01.12.2020: Today's Banking / Financial News

01.12.2020: Today's Banking / Financial News at a Glance

🍒 Union Bank aims to increase CASA to 40% by FY23 : Union Bank of India (UBI) plansto increase the proportion of low-cost current account and savings account (CASA) deposits in its overall deposits to about 40 per cent by March-end 2023 from 34.6 per cent as of September-end 2020. This will help the bank improve its net interest margin (NIM). Simultaneously, the Mumbai-headquartered public sector bank (PSBs) is seeking to bring down the proportion of bulk (term) deposits (of ₹2 crore and above) in the overall deposits by not offering special interest rates. UBI’s focus on CASA comes in the backdrop of its net interest margin (NIM) declining to 2.51 per cent as of September-end 2020 against 2.68 per cent as of September-end 2019. NIM (excess of interest income over interest expense divided by average interest earning assets) is one of the indicators of a bank’s profitability. Rajkiran Rai G, MD and CEO, UBI, said: “Banks with large presence in the North and the East have higher CASA deposits. Typically, South-based banks have relatively lower CASA deposits.” - Business Line

🍒 Indian Bank in pact with SIDBI for asset restructuring module for MSMEs : Indian Bank has entered into an agreement with Small Industries Development Bank of India (SIDBI) to use the latter’s asset restructuring module for MSME borrowers. MSMEs have been finding it difficult to maintain books of accounts, preparation of financial statements and submission of financial projections for producing the same to banks / FIs for availing credit finance / restructuring their loans based on their estimates and revision in working capital cycle. MSMEs have to approach third parties for this purpose which involves time and cost. Small Industries Development Bank of India (SIDBI) has come out with Asset Restructuring Module for MSMEs – Do it Yourself (ARM-MSME DIY) – for supporting these MSMEs. The module enables MSMEs prepare their restructuring proposals / financial viability assessments by themselves and submit to the bank. MSMEs can use this module free of cost. SIDBI is also appointing councillors at select centres to guide the MSMEs in usage of this module. - Business Line

🍒 ECLGS 2.0 will be sufficient to ease liquidity pressures: Crisil : The Emergency Credit Line Guarantee Scheme (ECLGS) 2.0 will be sufficient to help companies, including those hit by a sharp decline in cash flows because of the pandemic, overcome liquidity pressures, according to a Crisil study. The scheme can potentially infuse about ₹40,000 crore in liquidity for Crisil-rated eligible companies, the credit rating agency said in a statement. The ECLGS has been extended as part of the government’s stimulus to the economy under Atmanirbhar Bharat 3.0 to eligible companies in 26 stressed sectors identified by the KV Kamath Committee, and also to the healthcare sector.- Business Line

🍒 Banks in India to see capital decline over 2 years without fresh infusion: Moody's : Moody's Investors Service on Monday said the bank capital will moderately fall in emerging Asia over the next two years, with India seeing larger capital decline without further infusion. In a report, Moody's said the uncertain trajectory of asset quality is one of the biggest threats for emerging market banks, as operating conditions remain challenging amid the current COVID pandemic. The 2021 outlook for banks in emerging markets is negative, while the outlook for insurers is stable, it said. "In the Asia Pacific region, banks' rising nonperforming loans and insurers' volatile investment portfolios are in focus. Capital will moderately fall in emerging Asia over the next two years, and banks in India and Sri Lanka will post larger capital declines without public or private injections," Moody's said. - economic times

🍒 Singapore's DBS says it has completed takeover of distressed Lakshmi Vilas Bank : Singapore's DBS Group said on Monday it had completed its takeover of distressed Lakshmi Vilas Bank, helping it shift from a largely digital presence in India to having hundreds of branches. The 94-year old Chennai-based private bank was folded into DBS's Indian subsidiary at the request of the Reserve Bank of India which cited a serious deterioration in its finances.Southeast Asia's largest lender, which will pump in Rs 2,500 crore ($338 million) into its India unit, until recently had just over 30 branches in India but has now added more than 550 and 900-plus ATMs. - economic times

