshmi Vilas deal, DBS faces potential culture clash : DBS Group's move to take over troubled Lakshmi Vilas Bank will give Southeast Asia's largest lender the boost in India it has long desired, but aligning the two banks' business cultures could prove tricky. LVB, facing mounting bad loans and governance issues and a failure to secure capital, is set to be folded into DBS's Indian subsidiary under a plan proposed by India's central bank, which took control of the 94-year old Chennai-based lender on Tuesday, citing a "serious deterioration" in its finances. The plan will accelerate Singapore-based DBS's expansion ambitions in India and potentially transform it from a largely digital bank in the country to one with hundreds of branches. - economic times

🍒 Supreme Court to resume hearing on loan moratorium, interest on interest waiver case today : The apex court will resume hearing a batch of petitions urging an extension of the loan moratorium period and waiver of interest on interest on term loans today. The RBI had given a loan moratorium owing to Covid-19 and its fallout on businesses and consumers' income. The period of moratorium had ended on August 31.Subsequently, borrowers had sought relief from the top court asking for waiver of interest on interest and a further extension of the moratorium period.The finance ministry in its affidavit filed before the top court on October 25 had stated that the government has decided to provide a waiver on compounding of interest for the the moratorium period for loans to MSMEs and personal loans up to Rs 2 crore. The RBI had directed banks to credit the requisite amount to borrowers' accounts. - economic times

🍒 Airtel Payments Bank to expand footprint in West Bengal : Airtel Payments Bank is rapidly expanding its footprint in West Bengal to take banking services to unbanked villages in remote areas and to contribute to financial inclusion in the state. The bank has a network of over 30,000 neighbourhood banking points spread across West Bengal, and plans to expand its banking points in the state by 50 per cent by March 2021, the company said on Wednesday. Over 12,500 unbanked villages in the state now have access to formal banking services with Airtel Payments Bank. Majority of the residents of these villages had no bank account or had to travel long distances to reach the nearest bank branch, the officials said.- economic times

🍒 RBI's swift resolution of Lakshmi Vilas Bank to maintain sector stability: S&P : S&P Global Ratings on Thursday said the Reserve Bank of India's swift resolution of troubled Lakshmi Vilas Bank will keep contagion at bay and help maintain stability in the banking system. The Reserve Bank has proposed merging Lakshmi Vilas Bank (LVB) with DBS Bank India Ltd (DBIL). As part of the proposal, DBIL, the wholly owned subsidiary of Singapore-based DBS Bank, will inject Rs 2,500 crore into the merged entity to support its financial position. S&P said this deal is positive for India's banking sector and will bring much-needed relief to LVB, which has been struggling for many years. "The RBI's swift resolution of troubled Lakshmi Vilas Bank will keep contagion at bay and help maintain stability in the banking system. We believe the RBI took into account DBIL's healthy balance sheet and capitalization when considering potential suitors for LVB," S&P said. - economic times

🍒 Axis Bank offers e-governance solutions to Bangalore Water Supply and Sewerage Board : Private sector lender Axis Bank has partnered with Bangalore Water Supply and Sewerage Board (BWSSB) to manage various e-payment collections through digital and offline modes. The integrated payment solutions will help BWSSB authorities to collect payments from its 10 lakhs plus customers in a seamless and effective way. All BWSSB customers can now pay digitally through Bharat Bill Payment System (BBPS), BHIM UPI/QR Code or deposit cash/cheque/DD at BWSSB kiosks, the bank said in a press release.- economic times

🍒 Lakshmi Vilas Bank bailout: A plum deal for DBS may nudge other foreign banks too : The existential crisis at Lakshmi Vilas Bank has been warded off. Unlike YES Bank, the resolution plan is not a half-hearted attempt to bail out the bank, which is welcome. The RBI’s proposal to amalgamate LVB with DBS Bank India (DBIL), a wholly-owned subsidiary of DBS Bank Singapore, is a clear and clean way of putting the long drawn uncertainty of the bank’s misfortunes to rest. What’s more, it now stretches the line of “white knights” that the RBI can call upon to bail out other stressed banks. The move is welcome on two counts. One, rather than an already weak and capital-starved domestic bank being saddled with LVB, the RBI has picked a bank with strong balance sheet and deep pockets. Two, the RBI has possibly nudged other foreign banks to consider similar opportunities to deepen their foothold in the Indian market. - Business Line

🍒 IL&FS Fin Services to sell external corporate loan book : IL&FS Financial Services plans to sell its external corporate loan book worth about ₹5,000 crore. It would be auctioned off through a bid process, and the public process of inviting bids is likely to be started this week. “The sale of the loans would be on cash consideration,” the company said, adding that it is part of the overall process to reduce the debt of IL&FS. IL&FS Financial Services, or IFIN, is a wholly-owned subsidiary of IL&FS, and is registered with the Reserve Bank of India as a systemically important, non-deposit accepting non-banking finance company. - Business Line

🍒 BharatPe plans to scale up to 65 cities by December : Merchant payment company BharatPe, on Thursday, announced plans to scale up to 65 cities by December. “The company is currently present in over 35 cities, and plans to substantially scale up its presence by adding another 30 cities to its list by December 2020. The cities include tier-1 cities like Kolkata and Chennai, emerging cities like Coimbatore, Kochi, Dehradun, Nagpur, Bhubaneswar, Patna, as well as tourist hubs like Amritsar, Varanasi, Agra, Allahabad, among others,” said BharatPe in a statement. - Business Line

🍒 Retail shareholding in LVB rises 7.69 percentage points in last one year : Retail investors have been caught on the wrong foot yet again in accumulating shares of Lakshmi Vilas Bank over the last two years even as the capital-starved lender was struggling with mounting losses, high non-performing assets (NPAs) and a host of other corporate governance issues. According to latest shareholding data, retail shareholding in LVB increased to 46.73 per cent as of September 2020 from 39.04 per cent during the same period last year. The increase in retail participation came despite the lender being placed under the Prompt Corrective Action (PCA) framework by the RBI in September 2019 on account of high net NPAs, insufficient capital, negative return on assets (RoA) for two consecutive years and high leverage. - Business Line

