15.12.2020: Today's Banking / Financial News

15.12.2020: Today's Banking / Financial News at a Glance

🍒 RBI eases some conditions for banks to open current accounts : The Reserve Bank of India (RBI) has exempted some services such as advance payments for home purchases, IPO and FPO applications and accounts used for settlement of credit, debit or ATM dues from the restrictions on opening current accounts without much lending exposure. In a notification on its website, the central bank mentioned eight specific services which have been exempt from its circular in August. Besides the three mentioned above, escrow accounts of payment aggregators or pre paid payment companies, payment settlement accounts, current accounts permitted under the Foreign Exchange Management Act (FEMA), accounts used for payment of taxes, duties a d statutory dues and accounts of white label ATM operators and their agents for sourcing currency have alao been exempt from the RBI regulations. - economic times

🍒 Fearing vacuum in key posts, SBI shelves VRS plan : State Bank of India (SBI) seems to have shelved its plan to offer a golden handshake to its employees. The proposal, floated in early September, appears to have been put on the back burner as no circular has been issued so far on the opening/implementation of the scheme. The reason: The Finance Ministry is apparently concerned that if many experienced employees and officers opt for the ‘Second Innings Tap – Voluntary Retirement Scheme–2020 (SITVRS-2020)’, there would be a vacuum in key positions. This could have an impact on the functioning of the country’s largest bank. The Government is the promoter of SBI with majority shareholding of 57.63 per cent. The VRS scheme was to open on December 1 and close on February 26, 2021. - Business Line

🍒 Private lender HDFC Bank appoints Sanmoy Chakrabarti as Chief Risk Officer : HDFC Bank on Monday said it has approved the appointment of Sanmoy Chakrabarti as the Chief Risk Officer (CRO) for three years. The bank's board of directors on Monday cleared the appointment of Chakrabarti, Head- Risk Management, as the CRO of the bank for a period of three years, with effect from December 14. He replaces Jimmy Tata, as part of an internal reorganization, according to the regulatory filing.Tata will be the new Chief Credit Officer of the bank.Chakrabarti is a Master's degree holder from the Indian Statistical Institute.HDFC Bank said he has been with the bank for the last decade in the risk management department. Previously, he has been in-charge of market risk, treasury mid-office, operational risk management and Basel credit risk functions of the bank. - economic times

🍒 RBI, DBS move Supreme Court, want all LVB merger cases transferred : The Reserve Bank of India and DBS Bank have moved the Supreme Court asking it to transfer all matters related to the LVB-DBS merger to the apex court. The Supreme Court is likely to hear the matter before it closes for the winter holidays. The amalgamation scheme of Lakshmi Vilas Bank and DBS Limited is under challenge before Bombay High Court, Karnataka High Court, Madras High Court and Delhi High Court. In a hearing before the Madras High Court on Monday senior counsel Mukul Rohatgi appearing for DBS Bank submitted that the matter of transfer of all cases will be mentioned before the Supreme Court during this week itself and it is likely to be taken up before the Supreme Court closes for Winter Holidays on December 18.- economic times

🍒 RBI approves reappointment of Uday Kotak as chief of Kotak Mahindra Bank : The Reserve Bank of India has approved the reappointment of Uday Kotak as the managing director and chief executive officer of Kotak Mahindra Bank, the lender said in an exchange filing on Monday. Kotak who has already served as the chief of the bank for over 17 years will continue at the position of MD & CEO for another three years. Speculation was rife about Kotak’s reappointment after RBI released a discussion paper in June this year on governance at commercial banks. The paper had proposed capping the tenure of bank CEOs who are promoters or large shareholders at 10 years. Since then several brokerage houses had anticipated a leadership change at Kotak Mahindra Bank. - economic times

🍒 Bank of Maharashtra raises Rs 200 crore under tier II bond programme : State-run Bank of Maharashtra on Monday said it has raised over Rs 200 crore through private placement of Basel III-compliant tier II bonds. The fund raise is part of the lender's Rs 1,000 crore tier II bond programme."The bank has successfully raised a capital of Rs 200.70 crore through private placement of Basel III compliant tier II bonds, the lender said in a filing to exchanges.The coupon offered on the bond was 7.75 per cent.Last week, Brickwork Ratings had reaffirmed AA rating of the lender's tier II bonds worth Rs 1,000 crore. The outlook was also reaffirmed as stable. The domestic rating agency had also assigned AA- rating to Bank of Maharashtra's Rs 1,000 crore of Basel III compliant additional tier I bonds with a stable outlook. - Business Standard

🍒 SBI, PNB, ICICI, HDFC among 8 top banks witnessing wilful defaults surge : Eight of India’s biggest banks have seen a significant jump in wilful defaults in the six months to September, with such loans rising by over ₹37,000 crore to ₹1.5 trillion, shows data on suit-filed accounts from credit bureau TransUnion Cibil. These banks—State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India, Union Bank of India, ICICI Bank, HDFC Bank and Axis Bank—account for 75% of all loans reported as wilful defaults as of 30 September. Also read: Why your health plan premium is suddenly spiking. In the same period last year, the increase was about ₹10,000 crore. - Live Mint

🍒 Shriram City Union Finance to raise up to Rs 200 crore via bonds : Shriram City Union Finance on Monday said it will raise up to Rs 200 crore by issuing bonds on private placement basis. The banking and securities management committee of the company at its meeting held on Monday approved issue of non-convertible debentures for an amount of Rs 100 crore with green shoe option up to Rs 100 crore, aggregating up to 2,000 NCDs amounting to Rs 200 crore, Shriram City Union Finance said in a regulatory filing. - moneycontrol.

🍒 Premature withdrawal of liquidity will hurt growth: Shaktikanta Das : Rolling back loose monetary policies prematurely can adversely affect economic revival which is still fragile and narrow and, at least for now, inflationary pressures are not going to weigh on the central bank’s policy formulation as they are more due to supply-side factors and not because of low interest rates or surplus liquidity, Reserve Bank of India governor Shaktikanta Das said. The RBI is, however, conscious of the risks posed by ultra-low interest rates and flooding the market with excess liquidity. “We are very much aware that a premature withdrawal will be detrimental to growth,” Das, who just completed two years at RBI told ET in an interview. “A delayed withdrawal will also have its own negative effects. We are fully aware and conscious of both the ends of the situation. Therefore, we have to take a balanced call and at the right time. Let me reiterate that our forward guidance to markets stands and we shall adhere to it.” - economic times

🍒 Uday Shankar takes over as FICCI President : Media executive Uday Shankar has taken over as Ficci President for 2020-2021, the industry body said on Monday. Currently, Shankar is President, The Walt Disney Company APAC & Chairman, Star & Disney India. He has taken over from Sangita Reddy, Joint Managing Director, Apollo Hospitals Group. The Walt Disney Company had recently said Shankar will step down as President of its Asia Pacific business and Chairman of Star and Disney India with effect from December 31, 2020. - economic times

🍒 DHFL: Worsening retail assets can complicate resolution : Even as lenders to distressed Dewan Housing Finance Corporation Ltd are expecting higher bids from Oaktree and Piramal, the deteriorating portfolio of the housing finance company could be a cause of worry. According to updated business figures for October and November, available at the data centre, DHFL’s retail book is said to have shown a further deterioration as also the performing portfolio. - Business Line

🍒 Bharti AXA General nets ₹95 cr profit in H1 : Bharti AXA General Insurance, a private general insurer, has recorded a net profit of ₹95 crore in the first six months of the current fiscal. The company had recorded a net loss of ₹90 crore in the same period last fiscal. However, gross written premium for April-September 2020 slipped to ₹1,574 crore (₹1,586 crore). The marginal drop in the premium income could be attributed to the impact of the ongoing Covid-19 pandemic, which resulted in flat growth in line with the non-life insurance industry, this general insurer said. - Business Line

🍒 To provide health and life cover, insurers offer ‘unique’ facilities for medical tests : Insurers are coming up with unique solutions for customers who wish to purchase high-ticket health and life insurance policies but are worried about getting medical tests amid the ongoing Covid-19 pandemic. “People want to buy insurance policies with higher sum insured, given the uncertainties of the pandemic and high medical costs, but often the need for medical tests proves to be a dampener,” said an insurance executive who did not wish to be named. - Business Line

🍒 Despite five-fold increase, India’s deposit insurance cover among lowest globally : The Budget 2020-21 had brought some respite to depositors by increasing the deposit insurance cover to ₹5 lakh (effective February 4) from ₹1 lakh earlier. Yet the latest annual survey by the International Association of Deposit Insurers (IADI) reveals that India ranks in the bottom 20 among the 110-odd countriesin terms of insurance cover. The coverage limits range from below $1,000 to $300,000; India’s ₹5-lakh cover works out to about $7,000, according to the IADI Survey (around $6,800 as per current exchange rate). Countries such as Philippines ($9,875), Mexico ($1,35,222), Argentina ($25,130) Russian Federation ($22,615), Turkey ($25,253), Malaysia ($61,080) and Brazil ($62,033) rank way higher than India, according to the latest IADI Survey. - Business Line

