19.12.2020: Today's Banking / Financial News

 19.12.2020: Today's Banking / Financial News at a Glance

🍒 Bank credit grows by 5.73%, deposits by 11.34% : Bank credit grew by 5.73 per cent to Rs 105.04 lakh crore while deposits increased by 11.34 per cent to Rs 145.92 lakh crore in the fortnight ended December 4, the RBI data showed. In the fortnight ended December 6, 2019, bank credit had stood at Rs 99.35 lakh crore and deposits at Rs 131.06 lakh crore. In the previous fortnight ended November 20, credit grew by 5.82 per cent to Rs 104.34 lakh crore and deposits by 10.89 per cent to Rs to Rs 143.70 lakh crore.In October, non-food credit growth decelerated to 5.6 per cent compared to a growth of 8.3 per cent in the same month of the previous year.Growth in loans to agriculture and allied activities accelerated to 7.4 per cent in the month from a growth rate of 7.1 per cent last year.Credit to industry contracted by 1.7 per cent in October 2020 as compared with 3.4 per cent growth in October 2019.Growth in loans to the services sector accelerated to 9.5 per cent in October 2020 from 6.5 per cent in the same month of the previous year. - economic times

🍒 PNB QIP issue falls short of target by 46 per cent : State-owned Punjab National Bank (PNB) has raised a little over 54 per cent of the targeted fund mop-up through QIP, which closed on Friday with Rs 3,788.04 crore in the kitty. Private sector IDBI Bank too closed its QIP without disclosing the amount raised. PNB had planned to raise up to Rs 7,000 crore through qualified institutional placement (QIP) that had opened on Tuesday (December 15). The capital raising committee of the board of directors of the bank has its meeting held on December 18, 2020, passed the resolution to declare the closure of the QIP today (December 18) pursuant to the receipt of applications from eligible qualified institutional buyers, PNB said in a regulatory filing. - Business Line

🍒 Govt exploring setting up bad bank, all other options: DEA Secretary : The government is exploring all options, including setting up of a bad bank, to improve the health of the country's banking sector, Economic Affairs Secretary Tarun Bajaj said on Friday. He also said the government has recapitalised public sector banks and continue to pump in c apital as per requirements. "We are looking at various options, including the option you mentioned (of bad bank), and it is still in the works... The RBI has been asking us, and we ourselves also feel that we need to recapitalise. We have recapitalised to a large extent and this year too, we have kept some money for recapitalisation so that commitment is there...," he said. - Business Standard

🍒 PMC Bank gets four investment proposals, says RBI : Punjab and Maharashtra Cooperative (PMC) Bank has received four investment proposals, the RBI said on Friday while extending the restrictions imposed on the crisis-hit lender to March 31 to enable it to finalise the reconstruction plan. In September 2019, the RBI had imposed restrictions on the fraud-hit multi-state urban cooperative bank, including on withdrawals by customers, following a scam. Depositors had held several protests demanding their money back. Last month, PMC had invited expression of interest (EoI) from potential investors for investment or equity participation in the bank for its reconstruction. The last date for submission of EoIs by potential investors was kept as December 15. - economic times

🍒 Bad loans set to rise in H2 of FY21 despite improving outlook: Axis Bank : Despite improving economic conditions, private sector lender Axis Bank sees bad loans rising and said it will continue to be conservative. “Collection efficiency has been in the range of 95-97 per cent. We saw payments bouncing in September (when the EMI moratorium came to an end) but since then, we have seen improvement month-on-month,” said Sumit Bali, president, retail lending and payments, Axis Bank. “While the stress is lower than projections, it would be higher than what we saw last year because of the pandemic. But it is getting better for us. However, Q3 and Q4 will see some slippages (in the retail book).” He said the bank has surpassed pre-Covid levels in secured loans. “The unsecured part of the business continues to at 60-70 per cent of pre-pandemic level. We are conservative on the unsecured part and would want to see some more series of data points before we start going back to the pre-pandemic level,” he added. - Business Standard

🍒 Too much fall in short term rates poses threat to financial stability: RBI minutes : The Monetary Policy Committee (MPC) that voted unanimously to keep interest rates to ensure economic revival has raised red flags on short-term interest rates falling below the desired levels raising the risk of financial instability. The MPC members also warned that rising pricing power of oligopolistic businesses and commodity prices could narrow the room available to continue with accommodative monetary policy even as concerns over the fragility of economic revival remain. “Liquidity, credit and monetary aggregates will need to be closely monitored with an eye on macro-financial stability that can be enervated when short-term borrowing costs fall below the operational policy rate. If this results in persistence of negative real rates for too long, it can adversely affect savings, lend support to mispricing of financial asset prices and encourage excessive leveraging,” said Mridul K Saggar.- economic times

🍒 Rising inflation is of concern: HDFC Chief Economist : ur Bureau Inflation has been rising and is at over 7 per cent as against the RBI mandated 6 per cent. This is a matter of concern as it has gone up substantially over the past three months, said Abheek Barua, Chief Economist, HDFC Bank. This means that if one is expecting more help from the RBI, it may become difficult to come by as there will be liquidity pressure, he said. “The fiscal deficit has gone for a toss. The government had set a target of 3.5 per cent of GDP for Centre and 3 per cent for the States. This is now at 6.5 per cent for the Centre and 4.5 per cent for States. Together it is at 11 per cent, which will be dangerous if not brought down,” he stated. - Business Line

🍒 PayU to offer Google Pay tokenised payment flow for merchants : PayU, an online payments solutions provider, has collaborated with Google Pay, a leading digital payments app, to introduce tokenised payments flow for merchants. With this collaboration, PayU’s merchants can offer Google Pay users the option to use their debit cards, credit cards, or Google Pay UPI to make repeated payments without having to physically share their card details. According to the joint official release, the card information is tokenised, and the digital token is linked to the phone, allowing Google Pay users to make repeat payments seamlessly and securely. It also added that during checkout, users can avail one-click payment experience as they do not have to re-enter the payment data. The OTP is read automatically, and the payment is processed instantaneously, without redirections to third party sites (3D secure). - Business Line