🍒 Shareholders question valuation of LVB : The valuation of troubled Lakshmi Vilas Bank in the proposed amalgamation with DBS Bank is being questioned by shareholders, though a legal redress may not be possible, say analysts. “The proposed scheme is not clear on as to what the shareholders of LVB will get. It looks like a transfer of business rather than an amalgamation. While the title to the scheme is mentioned as amalgamation, it is more a slump sale. More clarity will be required on this,” said KR Pradeep, former promoter of LVB. - Business Line

🍒 RXIL, Tata AIG initiate trade credit insurance in sandbox environment : Receivables Exchange of India Ltd (RXIL) initiated a Trade Credit Insurance (TCI) backed transaction with Tata AIG as the insurer and ICICI Bank and Yes Bank as the financiers in a sandbox environment. “This is the first time a TReDS platform has tested the efficacy of TCI backed transaction, improving the ability of financiers in assigning credit limits to corporates. TCI, once implemented post regulatory approvals, will enable financiers to discount the invoices drawn on lower-rated corporate buyers, by their MSME sellers and will improve the liquidity from lenders,” RXIL said in a statement on Thursday. - Business Line

🍒 Kotak Mahindra MF launches ESG Opportunities Fund : Kotak Mahindra Asset Management Company has launched ESG Opportunities Fund, which will focus on environmental, social and governance (ESG) factors and the principles for responsible investing. The new fund offer will open for subscription between Friday and December 4. Kotak will use Sustainalytics ESG Risk Ratings, a leading global provider of ESG research, ratings and data to support its Kotak ESG Opportunities Fund. - Business Line

🍒 NHB, lenders tussle may delay DHFL resolution : A tug-of-war has broken out between the National Housing Bank (NHB) and other lenders vis-a-vis the corporate insolvency resolution process (CIRP) over the scam-hit Dewan Housing Finance Corporation Ltd (DHFL). While the NHB is asserting its right to receive proceeds from the ongoing CIRP on a preferential basis as per the Act governing it, lenders say the NHB has conceded pari-passu (equal footing) charge for its ₹2,350-crore refinance exposure to DHFL.- Business Line

🍒 RBI imposes fine on Muthoot Finance, Manappuram Finance for non-compliance : The RBI on Thursday said it has imposed a penalty of Rs 10 lakh on Muthoot Finance, Ernakulam, for non-compliance with directions on maintaining loan to value ratio in gold loans and on obtaining copy of PAN card of the borrower while granting gold loans of over Rs 5 lakh. The central bank has also imposed a penalty of Rs 5 lakh on Manappuram Finance, Thrissur for non-compliance with directions on verification of ownership of gold jewellery.Regarding Muthoot Finance, the central bank said the statutory inspection of the company with reference to its financial position as on March 31, 2018 and March 31, 2019, revealed non-compliance with the directions issued by it. A notice was issued to the company advising it to "show cause as to why penalty should not be imposed for failure to comply" with the directions issued by the Reserve Bank of India (RBI). - Business Stanard.

🍒 Indices end in red; Sensex tanks 580 points : After briefly touching its record intra-day high of 44,230 in a volatile session, the 30-share BSE index ended 580.09 points or 1.31 per cent lower at 43,599.96. Similarly, the broader NSE Nifty hit a fresh intra-day peak of 12,963, before ending 166.55 points or 1.29 per cent lower at 12,771.70. SBI was the top laggard in the Sensex pack, tumbling around 5 per cent, followed by Axis Bank, ICICI Bank, UltraTech Cement, Bajaj Finance, HDFC Bank and Bharti Airtel. On the other hand, PowerGrid, ITC, NTPC, Tata Steel and Titan were among the gainers. - Business Line

🍒 Rupee settles 8 paise lower at 74.27 against US dollar : The rupee depreciated 8 paise to settle at 74.27 (provisional) against the US dollar on Thursday, tracking muted domestic equities and strong American currency. At the interbank forex market, the domestic unit opened at 74.28 against the US dollar and touched an intra-day high of 74.22 and a low of 74.33. It finally closed at 74.27 against the greenback, registering a fall of 8 paise over its previous close. On Wednesday, the rupee had settled at 74.19 against the US dollar. - Business Line

🍒 Gold prices today fall for 4th day in row, silver rates slump : Gold and silver prices today slipped in Indian markets, extending their recent decline. On MCX, gold futures fell 0.3% to ₹50,180 per 10 gram in its fourth straight day of losses while silver futures declined 0.8% to ₹62,043 per kg. Gold and silver prices had fallen sharply in previous session. Gold fell about ₹450 per 10 gram while silver rates declined ₹718 per kg. Gold prices are now down more than ₹6000 from their August highs of ₹56,200. In global markets, gold prices slipped today, pressurized by a stronger US dollar. Optimism about progress in covid vaccine development also dented the precious metal's appeal. Spot gold fell 0.1% to $1,869.86 per ounce..