🍒 Aided by two-wheeler loans, Shriram City sees strong growth in Q3 disbursements : Shriram City Union Finance Ltd, a leading NBFC in the retail financing space, will see its disbursements doubling in Q3 when compared to the preceding quarter, aided by strong growth in two-wheeler loans and return of business to pre-Covid levels in most of the other loan segments. For the company, disbursement levels are slowly coming back to pre-Covid-19 levels, barring the SME (small and medium enterprises) segment, which is expected to take at least another quarter to reach normal levels. - Business Line

🍒 Glitter online: Increased digitisation is remoulding India's gold loan biz : The gold financing business in India is undergoing a major transformation, whose main driver is increased use of technology for faster loan processing, accurate gold valuation, safekeeping, auctions and cost-cutting. According to a report by the World Gold Council, several leading gold loan non-banking financial companies (NBFCs) such as Muthoot Finance, Manappuram Finance and others have witnessed a significant rise in online transactions in recent months. The report states that 19.2 per cent of Muthoot Finance’s gold transactions now takes place online. - Business Standard

🍒 NBFCs expect higher credit loss on Covid-19 woes, says study : Non-Banking Financial Companies (NBFCs) are expecting higher credit loss as well as an increase in provision coverage rates, mainly due to the impact of the coronavirus pandemic, according to a study. The study by leading consultancy EY is based on an analysis of the standalone financial statements of 42 NBFCs, including 14 Housing Finance Companies (HFCs), for the year ended March 31, 2020. The companies have reported an "increase in Expected Credit Loss (ECL) allowance by 33 per cent and an overall increase in provision coverage rate by 26 per cent as at 31 March 2020 compared to the year ended 31 March 2019". Further, COVID-19 impact accounted for 19 per cent of the ECL allowance as on March 31 this year. - Business Standard

🍒 Gold prices drop Rs 187 to Rs 48,859/10 gm as investors chase riskier assets : Gold prices slumped by Rs 187 to Rs 48,859 per 10 gram in the Mumbai retail market on a stronger rupee and a rally in the equity market. The precious metal traded lower on the hope of improvement in the global economic outlook as nations rollout COVID vaccine and investors’ appetite for riskier assets. The rate of 10 gram 22-carat gold in Mumbai was Rs 44,755 plus 3 percent GST, while 24-carat 10 gram was Rs 48,859 plus GST. The 18-carat gold quoted at Rs 36,644 plus GST in the retail market. Silver prices rose Rs 368 to Rs 62,600 per kg from its closing on December 11.

🍒 Sensex jumps 154 points to fresh record; Nifty tops 13,550 : After touching its record intra-day peak of 46,373.34 during the day, the 30-share BSE index ended 154.45 points or 0.34 per cent higher at 46,253.46. Similarly, the broader NSE Nifty rose 44.30 points or 0.33 per cent to close at a record 13,558.15. It hit a lifetime high of 13,597.50 during the session. ONGC was the top gainer in the Sensex pack, rallying around 5 per cent, followed by L&T, NTPC, ICICI Bank, Sun Pharma, HCL Tech, Titan and Kotak Bank. On the other hand, M&M, Bajaj Auto, Tech Mahindra and Bajaj Finserv were among the laggards.

🍒 Rupee gains 9 paise to 73.55 against US dollar : The rupee advanced by 9 paise to settle at 73.55 (provisional) against the US dollar on Monday, buoyed by sustained foreign fund inflows and heavy buying in domestic equities. t the interbank forex market, the domestic unit opened at 73.62 against the US dollar, then gained ground and touched an intra-day high of 73.48 against the greenback. The local unit finally closed at 73.55 against the American currency, registering a rise of 9 paise over its previous close.

13.12.2020: Today's Banking / Financial News

13.12.2020: Today's Banking / Financial News at a Glance

🍒 RBI elevates 3 CGMs : The Reserve Bank of India (RBI) has elevated three Chief General Managers (CGMs) as Executive Directors (EDs) with effect from December 11. R. Subramanian, Rohit Jain and R.S. Ratho are the new EDs. Following the aforementioned appointment, the central bank now has 13 EDs. As ED, Subramanian will look after Foreign Exchange Department, Financial Markets Regulation Department, Internal Debt Management and International Department. Prior to being promoted, he was CGM-in-Charge, Enforcement Department, the central bank said in a statement. Jain will look after Department of Supervision (Risk, Analytics and Vulnerability Assessment). Prior to this, he was CGM-in-Charge, Department of Supervision. Ratho will look after Financial Markets Operations Department, Department of External Investments and Operations, Legal Department and Secretary’s Department. He was CGM, Financial Markets Operations Department. - Business Line

🍒 SBI will prefer co-origination models of lending to MSMEs: Chairman : State Bank of India (SBI) will prefer the co-origination model to cater to the financing needs of MSMEs and collaboration with fintechs is a good idea as it helps in assessing the risk profile of the borrower in a better manner, its chairman Dinesh Kumar Khara said on Saturday. Pointing out that the Micro, Small and Medium Enterprises (MSMEs) are constrained today in terms of cash flows, time gap in realising receivables, among others and also the level of lenders' confidence in funding them, Khara said collaborating is a better model than lending directly to MSMEs. "The fact of the matter is that today not many NBFCs have come in this space. And of late, when it comes to finding solutions, we feel that apart from lending directly to the MSMEs, there is a way forward in terms of collaborating with these NBFCs along with the biggest fintechs who have the ability to process the structured and unstructured (financial) data to have a better sense in terms of assessment of risk," Khara said. Based on that assessment, he said, bankers feel very comfortable in lending to the MSMEs. He was speaking at a webinar on financing the unfinanced organised by the Global Alliance for Mass Entrepreneurship (GAME). - Business Standard

🍒 Central Bank of India to raise up to ₹500 crore by issuing bonds : Central Bank of India on Friday said it will raise up to ₹500 crore by issuing Basel III compliant bonds. "The capital raising committee of the board of directors of the bank at its meeting held today i.e., December 11, 2020, considered and approved the proposal for raising of capital funds up to ₹500 crore," the bank said in a regulatory filing. Central Bank of India reported over 20% rise in its net profit at ₹161 crore for the second quarter ended 30 September. The bank had posted a net profit of ₹134 crore in the corresponding quarter of the previous financial year. Its total income grew nearly 2% to ₹6,833.94 crore during July-September 2020, against ₹6,703.71 crore in the year-ago period, Central Bank of India said in a regulatory filing. - Live Mint

🍒 Big private lenders see their coffers swell : A wider network, better capital position and stronger market perception are helping larger private sector banks expand their deposit base much quicker than their smaller peers, especially the vintage private banks, showed data from Capitaline. Events at some banks and non-banks in the past one year that attracted regulatory interventions could have led to greater faith in bigger banks. For instance, deposits at HDFC Bank and ICICI Bank as on 30 September were 20% higher from a year ago, despite the two banks already having large outstanding deposits. On an absolute basis, HDFC Bank saw a growth of ₹2.07 trillion, while rival ICICI Bank’s deposits rose ₹1.36 trillion in the 12 months to September 2020, showed data from Capitaline. Other private lenders like Axis Bank and Kotak Mahindra Bank also saw their deposits rise by ₹51,496 crore and ₹28,493 crore, respectively, as on 30 September from a year earlier, the data showed. - Live Mint

🍒 YES BANK unveils premium credit card for affluent, HNIs. Features, benefits : YES BANK has recently launched Yes Private Prime Credit Card for India’s affluent and ultra High-Net-Worth Individuals (HNIs). The product will offer global privileges and experiences across travel, lifestyle, hospitality, dining, entertainment and wellness, the lender said. The credit card is available on the Mastercard World Elite platform. It is focused on ultra HNI consumers, offering exclusive concierge service, features and benefits that uniquely appeal to affluent cardholders. This by-invitation-only credit card provides unique customer value proposition along with a host of experiences. - Live Mint

🍒 No specific plan needed for invoking Resolution Framework: RBI : The Reserve Bank on Saturday said that borrowers opting for resolution of COVID-related stressed loans are not required to submit any specific plans. In FAQs on Resolution Framework for COVID-19 related stress, the RBI said that borrowers can invoke the resolution framework by merely submitting a request to the lending institutions. The Reserve Bank had announced a resolution framework to help the entities facing financial stress on account of disruption in normal business activity on account of coronavirus pandemic."The Resolution Framework does not require any resolution plan in any form to be submitted to the lending institutions at the time of request for invocation. Rather, for invocation, the borrowers are required to merely submit a request to the lending institutions for being considered under the Resolution Framework," the RBI said. On submission of the request, the lending institutions will take an in-principle decision - as per their Board-approved policy - on invoking the Resolution Framework, it said. - economic times

🍒 Lenders look to revive restructuring of JP Associates outside IBC : Lenders to Jaiprakash Associates Ltd are looking at a possible resolution outside the Insolvency and Bankruptcy Code. Sources close to the development confirmed that the consortium of lenders, led by ICICI Bank, are working on a proposal for restructuring under the RBI’s June 7 circular. The objective is to go in for timely restructuring so that lenders can get back some of their dues. Lenders are expected to submit the proposal to the RBI in the coming months as discussions are still on. “There have been previous instances also when similar discussions were started but did not fructify. Banks are now hoping that this will go through,” said a person familiar with the development, adding that public sector lenders are taking a keen interest. - Business Line