🍒 RBI central board reviews current economic situation : The central board of the Reserve Bank of India (RBI), on Friday, reviewed the current economic situation in the backdrop of global and domestic challenges and various areas of operations of the RBI, including the customer education initiatives and resolution of customer complaints. The board meeting, chaired by Governor Shaktikanta Das, noted the change in the bank’s Financial Year from July-June to April-March, and the changes in the unit of presentation from millions / billions to lakh / crore, the central bank said in a statement. - Business Line

🍒 CBI registers cases against Transstroy for alleged bank fraud, conducts raids : The Central Bureau of Investigation has registered a case against Hyderabad-based infrastructure company Transstroy (India) Ltd and its directors for alleged bank fraud estimated at more than ₹7,926 crore. Following a complaint by Canara Bank, which along with its consortium partners had extended credit facilities to the infra firm, the investigating agency has registered a case against the company and named its Chairman and MD, Cherukuri Sridhar, and additional directors, Rayapati Sambasiva Rao, former MP, and Akkineni Satish, in the case. - Business Line

🍒 Sipadan Investments (Mauritius) sells 2.17% stake in IDFC : After selling the shares in the open market, Sipadan holds 7.30 per cent stake in IDFC, as per the company’s regulatory filing. IDFC is registered with the Reserve Bank of India as an ‘non-banking finance company — investment company’. It mainly holds investment in IDFC Financial Holding Company Ltd, which is a non-operative financial holding company. IDFC FHCL in turn holds investments in IDFC FIRST Bank Ltd and IDFC Asset Management Company Ltd. As at September-end 2020, the government was the single largest shareholder in IDFC, with 16.37 per cent stake.- Business Line

🍒 Bids for DHFL still under evaluation : The Committee of Creditors (CoC) for the troubled Dewan Housing Finance Corporation Ltd (DHFL) on Friday evaluated the bids by Oaktree Capital, Piramal Capital and Housing Finance Ltd (PCHFL) and the Adani Group for buying the company. There was no word yet on the fate of the bids as the CoC meeting was in progress at the time of going to press. Voting on the corporate insolvency resolution process (CIRP) is expected to take place next week. Lenders are evaluating the bids based on four quantitative parameters — upfront cash recovery; net present value of the cash recovery; equity allotment; and infusion of funds in the corporate debtor; and two qualitative parameters — track record of the resolution applicant and key managerial personnel. Lenders are keen on ensuring a smooth resolution of the debt-ridden housing finance company. They want to iron out all wrinkles to ensure that the CIRP does not face last minute legal challenges like it did previously. - Business Line

🍒 Premature rollback of RBI policies could derail nascent growth: RBI Governor Shaktikanta Das : RBI Governor Shaktikanta Das voted for status quo at the last bi-monthly monetary policy review arguing that premature rollback of policies undertaken to mitigate the impact of the pandemic would be detrimental to nascent growth and recovery, minutes of the meeting showed on Friday. All members of the Monetary Policy Committee (MPC) — Shashanka Bhide, Ashima Goyal, Jayanth R Varma, Mridul K Saggar, Michael Debabrata Patra and Shaktikanta Das — had voted for maintaining status quo in the policy review announced on December 4. - financial express

🍒 Markets extend winning run to 6th session; Sensex ends at record high : After opening at its lifetime intra-day high of 47,026.02, the 30-share BSE index pared some gains to finish at 46,960.69, up 70.35 points or 0.15 per cent. Similarly, the broader NSE Nifty rose 19.85 points or 0.14 per cent to 13,760.55 -- its new closing record. Infosys was the top gainer in the Sensex pack, rising around 3 per cent, followed by Bajaj Auto, SBI, ICICI Bank, HCL Tech, Titan and Asian Paints. On the other hand, IndusInd Bank, ONGC, HDFC Bank, Maruti and Bajaj Finserv were among the laggards.

🍒 Rupee ends 3 paise up at 73.56 against US dollar : The rupee appreciated by 3 paise to close at 73.56 (provisional) against the US dollar on Friday amid sustained foreign fund inflows and positive domestic equities. Traders said weakness in the American currency in the overseas market supported the domestic unit. At the interbank forex market, the local unit opened at 73.55 against the greenback and witnessed an intra-day high of 73.49 and a low of 73.57.

🍒 India's forex reserves down by $778 million to $578.568 billion : The country's foreign exchange reserves declined by $778 million to $578.568 billion in the week to December 11, RBI data showed on December 18. In the previous week, the reserves had touched a lifetime high of $579.346 billion after increasing by $4.525 billion. In the reporting week, the reserves declined due to a fall in foreign currency assets (FCAs), a major component of the overall reserves. FCAs dropped by $1.042 billion to $536.344 billion, as per the weekly data by the Reserve Bank of India (RBI). 

🍒 Gold price rises for fourth day in a row to Rs 50,108 per 10 gram; silver up by Rs 50 a kg : Gold prices jumped for the fourth straight day by Rs 101 to Rs 50,108 per 10 gram in the Mumbai retail market on subdued global cues and a flat rupee. The precious metal price was supported by the weakness in dollar and expectation of a stimulus package for the US economy. The bullion metal ended the week with a gain of Rs 1,062 or 2.17 percent for the week. The rate of 10 gram 22-carat gold in Mumbai was Rs 45,899 plus 3 percent GST, while 24-carat 10 gram was Rs 50,108 plus GST. The 18-carat gold quoted at Rs 37,581 plus GST in the retail market. Silver prices gained Rs 50 to Rs 66,519 per kg from its closing on December 17..