19.11.2020: Today's Banking / Financial News

19.11.2020: Today's Banking / Financial News at a Glance

🍒 SBI banks on Juniper network infrastructure for its new data centre : State Bank of India (SBI) is India’s largest commercial bank serving more than 440 million account holders. That’s even more than the entire population of United States. Through its network of more than 22,000 branches across the country, and footprint in over 30 other countries, SBI has been driving radical changes to pave the way for an agile and digitally- enabled banking. It has always been responsive to changing customer preferences. New product launches, like You Only Need One (YONO) app, is one example that has been well received by customers and has proven to be a huge success. While SBI stepped on the accelerator to hit the digital highway in a big way by launching new products and services, it was also focusing to complete the integration and merger process of its five associate banks and Bharatiya Mahila Bank. “With increasing customer base and launch of new applications, our technology and resiliency requirement was increasing manifold. There was a need to centralize our operations for ease of use and effective management,” says Amol Pai, Chief Technology Officer, State Bank of India. - economic times

🍒 UCO Bank cuts home loan rate by 25 basis points: UCO Bank has cut home loan interest rates by 25 basis points with effect from Wednesday, the lender said. The revised home loan interest rates start from 6.90 per cent, irrespective of loan amount and occupation of the borrower. The state-owned bank is confident of meeting the Rs 3,000 crore lending target for retail and MSME segments for the festive season months of October and November and around Rs 1,900 crore had already been sanctioned .- economic times

🍒 Punjab & Sind Bank's board to consider plan for raising up to ₹5,500 cr : State-owned Punjab & Sind Bank on Wednesday said the board of bank will meet later this week to consider raising up to ₹5,500 crore by issuing shares on a preferential basis. "A meeting of board of directors of Punjab & Sind Bank is scheduled to be held on Saturday, November 21, 2020, for considering to offer, issue, create and allot equity shares up to ₹5,500 crore (including preferential issue of equity shares)," the bank said in a regulatory filing. Shares of Punjab & Sind Bank on Wednesday closed 0.88% up at ₹11.40 apiece on the BSE. - Live Mint

🍒 Lakshmi Vilas Bank depositors' money safe, says RBI-appointed administrator : T N Manoharan, the RBI-appointed administrator of Lakshmi Vilas Bank, on Wednesday said that depositors' money is safe and expressed confidence of completing the lender's merger with DBS Bank India within the deadline set by the regulator. On Tuesday, the Reserve Bank of India (RBI) appointed former non-executive chairman of Canara Bank T N Manoharan as the administrator of Lakshmi Vilas Bank after superseding the board of the crippled private sector lender.A moratorium has been imposed on the bank and cash withdrawals have been capped at Rs 25,000 per account. Talking to reporters, Manoharan said that he was confident of the timely merger of the bank with DBS Bank India before the December 16 deadline.- economic times

🍒 AIBOC opposes merger of LVB with DBS Bank; pitches for merger with state-owned bank : A day after the RBI put in public domain a draft scheme of merger of Lakshmi Vilas Bank (LVB) with subsidiary of Singapore-based DBS, public sector banks' officer union AIBOC on Wednesday said the amalgamation is not in the national interest and demanded the consolidation with any PSB. The proposed amalgamation of the cash-strapped LVB with DBS Bank India seems to be a ploy to provide entry of foreign banks into the country in a big way, All India Bank Officers' Confederation (AIBOC) President Sunil Kumar said. The Indian banking sector provides huge opportunity for growth, so the foreign banks have been looking at inorganic route to expand their presence for long, he said. - economic times

🍒 AIBEA decries ‘long rope’ given to LVB : The All India Bank Employees’ Association (AIBEA) has demanded a probe into why the Reserve Bank of India (RBI) gave a long rope to the loss-making Lakshmi Vilas Bank (LVB) when its financial health was going downhill. The RBI, on Tuesday, superseded the old generation private sector bank’s board, placed it under moratorium, including capping deposit withdrawals to ₹25,000 per depositor, up to December 16, 2020, and announced a draft scheme for its amalgamation with DBS India Ltd, a wholly-owned subsidiary of DBS Bank, Singapore. CH Venkatachalam, General Secretary of the Association, in a statement, observed that for the past more than three years, Tamil Nadu-based private sector Lakshmi Vilas Bank was suffering from bad health and continuous losses. - Business Line

🍒 ‘Lakshmi Vilas Bank has enough liquidity to pay depositors’ : Allaying depositors’ concerns over the safety of their funds, the RBI-appointed Administrator of Lakshmi Vilas Bank, TN Manoharan, said the top priority was to successfully implement the amalgamation scheme in a time-bound manner. He also insisted that there is no run on the bank and that it has enough liquidity to pay the depositors. “The priority now is to resurrect the business by implementing the scheme of amalgamation after all due process and legal measures are completed. Other issues will be addressed by DBS Bank India once the amalgamation process is completed,” said Manoharan. - Business Line

🍒 Promote Mudra loans, augment poverty alleviating schemes: Sadananda Gowda to SBI : Focus on promoting Mudra loans and augmenting poverty alleviating schemes of the Central government, DV Sadananda Gowda, Union Minister of Chemicals & Fertilizers, advised the State Bank of India (SBI). Inaugurating SBI’s new branch at Kavalbyrasandra in Bengaluru, Gowda also stressed upon the role played by the bank in reviving the economy by implementing the Central government initiatives. He thanked SBI and its officers for the continuous support extended to the public during the difficult times of Covid-19 and in the implementation of various government schemes. He further said SBI is the “mother” of all banks in India, and asked the public to utilise the services of the bank. - Business Line

🍒 DBS Bank issues maiden green loans in India worth Rs 1,050 cr to CapitaLand : DBS Bank on Wednesday said it has issued its first two green loans in India totalling Rs 1,050 crore to CapitaLand. DBS grows its sustainable financing footprint with maiden green loans in India totalling Rs 1,050 crore. Both green loans are also the first to be issued in India by a Singapore bank, DBS Bank said in a release. The lender issued a three-year Rs 425 crore (SGD 80.8 million) loan to refinance construction financing for the development of phase 1 of International Tech Park Gurgaon (ITPG) and other general corporate purposes related to the project, it added. - economic times

🍒 Merger with LVB to strengthen DBS Bank's India biz: Moody's : Moody's Investors Service on Wednesday said Singapore's DBS Bank will strengthen its India business following merger with troubled Lakshmi Vilas Bank. Banking regulator RBI on Tuesday announced a draft scheme to amalgamate the troubled Lakshmi Vilas Bank (LVB) into DBS Bank India, which is fully owned by DBS Bank Ltd. "The merger will strengthen DBS' business position in India by adding new retail and small and medium sized customers. We estimate that DBS India's customer deposits and net loans will increase by about 50 per cent-70 per cent following the merger," Moody's said in a statement. LVB will also add around 500 branches to DBS India's 27 branches. - economic times