🍒 Retail loans showing some stress, but no alarm bells yet: Experts : Retail loans, the mainstay of banks, have started showing some cracks but the stress is not alarming, said executives and analysts. While a Macquarie report had pegged nonperforming assets (NPAs) in this category to double to 4 per cent from 2 per cent levels, financial institutions have stepped up their collection efficiency efforts to improve bounce rates in retail segments. The National Automated Clearing House (NACH), a clearing service for interbank transactions run by the National Payments Corporation of India (NPCI), shows that bounce rates by volume have gone up to 40.5 per cent, and 31.1 per cent by value. These were 31 per cent and 25 per cent, respectively, in February. NACH is indicative of only a quarter of the total retail payments segment and does not reflect intrabank transactions, or those made by cash or cheque. - economic times

🍒 To cope with Covid blues, borrowers must ask lenders to invoke Resolution Framework: RBI : Borrowers are required to merely submit a request to the lending institutions for invocation of resolution under the Resolution Framework for Covid-19-related stress, according to the Reserve Bank of India (RBI). In its frequently asked questions (FAQs) on the Resolution Framework, the central bank said the Framework does not require any resolution plan in any form to be submitted to the lending institutions at the time of request for invocation. Rather, for invocation, the borrowers are required to merely submit a request to the lending institutions for being considered under the Resolution Framework. - Business Line

🍒 Borrowers seeking debt resolution can make a request by December 31: RBI : The Reserve Bank of India (RBI) on Saturday clarified that borrowers, seeking resolution of their bad debt under the Covid-19 stress scheme as suggested by the KV Kamath committee, need not submit a resolution plan that the lenders would evaluate, rather, they can simply request by December 31. “The Resolution Framework does not require any resolution plan in any form to be submitted to the lending institutions at the time of request for invocation," the central bank said in an update of its frequently asked question (FAQ) section on resolution framework for Covid-19 related stress. “Rather, for invocation, the borrowers are required to merely submit a request to the lending institutions for being considered under the resolution framework," After the request is submitted, the lending institutions will take an in-principle decision on invoking the resolution framework. - Business Standard

🍒 AP CM Jagan asks bankers to support welfare schemes : Andhra Pradesh Chief Minister YS Jagan Mohan Reddy has urged bankers to extend support in implementing government welfare schemes and strengthen the rural economy. Addressing the 213th State Level Bankers Committee (SLBC) meeting on Friday, the Chief Minister asked the bankers to focus on doubling farmers’ income, reducing investment costs, providing proper market facilities for produce, and to support farmers at the time of natural disasters. He said the government has started various initiatives to reduce the investment cost to farmers. It has been providing financial assistance of ₹13,500 per annum through Rythu Bharosa Scheme. Fifty per cent of farmers in the State have less than half a hectare and 80 percent of investment cost to those farmers would be covered through this scheme. - Business Line

🍒 Bharti AXA Life ties up with Primero Skills to support healthcare workers amid Covid-19 pandemic : ‘GotYouCovered’ campaign, a special initiative to appreciate frontline healthcare workers who are striving to protect people from the Covid-19 pandemic. Observing the Universal Health Coverage Day promoted by the World Health Organisation, that urges all nations to provide affordable and quality healthcare to citizens, the company aims at spreading awareness of the importance of protecting life and health against all uncertainties. Bharti AXA Life Insurance has joined hands with Primero Skills & Training, a skill development organisation imparting free skills and training programmes to youth under the Atmanirbhar Bharat initiative, to support its healthcare workers by masking them against life and health risks during the ongoing Covid pandemic. - Business Line

🍒 EXIM Bank extends LOC of $448 million to Uzbekistan : Export-Import Bank of India (Exim Bank), on behalf of the Government of India, has extended a Line of Credit (LOC) of $448 million to the Government of Republic of Uzbekistan. This LOC is for financing various projects in the Roads & Transport, Water and Technology & Communication sectors in Uzbekistan, Exim Bank said in a statement. With the signing of this LOC Agreement, Exim Bank has now in place 266 Lines of Credit, covering 62 countries in Africa, Asia, Latin America, CIS and the Oceania, with credit commitments of around $26.59 billion, available for financing exports from India. - Business Line

🍒 AIFs can leverage without limits in IFSC : GIFT City regulator IFSCA has removed several restrictions in current regulations on Alternative Investment Funds (AIFs) operating in International Financial Service Centre (IFSC), providing more flexibility to offshore fund managers looking to set up funds in such centres in the country. Restrictions on leverage, creation of co-investment pools and diversification norms have been done away with by the International Financial Services Centres Authority (IFSCA). - Business Line

🍒 Non-banks will see asset growth only in FY22, says Crisil : Assets of India’s non-bank financiers are expected to shrink for the first time in two decades in the current financial year, rating agency Crisil said, adding an expansion is likely only in FY22. “Assuming that the current green shoots gain momentum, we expect growth to be positive for non-banking financial companies (NBFCs) in the next fiscal," Gurpreet Chhatwal, president, Crisil Ratings told reporters on Friday. Crisil expects loan growth for NBFCs in FY22 to be subdued at 5-6%. Non-bank lenders, Chhatwal said, have been facing a challenging operating environment since September 2018 right after the Infrastructure Leasing & Financial Services (IL&FS) default. He said while it was expected that the situation would normalize in the early part of the current year, the onslaught of covid-19 moved the focus to asset quality and funding challenges. - Live Mint

🍒 Exim Bank extends $448-mn line of credit to Uzbekistan : Export-Import Bank of India (Exim Bank) on Saturday said it has extended a $448-million line of credit (LOC) for various infrastructure projects in Uzbekistan. The LOC has been extended on behalf of the Indian government, Exim Bank said in a statement. With the signing of this LOC agreement, Exim Bank has now in place 266 LOCs, covering 62 countries in Africa, Asia, Latin America, Commonwealth of Independent States and the Oceania, with credit commitments of around $26.59 billion, available for financing exports from India, it added. The LOC of $448 million to Uzbekistan has been extended for financing various projects in the roads and transport, water and technology and communication sectors in Uzbekistan. - financial express

🍒 Demand for gold loans slows down after recording a good growth in the second quarter: CSB Bank chief : The demand for gold loans has slowed down after recording a good growth in the second quarter, CSB Bank MD and chief executive CVR Rajendran said on Friday. The Thrissur based lender said its gold loan portfolio grew by Rs 1,100 crore in the second quarter, an increase of 30% quarter-on-quarter and 47% year-on-year. The RBI’s relaxation on LTV norms has helped the bank increase its gold loan portfolio, which currently accounts for 35% of the total loan book. CSB had earlier said average LTV of the gold loan portfolio is 71% and the yield on gold loans improved from 12.22% in Q1 to 12.53% during Q2, which indicates that the growth has been achieved without compromising on the yield. - financial express

🍒 Pandemic fast-tracked India’s digitisation march, says NPCI COO; acceptance of UPI increasing : India’s march towards digitisation of its payment landscape has been fast-tracked during the coronavirus pandemic, said Praveena Rai, Chief Operating Officer, National Payments Corporation of India’s (NPCI) on Saturday. The COO of the umbrella body for retail payment and settlements in India said that the pace of digitisation of India has also increased due to the regulatory framework and policies of the government and the Reserve Bank of India (RBI), new agency PTI reported. NPCI is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007. “Digitisation has revolutionized every single aspect of life and onboarding has risen substantially. There has been gradual migration from cash to digital payments both offline and online”, Praveena Rai said. The COO of NPCI was speaking at a seminar organised by Xavier School of Management. She added that digitisation has cut across all sections of the society. Praveen Rai further added that there has been a rise in digital engagements by giving reward programmes to customers. According to her, digitisation is also driving a habit of savings among the customers which is also leading to financial inclusion in the country. The NPCI COO said that now people, consumers and merchants are preferring to go digital, adding that there also has been a big growth in UPI driven by acceptance of QR. - financial express

🍒 Investments via SIPs dive to 30-month low : Many retail investors have preferred to use Systematic Investment Plans (SIP) to invest in mutual funds over the last six years, resulting in sustained growth in monthly investments. But the Covid-19 pandemic has impacted the inflow, which has declined gradually since this April. The monthly SIP investment of ₹7,302 crore in November 2020 was the lowest since May 2018. SIPs in mutual funds are preferred by retail investors who invest a fixed sum at regular intervals, in the scheme of their choice, thus imbibing discipline in their investment process. But the monthly investments since May 2020 have been lower compared to the corresponding month in the previous year. This gap expanded to 11.74 per cent in November this year. - Business Line

🍒 Gold prices rise to Rs 49,290 per 10 gram, outlook bearish : Gold prices edged higher to settle at Rs 49,290 per 10 gram on December 11 as participants trimmed their long position as seen by the open interest. The precious metal ended the week with a marginal loss of 0.14 percent for the week. The rate of 10 gram 22-carat gold in Mumbai was Rs 44,926 plus 3 percent GST, while 24-carat 10 gram was Rs 49,046 plus GST. The 18-carat gold quoted at Rs 36,785 plus GST in the retail market. Silver prices fell Rs 368 to Rs 62,232 per kg from its closing on December 11.

