🍒 Central Bank of India to exit housing finance business; to sell JV stake for Rs 160 crore : State-owned Central Bank of India will exit housing finance joint venture by selling its entire stake of over 64 per cent to Centrum Housing Finance for Rs 160 crore. "This is to inform that the bank has entered into a binding agreement to divest its entire equity stake of 64.40 per cent i.e. 1,61,00,000 shares of face value of Rs 10 each in Cent Bank Home Finance Ltd (CBHFL), to Centrum Housing Finance, subject to approvals from regulatory authorities," Central Bank of India said in a BSE filing. According to a separate filing by Centrum Capital, the parent of Centrum Housing, the cost of acquisition is about Rs 160 crore on cash basis. "The company's subsidiary, Centrum Housing Finance has entered into a share purchase agreement with Central Bank of India for acquisition of bank's entire equity stake in CBHFL constituting 64.40 per cent of the share capital of CBHFL on a fully diluted basis, " Centrum Capital said in the filing. The target entity is in the same line of business as the subsidiary, hence this is a strategic acquisition, it added. - economic times
🍒 Banks will focus on cash flow-based lending in future: UCO Bank's Ajay Vyas : Moving on from ratings criteria for grant of loans, banks are likely to focus on cash flow-based lending in times to come, a top executive of UCO Bank has said. "Banks will focus on cash flow based lending in times to come and this has already been started by SBI," Ajay Vyas, Executive Director, UCO Bank said at a virtual panel discussion on Redefining Corporate Financing in New Normal organized by PHD Chamber on December 23, 2020. Various SBI officials have advocated for cash flow-based lending models over the traditional asset-based or ratings-based ones. In cash flow lending, a financial institution grants a loan that is backed by the recipient's past and future cash flows. Vyas further noted that the turn around time (TAT) for grant of loans need to come down and emphasized that it is important to move on from ratings criteria for grant of loans. According to Vyas, Artificial Intelligence, algorithms, prediction analysis are the future of lending norms for banks to follow.- economic times
🍒 RBI unlikely to extend Dec 31 loan rejig deadline : The December 31 deadline for banks to accept restructuring requests from Covid-hit businesses is unlikely to be extended. This was indicated by RBI governor Shaktikanta Das in his meeting with bankers. The governor on Wednesday concluded a two-day meeting with public sector and private sector banks, held through video conference. Days before banks closed their books for the third quarter, Das asked them to make enough provisions should loans go bad. He also asked banks to raise more capital to grow loans. In his meeting, the governor asked bank chiefs to remain vigilant and to take proactive measures to strengthen their resilience and lending capacity. He also sought an update from banks on the progress in the implementation of a resolution framework for Covid-related stressed assets. - economic times
🍒 Banks expect to recover Rs 12K cr from sale of Videocon's oil blocks in Brazil : Bankers are expecting to recover as much as Rs 12,000 crore or $1.6 billion from the sale of Videocon’s Brazil oil blocks after a spurt in oil prices resulted in a boost in the valuation of the assets, according to people in the know. This is at least 60% higher than what they had originally planned to recover from the sale of the assets when expressions of interest were first invited from potential bidders in September, according to these people. The revised valuation was discussed at a recent meeting of the bankers where they also accepted a request from potential bidders to extend the deadline for bids to the first week of January, these people said. The bidders sought an extension of the timeline to conduct physical due diligence in Brazil. “Oil prices are inching towards $50 a barrel. That changes the valuation of the assets because exploration has started. We expect to recover at least 50% of our dues now,” an executive familiar with deliberations between the bankers said. At least five bidders - US’s Murphy Oil, European oil giant Wintershall DEA (owned by BASF), PetroRio, Vedanta and a local consortium comprising Indian businessman - are amongst potential bidders for the stake, ET reported on September 21. - economic times
🍒 RBI cancels licence of Subhadra Local Area Bank, Kolhapur : The RBI on Thursday said it has cancelled the licence of Subhadra Local Area Bank, Kolhapur, as its affairs were conducted in a "manner detrimental" to the interests of its present and future depositors. The bank had breached the minimum net worth requirement for two quarters in the financial year 2019-20, the RBI said in a statement. However, Subhadra Local Area Bank has enough liquidity to pay all its depositors, it added. "Public interest would be adversely affected if it is allowed to continue to do the business in the manner in which it is functioning", the RBI said, adding that the general character of the management is considered prejudicial to the interest of the present and future depositors. The licence issued to Subhadra Local Area Bank stands cancelled to carry out banking business from the close of business on December 24, 2020.- economic times