17.12.2020: Today's Banking / Financial News

17.12.2020: Today's Banking / Financial News at a Glance

🍒 Disinvestment will now gain a lot of momentum: Finance Minister Sitharaman : Finance Minister Nirmala Sitharaman on Tuesday said the pace of disinvestment will now gain a lot of momentum, and those which have already found cabinet approval will be taken up with all earnestness.Speaking on Day 1 of ASSOCHAM Foundation Week, via video conferencing, Sitharaman said "Disinvestment will be happening, corporatisation of not just the defence, DRDO related labs *but also banks* - where I want them to run a lot more professional, they should also be able to raise money from the market," she said. Sitharaman said that the Union Budget for 2021-22 would emphasise on sustaining high public expenditure on infrastructure to revive the economy.. - Business Standard

🍒 Banks must focus on asset quality, capital for monetary policy impact: RBI : The credit channel of monetary policy transmission in India is robust, however, its effectiveness is hampered by asset quality of issues of banks, an RBI working paper on “asset quality and credit channel of monetary policy transmission in India” revealed. Hence, for monetary policy actions to have their full impact, banks need to strengthen their capital position and address quality issues.While asset quality issues have an impact on the credit growth of the economy, better capital position of banks can negate the effect. “Controlling asset quality, in the short-run, the credit channel of monetary transmission of public sector banks is stronger relative to that of private sector banks”, the RBI working paper said. - Business Standard

🍒 Regulatory Sandbox: RBI relaxes norms for applicantsRegulatory Sandbox: RBI relaxes norms for applicants : The Reserve Bank of India (RBI) has reduced the net worth requirement for applicants for entry to the Regulatory Sandbox (RS) to foster innovation in financial services. Further, the central bank has allowed partnership firms and Limited Liability Partnership (LLPs) to participate in RS. RS refers to the live testing of new products or services in a controlled/ test regulatory environment for which regulators may (or may not) permit certain regulatory relaxations for the limited purpose of the testing. As per the modified enabling framework, an entity seeking entry to RS shall have a minimum net worth of ₹10 lakh as per its latest audited balance sheet against the existing ₹25 lakh - Business Line

🍒 Union Bank of India raises Rs 500 cr by issuing Basel III compliant bonds : State-owned Union Bank of India on Tuesday said it has raised Rs 500 crore debt capital by issuing Basel III compliant bonds. The bank has allotted unsecured, subordinated, non-convertible taxable perpetual fully paid-up Basel III compliant debt instruments in the nature of debentures aggregating to Rs 500 crore on December 15, 2020, Union Bank of India said in a regulatory filing.To comply with Basel-III capital regulations, the banks need to improve and strengthen their capital planning processes.These norms are being implemented to mitigate concerns on potential stresses on asset quality and consequential impact on performance and profitability of banks. Shares of Union Bank of India on Tuesday closed 1.03 per cent lower at Rs 33.50 apiece on the BSE. - Business Standard

🍒 PNB QIP issue opens; to raise ₹7,000 crore : Punjab National Bank (PNB) has launched its Qualified Institutional Placement (QIP) issue on Tuesday, seeking to mop up about ₹7,000 crore. The capital-raising committee of the bank, which met on Tuesday, had approved the floor price of ₹37.35 per share for the QIP. The committee will next meet on Friday to consider and determine the issue price for the equity shares, including the discount, to be allotted to Qualified Institutional Buyers, said PNB in a filing with the stock exchanges. - Business Line

🍒 Stress predates Covid: Bankers tell Supreme Court : The Reserve Bank of India (RBI) on Wednesday said in the Supreme Court that there has not been a single case of Covid-related financial stress to which banks have shown an “apathetic” attitude. A three-judge Bench led by Justice Ashok Bhushan was hearing several pleas by industry and business sectors, including power and real estate, to extend the moratorium or even waive the interest on their debts due to losses incurred during the pandemic. The Indian Banks Association, represented by senior advocate Harish Salve, said the pleas extend beyond the financial stress caused by the pandemic. He asked whether some of these sectors have placed on record anything to reveal how wobbly they were even before the pandemic. The court will resume the hearing today. - Business Line

🍒 NPCI adds reloadable wallet feature in RuPay cards for offline transactions : RuPay contactless cards have been enabled with an offline feature for retail payments on a pilot basis to ensure seamless transactions in areas of low connectivity. The cards also have a reloadable wallet facility, whereby customers can store money and use that for day-to-day transit payments. The wallet feature, too, could be used to make payments despite facing connectivity issues at point-of-sale machines.This will boost the adoption of digital payments in the country, especially when the government has been pushing RuPay cards by nudging banks to promote these as the first option. In a statement on Wednesday, the National Payments Corporation of India (NPCI), the umbrella body for payments and settlement, said these features would augment the transaction experience for new RuPay contactless cardholders and revolutionise the card payments ecosystem. - Business Standard

🍒 Lakshmi Vilas Bank will finally delist from bourses on December 18 : Lakshmi Vilas Bank (LVB) has decided to delist. The Bank, which was amalgamated with DBS Bank India last month, said today that the trading in its equity shares will be withdrawn (delisted) with effect from December 18, 2020 pursuant to a gazette notification dated November 25, issued by Department of Financial Services, Ministry of Finance. It may be noted, the scheme of amalgamation (LVB with DBS Bank India) was implemented under the special powers of the Government of India and RBI under Section 45 of the Banking Regulation Act, 1949, India. After the Cabinet approval on November 25, the scheme was notified and came into effect on November 27. - Business Standard

