27.11.2020 : Today's Banking / Financial News

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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