🍒 Small & Midcaps underperform: Only 34 stocks in BSE 500 rose 10-40% this week : It was a historic week for Indian markets as both Sensex and Nifty50 hit fresh record highs and climbed crucial milestone levels. The S&P BSE Sensex climbed Mount 46K while the Nifty50 rose above 13,500 for the first time. As benchmark indices hit fresh record highs, small & midcaps underperformed in the week gone by but there were more than 30 stocks that rose 10-40 percent in the same period. The S&P BSE Sensex rallied 2.2 percent while the Nifty50 was up 1.9 percent for the week ended December 11. Meanwhile, there was 0.7 percent rise seen in the S&P BSE Midcap index, and about 1.3 percent growth recorded in the S&P BSE Smallcap index in the same period. There are as many as 34 stocks in the BSE 500 index that rose 10-40 percent. These include MMTC, Bank of Baroda, Canara Bank, Vedanta, Punjab National Bank, Shoppers Stop, Wockhardt, IFCI, and PC Jeweller.

12.12.2020: Today's Banking / Financial News

 12.12.2020: Today's Banking / Financial News at a Glance

🍒 RBI eases norm for entities availing TLTRO funds to get guarantee : The Reserve Bank of India (RBI), on Friday, said the credit outstanding stipulation for availing credit guarantee under ECLGS (Emergency Credit Line Guarantee Scheme) 2.0 will not apply to funds availed under On Tap TLTRO (Targeted Long-Term Repo Operation). Currently, under ECLGS 2.0, only entities with credit outstanding between ₹50 crore and ₹500 crore are eligible for credit guarantee. The RBI’s latest move will increase liquidity availability and credit guarantee to those entities with credit outstanding below ₹50 crore and above ₹500 crore. Banks have been encouraged to synergise the two schemes – ECLGS 2.0 and On Tap TLTRO – by availing funds from the RBI under TLTRO and seek guarantee under ECLGS to provide credit support to stressed sectors (identified by the Kamath Committee). - Business Line

🍒 Banks sanction Rs 2.05 lakh cr to 81 lakh MSMEs under credit guarantee scheme : The Finance Ministry on Friday said banks have sanctioned loans worth Rs 2,05,563 crore to about 81 lakh accounts under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector that was impacted by disruptions caused due to the coronavirus pandemic. While, 40 lakh MSME accounts have received Rs 1,58,626 crore till December 4, the Finance Ministry said in a series of tweets. "Rs 3 lakh cr Collateral-Free Guaranteed Loans - Budgetary provision of Rs 4,000 crore made for the Scheme in First Supplementary Demand for Grants for FY 2020-21," a tweet said.Announcing Aatmanirbhar Bharat Package 3.0 last month, Finance Minister Nirmala Sitharaman had said that Rs 2.05 lakh crore sanctioned and Rs 1.52 lakh crore disbursed under ECLGS 1.0. "As part of the Aatmanirbhar Bharat Abhiyan 3.0 (announced on November 12), ECLGS Scheme has been extended through ECLGS 2.0 for the 26 stress sectors and health care sector with credit outstanding of above Rs 50 crore and up to Rs 500 crore as on February 29, 2020," a tweet said. - economic times

🍒 Post-lockdown boost: Public-sector banks told to tap markets aggressively to help spur economic activities : The government has impressed upon public-sector banks (PSBs) to raise capital from the markets more aggressively, taking advantage of abundant liquidity, and ensure a sustained credit push to help spur economic activities, as lockdown curbs are all but lifted. At the same time, it is planning to finalise by late February or early March the distribution of the Rs 20,000-crore capital, approved in September, among various PSBs after assessing their financial performance in the third quarter as well as success in fund-raising, sources told FE. “The idea is to ensure that PSBs have adequate capital to not just meet regulatory requirement but also substantially boost lending. PSBs have lined up fund-raising plans, so that they don’t have to rely excessively on the government for more capital,” said a senior banker. - financial express

🍒 COVID crisis has brought an inflection point in banking system: Axis Bank chief : The pandemic due to COVID-19 has ushered in an inflection point in the entire banking system which is going to bring in radical changes in terms of lending parameters, MD and CEO of Axis Bank Amitabh Chaudhary said on Friday. Speaking at a session on financial system organised by XLRI, he said that the COVID crisis has created a huge disruption in the banking system in the country where individual banks are feeling its impact. He said that due to the pandemic, individuals ability to repay loans has reduced significantly while 90 per cent of the banks’ books is in moratorium. “The crisis has increased the health costs and the average individual household needs money while banks at the same time will have to be more cautious. A vicious negative cycle has set in while discretionary spending has hit an all time low”, Chaudhary said. - financial express

🍒 Finance Ministry gives progress report on Atmanirbhar package : The finance ministry on Friday provided details of the progress made under various schemes announced in the Atmanirbhar package. It noted that around 50% of the loans have been disbursed under the Rs 3-lakh crore collateral free guaranteed loan scheme for businesses, a part of the Atmanirbhar package announced in May 2020. “Loans worth Rs 2.05 lakh crore have been sanctioned to over 80 lakh accounts, of which Rs 1.58 lakh crore have been disbursed to over 40 lakh accounts,” it noted detailing the progress under the scheme. The scheme provides fully guaranteed and collateral-free loans for amounts up to 20% of outstanding loans to all business enterprises, individuals seeking credit for business purposes and MUDRA borrowers. - economic times

🍒 LIC allows online switching of Ulips : To help policyholders during the pandemic, the national life insurer LIC has allowed them to switch online funds under ulip policies through its portal. The facility will be available for those policyholders who are registered for its premier services, LIC said in a statement on Friday. This online switching of funds will be available for the new endowment plus (Plan 935), Nivesh plus (Plan 849) and the SIIP (Plan 852), it added. There is no fee for doing so. One switch is allowed per day per policy through an OTP-based authentication system, it added. The insurance behemoth has also launched a multilingual call centre by extending the support to Marathi, Tamil and Bengali. The corporation plans to add more regional languages in the near future. Call centre services were available only in English and Hindi since September 2018. BEN MR - economic times

🍒 I-T refunds worth Rs 1.45 lakh cr issued to 89 lakh taxpayers : The Finance Ministry on Friday said the Income Tax Department has issued refunds worth Rs 1.45 lakh crore to about 89 lakh taxpayers so far this fiscal. This includes personal income tax (PIT) refunds during this period. "CBDT issues refunds of over Rs 1,45,619 crore to more than 89.29 lakh taxpayers between 1st April, 2020, to 08th December, 2020," the Finance Ministry said in a tweet. - economic times

🍒 Lenders look to revive restructuring of JP Associates outside IBC : Lenders to Jaiprakash Associates Ltd are looking at a possible resolution outside the Insolvency and Bankruptcy Code. Sources close to the development confirmed that the consortium of lenders, led by ICICI Bank, are working on a proposal for restructuring under the RBI’s June 7 circular. The objective is to go in for timely restructuring so that lenders can get back some of their dues. Lenders are expected to submit the proposal to the RBI in the coming months as discussions are still on. “There have been previous instances also when similar discussions were started but did not fructify. Banks are now hoping that this will go through,” said a person familiar with the development, adding that public sector lenders are taking a keen interest. - Business Line

🍒 ATM moment of banking services is here as lenders make apps open for all : Long after automated teller machines (ATM) were made interoperable for bank customers, the whole gamut of banking is becoming membership agnostic. Earlier this week, ICICI Bank created some buzz by announcing its banking app — iMobile Pay — would be free for all to use. A customer need not be with the bank but can link her bank account with a Unified Payments Interface (UPI) ID with ICICI Bank and start using it for all kinds of payments across all platforms. Much like how Google Pay is being used for paying bills and purchases through UPI. iMobile Pay can also be used to get credit cards, instant loans, and, if needed, a savings bank account with the ICICI Bank. In the coming days, the bank plans to introduce products such as fixed deposits, recurring deposits, mutual funds and insurances through the app. - business standard

🍒 ICICI Prudential's assets under management cross Rs 2 trillion : ICICI Prudential Life, which is entering the 20th year of operations, on Friday said that its assets under management have crossed Rs 2 lakh crore. The company, the first in the industry to go public, started operations 20 years ago with the issuance of policies to seven underprivileged children and closed the first year of operations with an AUM of around Rs 100 crore (in FY01). The AUM grew to about Rs 50,000 crore in FY10 and subsequently the company was the first in the insurance industry to achieve an AUM of Rs 1 lakh crore in February 2015. As of September 2020, its total sum assured stood at Rs 18.06 lakh crore. "Achieving the Rs 2-lakh-crore assets milestone demonstrates the trust reposed in us by our customers," ICICI Prudential Life MD and chief executive NS Kannan said. "As one of the largest life insurers, it is our mission to protect and provide financial security to every citizen."- business standard