🍒 IndusInd Bank promoters get 1 month extension to infuse remaining capital : Private lender IndusInd Bank on Wednesday said Sebi has granted one-month extension for its promoters to infuse residual capital in lieu of conversion of warrants, issued to them last year, worth over Rs 2,695 crore into equity. IndusInd Bank had issued convertible warrants to its promoters–IndusInd International Holdings ltd (IIHL) and its subsidiary IndusInd Ltd (IL) on July 6, 2019 under the composite scheme of arrangement for a total amount of Rs 2,695.26 crore for 1,57,70,985 share warrants. The promoters had paid Rs 673.82 crore towards warrant subscription for price — 25 per cent of the warrant price of Rs 1,709 per share. “An amount of Rs 2,021.44 crore was to fall due on January 5, 2021, for conversion of warrants into equity shares,” the bank said. In view of the present uncertain times due to disruption caused by the COVID-19 pandemic, the bank had, at the request of IIHL and IL, approached Sebi for extension in time for payment of balance amount, it added. - financial express

🍒 Axis Bank says report alleging Rs 44,000 crore exposure to SREI Group 'grossly inaccurate' : Axis Bank on December 15 said that it followed underwriting practices and approval processes while extending loans to Srei Equipment Finance Ltd and Srei Infra Finance Ltd. In a notice to the stock exchanges, the bank said that its outstanding exposure to Srei group is Rs 800 crore as opposed to Rs 44,000 crore alleged by web portal Scams Breaking. "The bank has complied with its underwriting practices and approval processes for any exposure taken in relation to SREI Equipment Finance Limited and SREI Infra Finance Limited. Axis Trustee Services Ltd acts in its fiduciary capacity as a trustee and/or custodian and charges registered by it is not a reflection of the exposure of Axis Bank Ltd," it said. - moneycontrol.

🍒 Cyber security, data protection must to promote financial inclusion, says RBI Governor Shaktikanta Das : Issues concerning cyber security and data protection must be addressed to gain confidence of the excluded section in use of technology, which is necessary for promoting financial inclusion, Reserve Bank Governor Shaktikanta Das said on Wednesday. “Technology, though being a great enabler, can also lead to exclusion of certain segments of society,” Das said in his keynote address at a webinar on ‘Investing in Investor Education in India: Priorities for Action’, organised by the NCAER. The RBI Governor added that it was imperative to build trust in formal financial services among the hitherto excluded population. - Business Standard

🍒 Credit bureaus, PCR to help improve credit flow: RBI Governor : Access to credit and cost of credit need to be addressed by lesser reliance on collateral security and greater cash-flow-based lending to improve the credit-to-GDP ratio, according to Reserve Bank of India Governor Shaktikanta Das. In this regard, Das observed that credit bureaus and the proposed Public Credit Registry (PCR) framework are expected to improve the flow of credit as well as credit culture. As per RBI data, scheduled commercial banks’ credit as a per cent of GDP came down to 50.99 per cent in FY20 from 51.51 per cent in FY19. “India, with a large section of population in the working age group, is already the third-largest economy in the world in terms of purchasing power parity and is aiming to become a $5-trillion economy. “...Among all the prerequisites for achieving demographic dividend and accelerated growth, quality of human resources, greater formalisation of economy, a higher credit-to-GDP ratio and greater financial inclusion are the differentiating factors that would elevate our economy to the desired level,” Das said at a webinar organised by the National Council of Applied Economic Research. - Business Line

🍒 Yes Bank could face significant asset quality stress in coming quarters: Macquarie : Private lender Yes Bank could face near term asset quality issues as the pandemic continues to ravage a large part of the formal and informal economy. A report issued by Macquarie Capital which recently met the Yes Bank management, states that the lender could see stress in its exposure to the real estate and hotel industry. “There is going to be a substantial increase in stress in the next 2 quarters as they have large exposure to the real estate and hotel industry where there are likely to be defaults,” said Suresh Ganapathy, associate director, Macquarie Capital. Despite the asset quality stress the management claimed that they had front loaded provisions and don’t see substantial dip in capital ratios. - economic times

🍒 Monetary policy transmission of PSU banks stronger than private lenders: RBI paper : The monetary policy transmission of state-owned banks in the short-run is stronger than their counterparts in the private sector, and can be improved further with capital infusion, said a RBI working paper. The credit channel of monetary policy transmission is robust in India and its efficacy can be reinforced by better capital position of banks, said the working paper on 'Asset Quality and Credit Channel of Monetary Policy Transmission in India: Some Evidence from Bank-level Data'. "Controlling for asset quality, in the short-run, the credit channel of monetary transmission of public sector banks is stronger relative to that of private sector banks," it said. The Reserve Bank of India said the views expressed in the paper are those of the authors and not of the central bank.- economic times

🍒 To revive scam-hit PMC Bank, 3 entities submit letter of intent : A Mumbai-based financial services group is among the three entities that are understood to have submitted letter of intent (LoI) to revive the scam-hit Punjab and Maharashtra Co-operative (PMC) Bank. The last date for the submission of LoI to the bank’s Administrator was December 15. The Administrator, AK Dixit and his team, are weighing the pros and cons of the LoIs. Based on their recommendations, the Reserve Bank of India (RBI) will take a call on which entity is best placed to revive the bank and commence regular day-to-day operations. As the aforementioned process is expected to take a few months, the central bank is expected to extend the validity of its Directions, currently valid up to December 22, by three months. According to banking sources, the financial services group, which has submitted its LoI, is headed by the former India head of a foreign bank. - Business Line

🍒 NBFCs seek relaxation in eligibility to recover loans under SARFAESI Act : Non-banking financial companies (NBFCs) have sought relaxation in eligibility to recover loans under the SARFAESI Act from the government. In the pre-Budget meeting with Finance Minister Nirmala Sitharaman, the Finance Industry Development Council, a representative body for NBFCs, has suggested lowering the minimum ticket size of Rs 50 lakh for loans eligible to be recovered by NBFCs under SARFAESI Act. The request has been made considering the recovery of small-ticket loans given to MSMEs, and proposes to bring parity in recovery of soured loans by banks and non-bank lenders, said Raman Aggarwal, co-chairman of the industry body. - Business Standard