🍒 Clix Capital may apply for banking licence after failed merger with Lakshmi Vilas Bank : Clix Capital may apply for a banking licence or look for other suitors to keep its hopes alive after the government approved the merger of Lakshmi Vilas Bank (LVB) with the Indian unit of Singapore-headquartered DBS Bank on Tuesday. Clix Capital has been in talks with the LVB management since June and had also submitted a non-binding agreement in October. Clix had proposed to invest Rs 1,700 crore in equity plus fundraising to meet growth capital requirements. The Reserve Bank of India could favourably look at a banking licence request as Clix Capital is backed by marquee foreign investors, founder Pramod Bhasin told ET.- economic times

🍒 Poonawalla Finance offers special loans to company secretaries : Puna-based Poonawalla Finance tied up with the Institute of Company Secretaries of India (ICSI) to offer collateral-free loans to over 65,000 financial professionals. The non-bank entity is a part of Cyrus Poonawalla group, which owns Serum institute, engaged in developing vaccines for the coronavirus. "As the economy is recovering from the pandemic impact, our focus is on offering credit support to the MSMEs and professionals like Company Secretaries so that they can further boost the entrepreneurial ecosystem and fuel economic growth,” said Adar Poonawalla, Chairman, Poonawalla Finance in a release. - economic times

🍒 Subscribers under NPS, APY schemes reach 3.83 crore till Oct-end: PFRDA : The number of NPS subscribers grew over 23 per cent to 3.83 crore by the end of October, according to data from the Pension Fund Regulatory and Development Authority (PFRDA). The number of subscribers in various schemes under the National Pension System (NPS) rose to 383.12 lakh by the end of October 2020 from 310.80 lakh in October 2019, showing a 23.27 per cent jump year-on-year, PFRDA said in a release on Wednesday. Subscribers under the Atal Pension Yojana (APY) increased 34.51 per cent to 2.45 crore at the end of October, from 1.82 crore a year ago. The total assets under management under the NPS rose 33.79 per cent to Rs 5.13 lakh crore as of October 2020, from Rs 3.83 lakh crore at the end of October 2019, PFRDA data showed. - Business Standard

🍒 LVB a strategic asset, must not be handed over 'free of cost': Promoter : Lakshmi Vilas Bank (LVB) is a strategic asset that must not be given to DBS Bank India "free of cost", said a promoter of the Chennai-based lender that was on Tuesday put under moratorium for a month. LVB is set to be folded into the Indian unit of Singapore's DBS under a plan proposed by the Reserve Bank of India (RBI), which took over the lender due to a "serious deterioration" in its finances. LVB has been in rough weather since a few years. In September, shareholders voted against seven board members—including interim MD and CEO S Sundar — at the annual general meeting. The bank has been struggling to raise capital. K R Pradeep, one of the 25 promoters of LVB, said on Wednesday that RBI should revisit the troubled lender's valuation and not hand it over to DBS Bank. He and his group own 5 per cent in LVB. - Business Standard

🍒 Dhanlaxmi Bank CEO case to test primacy of RBI over banks' shareholders : The removal of Sunil Gurbaxani from the corner room at Dhanlaxmi Bank in a shareholder coup has led the private banking system into uncharted waters. Should the Reserve Bank of India (RBI) go along with what a bank’s shareholders deem fit by exercising their rightunder the Companies Act? Or should it reinstate a helmsman (in the immediate instance Gurbuxani) to underscore its powers, and the primacy of the Banking Regulation Act (BR Act: 1949), if it were to feel otherwise? The BR Act vests the banking regulator with the powers to appoint “the chairman of the Board of Directors (BoD) on a whole-time basis, or a managing director (MD) of a banking company”. By extension, this Act allows for their removal, too. Privileging the BR Act over other regulations has never been a point of debate so far, but the fate of Gurbuxani at Dhanlaxmi Bank has changed the plot, and either side of the debate can be argued. - Business Standard

🍒 Disbursements in H2 will be at least three times that in H1: Shriram Transport Finance chief : After reeling under the impact of Covid-19 pandemic in the first half (H1) of FY21, Shriram Transport Finance Company Ltd (STFC) is expecting its business to be back on an even keel in the second half (H2). The nearly four decades old non-banking finance company, which specialises in financing pre-owned trucks, will step on the gas in H2 (October 2020 to March 2021), eyeing nearly three times H1 (April to September 2020) loan disbursements, opening 100 branches in rural and semi-urban areas and hiring 1,000 people, Umesh Revankar, MD & CEO, told BusinessLine in an interview. - Business Line

🍒 Online gold loan business gaining traction and NBFCs want to make most of it : The online gold loan remains the preferred choice for businesses and individuals even after nonbanking finance companies reopened their branches. With increased adoption of smartphones and expanding internet connectivity in rural and semi-urban India, NBFCs are aiming to get most of their customers on to the online gold loan platform. Some plan to launch co-branded prepaid cards while others are developing a semi-automated gold loan kiosk to expand the business. “The share of the online gold loan (OGL) in our total gold loan business before the lockdown was about 45% and this has now gone up to over 62%,” VP Nandakumar, managing director of Manappuram Finance, told ET. “Clearly, the lockdown period was when many of our customers realised the benefits of OGL as they were able to operate their account and borrow higher amounts, even as our branches remained closed. Even after reopening the branches, we continue to see increased adoption of OGL.” - economic times

🍒 I-T refunds worth Rs 1.36 lakh cr issued to 40.19 lakh taxpayers till Nov 17 : The Income Tax department has issued refunds worth over Rs 1.36 lakh crore to over 40 lakh taxpayers so far this fiscal. This includes Personal income tax (PIT) refunds amounting to Rs 35,750 crore and corporate tax refunds of over Rs 1 lakh crore during this period. “CBDT issues refunds of over Rs 1,36,066 crore to more than 40.19 lakh taxpayers between 1st April, 2020 to 17th November, 2020. Income tax refunds of Rs 35,750 crore have been issued in 38,23,304 cases and corporate tax refunds of Rs 1,00,316 crore have been issued in 1,95,518 cases,” the I-T department tweeted. - economic times