🍒 Lakshmi Vilas Bank customers can access all services; no change in interest rates as of now: DBS : DBS Bank India on Monday said customers of Lakshmi Vilas Bank, which has now been merged with it, can continue to access all banking services, and interest rates on savings and fixed deposits are unchanged as of now. Lakshmi Vilas Bank (LVB) has now been amalgamated with DBS Bank India Ltd (DBIL), the wholly-owned subsidiary of DBS Group Holdings Ltd, DBS Bank India said in a statement. The amalgamation of LVB into DBS Bank India came into effect from November 27 under the special powers of the government and the Reserve Bank of India under Section 45 of the Banking Regulation Act, 1949. - economic times

🍒 Loan growth continues to remain tepid; but loans to medium sized firms, wholesale trade are outliers : Bank loans to most segments including retail and home loans continued to be tepid in October. But loans for wholesale trade, MSMEs, loan against shares and vehicle loans were outlier with higher growth than last year, according to the latest data on sectoral deployment of bank credit released by the Reserve Bank. Non-food bank credit growth decelerated to 5.6 per cent on a year-on-year (y-o-y) basis, in October 2020 from 8.3 per cent in October 2019. Good monsoons have brightened the prospects for agriculture. Credit growth to agriculture and allied activities accelerated to 7.4 per cent in October 2020 from 7.1 per cent in October 2019.- economic times

🍒 Sidbi to handhold MSMEs for free in formulating restructuring plans : Sidbi is tying up with banks to consider MSME restructuring proposals sent through its newly launched hand-holding help-line. Punjab National Bank (PNB) and Indian Bank have agreed to accept restructuring proposals generated by Sidbi's MSME customers using its helpline. The bank has already signed an MoU with Indian Bank and is in the process of signing separate MoU with PNB and other banks, according to senior officials at Sidbi.Sidbi's helpline- a web portal-"arm-msme" is designed to help MSMEs take benefit of Reserve Bank of India’s MSME restructuring guideline. With the help of this `Do-It-Yourself' asset restructuring web module, MSMEs will be able to prepare restructuring proposals by keying the most essential data of their past financials, future projections and restructuring requirement. - economic times

🍒 Large banks may move RBI to tweak loan rejig rule : Large lenders may soon impress upon the Reserve Bank of India (RBI) the need to tweak a rule to make it easier to rejig loans to companies impacted by the pandemic-induced slowdown. In several cases, such a change will spare companies hit by Covid-19 the stigma attached to a nonperforming asset (NPA) as well lower provisioning for banks. This would call for recognising the months between the ‘invocation of the resolution framework’ (for one-time restructuring of a loan) and its ‘implementation’ as a standstill period. “This may help more banks as well as borrowers to take up one-time restructuring of loans… It will be all the more relevant once the Supreme Court lifts the stay on classification of loan assets,” a senior banker told ET. - economic times

🍒 Jan Dhan accounts, direct cash transfers from government boost ATMs in rural areas : With Jan Dhan accounts and the government’s direct benefit transfers (DBT), ATM usage has gone up in rural areas. This is most clearly seen by the trend of increased usage of ‘white-label operators’ ATMs, which are used only in rural and remote parts of the country. From just 2 per cent of total ATM transactions in India in 2014, these white-label ATMs now make up 12 per cent of total transactions. ATM players say that the main reason for this is that over seven years, the number of debit cards in India has doubled to 86 crore as of September 2020. And of those cards, 35 per cent (30 crore) are RuPay ones issued to PM Jan Dhan Yojana accounts. “We are seeing rural demand growing despite the pandemic. One of the reasons is that the rural economy has not been as severely impacted as the urban one with the lockdown,” says K Srinivas, CEO, BTI Payments, a white-label ATM operator. The government’s assistance to BPL workers during the pandemic is also held to have helped in part the industry take a quantum leap from 9.5 per cent in September 2019 to 12 per cent in September 2020. - economic times

🍒 RBI may keep policy rates unchanged : The Reserve Bank of India (RBI) is likely to keep interest rates unchanged and reiterate its accommodative stance in this week’s monetary policy review, buoyed by good news on the economic front, said investors and traders. But it could also cite concerns about inflation, which has stubbornly remained above the prescribed target range. The monetary policy committee (MPC) is scheduled to meet on December 2-4. Bankers will watch out for any guidance on how the RBI plans to manage the record excess liquidity in the financial system, which has distorted market conditions and led to a drop in short-term rates. Some companies are borrowing at rates lower than the RBI benchmark. - economic times