🍒 Insurance funds should invest in low-rated instruments: SBI chairman : To make the debt capital market more vibrant, the long-term liabilities with insurance and pension sector need to be channeled effectively by allowing them to invest in low-rated instruments rather than just AAA and AA papers, said State Bank of India (SBI) Chairman Dinesh Kumar Khara. Speaking at the CII Partnership Summit, Khara said, as of now such funds are only into AAA and AA papers. “But I think these funds can be made available to low grade papers also. This is perhaps the needs of the hour if we want to create infrastructure, we have to ensure this money has to flow into infrastructure, which we have seen happen across the globe,” he said. - Business Standard

🍒 EPFO settles 52 lakh COVID-19 claims, disburses Rs 13,300 cr: Gangwar : Retirement fund body EPFO has settled 52 lakh COVID-19 non-refundable advance claims, and disbursed Rs 13,300 crore so far, Labour Minister Santosh Gangwar said on Wednesday. In March, the government had allowed over 6 crore subscribes of EPFO to withdraw an amount not exceeding their three months basic pay and dearness allowance from their EPF account in view of the lockdown to fight the pandemic.Speaking at Assocham Foundation Week programme, Gangwar said EPFO has settled 52 lakh COVID-19 withdrawal claims and disbursed Rs 13,300 crore to subscribers during the pandemic.He noted that the country has faced the pandemic with brave face. The Centre had launched the Pradhan Mantri Garib Kalyan Yojana (PMGKY) on March 26 to help the economically weaker sections cope with the pandemic.- Business Standard

🍒 As bitcoin rally roars, Indian banks look to cash in on opportunities : Bitcoin’s rally in 2020, rising 1.5 times so far this year, has piqued investors’ and financial services providers’ interest. And Indian banks are taking note as the crypto currency nears its all-time high of $20,000. They are now option like providing finance to crypto exchanges, loans against bitcoin and so on, to cash in on this opportunity. The sharp bitcoin rally this year has been attributed to several developments in the past month. The most prominent among them is decision of PayPal, the largest payment company by market cap, to allow the transfer, purchase, sales and settlements of bitcoins on its platform. Following this announcement, PayPal’s market cap rose to $252 billion, higher than most major international banks. Only JP Morgan has a higher m-cap at $366 billion and its Chairman Jamie Dimon has reversed his stand on bitcoin and decided to serve crypto exchanges as banking clients. Other players, too, are looking to capture a slice of the pie. Singapore-based DBS bank has set up an integrated exchange for bitcoins. Institutional investors like hedge funds, too, have jumped on the bandwagon, with one such investor buying around $500 million worth of coins. Added to these factors is China’s decision to launch a pilot for its central bank backed digital yuan as its official crypto currency. - Business Standard

🍒 PNB share price plunges 8% a day after QIP opens : Shares of Punjab National Bank (PNB) plunged more than 8 percent in the morning trade on BSE on December 16, a day after the lender's qualified institutions placement (QIP) opened. PNB's QIP opened on December 15 with the floor price set at Rs 37.35 per share. The bank aims to raise Rs 7,000 crore through the offer.

🍒 Sensex, Nifty capture new heights on positive global cues : The BSE Sensex settled 403.29 points or 0.87 per cent higher at 46,666.46, while the NSE Nifty climbed 114.85 points or 0.85 per cent to 13,682.70 -- record closing for both the benchmarks. Both the indices also marked their all-time intra-day highs of 46,704.97 and 13,692.35, respectively. In the Sensex pack, HDFC, ONGC, Bharti Airtel, Titan, Asian Paints, Mahindra and Mahindra and TCS were the prominent gainers. On the other hand, ICICI Bank, IndusInd Bank, NTPC, UltraTech Cement, Tech Mahindra and SBI were among the major laggards. 

🍒 Rupee settles 5 paise higher at 73.58 against US dollar : The rupee appreciated 5 paise to close at 73.58 (provisional) against the US dollar on Wednesday, as sustained foreign fund inflows and strong domestic equities strengthened investor sentiment. At the interbank forex market, the rupee opened at 73.49 against the US dollar and witnessed an intra-day high of 73.48 and a low of 73.60. The local unit finally closed at 73.58 against the American currency, registering a gain of 5 paise over its previous close.

🍒 Gold prices today rise for second day in a row, silver rates edge higher : Gold and silver prices today edged higher in India following an overnight rally in global markets. Hopes of rollout of more US stimulus have supported the recent bounce in gold and silver. On MCX, February gold futures gained 0.26% to ₹49,571 while silver futures rose 0.6% to ₹65,230 per kg. In the previous session, gold had jumped ₹530 or 1.1% per 10 gram while silver had surged 2%..

16.12.2020: Today's Banking / Financial News

16.12.2020: Today's Banking / Financial News at a Glance

🍒 PNB sets floor price for QIP at Rs 37.35 per share : Punjab National Bank (PNB) has set the floor price for its proposed QIP of Rs 7,000 crore at Rs 37.35 per share. The Capital Raising Committee of the bank at a meeting held on Tuesday authorised the opening of the QIP issue and approved the floor price at Rs 37.35 per equity share, PNB said in a regulatory filing. The bank may at its discretion offer a discount of not more than 5 per cent on the floor price, it added. PNB said the committee will meet on Friday to consider and determine the issue price for the equity shares, including a discount, if any, to be allotted to Qualified Institutional Buyers, pursuant to the QIP (qualified institutional placement). With this fund mobilisation, capital-to-risk-weighted assets ratio of the bank, which was at 12.8 per cent at the end of September quarter, would increase to 13.5-14 per cent. PNB stock closed 1.70 per cent down at Rs 40.55 on BSE.