🍒 Kotak can’t pay dividend on preference shares, says RBI : The Reserve Bank of India (RBI) has barred Kotak Mahindra Bank from paying dividend on perpetual non-cumulative preference shares (PNCPS) worth ₹500 crore that it sold in 2018 to comply with a regulatory ceiling on promoter shareholding. The regulator first ordered banks and certain categories of non-banks on 4 December not to pay dividends from their profits in FY20 to conserve capital but clarified on Thursday that it applied to PNCPS as well in a letter to Kotak Mahindra Bank. - Live Mint

🍒 NBFCs AUM to grow at 5-6 per cent in FY22: Crisil : The asset under management (AUM) of non-banking finance companies, including housing finance companies, is likely to see a positive growth but will be muted at 5-6 per cent in the next financial year, according to Crisil Ratings. The turnaround will be led by larger entities with stronger parentage. In the current fiscal, NBFCs’ AUM is likely to de-grow for the first time in the last two decades, it said. “Navigating a raft of headwinds for over two fiscals – culminating in de-growth in the current fiscal – assets under management (AUM) of non-banking financial companies (NBFCs) is set to grow again – although at a relatively subdued 5-6 per cent next fiscal,” the agency said in a report. According to the agency’s president Gurpreet Chhatwal, despite an estimated GDP growth of 10 per cent next fiscal, overall NBFC sector growth is likely to be slower because access to funding remains a challenge due to concerns about the impact of the pandemic on asset quality. “Additionally, competition is expected to be more intense from banks – which are flush with low-cost deposits and better placed with improved capital buffer than in the previous years,” he said. - financial express

🍒 Gold eases to Rs 49,046 per 10 gram on a firm dollar, silver also falls : Gold prices fell Rs 145 to Rs 49,046 per 10 gram in the Mumbai retail market on a firm dollar and subdued global cues. The precious metal traded under pressure on optimism surrounding coronavirus vaccine after the USFDA approved Pfizer/BioNTech jab for emergency use. The metal has dropped Rs 270, or 0.55 percent, in the domestic market this week and traded lower in four of the five sessions. The rate of 10 gram 22-carat gold in Mumbai was Rs 44,926 plus 3 percent GST, while 24-carat 10 gram was Rs 49,046 plus GST. The 18-carat gold quoted at Rs 36,785 plus GST in the retail market. Silver slipped Rs 368 to Rs 62,232 per kg from its closing on December 10.

🍒 India's forex reserves surge by $4.525 billion to record $579.346 billion : The country's foreign exchange reserves surged by $4.525 billion to touch a record high of $579.346 billion in the week ended December 4, the RBI data showed. In the previous week ended November 27, the reserves had declined by $469 million to $574.821 billion. In the reporting week, the increase in reserves was on account of a rise in foreign currency assets (FCA), a major component of the overall reserves. FCA rose by $3.932 billion to $537.386 billion, the Reserve Bank of India's (RBI) weekly data showed. Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves. 

🍒 Rupee ends 2 paise higher at 73.64 against US dollar ; The rupee traded in a narrow range and settled for the day 2 paise higher at 73.64 against the US dollar on Friday, tracking recovery in doemstic equities towards the fag-end of the session. At the interbank forex market, the domestic unit opened at 73.65 against the US dollar and witnessed an intra-day high of 73.56 and a low of 73.71. 

🍒 Markets perch near all-time highs; bank, FMCG stocks shine : After touching its all-time intra-day high of 46,309.63, the 30-share BSE Sensex dipped into the negative zone in late-afternoon trade. However, it staged a comeback to end 139.13 points or 0.30 per cent higher at 46,099.01, just shy of its closing record. On similar lines, the broader NSE Nifty rose 35.55 points or 0.26 per cent to 13,513.85. It hit a lifetime high of 13,579.35 during the session.ONGC topped the Sensex gainers’ chart, rallying 5.68 per cent, followed by NTPC, Tata Steel, ITC, ICICI Bank, Titan, Bajaj Auto and SBI. On the other hand, Axis Bank, M&M, Tech Mahindra, HCL Tech, Bajaj Finserv and Infosys were among the laggards, skidding up to 2.19 per cent..

11.12.2020: Today's Banking / Financial News

11.12.2020: Today's Banking / Financial News at a Glance

🍒 Canara Bank sets issue price for Rs 2,000 crore QIP at Rs 103.50 a share : State-run Canara Bank on December 10 said it has approved the issue price at Rs 103.50 per share for its qualified institutional placement (QIP) to raise Rs 2,000 crore. Earlier this week, the bank had set the floor price for the issue at Rs 103.50 apiece. In respect of the QIP, the sub-committee of the board at its meeting held on December 10 "approved the closure of the issue period for QIP today (i.e., December 10, 2020)", Canara Bank said in a regulatory filing.The sub-committee approved the "issue price at the floor price of Rs 103.50 per equity share…for an aggregate value of Rs 2,000 crore to be allotted to eligible qualified institutional buyers in the QIP", the bank said. Further, it has also approved the confirmation of allocation note to be sent to the qualified institutional buyers, intimating them of allocation of equity shares pursuant to the QIP, it added. Stock of Canara Bank closed 4.37 per cent down at Rs 122.50 apiece on BSE. - moneycontrol

🍒 Indian Bank aims to grow MSME portfolio riding on mentoring programme : Indian Bank is aiming to grow its MSME portfolio riding on its small entrepreneurship mentoring programme, christened MSME Prerana, as it will enable small businesses to access bank credit more easily. The bank’s MSME portfolio is of Rs 65,176 crore (17.34 lakh accounts), which is 18% of total advances portfolio. During the first half of 2020-21, the MSME portfolio had grown by 14.73%. Under the Prerana, online training sessions for MSMEs are being conducted to train them in basics of accounting, maintenance of books of accounts, government and bank schemes. Training programmes are being arranged in vernacular languages for the benefit of MSMEs. The bank has entered into tie-ups with Poornatha & Co, a entrepreneurial development organisation and Michigan Academy for Developing Entrepreneurs for this purpose. The lender has recently started its fourth batch of MSME Prerana for entrepreneurs in Tamil Nadu. MSME Prerana, a first-of-its-kind initiative by a bank for the MSME sector, was launched by Union finance minister Nirmala Sitharaman on October 6, 2020. - financial express

🍒 RBI imposes penalty of ₹10 lakh on HDFC Bank : Private sector lender HDFC Bank, on Thursday, said the Reserve Bank of India has imposed a penalty of ₹10 lakh on it. “The RBI has, vide its letter dated December 4 (which was received by the bank on December 9), imposed a monetary penalty of ₹10 lakh on the bank for bouncing of SGL, which lead to shortage of balance in certain securities in the bank’s CSGL account on November 19,” it said in a regulatory filing. The bank has since enhanced its review mechanism to ensure that such incidents do not recur, it further said. On Thursday, HDFC Bank scrip closed 1.42 per cent lower at ₹1,385.85 apiece on the BSE.- Business Line

🍒 RBI to Kotak Mahindra Bank: No dividend payment on perpetual non-cumulative preference shares : The Reserve Bank of India has restricted Kotak Mahindra Bank from paying dividend on perpetual non-cumulative preference shares (PNCPS). The private sector lender, in a regulatory filing, said it has received communication from the RBI on this issue. The central bank had, on December 4, issued a circular advising banks not to make any dividend payment on equity shares from the profits pertaining to the financial year ended March 31, 2020. “It is clarified that the above restriction on dividend distribution also applies to PNCPS,” the RBI said in its letter to Kotak Mahindra Bank.- Business Line

🍒 Indian Bank makes requisite accounting entries to set off losses : Indian Bank said that it made requisite accounting entries setting off accumulated losses of Rs18,975.53 crore from the share premium account of the bank. The bank informed exchanges that on November 30, 2020, a special resolution was passed by the shareholders of the bank approving "Appropriation of accumulated losses of Rs.18,975.53 crore from share premium account of the bank in the Extraordinary General Meeting (EGM), we have to inform you further that the bank on the date, with prior approval of Reserve Bank of India, has passed the requisite accounting entries setting off accumulated losses of Rs.18,975.53 crore from share premium account of the bank. On November 30, at the extraordinary general meeting (EGM) the Bank approved the appropriation of accumulated losses of Rs 18,975.53 crore from the share premium account of the bank. - Business Standard

🍒 RBI lays down stringent dividend distribution formulae for NBFCs : The Reserve Bank of India has said that non-banking finance companies (NBFC) with minimum 15% capital adequacy and net non-performing assets (NPA) below 6% for three years will be eligible to declare dividend from this fiscal onwards. In a graded dividend payout format released on Wednesday, the regulator said that a better managed NBFC with less than 4% net NPA can still become eligible for dividend distribution even if the minimum capital and leverage norms are not met for the previous two years. These are part of a matrix where capital adequacy, leverage ratio, adjusted net worth and net NPA set the criteria for distributing the earnings with shareholders. - economic times