🍒 DBS faces potential culture clash as it scoops up distressed Indian lender : DBS Group’s move to take over troubled Lakshmi Vilas Bank will give Southeast Asia’s largest lender the boost in India it has long desired, but aligning the two banks’ business cultures could prove tricky. LVB, facing mounting bad loans and governance issues and a failure to secure capital, is set to be folded into DBS’s Indian subsidiary under a plan proposed by India’s central bank, which took control of the 94-year old Chennai-based lender on Tuesday, citing a “serious deterioration” in its finances. - financial express

🍒 RBI imposes Rs 5 lakh penalty on Nissan Renault Financial Services India : The Reserve Bank of India has imposed a penalty of Rs 5 lakh on Chennai-based Nissan Renault Financial Services India Private Limited for non-compliance with the central bank’s directions. In a statement on Wednesday, RBI said the penalty has been imposed for non-compliance with its directions contained in Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 on Fair Practices Code for applicable NBFCs. The statutory inspection of Nissan Renault Financial Services India with reference to its financial position as on March 31, 2019, revealed, inter alia, non-compliance with the RBI directions. - financial express

🍒 Lakshmi Vilas Bank share price tanks 20% as RBI puts bank under moratorium : Lakshmi Vilas Bank (LVB) stock was locked in 20 percent lower circuit in the early trade on November 18 after Finance Ministry put the bank under moratorium, with effect from November 17 6 pm till December 16, 2020. There were pending sell orders of 30,945,341 shares, with no buyers available at the time of market opening.During this time, the beleaguered bank will not be able to make any payment worth more than Rs 25,000 to its depositors without written permission from the Reserve Bank of India (RBI). As per the draft scheme of amalgamation of the Lakshmi Vilas Bank (LVB) with DBS Bank India, the entire amount of the paid-up share capital will be written off. - moneycontrol.

🍒 Sensex spurts 227 points to close above 44,000-mark for first time; Nifty tops 12,900 : The BSE Sensex jumped 227 points to finish above the 44,000-mark for the first time on Wednesday, tracking gains in financial stocks amid largely positive cues from Asian markets and persistent foreign fund inflows. After touching its lifetime intra-day high of 44,215.49, the 30-share BSE benchmark ended 227.34 points or 0.52 per cent higher at its record closing of 44,180.05. Similarly, the broader NSE Nifty advanced 64.05 points or 0.50 per cent to end at its all-time high of 12,938.25. It had touched an intra-day record of 12,948.85. M&M was the top gainer in the Sensex pack, soaring over 10 per cent, followed by L&T, IndusInd Bank, Bajaj Finserv, SBI, Bajaj Finance, ICICI Bank and Kotak Bank. On the other hand, HUL, ITC, Titan TCS and Bharti Airtel were among the losers.

🍒 Rupee rises for third day, up 27 paise at 74.19 per dollar : The rupee continued its winning run for the third session in a row on Wednesday, spurting 27 paise to settle at 74.19 against the US dollar amid unabated foreign fund inflows and a weak greenback overseas. At the interbank forex market, the domestic unit opened at 74.49 against the US dollar and touched an intra-day high of 74.09 and a low of 74.52.

🍒 Gold prices today fall for 3rd day in a row, silver rates drop : Gold and silver prices in India edged lower today, tracking muted global cues. On MCX, gold futures today fell 0.43% to ₹50,546 per 10 gram, extending losses to the third day. Silver futures on MCX also declined 0.6% to ₹62,875 per kg. Last week, gold prices in India had retreated ₹1200 per 10 gram as optimism about covid vaccine lifted global risk sentiment and put pressure on the yellow metal. As compared to its August highs of ₹56,200, gold prices are now down about ₹6,000. In global markets, gold rates edged lower today even as coronavirus cases continued to surge in many parts of the world. Gold slid 0.2% to 1,876.85 an ounce. Among other precious metals, silver was flat at $24.47 per ounce while platinum was steady at $925.60.

18.11.2020: Today's Banking / Financial News

 18.11.2020: Today's Banking / Financial News at a Glance

🍒 BoB issues Basel III compliant AT-I bonds worth ₹833 crore : Bank of Baroda (BoB) on Tuesday said it has issued and allotted Basel III Compliant Additional Tier (AT) I Bonds aggregating ₹833 crore to 10 allottees. The issue of “8.50 per cent unsecured, rated, listed, subordinated, non-convertible, fully paid up AT I perpetual bonds” opened and closed on November 12, 2020 on BSE Bond platform, the public sector bank said in a regulatory filing. The bonds were allotted on Tuesday. - Business Line

🍒 RBI proposes merger with DBS Bank as possible solution to Lakshmi Vilas Bank's capital woes : Lakshmi Vilas Bank is proposed to be merged with DBS Bank India, the local unit of Singapore-based DBS Holdings, ending years of speculation about the future of the teetering bank. DBS would invest Rs 2,500 crore in the equity of the bank that would help the merged entity have a comfortable capital position. This would also help the Singapore bank get a significant foothold in the Indian banking space with a network of 560 branhes. The development also ends Clix Capital's plan of a merger with Lakshmi Vilas and gaining a banking license. The government on Monday evening has placed the capital-starved bank under moratorium for a month till December 16 and put a ceiling on cash withdrawal up to Rs 25000 for the bank's depositors. The decision was taken in consultation with the Reserve Bank of India. - economic times