🍒 IDBI Bank QIP to raise ₹6,000 crore opens : The Qualified Institutions Placement (QIP) committee of IDBI Bank’s board of directors has authorised the opening of the bank’s QIP issue on December 15. The bank plans to to raise up to ₹6,000 crore via the QIP issue. The floor price of the issue, based on the pricing formula as prescribed under SEBI ICDR Regulations, is ₹40.63 per equity share, the bank said in a regulatory filing. The bank said it may offer a discount of not more than 5 per cent on the floor price calculated for the issue. Life Insurance Corporation of India (LIC) had acquired a majority stake (51 per cent) in IDBI Bank in January 2019, becoming its promoter. The government owns 47.11 per cent stake. - Business Line

🍒 Disbursal of Mudra loans hits the slow lane in FY21 : The disbursal of small business loans under Pradhan Mantri Mudra Yojana (PMMY) has been trailing so far in the current fiscal. The disbursal of Mudra loans stood at ₹1,21,356 crore as on December 11, 2020, compared to about ₹1.51-lakh crore in the same period last year. While the going appears slow for the small business loan scheme of the government compared to last year, bankers actually see it in positive light. “One has to factor in the impact of Covid-19 pandemic. Despite constraints like lockdown and difficulty in reaching out to people, the difference between last year and this year’s disbursal amount is not so huge,” said a senior official with State Bank of India. “In fact, Mudra loan segment has been able to deal with Covid challenges and made up for the loss of time,” he added. - Business Line

🍒 Indian Bank declares IFIN account as fraud with over Rs 408 cr outstanding : Indian Bank said that it has reported to the Reserve Bank of India (RBI) the account of IL&FS Financial Services (IFIN) as fraudulent with outstanding dues of over Rs 408 crore. In October, Punjab and Sind Bank had also reported the account of IFIN as fraud with outstanding dues of over Rs 561 crore to the RBI. In September 2018, the government ordered an SFIO probe into the affairs of IL&FS and its subsidiaries. In October the same year, the National Company Law Tribunal (NCLT) suspended the erstwhile board of IL&FS amid the financial turmoil. On the resolution process proposed by the new board of directors of IL&FS, the company said it has submitted several progress reports and updates to the NCLT. - Business Standard

🍒 Loan disbursement by NBFC-MFIs dips 43% to ₹10,617 cr in Q : Loan disbursement by non-banking financial companies-microfinance institutions (NBFC-MFIs) declined 43% to ₹10,617 crore in the quarter ended September as against ₹18,565 crore in the same period of previous fiscal, according to a report by MFIN. In the quarter ended June 2020, loan disbursement had declined 96% to ₹570 crore from ₹15,865 crore in the corresponding quarter of the previous fiscal. The data pertains to NBFC-MFI members of the Microfinance Institutions Network (MFIN), a self-regulatory organisation and industry association of the microfinance industry in the country. Analysis on NBFC-MFIs is based on data collected from 54 members that are registered with the Reserve Bank of India (RBI). - Live Mint

🍒 Punjab & Sind Bank and Central Bank of India offer car loans at 7.1 % : With interest rates in India at record lows, it has become easier to borrow funds to meet your various requirements. While it makes sense to buy a house, given the extended festive offers all round and 15-year-low home loan rates, you should treat with caution in case of other loans. Personal loans should definitely be avoided and used only as the last resort. A housing loan leads to the creation of an asset. Now, it is true of car loans as well, but remember that it is a depreciating asset. If you have set your heart on your dream car, however, ensure that you carry out thorough research before zeroing in on the bank that offers best terms. Punjab & Sind Bank offers the lowest rate – 7.1 percent - on a car loan of Rs 10 lakh with a tenure of seven years, as per data from Bankbazaar. Central Bank of India is next on the list of cheapest car loan lenders with 7.25 percent. It dominated by public sector banks – in fact, none of the private lenders figure in the list. - moneycontrol.

🍒 India Post, IPPB customers can now transact through app DakPay : Customers of the Department of Post (India Post) and the India Post Payments Bank (IPPB) can now operate their banking service through an app DakPay, which was unveiled by Communications and IT Minister Ravi Shankar Prasad on Tuesday. DakPay will provide digital financial and assisted banking services provided by India Post and IPPB through the postal network across the country. It will facilitate services such as sending money, scanning QR code and making payment for services and merchants digitally. It will also provide interoperable banking services to the customers with any bank in the country. "Launch of DakPay adds up to the legacy of India Post, which is about reaching out to every household. "This innovative service will not only give access to banking services and postal products online but also is a unique concept where one can order and avail postal financial services at doorsteps," Prasad said while launching the app. - Moneycontrol.

🍒 SBI Card, BPCL jointly launch credit card offering benefits to high fuel spending customers : SBI Card on Tuesday announced launch of "BPCL SBI Card Octane" in association with Bharat Petroleum Corporation Ltd (BPCL), offering maximum savings to consumers who spend a significant amount on fuel. The credit card has been designed to offer maximum savings to the well-heeled consumer segment which spends a significant amount on fuel.The BPCL SBI Card Octane brings 25X reward points on spends for BPCL fuel and MAK Lubricants, Bharat Gas (LPG) spends (website and app only) and BPCL''s ''In & Out'' convenience store spends, SBI Card said in a release. The card offers 7.25 per cent value back (including 1 per cent surcharge waiver) on fuel and lubricant spends at BPCL fuel stations and 6.25 per cent value back on Bharat Gas spends, it added. - moneycontrol.