🍒 ICICI opens new front with mobile app interoperability, other banks may follow : State Bank of India (SBI) will follow ICICI Bank's unprecedented move to open its mobile application to use by other bank's customers using the UPI platform, opening a new front in the battle for new customers and cheap deposits in the banking sector. ICICI on Monday announced that customers of any bank can link their bank account generate a UPI ID and start sending and receiving money to any bank account, payment app or digital wallet immediately. Moreover customers will also get instant access to the entire range of ICICI Bank’s banking services. Anup Bagchi, executive director, retail banking at ICICI said the bank hopes to benefit from new customer leads and ultimately deposits in the long run by allowing other bank customers to use its application. - economic times

🍒 Kotak can’t pay dividend on preference shares, says RBI : The Reserve Bank of India (RBI) has barred Kotak Mahindra Bank from paying dividend on perpetual non-cumulative preference shares (PNCPS) worth ₹500 crore that it sold in 2018 to comply with a regulatory ceiling on promoter shareholding. The regulator first ordered banks and certain categories of non-banks on 4 December not to pay dividends from their profits in FY20 to conserve capital but clarified on Thursday that it applied to PNCPS as well in a letter to Kotak Mahindra Bank. - Live Mint

🍒 Despite improved collections, bad loans could rise: Moody’s : Despite improvement in collection efficiencies delinquencies will continue to rise amid weak economic conditions, Moody’s Investors Service said in a report. The rating agency said that Indian asset-backed securities (ABS) performance risks will remain elevated over the next 12 months, as weak economic conditions will continue to hurt borrowers’ ability to repay loans. “As payment moratoriums came to an end in August, collections in rated Indian ABS improved markedly in September and October, although they remain below pre-coronavirus levels,” says Dipanshu Rustagi, Moody’s Assistant Vice President. Indian asset-backed securities loan collection rates for our rated deals have improved since the end of coronavirus-related payment moratoriums, which shows that many borrowers have resumed repayments after lenders' grace periods finished. - economic times

🍒 Gradual phase-out of moratorium mitigates asset quality cliff for Indian banks: Moody’s : The gradual tapering of coronavirus relief measures will help prevent a spike in nonperforming loans for Indian banks, as the country faces an uneven recovery ahead, Moody’s Investor Service said on Thursday. "The gradual tapering of support measures will give borrowers time to adjust and enable banks to build loan-loss buffers, in turn reducing the risk of a sharp decline in banks' asset quality," said Rebaca Tan, Moody's Assistant Vice President. "Still, risks remain amid a likely uneven recovery in 2021 that remains vulnerable to setbacks, including any new wave of coronavirus infections," Tan added. - economic times

🍒 New dividend policy not to affect most NBFCs: Report : The new dividend distribution policy for non-banking lenders is unlikely to impact most of them as their payout ratios have been hovering at 10-20 for the past three years, according to a report. The Reserve Bank of India on December 9 issued a new draft dividend distribution policy for NBFCs to ensure financial discipline and transparency under which only those NBFCs that meet the prescribed prudential requirements on capital and asset quality will be allowed to pay dividends. The new payout norms assume importance as unlike banks, currently, there are no guidelines in place concerning the distribution of dividend by NBFCs. The RBI had on October 4 asked banks to not to pay dividend this year given their stretched balance sheets pummelled by the pandemic.- economic times

🍒 Muthoot Finance to raise ₹1,000 crore through NCDs : Muthoot Finance Ltd has announced its 24th series of public Issue of Secured Redeemable Non-Convertible Debentures of face value of ₹1,000 each (secured NCDs). The issue is with a base issue size of ₹100 crore, with an option to retain oversubscription of up to ₹900 crore aggregating up to tranche limit of ₹1,000 crore (issue). The issue opens on December 11 and closes on January 5, 2021, with an option to close on such earlier date or extended date as may be decided by the board of directors or NCD committee. - Business Line

🍒 Pull payments made on behalf of merchants: Acquirer banks should not push consumers to pay for services : The Reserve Bank of India (RBI) needs to move towards creating an environment whereby for pull payments effected on behalf of merchants, the acquirer banks/Payment Aggregators (PAs) are not allowed to push consumers to pay for a payment service, according to a study by an IIT Professor. Pull payments entail a recipient (for example a merchant) requesting payment. Ashish Das, Professor, Department of Mathematics, IIT-Bombay, in his study, ‘Charging Consumers for Merchant Payments’, emphasised that consumers have a relationship only with the core merchant and the issuer bank (that issues cards).The Reserve Bank of India (RBI) needs to move towards creating an environment whereby for pull payments effected on behalf of merchants, the acquirer banks/Payment Aggregators (PAs) are not allowed to push consumers to pay for a payment service, according to a study by an IIT Professor. Pull payments entail a recipient (for example a merchant) requesting payment. Ashish Das, Professor, Department of Mathematics, IIT-Bombay, in his study, ‘Charging Consumers for Merchant Payments’, emphasised that consumers have a relationship only with the core merchant and the issuer bank (that issues cards). - Business Line

🍒 Restricting foreign capital in banking sector a mistake: Abhijit Banerjee : Nobel laureate Abhijit Banerjee has said that restricting capital infusion in the banking sector to Indian capitalists is a mistake. “It is a wrong view that Indian capitalists are somehow better than foreign capitalists,” he said. “Foreign banks can bring in capital. Involving foreign banks in the Indian banking sector but restricting it to Indian ownership is bad,” he said.Stating that the Indian banking sector is in a ‘zombie’ state, he said, banks are half-dead with so much bad debt. “If the books are carefully examined they are not in good health and they are in red,” Banerjee said. “They are not lending as they don’t have capital. This capital can come from the foreign investors in the banking sector,” he said. - Business Line

🍒 Banks have been lending more to NBFCs: CARE Ratings : Banks have been lending more to non-banking financial companies (NBFCs), increasing their overall exposure to them, according to CARE Ratings. This comes in the backdrop of decline in both the total monthly funds raised by NBFCs from the primary market and the external commercial borrowings (ECBs) registrations in financial services. The credit rating agency assessed that banks’ outstanding exposure to NBFCs registered a growth of 42.5 per cent in absolute terms from September 2018 (₹5.5 lakh crore) to October 2020 (₹7.8 lakh crore). - Business Line

🍒 Equitas Small Finance Bank launches 3-in-1 account : Equitas Small Finance Bank, on Thursday, announced that it has launched a 3-in-1 account, which includes savings, trading and demat, to widen its product offerings and allows its customers to keep their banking and financial investments under one umbrella entity. The bank will provide stock broking and demat services through referral arrangement with brokerage firms for trading and depository services. “This product allows customers a secure seamless and convenient way to invest in their choice of investment instruments including equity, FDs, govt securities and mutual fund products. Customers can transfer money seamlessly between their bank account when they have a 3-in-1 account with us,” said Murali Vaidyanathan, President & Country Head- Branch Banking, Liabilities, Product & Wealth, Equitas Small Finance Bank in a press statement. - Business Line

🍒 First-year premium for life insurers down 27% in November : First-year premium for life insurance companies declined in November by almost 27 per cent after months of positive growth, with both private sector insurers and Life Insurance Corporation (LIC) of India registering a contraction in premiums. Data released by IRDAI revealed that first-year premium for life insurers in November fell by 26.93 per cent to ₹19,159.30 crore from ₹26,221.24 crore in November 2019. First-year premium for the period between April and November also contracted by 1.53 per cent to ₹1,66,662.97 crore as against ₹1,69,251.20 crore in the same period a year ago. - Business Line

🍒 PhonePe plans to fill 700 open job positions in 3-6 months : Online payment company PhonePe is planning to fill in 700 open job positions in the next 3-6 months in line with its business growth led by the accelerated adoption of digital payments across the country post the Covid 19 pandemic. “We have over 700 open positions which we aim to fill…we are hiring across functions in line with our business strategy and needs,” said Manmeet Sandhu, Chief People Officer, PhonePe. “In addition to this, we will be looking to expand our rural network which will involve leveraging locally available talent to service this network,” she added. “We are still in the process of closing out the numbers for next year, but our growth trajectory will likely continue at the same rate," she said in an interaction with ET. - economic times

🍒 IL&FS puts corporate loans worth Rs 5,000 crore on the block : IL&FS financial services arm IFIN has put NPA accounts of Essar Shipping, Reliance Naval & Engineering, Unitech, Parsvnath Developers, Ansal API among others on the block. Corporate loans of 70 companies worth Rs 5,000 crore have put been on the block and will be put through a bid process. The deal will be on cash consideration basis with the beleaguered group seeking one consolidated bid for the entire portfolio. Applicants have to submit binding bids by next month. IFIN is owed a principal amount of Rs 209 crores from Unitech Limited, Rs 174 crore from Parsvnath Developers, Rs 135 crore from Ansal Group, Rs 25 crore from Essar Shipping and Rs 5 crore from Reliance Naval. - economic times

🍒 India’s CPI to decelerate marginally to 7.3%: Morgan Stanley : India could see some easing pressure on inflation in November as compared to October as the country’s consumer price index or CPI could decelerate marginally, a Morgan Stanley research has said. We expect headline CPI to decelerate marginally to 7.3% year on year in November from 7.6% year on year in October. “High-frequency food prices suggest food inflation likely softened sequentially in the month, while we expect core inflation to remain largely steady,” the research said. In addition, favourable base effects should also support the moderation, the report added. - economic times