🍒 Yes Bank launches co-branded prepaid card with Neokred for cashless payments : Yes Bank on Tuesday said it has launched a co-branded prepaid card in partnership with Neokred Technologies to facilitate cashless payments. The card offerings can be personalised to suit the requirements of corporates seeking salary cards or expense cards for their employees.Yes Bank in partnership with Neokred Technologies has launched 'Yes Bank Neokred Card', a co-branded prepaid card, encouraging cashless payments, the lender said in a release.The prepaid card will be offered to Neokred's corporate partners across various sectors, including healthcare, financial institutions, NBFCs, oil companies, educational institutions, FMCG and infrastructure. The prepaid card can be loaded with balance and used for spends such as purchases, payment for utility bills, online shopping, ticket bookings and cash withdrawal at ATMs along with various benefits. - economic times

🍒 Lakshmi Vilas Bank placed under moratorium; withdrawals capped at Rs 25,000 : The Indian government on Tuesday imposed a one-month moratorium on Lakshmi Vilas Bank and capped the cash withdrawal limit at Rs 25,000 for depositors. “The financial position of The Lakshmi Vilas Bank has undergone a steady decline with the bank incurring continuous losses over the last three years, eroding its net-worth. In absence of any viable strategic plan, declining advances and mounting non-performing assets (NPAs), the losses are expected to continue. The bank has not been able to raise adequate capital to address issues around its negative net-worth and continuing losses,” the Reserve Bank of India (RBI) said. Further, the central bank added that LVB is also experiencing continuous withdrawal of deposits and low levels of liquidity. It has also experienced serious governance issues and practices in the recent years which have led to deterioration in its performance. The bank was placed under the Prompt Corrective Action (PCA) framework in September 2019 considering the breach of PCA thresholds as on March 31, 2019. - economic times

🍒 Had demanded timely action from RBI on Lakshmi Vilas Bank, merger with a public sector bank: AIBEA : The umbrella body of bank unions AIBEA on Tuesday said it was demanding a timely action from the RBI on Lakshmi Vilas Bank (LVB) as the regulator was aware about its financial condition for the last three years and said its demand for a merger with a public sector bank has not been accepted. For the past three years and more, the Tamil Nadu-based private sector Lakshmi Vilas Bank has not been in good health, rather, it was suffering from bad health and continuous loss, it said. The reason is well known to all including the RBI, the All India Bank Employees’ Association (AIBEA) said in a release. - financial express

🍒 NBFCs, HFCs saw an improvement across asset class in September: ICRA : Non-banking companies and housing finance companies were able to improve their collections this September amidst the economic impact of the Covid pandemic in the country, ICRA said Tuesday. The collection efficiency in ICRA-rated retail pools (originated largely by non-banking financial companies or NBFCs and Housing Finance Companies or HFCs) witnessed considerable improvement in September 2020 for almost all the asset classes, ICRA research said. The research said that many consumers also cleared their overdues and opted for pre-payments of their past dues.- economic times

🍒 Govt mulls easing rules for border nation FDI : India is considering a plan to allow up to 26% foreign direct investment (FDI) from countries with which it shares a land border, including China and Hong Kong, without government scrutiny in sectors that are on the automatic route. An inter-ministerial panel of secretaries is discussing various options and a decision is expected soon, government officials said. The decision would expedite more than 100 proposals that are stuck after the FDI policy was amended in April, making government approval mandatory for foreign investment from border nations. The inter-ministerial panel is headed by the home secretary. - economic times

🍒 NBFCs lose car loan market share on rate war by PSBs : NBFCs are losing market share to banks in car and SUV financing and are shifting their focus to used cars, two-wheelers and commercial vehicles instead. A combination of capital constraints among NBFCs and renewed aggression from public sector banks (PSBs) has led to this situation, said auto financiers. In a bid to grow their retail portfolio, PSU banks are offering auto loans at 7.25% to 7.7% compared to NBFCs whose rates range from 8.75% to 11%. While State Bank of India (SBI) is offering auto loans starting from 7.7%, others are even cheaper with Central Bank of India offering loans at 7.25%, followed by Canara Bank (7.3%), United Bank of India (7.4%) and Indian Overseas Bank (7.55%). - economic times

🍒 Former Infosys chief appointed as chairperson of RBI's newly set up Innovation Hub : The Reserve Bank of India has set up an innovation hub for accelerating innovation in the financial sector through effective use of technology. Former Infosys chairman and co-founder, Senapathy Gopalakrishnan, has been appointed as the first chairperson of the Reserve Bank Innovation Hub (RBIH), central bank said in a statement on Tuesday. The governance council of RBIH composes prominent scientists, academicians, regulators and former executives of the banking sector. “The Reserve Bank in its Monetary Policy Statement…the Bank will set up to promote innovation across the financial sector by leveraging on technology and creating an environment which would facilitate and foster innovation,” the central bank said. - - economic times

🍒 Karnataka Bank launches CASA campaign : Karnataka Bank launched CASA (current account, savings account) mobilisation campaign on Monday which will run from November 17 to March 4, 2021. A press release by the bank said that it intends to mobilise over 4.10 lakh current and savings accounts with an accretion of ₹650 crore of business. Quoting Mahabaleshwara MS, Managing Director and Chief Executive Officer of the bank, the release said that the campaign has twin objectives of enabling basic banking services to unbanked sections of society and also popularising digitally-powered CASA products of the bank for the next level of customers based on their requirements. - Business Line

🍒 RBI commences first Test Phase of Regulatory Sandbox retail payments : The Reserve Bank of India (RBI) on Tuesday said two entities — Natural Support Consultancy Services Pvt Ltd, Jaipur and Nucleus Software Exports Ltd, New Delhi — started testing of their products under its ‘Regulatory Sandbox (RS) - First cohort on Retail Payments - Test Phase’ from November 16. RS usually refers to live testing of new products or services in a controlled and test-regulatory environment for which regulators may (or may not) permit certain regulatory relaxations for the limited purpose of the testing. - Business Line