🍒 Bankers to make last-ditch attempt to get more cash from Lavasa's bidders : Financial creditors to the debt laden Lavasa will make a last-ditch attempt to get more value from bidders for the bankrupt real estate project as the current three bids are close to the liquidation value. Bankers want more cash and will try one on one negotiation with the bidders to extract a better deal, said three persons with direct knowledge of the development. "We have not decided on whether to give the approval for liquidation or to seek a better value from the existing bidders. The assets are still being consolidated and the process is on," said one person aware of the discussions. Creditors to the hill city project are in a bind because the offers that are on the table so far have little or no cash being offered upfront and are based on the returns the bidders expect to make in the future upon completion of the project. - economic times

🍒 Passenger vehicle, 2-wheeler wholesales to decline over next few months: Ind-Ra : Domestic passenger vehicle and two-wheeler wholesales will come down in the next few months as inventory levels remain high at dealer level, according to rating firm India Ratings and Research (Ind-Ra). The overall auto industry would however continue to grow in the next few months, it noted. "With the festive season now over in India, the rating agency expects wholesale billings to moderate in the next couple of months, given that the inventory at dealer level for passenger vehicles (PVs) and two-wheelers is already at higher than the 21 days recommended by Federation of Automobile Dealers Association (FADA)," Ind-Ra said in a statement.- economic times

🍒 Consumers going back to credit cards as inquiries exceed October '19 levels: Transunion Cibil : Consumers are back to moving away from cash to credit card spending, a gauge of increase in formalising economic activity that had come to a virtual standstill after the country-wide lockdown post the COVID pandemic forcing households to opt for cash transactions. Credit card inquiry volumes in October 2020 were at 106 per cent of October 2019 levels, suggesting that consumer economic activity has materially improved since the easing of COVID-19 lockdown measures, according to a report by Transunion Cibil. Data with the credit bureau shows that credit card popularity in traditionally cash driven, non-metro locations has risen with more consumers wanting to transact through cards. Significantly, the credit culture which has been traditionally metro-centric is becoming more broad-based with more non-metro consumers seeking interest in credit cards. October 2020 inquiry volumes in non-metro locations increased by 23 per cent year-on-year (y-o-y), compared to a decline of -10 per cent y-o-y for metro locations. - economic times

🍒 Paytm Money to facilitate investment in public offers : Paytm Money will start facilitating investments in Initial Public Offers (IPOs) in India. The company has made the process of IPO application completely digital and simple for retail investors. Paytm Money has enabled investors to instantly apply for all the latest IPOs via UPI ID, linked to their bank accounts to complete the IPO application process. The platform offers a seamless interface to make changes in, cancel or reapply for the bid application within the IPO window. It is equipped with features enabling investors to track upcoming IPOs, view the company history and details, download prospectus, and also check the performance of past IPOs. This service is available on both the Paytm Money app and website. - Business Line

🍒 Bharti AXA Life renewal premium income up 10% in H1 : Bharti AXA Life Insurance on Monday said that the company registered 10 per cent growth in its renewal premium to ₹594 core in the first half of the financial year 2020-21 from ₹541 crore in the corresponding fiscal period a year ago. However, due to the Covid-19 crisis and subsequent disruptions, the company’s new business premium income fell 23.37 per cent to ₹318 crore (₹415 crore). Total premium income fell 4.6 per cent to ₹912 crore in the April-September period of this fiscal from ₹956 crore in the first six months of the last financial year. The company recorded a surge of 25 per cent in its asset under management at ₹7,987 crore in the first half of 2020-21 against ₹6,404 crore in the corresponding period of the last fiscal. - Business Line

🍒 Merger to provide stability to LVB depositors, employees: DBS Bank India CEO : The amalgamation of Lakshmi Vilas Bank with DBS Bank India will provide stability to LVB's depositors and employees, according to Surojit Shome, DBS Bank India CEO. “The amalgamation of LVB has enabled us to provide stability to LVB’s depositors and employees. It also gives us access to a larger set of customers and cities where we do not currently have a presence. We look forward to working with our new colleagues towards being a strong banking partner to LVB’s clients,” said Shome in a statement on Monday. - Business Line