🍒 Nippon MF launches passive Flexicap FoF : Nippon Life India Asset Management has launched Passive Flexicap Fund of Fund, an open-ended fund of funds (FoF) scheme that will invest in units of ETFs/Index Funds of Nippon India Mutual Fund. The fund will be benchmarked to the Nifty 500 TRI. The new fund offering (NFO) will close on December 24. The minimum investment required is ₹5,000. Different parts of the market ― large-cap, mid-cap and small-cap ― perform at various points in time. It is difficult to predict which part of the markets would outperform. Hence, staying invested across market-caps may help generate potentially better returns over the long run. - Business Line

🍒 Central bank's proposals on dividend payouts weigh on state-owned NBFCs : Shares of state-owned REC, Power Finance Corporation (PFC), LIC Housing Finance, and M&M Financial Services (MMFS) fell around three per cent each on Thursday after the Reserve Bank of India (RBI) proposed to cap dividend payouts by non-banking financial companies (NBFCs). Under the new rules, the dividend payouts will be dependent upon factors such as capital adequacy, non-performing asset (NPA) ratio and leve­rage ratio from the next financial year. “Among the listed NBFCs, we expect PFC and REC to react negatively to the new rules as both the entities have a historic dividend payout of 45 per cent. As per new norms, they will be eligible for a 25 per cent dividend payout. Being high-dividend-yielding NBFCs had been one of the arguments in favour of these entities, which will be negatively affected by the new RBI rules,” said Emkay analysts Jignesh Shial, Anand Dama and Parth Sanghvi in a note. - Business Standard

🍒 ATM moment of banking services is here as lenders make apps open for all : Long after automated teller machines (ATM) were made interoperable for bank customers, the whole gamut of banking is becoming membership agnostic. Earlier this week, ICICI Bank created some buzz by announcing its banking app — iMobile Pay — would be free for all to use. A customer need not be with the bank but can link her bank account with a Unified Payments Interface (UPI) ID with ICICI Bank and start using it for all kinds of payments across all platforms. Much like how Google Pay is being used for paying bills and purchases through UPI. iMobile Pay can also be used to get credit cards, instant loans, and, if needed, a savings bank account with the ICICI Bank. In the coming days, the bank plans to introduce products such as fixed deposits, recurring deposits, mutual funds and insurances through the app. . - Business Standard

🍒 Late Payments: Banks blame fintechs for EMI bounces : Bankers have attributed the high bounce rates, in large part, to defaults at fintech lenders, whose collections are still below pre-Covid levels. Most banks claim their collection efficiencies stood well over 90% in the September quarter. The share of unsuccessful auto debit requests at 40.5% in November was a shade higher than the 40.1% seen in October, according to data released by the National Payments Corporation of India (NPCI) from its National Automated Clearing House (NACH) platform. o be sure, the data doesn’t account for EMI requests made to deposit accounts held within the same bank. Nonetheless, bounce rates of anything above 25% should continue to be a cause for concern as it would mean retail delinquencies remain well above pre-Covid levels. Of the 86.96 million debit requests for Rs 78,433 crore worth of payments made in November, 35.22 million requests for Rs 24,417 crore were declined. In other words, the bounce rate in value terms at 31.13% was a tad better than 32.27% a month ago. - financial express

🍒 Gold prices slide to Rs 49,191 per 10 gram on increased risk appetite : Gold prices dropped by 498 to Rs 49,191 per 10 gram in the Mumbai retail market on increasing risk appetite amid COVID-19 vaccine optimism. The precious metal traded under pressure as negotiations over further US fiscal stimulus dragged on and the dollar rose for a fourth straight session. The rate of 10 gram 22-carat gold in Mumbai was Rs 45,059 plus 3 percent GST, while 24-carat 10 gram was Rs 49,191 plus GST. The 18-carat gold quoted at Rs 36,893 plus GST in the retail market. Silver prices declined Rs 792 to Rs 62,600 per kg from its closing on December 9.

🍒 Sensex snaps 5-day winning run, ends 144 points lower : The 30-share BSE index settled 143.62 points or 0.31 per cent lower at 45,959.88. The broader NSE Nifty fell 50.80 points or 0.38 per cent to 13,478.30. UltraTech Cement was the top loser in the Sensex pack, shedding around 3 per cent, followed by M&M, HDFC Bank, IndusInd Bank, Axis Bank and Reliance Industries. On the other hand, Nestle India, ITC, HUL and Kotak Bank were among the gainers.According to traders, profit-booking emerged at higher levels, dragging benchmark indices lower.UltraTech Cement was the top loser in the Sensex pack, shedding around 3 per cent, followed by M&M, HDFC Bank, IndusInd Bank, Axis Bank and Reliance Industries.On the other hand, Nestle India, ITC, HUL and Kotak Bank were among the gainers. According to traders, profit-booking emerged at higher levels, dragging benchmark indices lower.

🍒 Rupee settles 9 paise lower at 73.66 against US dollar : The rupee snapped its two-day winning streak to close 9 paise lower at 73.66 (provisional) against the US dollar on Thursday, tracking muted domestic equities and a rebound in the American currency. At the interbank forex market, the domestic unit opened at 73.68 against the US dollar and witnessed an intra-day high of 73.62 and a low of 73.77. The local unit finally closed at 73.66 against the American currency, registering a fall of 9 paise over its previous close..

10.12.2020: Today's Banking / Financial News

10.12.2020: Today's Banking / Financial News at a Glance

🍒 RBI lays down stringer dividend distribution formulae for NBFCs : The Reserve Bank of India has said that non-banking finance companies (NBFC) with minimum 15% capital adequacy and net non-performing assets (NPA) below 6% for three years will be eligible to declare dividend from this fiscal onwards. In a graded dividend payout format released on Wednesday, the regulator said that a better managed NBFC with less than 4% net NPA can still become eligible for dividend distribution even if the minimum capital and leverage norms are not met for the previous two years. These are part of a matrix where capital adequacy, leverage ratio, adjusted net worth and net NPA set the criteria for distributing the earnings with shareholders. Stronger entities can offer higher but with a cap of 50% of net profit for the accounting year for which the dividend is proposed. The dividend has to be paid only out of the current year's profit. "In order to infuse greater transparency and uniformity in practice, it has been decided to prescribe guidelines on distribution of dividend by NBFCs," RBI said. - economic times

🍒 ICICI opens new front with mobile app interoperability, other banks may follow : State Bank of India (SBI) will follow ICICI Bank's unprecedented move to open its mobile application to use by other bank's customers using the UPI platform, opening a new front in the battle for new customers and cheap deposits in the banking sector. ICICI on Monday announced that customers of any bank can link their bank account generate a UPI ID and start sending and receiving money to any bank account, payment app or digital wallet immediately. Moreover customers will also get instant access to the entire range of ICICI Bank’s banking services. Anup Bagchi, executive director, retail banking at ICICI said the bank hopes to benefit from new customer leads and ultimately deposits in the long run by allowing other bank customers to use its application. - economic times

 

🍒 Not viable to extend date of moratorium: RBI : The Reserve Bank of India (RBI), on Wednesday, told the Supreme Court that extending the date of the loan moratorium is “not viable”. Appearing before a three-Judge Bench, led by Justice Ashok Bhushan, the RBI, represented by senior advocate VGiri, referred to clause 3 of its August 6 circular for ‘Resolution Framework for Covid-19-related Stress’ to point out that lending institutions, guided by their respective board-approved policy, would prepare viable resolution plans for eligible borrowers. But lenders would also ensure that this resolution is provided only to borrowers stressed on account of Covid-19. - Businss Line

🍒 RBL Bank, ICICI Prudential join hands for bancassurance partnership : : RBL Bank and ICICI Prudential Life Insurance have joined hands under a bancassurance partnership to sell insurance policies to the bank's customers. As many as 398 RBL Bank branches across 28 states will distribute ICICI Prudential Life's protection and savings products, according to a joint press release issued on Wednesday. The alliance will enable over 8.7 million customers of RBL Bank to access and seamlessly purchase customer-centric protection and long-term savings products of the insurance company, it added. - economic times

🍒 SBI General, Mahindra Insurance in tie-up : SBI General Insurance has partnered with Mahindra Insurance Brokers to increase insurance penetration in rural areas. “This association will enable the company to provide health insurance cover to a significant number of people in tier 2 and 3 markets and generate employment,” said SBI General Insurance in a statement on Wednesday. SBI General is also associated with Mahindra Insurance Brokers Ltd (MIBL) for new cars, commercial vehicles, tractors and used cars, and provides vehicle Insurance with several add-ons. The two have also partnered in the digital space with PAYBIMA for affordable insurance solutions. - Businss Line