🍒 Focus on raising cash: Das to banks : Reserve Bank of India (RBI) governor Shaktikanta Das asked top executives of commercial banks to raise capital to help strengthen their lending capacity and proactively set aside money to cover loan losses. “Most banks said that stress is under control," a banker who attended the meeting said. During the two-day meeting, governor Das, along with his deputy governors, discussed the economic situation with bank chiefs and emphasized the role of the banking sector in supporting the ongoing revival in economic activity. Das recounted the measures taken by RBI since the onset of the pandemic to stabilize the economy. - Live Mint
🍒 Credit-deposit ratio takes a hit in 2020: Loans disbursed by Indian banks as a percentage of deposits have constantly declined in 2020, underscoring the effects of excess liquidity and lack of credit demand. In calendar year 2020, the credit-deposit (CD) ratio has consistently declined from 75% levels in January to 71.3% on 4 December, with the hit becoming evident in the first months of the covid-19 pandemic as credit growth slumped. The fall in CD ratio is a consequence of the constant inflow of deposits, which have outpaced credit growth in the last several quarters as demand dropped along with lenders’ appetite for riskier assets. Under Reserve Bank of India rules, banks have to set aside 3% of deposits as cash reserve ratio (CRR) and another 18% in statutory liquidity ratio (SLR) compliant holdings. The rest, along with other resources, can be used for lending. - Live Mint
🍒 Axis MF changes multicap fund to flexicap : Axis Mutual Fund has renamed existing multi cap fund to the newly formed Flexi Cap category keeping in line with its current product positioning. The open ended dynamic equity scheme invests across large, mid, and small cap stocks to facilitate capital appreciation over medium to long term. The change in name will be effective from January 30, said the fund house. As part of scheme categorisationand make it true to label, Sebi had insisted that multicap funds should invest 25 per cent each in small, mid and large cap stocks. This has unsettled most multicap schemes as their învestments were tilted towards large cap stocks. - Business Line
🍒 RBI to conduct simultaneous purchase and sale of G-Secs on December 30 : The Reserve Bank of India on Thursday said it will conduct simultaneous purchase and sale of government securities (G-Secs) under Open Market Operations (OMO) for an aggregate amount of ₹10,000 crores each on December 30. The decision to conduct simultaneous purchase and sale of G-Secs under OMO was taken after a review of current liquidity and financial conditions, RBI said in a statement.- Business Line
🍒 All Central co-operative banks and States co-operative banks will follow new set of regulations as prescribed under Banking Regulations Amendment Act with effect from April 1, 2021. With this, the RBI will have more power to deal with State and Central co-operative banks. These regulations include issuance of shares and bonds, beside others. The Finance Ministry has issued a notification stating that from April 1, the provisions of Section 4 of the said Act shall come into force for State co-operative banks and Central co-operative banks. The new Act was assented on September 29, which replaced the ordinance promulgated on June 26. Section 4 is about amending Section 56 of original act of 1949, which deals with co-operative societies.- Business Line
🍒 Banking system liquidity on the slide due to advance tax outflow : The banking system liquidity has fallen substantially in recent weeks, but experts say that is largely because of advanced tax outflow and is not sudden activism on the part of the central bank even as it might have carefully started to drain the system without flustering the bond markets. As of Monday, the banking system liquidity was at a surplus of Rs 4.95 trillion, as against Rs 6.13 trillion a week earlier, on the eve of the deadline for the third instalment of advance tax. In both cases, however, the overall system liquidity was Rs 8.22 trillion. The overall system liquidity takes into account the banking system liquidity plus the government cash balances with the RBI. The liquidity overhang had figured in the discussions of the monetary policy committee (MPC), the minutes showed. The MPC discussed how huge liquidity could generalise the inflation in the coming days, and how the low interest rates could be benefiting only a few "oligopolistic" firms. New code for co-ops to kick in from April : Business Standard
🍒 Former PNB chief manager, two associates held in Delhi for loan fraud : A former chief manager of a public sector bank and his two associates were arrested in Delhi for allegedly misappropriating funds through a loan fraud, police said on Wednesday. The accused have been identified as Shailendra Kumar (63), a resident of Dwarka Sector-10, Ankit Sangwan (29), a resident of Vikaspuri and Sunil Sarki (31), a resident of Vikas Nagar, they said.Police said a complaint was made by the Punjab National Bank alleging that one Sarki Trading Company through its proprietor Sunil Sarki obtained a cash credit (CC) limit of Rs 2.50 crore on the basis of false credentials and documents in 2013. The company was shown having the business of clothes and garments. To secure the CC limit, forged documents of a property were mortgaged with the bank. The addresses of the borrower and the guarantor were not traceable and the account turned into a non-performing asset (NPA) in 2014, a senior police officer said. - Business Standard