🍒 IIFL Finance raises ₹100 crore via NCDs : IIFL Finance on Tuesday said it has raised ₹100 crore through issuance of non-convertible debentures on a private placement basis. It said the debentures will be listed on the wholesale debt market segment of the NSE. “The finance committee of the board of directors of the company.... approved allotment of 1,000 non convertible debentures.....of face value of Rs. 0 lakh each, for cash at par, aggregating to ₹100 crore, on private placement basis,” IIFL Finance said in a regulatory filing. - Business Line

🍒 DHFL resolution: No decision taken on Adani’s bid at creditors’ meet : The meeting of the Committee of Creditors of Dewan Housing Finance Corporation Ltd on Tuesday ended without any decision being taken on whether to accept the unsolicited offer made by the Adani Group. Top banking sources told BusinessLine that the CoC will wait for a direction on how to deal with the situation under the IBC rules. “The bid covers were not opened,” said a source aware of the proceedings. - Business Line

🍒 Kris Gopalakrishnan appointed first chairperson of Reserve Bank Innovation Hub : The Reserve Bank of India (RBI) has appointed Senapathy (Kris) Gopalakrishnan, co-founder and former co-Chairman, Infosys, as the first Chairperson of the Reserve Bank Innovation Hub (RBIH). The central bank, in its Statement on Developmental and Regulatory Policies issued on August 6, 2020, had announced that it would set up an Innovation Hub to promote innovation across the financial sector by leveraging on technology and creating an environment which would facilitate and foster innovation. - Business Line

🍒 Magma Fincorp to raise up to ₹500 cr for housing finance arm : Magma Fincorp is looking to raise capital to the tune of ₹400-500 crore for its wholly-owned subsidiary – Magma Housing Finance Ltd (MHFL). Plans are afoot to rope in a strategic partner to infuse funds into the business, which has been growing at a CAGR of over 30 per cent for the last 2-3years. According to Kailash Baheti, CFO, Magma Fincorp, housing finance portfolio has been doing well and the company would like to grow the business further. MHFL’s asset under management (AUM) stood at ₹3,554 crore as of Q2 FY21.- Business Line

🍒 As economy picks up, need for one-time debt restructuring will decrease: Crisil : There will be few takers among companies for one-time Covid-related debt restructuring as improving business sentiment and ongoing, gradual recovery minimise the need for it, according to Crisil. A preliminary analysis of 3,523 non-MSME companies rated by the credit rating agency indicates that as many as 99 per cent of them are unlikely to opt for the Reserve Bank of India’s (RBI’s) one-time-debt-restructuring (OTDR). The RBI had, on August 6, announced the scheme as a relief measure for non-MSME corporate borrowers having an aggregate exposure greater than ₹25 crore and were under stress due to the pandemic. - Business Line

🍒 RBI curbs withdrawals from Jalna-based Mantha Urban Coop Bank for 6 months : Reserve Bank of India on Tuesday imposed restrictions on withdrawals from Maharashtra-based Mantha Urban Cooperative Bank for six months. The RBI, in a release, said it has issued certain directions to Mantha Urban Cooperative Bank, Mantha District Jalna, Maharashtra, from the close of business on November 17, 2020.As per the directions, the bank will not, without prior approval of RBI in writing, grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment, among others. "In particular, no deposit of the total balance across all savings bank or current account or any other account of a depositor may be allowed to be withdrawn" subject to conditions stated in the directions, the central bank said. - Business Standard

🍒 Sensex rallies over 300 points to hit fresh peak : After touching its all-time peak of 44,161.16 during the session, the 30-share BSE index settled 314.73 points or 0.72 per cent higher at 43,952.71. Similarly, the broader NSE Nifty touched a fresh intra-day high of 12,934.05. It finally finished 93.95 points or 0.74 per cent up at its closing record of 12,874.20. Tata Steel was the top gainer among the Sensex constituents, surging around 6 per cent, followed by SBI, HDFC Bank, Bajaj Finance, Axis Bank, LT, Maruti, IndusInd Bank and HDFC. On the other hand, NTPC, HCL Tech, ONGC, Infosys, ITC, PowerGrid, and Hindustan Unilever were in the red.

🍒 Rupee settles 16 paise higher at 74.46 against US dollar : The rupee on Tuesday appreciated by 16 paise to settle at 74.46 (provisional) against the US dollar on the back of improved demand for riskier assets after positive news on the coronavirus vaccine. Besides, a weak dollar overseas also supported the local unit. At the interbank forex market, the domestic unit opened strong at 74.43 against the US dollar and later touched a high of 74.38 in day trade.

🍒 Gold prices today struggle after falling ₹1,200 last week, silver rates drop : Gold and silver prices in India struggled today after a sharp fall last week. On MCX, December gold rose 0.05% to ₹50,856 per 10 gram while silver futures were steady at ₹63,700 per kg. Gold prices had edged about 0.2% lower in previous day's truncated session as MCX remained closed during for the morning session due to a holiday. Last week, gold prices on MCX fell ₹1,200 per kg, tracking a similar trend in overseas markets as optimism over covid vaccine put pressure on gold prices.

16.11.2020: Today's Banking / Financial News

16.11.2020: Today's Banking / Financial News at a Glance

🍒 RBI likely to put its foot down, reinstate Gurbaxani at Dhanlaxmi Bank : The Reserve Bank of India (RBI) may reinstate Sunil Gurbaxani in the corner-room at Dhanlaxmi Bank and underscore the primacy of powers given to it under the Banking Regulation (BR) Act, 1949. The banking regulator is also said to be looking into the bank’s larger accounts to see if credit decisions were unduly influenced. “Gurbaxani’s removal from his post by shareholders is a test case. There is no precedent for the bank’s managing director (MD) and chief executive officer (CEO) being removed from his post in this manner. It’s only the RBI under the BR Act which has the powers to decide on their appointment and removal, and this will override the Companies Act,” said a source. Section 10BB of the BR Acts vests the central bank with the powers to appoint “the chairman of the board of directors on a whole-time basis or MD of a banking company”. This could be a technical reason why the central bank is yet to formally accept Gurbaxani’s resignation. - Business Standard