🍒 RTGS 24x7 to be launched on December 14 : The Reserve Bank of India (RBI), on Wednesday, said that RTGS (real-time gross settlement) 24x7x365 will be launched with effect from 00:30 hours on December 14. The central bank, in a statement, said India will become one of the few countries in the world to operate its RTGS system round-the-clock throughout the year. This comes within a year of operationalising NEFT (national electronic funds transfer) 24x7 by the Reserve Bank. The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is ₹2 lakh with no upper or maximum ceiling. - Businss Line

🍒 Credit card: RBL Bank hopes to be back to pre-Covid levels on customer onboarding by Dec-Jan : Private sector lender RBL Bank hopes to continue with customer onboarding for its credit card division and touch pre-Covid levels by December or next month, but remains cautious about the segments it is acquiring new customers from. “On customer onboarding in credit cards, we will reach pre-Covid level either this month or latest by January,” said Harjeet Toor, Head -Retail, Inclusion and Rural Business, RBL Bank. The bank onboarded about 1.25 lakh new credit card customers last month against a monthly run rate of 1.3 lakh to 1.35 lakh customers before the Covid-19 pandemic. - Businss Line

🍒 Maruti Suzuki launches Smart Finance service for one-stop loan solutions : Maruti Suzuki India (MSIL), on Wednesday, has launched Smart Finance service for Nexa customers across 30 citiesfor seamless and faster solutions for customers. The Maruti Suzuki Smart Finance will offer comprehensive finance solutions online and aim to simplify and digitalise the customer’s car buying journey with a bouquet of financing options, the company said. The services include choosing the right finance partner, selecting the best suited loan product, completion of all finance-related formalities, and disbursal of the loan with just a few clicks. - Businss Line

🍒 Exim Bank, SIDBI to set up investment fund to provide loan support to SMEs : Export-Import Bank of India (Exim Bank) and Small Industries Development Bank of India (SIDBI) plan to jointly set up an Alternative Investment Fund (AIF) to provide equity and loan support to small and medium enterprises (SMEs), which could emerge as rising stars in the export firmament. The AIF is being floated to give effect to a scheme, announced in FY21 Union Budget, to be jointly anchored by the aforementioned government-owned financial institutions to extend support to SMEs in sectors such as pharmaceuticals, auto components and others for technology upgradation, research and development, and business strategy, among others. - Businss Line 

🍒 With conglomerates reluctant, PEs may be better source of capital for banks : It’s been two weeks since the Reserve Bank of India’s (RBI’s) internal working committee (IWC) report proposed the idea of allowing business conglomerates to own banks. Criticisms have far outweighed acceptance, even prompting the RBI governor to distance himself from the proposal recently. Amid the debate, it would be pertinent to ask if corporations would be willing to participate in the banking sector any longer. Barely one out of the 22 that had evinced interest when bank licensing opened up in 2016 seemed enthused today. At least part of the reason could be the more stringent scrutiny that a banking licence would entail. A finer reading of the IWC’s recommendation suggests that India may adopt norms similar to the US Federal Reserve model, which regulates conglomerate-led banks in the country. The US Bank Holding Companies Act, established in 1956, was designed to tightly regulate banks floated by industrial houses. Under these regulations, every other business or subsidiary other than the banking operations (which is directly monitored by Federal Reserve) also falls under the Fed’s supervision, and is subject to dual regulations and scrutiny. “The bedrock principle is that don’t let commerce into banking, but it’s okay to allow banking into commerce,” says Jeff Berman, partner, financial services regulatory group, Clifford Chance US LLP, a top-tier US law firm. US industrial houses have stayed away from the banking business ever since the law came into force. - Business Standard

🍒 New business premium of life insurers decline 26.93% YoY in November : After witnessing growth in new business premiums (NBP) for four straight months starting from July, life insurance companies saw their NBP decline almost 27 per cent in November, with state owned insurance behemoth Life Insurance Corporation (LIC) dragging the industry performance. In November, the NBP of the industry totaled Rs 19,159.31 crore, compared to Rs 26,221.24 crore in the same period last financial year (FY20). While private insurers saw their NBP decline 5.15 per cent to Rs 7,066.65 crore, LIC’s NBP declined more than 35 per cent to Rs 12,092.66 crore. In the same period last financial year, LIC had amassed NBP of Rs 18,770.56 crore. NBP is the premium acquired from new policies in a year. In the April – November period of FY21, NBP of life insurers declined by 1.5 per cent to Rs 1.66 trillion, as against Rs 1.69 trillion in the same period last financial year. LIC’s premium collection dropped 3.75 per cent to Rs 1.15 trillion from Rs 1.20 trillion in the same period but private insurers reported a growth of almost 4 per cent in NBP to Rs 51,004.23 crore, compared to Rs 49,078.27 crore. - Business Standard

🍒 HC seeks govt, RBI views on plea seeking regulation of Big Tech in finance : The Delhi High Court Wednesday sought response of the Centre, RBI, SEBI, IRDAI and National Payments Corporation of India (NPCI) on a PIL seeking a detailed legal framework for regulating operations of techfin companies such as Facebook, Google and Amazon in India's financial sector space. According to the petition filed by an economist, techfin entities are technology, telecommunications or e-commerce companies which have entered the financial sector to provide financial services and need to be regulated. A bench of Chief Justice D N Patel and Justice Prateek Jalan issued notice to the ministries of finance and law as also Reserve Bank of India (RBI), NPCI, Insurance Regulatory and Development Authority of India (IRDAI), Securities and Exchange Board of India (SEBI) and the Pension Fund Regulatory and Development Authority (PFRDA) seeking their stand on the plea by Resmi P Bhaskaran - Business Standard

🍒 RBL Bank and ICICI Prudential Life Insurance forge bancassurance partnership : RBL Bank and ICICI Prudential Life Insurance on Wednesday entered into a bancassurance partnership to offer an array of life insurance products to the Bank's customers. This alliance will enable more than 87 lakh customers of RBL Bank to access and seamlessly purchase customer-centric protection and long-term savings products of the Company and provide financial security to themselves and their families. RBL Bank will distribute ICICI Prudential Life's products through its network of 398 branches spread across 28 states besides it's internet and mobile banking touch-points. - Live Mint

🍒 ICICI bank fraud: Drivers, gardeners were directors in Deepak Kochhar and Dhoot’s companies. They didn’t know, says ED : A charge sheet filed by Enforcement Directorate (ED) last month in the ICICI Bank bribery scandal involving its former managing director Chanda Kochhar reveals how her husband Deepak Kochhar and Videocon Group chairman Venugopal Dhoot had appointed drivers, gardeners, office boys, and other junior employees as dummy directors in their companies. Statements of these employees, which are now part of the charge sheet, were recorded by the ED. Some of them have claimed that they never even heard about the companies in which they were made directors. HT has seen the charge sheet, filed on November 3. The ED charge sheet says Kesharmal Nensukhlal Gandhi, who worked as a cleaner at Dhoot’s bungalow in Ahmednagar since 1994, was director in IRCL (Indian Refrigerator Company Ltd). He told ED that he was “neither aware about the company IRCL, nor aware about his directorship in IRCL and others. He was also unaware about transactions carried out by the company”. Gandhi told ED he used to sign documents on the directions of Dhoot and hadn’t attended any board meetings of the company. - hindustantimes

🍒 Cabinet approves Rs 22,810 crore outlay for Atmanirbhar Bharat Rozgar Yojana : The Union Cabinet on Wednesday approved Rs 22,810 crore outlay for a new employment scheme that aims at encouraging businesses to do fresh hiring. Under the Atmanirbhar Bharat Rojgar Yojana, the government will for two years provide employee and employer contribution to the retirement fund for new hires by businesses and entities, Labour Minister Santosh Gangwar said. The scheme would till 2023 entail an outgo of Rs 22,810 crore and would benefit around 58.5 lakh employees. - moneycontrol.

🍒 Rupee settles 3 paise higher at 73.57 against US dollar : The rupee strengthened by 3 paise and settled for the day at 73.57 against the US dollar on Wednesday, supported by foreign fund inflows and heavy buying in domestic equities. Traders said weakening of the American currency in the overseas market also supported the local unit. At the interbank forex market, the domestic unit opened at 73.58 against the US dollar and witnessed an intra-day high of 73.49 and a low of 73.61. The local unit finally closed at 73.57 against the American currency, registering a rise of 3 paise over its previous close. 

🍒 Sensex hits new peak of 46,000 on FPI buying : Just three trading sessions after it hit 45,000-mark, the Sensex on Wednesday scaled a new peak of 46,000. Foreign portfolio investors kept up the momentum with net purchases of ₹3,564 crore.Sensex rose 1.09 per cent on Wednesday to close at 46,103. The broader index Nifty gained 1.02 per cent, or 136 points, at 13,529. Both the Sensex and Nifty have gained 80 per cent from the lows they hit in March due to the Covid crisis. 

🍒 Gold prices today fall sharply, silver rates tumble : Gold prices fell in Indian markets today as equity markets rallied across the world amid covid vaccine optimism. On MCX, February gold futures fell 0.8% to ₹49,691 per 10 gram while silver tumbled 1.4% to ₹64,251 per kg. Weighing on gold price is progress on vaccine front and weaker investor interest, say analysts. In the previous session, gold had ended 0.2% higher while silver had dipped 0.6%..