🍒 S&P affirms Indian Bank's 'BBB-' rating, removes from CreditWatch : Rating agency Standard and Poor’s (S&P) has affirmed ratings for Indian Bank at “BBB-” on expectation of ability to absorb a moderate deterioration in its asset quality over the next 12 months. The Chennai-based public sector lender is expected to benefit from faster-than-expected economic recovery in India.Rating agency removed the ratings from CreditWatch, where they were placed with negative implications on June 26, 2020. Another public sector lender Allahabad Bank was merged with Indian Bank on April 01, 2020. Outlook on financial instrument is negative due to asset quality and capital risks. It reflects the view that the bank's capital and asset quality could deteriorate due to the Covid-19 fallout over the next 12-18 months. - Business Standard
🍒 Bankers' sentiment on lending improves; loan demand to rise: RBI survey : After a severe impact of the Coronavirus (Covid-19) pandemic during April-June 2020, bankers’ sentiments on lending conditions have shown a broad-based improvement. The demand for loans is expected to become better, according to RBI’s bank lending survey. Responses suggest that perceptions on retail/personal loans, which were most severely hit during the period, have bounced back. There is lower optimism for the infrastructure, mining and quarrying sectors when compared to other major sectors. The survey is part of RBI's December 2020 bulletin. The Covid-19 pandemic and the related lockdown led to significant contraction in loan demand across all sectors during April-June 2020, which severely dampened the sentiment among Indian lenders. - Business Line
🍒 SBI Life acquires 9% stake in Paisalo Digital for Rs 186.20 cr : SBI Life Insurance Company on Thursday said it has acquired nearly 9 per cent stake in non-banking finance company Paisalo Digital for about Rs 186.20 crore through the open market. SBI Life has acquired a total of38,00,000 equity shares equivalent to 8.99 per cent at Rs489.99 per share for a cash consideration as an ordinary course of business on the stock exchange on December 24, it said in a regulatory filing.It is not a related party transaction, the insurer added.Paisalo Digital has a market capitalisation of Rs 2,204.69 crore as on December 24, 2020. The company's turnover as of March 31, 2020, was Rs337.45 crore. - Business Line
🍒 Fintechs show interest in becoming SFBs, but transitions involve risks : On Wednesday, the Reserve Bank of India (RBI) said digital lending platforms used on behalf of banks and non-banking finance companies (NBFCs) should disclose the names of such lenders to customers. This may be the first sign of a tightening regulatory regime for digital, or fintech, companies. Perhaps in anticipation of a faster compression in the regulatory arbitrage between payments banks (the most popular fintech model) and traditional ones, the RBI’s internal working committee suggested that the term of conversion to small finance banks (SFBs) be reduced from five to three years for payments banks (that is, banks that can accept deposits but cannot lend or issue credit cards), and such SFBs must be listed within six years of conversion against three years specified earlier. - Business Standard
🍒 Sensex soars 529 points as RIL, HDFC twins shine : The 30-share BSE Sensex surged 529.36 points or 1.14 per cent to close at 46,973.54. The broader NSE Nifty zoomed 148.15 points or 1.09 per cent to 13,749.25. Axis Bank topped the Sensex gainers chart, spurting 3.04 per cent, followed by Sun Pharma, ONGC, Reliance Industries (RIL), HDFC, ICICI Bank, Bharti Airtel, Bajaj Finance and Kotak Bank.Index heavyweights RIL, HDFC and HDFC Bank accounted for over half of the Sensex''s gains.On the other hand, Infosys, Nestle India, IndusInd Bank, Dr Reddy's, HCL Tech and Bajaj Finserv were among the main laggards, dropping up to 1.32 per cent.
🍒 Rupee rallies 21 paise to 73.55 per US dollar : Climbing for the second straight session, the rupee darted up 21 paise to end at 73.55 against the US dollar on Thursday amid sustained foreign fund inflows and positive domestic equities. At the interbank forex market, the rupee opened at 73.66 against the US dollar and witnessed an intra-day high of 73.54 and a low of 73.66. The domestic unit finally finished at 73.55, registering a rise of 21 paise over its previous close.
🍒 Gold prices fall for third consecutive day : Gold prices edged lower in Indian markets today, while silver prices went up. On MCX, February gold futures edged 0.16% lower to ₹50,070 per 10 gram. The yellow metal declined for the fourth time in the last five days. Silver is up 0.1% to ₹67,641 per kg. Though gold has recovered from lows of below ₹48,000, it remains significantly lower than the August highs of ₹56,200. Similarly, silver had also almost touched ₹80,000 per kg in the same month. Gold closed at ₹50,149 and silver closed at ₹67,576 on Wednesday on MCX. - Live Mint
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