🍒 NCLT approves Rs 103 crore resolution plan for NIIL Infrastructures : The National Company Law Tribunal (NCLT) has approved a Rs 103-crore bid to acquire debt-ridden NIIL Infrastructures, which is developing a housing project in Agra, Uttar Pradesh. A two-member Principal bench of NCLT, headed by Acting President BSV Prakash Kumar, has approved the Rs 103.18 crore resolution plan by a consortium of Rishabh Verma and Shilendra Khirwar along with N-Homes.In March 2018, NCLT Delhi had admitted the application seeking resolution for NIIL Infrastructures under the Insolvency and Bankruptcy Code and appointed Nisha Malpani as the Resolution Professional (RP). In its order, NCLT has observed that the resolution plan provides no lay off for the workmen of the debt-laden company and for the full and final discharge of their dues for the period of 24 months preceding the insolvency commencement date. - moneycontrol.com

🍒 Will ask govt to make employers' contribution, tier-II account tax free for all in Budget: PFRDA : Pension fund regulator PFRDA will propose to the government to make employers'' contribution of 14 percent under NPS tax free for all categories of subscribers in the next Budget, Chairman Supratim Bandyopadhyay said. Employers'' contribution of 14 percent in pension under the National Pension System (NPS) scheme for the central government employees was made tax free from April 1, 2019. "We may propose things like 14 percent contribution by employers to be made tax free to all. Currently, it is given only to the central government employers. "So we are requesting the government to give it to all the employers, whether it is state governments or other corporate entities, so that subscribers across the board can get this benefit," Bandyopadhyay told PTI. - moneycontrol.

🍒 India rate cuts bets fall as recovery gains hold, inflation stays high : Negative real rates in India and recovering growth alongside high inflation suggest its central bank has little room for more monetary stimulus, but policy is likely to stay accommodative, economists and analysts said. Industrial production in September grew for the first time in six months while green shoots are also visible in rising goods and services tax collections, higher energy consumption, and an uptick in the purchasing managers' index among other gauges. With inflation staying above 7% in October for a second straight month, well above the RBI's medium term target of 4%, views that India is near the end of the current rate cutting cycle have become more pronounced. "The inflation rate has been consistently ahead of not only your target rate but the upper end of your target range as well. Ideally, you should be looking at rate hikes right now," said Sameer Narang, chief economist at Bank of Baroda. - Live Mint

🍒 Sales of ULIPs are likely to start picking up: Tarun Chugh : The life insurance sector, which has slowly been seeing a revival, should register growth from the fourth quarter this fiscal, believes Tarun Chugh, Managing Director and CEO, Bajaj Allianz Life Insurance. He added that with the stock markets now doing well, sales of ULIPs could also see an uptick. In an interview with BusinessLine, Chugh said that Covid-related claims have not been an issue for the life insurance industry as yet but noted that frauds could prove to be a concern. Replying to question to Life insurance sales now seem to be picking up. What is your outlook? - he said The first quarter was flat for us and negative for the industry; but from the second quarter, there has been an improvement month on month for the sector as well. Sales are coming back and we are seeing a positivity in the market and good uptake of all products. From the fourth quarter, there should be growth as well. For the sector, the third quarter is difficult to predict, but it should be flat if not register growth over last year. Guaranteed and term-life products will keep seeing an uptick. But with markets also now doing well, sales of ULIPs are also likely to start coming back. - Business Line

🍒 Gold imports dip 47% in April-October to $9.28 billion : Gold imports, which have a bearing on the current account deficit, declined 47.42 percent to USD 9.28 billion during April-October due to fall in demand in the wake of the COVID-19 pandemic, according to data from the Commerce Ministry. Imports of the yellow metal stood at USD 17.64 billion in the corresponding period of 2019-20. The imports, however, recorded a growth of about 36 percent in October. Silver imports during the period too dipped 64.65 percent to USD 742 million. - moneycontrol.com

🍒 Rupee likely to trade in 73.90-74.90 range next week, deploy theta depreciating based 'bear call spread' : United States Dollar/ Indian Rupee (USD/INR) traded with positive bias throughout the last trading week and appreciated by more than 60 paise on a week-on-week basis. The candle formed on November 9, 2020, with high upper and lower shadow generated demand at lower levels which was followed by three bullish candles in a row. The downward trend of the currency pair seems to be getting abated but the road for bulls still looks skeptical and the range-bound move can be expected in the coming trading sessions. The bullish crossover of short term and medium term moving averages are likely to provide a cushion to the prices at lower levels while the short term negative divergence and overhead resistance of 74.70 could abate the up move for time being. Apart from this, the declining trend line originated by joining the highs of April 21, 2020, and June 18, 2020, could act as a supply point at 74.90 per USD. The base for the short term is emerging at 73.90 per USD and traders can expect the currency pair to trade in the range of 73.90 to 74.90 per USD in the forthcoming truncated trading week.

🍒 M-cap of eight of top-10 most valued firms zooms Rs 1.90 lakh crore : The combined market valuation of eight of the top-10 most valued companies zoomed Rs 1,90,571.55 crore last week, with Bajaj Finance emerging as the biggest gainer, reflecting bullish investor sentiment. While Reliance Industries Ltd (RIL) and Tata Consultancy Services (TCS) witnessed erosion in their market capitalisation, rest of the eight companies including Hindustan Unilever Limited, HDFC, ICICI Bank and Bharti Airtel emerged as gainers. The market valuation of Bajaj Finance jumped Rs 35,878.56 crore to Rs 2,63,538.56 crore, becoming the biggest gainer among the top-10 most valued firms. HDFC Bank added Rs 34,077.46 crore to its market valuation, taking it to Rs 7,54,025.75 crore, while HDFC''s market capitalisation jumped Rs 31,989.44 crore to Rs 4,15,761.38 crore.