🍒 Paytm launches 24x7 RTGS money transfer for merchants : Digital financial services platform Paytm on December 15 launched a 24x7 RTGS facility to support the companies that make high-value transactions. It also enables businesses to make bulk and instant money transfers to their employees, vendors & partners. Customers can instantly make bulk payments to Bank Accounts, UPI addresses, and Paytm Wallets through Paytm Payouts' APIs and Paytm for Business Dashboard.Paytm Payout is the only service provider that offers seamless round the clock money transfers through Wallet, UPI, IMPS, NEFT & RTGS.The company has made this announcement after Reserve Bank of India (RBI) decision to make RTGS facility 24x7. This service saves time and resources and it is beneficial for SME & large enterprises who use it to adopt an automated payment mechanism. "RBI's move supports commerce in the country and enhances ease of doing business recently allowed the transfer of funds through Real-Time Gross Settlement (RTGS) round-the-clock, 365 days a year," Paytm said in a statement. - moneycontrol.

🍒 South Indian Bank shares fall 6%; year-to-date stock is down 11% : Shares of South Indian Bank fell over 6 percent in intraday trade on BSE on December 15, looking on course to extend the losing run into the fourth consecutive session. Year-to-date the stock is down about 11 percent on BSE. The stock traded in the red even as CNBC-TV18 reported that the bank was planning to raise money at the right price. There is an approval of Rs 750 crore fundraising by the board and the focus is on improving fundamentals, it said. The bank had reported a 23 percent decline in net profit at Rs 65.09 crore for the September quarter of the current fiscal year. The lender posted a net profit of Rs 84.48 crore in July-September 2019-20. In the June quarter, SIB had a profit of Rs 81.65 crore. - moneycontrol.

🍒 Aceware launches micro ATM service in association with ICICI Bank : Aceware, a fintech company based in Infopark, has launched a micro ATM service in association with ICICI Bank. The company will bring a micro ATM to the customer’s house and he/she can collect the money by swiping the ATM card, Nimisha J Vadakkan, managing director at Aceware, said. Initially, the service will be available in Kochi city and the company has already recruited delivery executives for rolling out the service. The company is planning to expand the same to all the municipalities in Kerala by January, she said. “The customers can place the order for money on the Ace Money app, which can be downloaded from Google Play Store and App Store. The money will be delivered at the doorstep within 30-40 minutes after the order is placed,” she said. - financial express

🍒 DHFL Case: Latest Grant Thornton report flags fraudulent transactions of Rs 1,058 crore : Crisis-ridden non-banking finance company DHFL on Sunday said fraudulent transactions of Rs 1,058.32 crore by way of undervaluation, fraud and preferential treatment to certain entities have been detected by transaction auditor Grant Thornton (GT). The company is undergoing resolution process under the Insolvency and Bankruptcy Code (IBC). The company, which is now being run under an administrator, had engaged Grant Thornton earlier this year to conduct an investigation into the affairs of the mortgage lender. The administrator of the company received additional report from professional agency (Grant Thornton), indicating that there are certain transactions which are undervalued, fraudulent and preferential in nature, Dewan Housing Finance Company Ltd (DHFL) said in a regulatory filing. - financial express

🍒 Coronavirus pandemic dents growth of personal loans segment in FY21 : The coronavirus (Covid-19) pandemic dented the growth in the personal loans segment as the portfolio expanded by a meager 0.57 per cent in the first five months of the current fiscal (FY21), according to CRIF High Mark. The outstanding portfolio stood at Rs 5.07 trillion at end of August 2020. Navin Chandani, MD & CEO, CRIF High Mark said that in FY21, Covid-19 disruptions had resulted in restricted lending by financiers who were earlier steering the volume growth of the PL market. There is small growth and not a sharp clampdown, he added. The personal loan segment had registered a growth of 26.5 per cent in the year ended March 2020, when the Covid-19 pandemic hit the country and the portfolio outstanding was Rs 5.04 trillion. This segment has seen exponential growth in the last few years as lenders focused increasingly on customer acquisition through small ticket lending, targeting young, low-income borrowers with short term credit needs. - Business Standard

🍒 Financial sector players suggest ‘Aatmanirbhar bonds’, special tax breaks for insurance in upcoming budget : From asking government to issue tax free “Aatmanirbhar bonds” to retail investors in these pandemic times to allowing special tax breaks under Section 80C for life insurance premium payments—-Banks, insurers and non banking finance companies (NBFCs) on Tuesday came up with several interesting suggestions that Finance Minister Nirmala Sitaraman could consider for her next budget in February 2021. At the pre-budget discussions that Finance Minister Nirmala Sitaraman had with chiefs of financial sector players through video conferencing, it was also suggested that NBFCs be allowed to issue secured bonds/NCDs “on tap”; gold loan companies be permitted to issue credit cards and exempt NBFCs registered with RBI and classified by the central bank as deposit taking NBFC and non deposit taking systemically important NBFCs from the provisions of Tax Deduction at Source (TDS) on interest income. - Business Line 

🍒 Ewire Softtech ties up with YES Bank for prepaid card : Ewire Softtech, under Kerala Startup Mission, has launched a prepaid card in association with YES Bank, enabling the next-generation payment platform provider chart an all-India presence. The co-branded digital banking mobile application will help the public and corporate houses with loans, insurance and CASA account through its channel partners. This can be done via its dedicated RuPay prepaid cards platform. The partnership with YES Bank has come as a milestone for Ewire, keen to establish its presence across the country in its digitisation drive. “Our customers can now avail the convenience of digital payments. The card will be offered through YES Bank’s branches across 28 States and 8 UTs,” said Ewire’s CEO, Yunus Puthenpurayil. - Business Line

🍒 DakPay should become popular like Google Pay: Prasad : The Postal Department should become a big part of the financial inclusion platform and the India Post Payment Bank (IPPB) app can become popular like Google Payin no time, said Ravi Shankar Prasad, Minister of Communications and IT, on Tuesday. Speaking at the launch of ‘DakPay’, a new digital payment app by IPPB, Prasad said that since the Department of Posts (DoP) has reach at the remotest areas of the country, the app can play a big role in digital financial inclusion at the last mile across India. - Business Line

🍒 ‘Credit channel of monetary policy transmission robust in India’ : The credit channel of monetary policy transmission is robust in India, according to a Reserve Bank of India (RBI) working paper. “Its efficacy, however, is impaired if there is a deterioration in asset quality but is reinforced by better capital position of banks,” the paper said. The paper assessed that an increase (decrease) in policy rate by 100 basis points causes the credit to decline (increase) by 1.95 per cent with a lag of six quarters, validating the existence of a robust credit channel of monetary transmission in India. - Business Line

🍒 India slated to become a premier digital society: Ambani : Facebook founder and CEO Mark Zuckerberg, on Tuesday, said that decisions that are made in India shape the global discussion about how technology can drive more economic opportunities and better outcomes for people. In a conversation with Mukesh Ambani, Chairman, Reliance Industries, at a virtual event, ‘Facebook Fuel for India’, Zuckerberg said: “India is a very special and important country for us. Millions of people here use our products every day to stay in touch with friends and family. “Whether it’s a WhatsApp message or a Facebook post or photos on Instagram. And millions of small businesses across the country use WhatsApp Business and Messenger to reach customers, manage orders, and grow their businesses. And, in fact, we actually test some of our new features here first before rolling them out globally.” - business line

🍒 Channelising long-term pension, insurance monies to even lower grade paper is need of the hour, says SBI Chief Khara : SBI Chairman Dinesh Kumar Khara on Tuesday said that India must look to channelise the long term liabilities (funds) available with pension and insurance sector into capital market to make the debt side of this market more vibrant. These long term liabilities should be made available to even lower grade paper which will make the debt market even more vibrant and this is need of the hour, Khara said at CII organised Partnership Summit, which is happening virtually for the first time ever. “If you want to create infrastructure in the country, this money (pension and insurance monies) has to flow into infrastructure, which is what we see around the globe”, Khara said. - business line

🍒 ‘JM Fin will apply for a bank licence if there is a right policy’ : JM Financial Ltd will apply for a bank licence if there is a right policy and right construct, according to Vishal Kampani, Group Managing Director. In reply to a specific question whether his company will consider applying for a bank licence, Kampani observed that for India to become a $5-trillion economy, it will need all sorts of banks and it will need many more banks. “So, it is not just about JM applying for a bank licence. “...And if the right policy and the right construct is there, definitely JM would apply for a bank licence. I mean there is no two ways about it that JM would apply for a bank licence,” said Kampani at the CII Partnership Summit.- business line

🍒 With collections yet to reach pre-Covid levels, banks keep a tab on repayments : Banks are watchful on repayments by retail borrowers as collection efficiencies are yet to reach pre-Covid levels. With the loan moratorium ending on August 30 this year, a large number of retail borrowers have managed to make repayments, with banks reporting collection efficiencies at about 90 per cent of pre-Covid level. However, there are worries about the remaining borrowers who have not been able to fully restart payments of their EMIs. A clearer picture is expected to emerge by the end of the month when the loan restructuring window will also end. “Anywhere between 12 per cent to 15 per cent of customers would have gone through trouble in this period. Cheque bounce rates are elevated and collection efficiencies are still in the 90s,” noted a banker. - Business Line

🍒 Strong show: Pension assets surge 35.65% as of November 2020 : India’s pension assets continue to record smart growth, with the latest Pension Fund Regulatory and Development Authority (PFRDA) data showing an overall growth in assets under management (AUM) of 35.65 per cent on a year-on-year basis to ₹5,32,378 crore as of end November 2020. The overall AUM as of end-November 2019 stood at ₹3,92,467 crore. And, as against the AUM of ₹4,17,479 crore as of end-March 2020, the latest reading reflects a growth of 27.5 per cent on a sequential basis, implying that the Covid-19 pandemic has had little impact on the growth of pension assets this year. - Business Line

🍒 ‘NBFCs continue to shine in personal loan segment’ : Non-banking finance companies (NBFCs) continue to grow in the personal loan (PL) segment in volume terms, doubling their market share in the last two years up to March-end 2020, according to CRIF High Mark. In terms of volume, NBFCs’ market share in PLs improved from 22.68 per cent in March 2018 to 44.92 per cent in March 2020. Their market share in August 2020 was at 42.16 per cent, according to the credit information bureau. Public sector banks (PSBs) and private sector banks (PvBs) lost significant volume share in PLs over the last 2 years. - Business Line

🍒 Rupee slips 8 paise to 73.63 against US dollar : The rupee depreciated by 8 paise to settle at 73.63 (provisional) against the US dollar on Tuesday, tracking muted domestic equities. At the interbank forex market, the domestic unit opened at 73.62 against the US dollar and witnessed an intra-day high of 73.59 and a low of 73.67. The local unit finally closed at 73.63 against the American currency, registering a fall of 8 paise over its previous close.

🍒 Market ends flat, Nifty holds 13,500; US Fed outcome in focus : Key equity indices the Sensex and the Nifty ended flat on December 15 as gains in select heavyweights such as Bajaj Finance and Bajaj Finserv were offset by losses in those of Hindustan Unilever, ICICI Bank, Axis Bank and State Bank of India. The Sensex opened in the red and traded in the lower territory for the most part of the session but at the fag end, it managed to erase losses and ended with nominal gains.It closed 10 points, or 0.02 percent, up at 46,263.17 and the Nifty, too, gained 10 points, or 0.07 percent, to close at 13,567.85. The BSE midcap index outperformed the Sensex, rising 0.42 percent, while the smallcap index closed 0.07 percent up..

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.