🍒 DHFL FD holders may get a quarter of their funds repaid : Fixed deposit holders of Dewan Housing Finance Corporation Ltd (DHFL) could get back about a quarter of their investments under the proposed resolution plans, but many point out that it would be too little, too late. “Recent discussions have indicated that FD holders will get atleast some repayment of their investments. It has been indicated that they may be repaid as much as 25 per cent of the amount invested,” said a person familiar with the development. “The SLR ratio is only 13 per cent so that is the amount they can get, irrespective of what the resolution amount is,” the person further said. - Business Line

🍒 Paytm Money launches IPO investments : Paytm, a homegrown financial services major, on Monday announced that its wholly-owned subsidiary, Paytm Money, now facilitates investments in Initial Public Offers (IPOs) in India. This launch will benefit retail investors with wealth creation opportunities, as they will be able to seamlessly apply and join the growth story of rapidly expanding companies. The company has made the process of IPO application completely digital and simple for retail investors across the country to apply for IPOs, a company statement said. Paytm Money has enabled investors to instantly apply for all the latest IPOs via UPI ID, linked to their bank accounts, to quickly complete the IPO application process. The company is leveraging the convenience of UPI infrastructure to offer a faster turnaround time reduced to 3-4 days for completion of the entire process. - Business Line

🍒 SIDBI launches asset restructuring web module : The Small Industries Development Bank of India (SIDBI) has launched an asset restructuring web module, https://arm-msme.in, to help MSMEs (micro, small and medium enterprises) get benefit from the Reserve Bank of India’s (RBI) MSME restructuring guideline. With the help of this Do-It-Yourself (DIY) asset restructuring web module, MSMEs will be able to prepare restructuring proposals by keying in only the most essential data of their past financials, future projections and restructuring requirements, SIDBI said in a statement. The proposal prepared can be submitted online to the banks and reports can also be generated for submission to banks through email or in hard copies. ARM-MSME is being offered free of cost as part of SIDBI’s developmental initiatives. SIDBI is the country’s apex financial institution for the promotion, financing and development of MSMEs. - Business Line

🍒 Mahagram to deploy 12 lakh wireless Bharat ATMs by March 2021 : Mumbai-based fintech start-up Mahagram is all set to deploy 12 lakh wireless ATMs that will empower kirana shops and other retail stores to disburse cash to people, as banks are finding it increasingly unviable to operate and maintain ATMs across the country. The five-year old bootstrapped start-up launched Bharat ATM, a rural banking platform last month, using private banks’ proprietary licenses.Bharat ATM already has 1.5 lakh touchpoints across the country which comprises 20,000 handheld terminals (wireless ATMs) for card payments run on Aadhaar and RuPay card, and the rest are all Android mobiles with the Bharat ATM app installed, which can be used along with a finger print scanner for Aadhaar authentication to dispense cash. - Business Line

🍒 DHFL: Higher offer as per bid documents, says Adani group : The fight to acquire Dewan Housing and Finance Corporation Ltd (DHFL) could spiral into a legal wrangle with the Adani group insisting that it was in the right to submit a higher bid for the entire book of the debt-laden housing finance company. In a communication to the lenders of DHFL, Adani said its bid is as per the process laid out in the bid documents and other applicants have no rights to raise any objections because the Committee of Creditors (CoC) and the Administrator are duty bound to ensure value maximisation. The Adani Group said rival bidders were using cursive means to derail the entire bidding process by threatening to pull out of the auction. - Business Line

🍒 Reliance Capital defaults on interest payment of term loans : Reliance Capital has defaulted on interest payments of term loans amounting to ₹624.61 crore. In a regulatory filing on Monday, it said the term loans of ₹523.98 crore was from Housing Development Finance Corporation and ₹100.63 crore from Axis Bank. The interest accruing on the HDFC loan amounts to ₹4.77 crore and to the Axis Bank loan ₹0.71 crore. The default took place on October 31. “The company is unable to proceed with asset monetisation, resulting in delay in debt servicing, due to prohibition on the company to dispose off, alienate, encumber either directly or indirectly or otherwise part with the possession, of any assets except in the ordinary course of business such as payment of salary and statutory dues, pursuant to order dated November 20, 2019, passed by the Delhi High Court, and orders dated December 3, 2019, and December 5, 2019, passed by the Debts Recovery Tribunal, Mumbai, and order dated November 4, 2020, passed by the Bombay High Court,” Reliance Capital said in the filing. - Business Line

🍒 ABN Amro to cut about 2,800 jobs as investment bank shrinks : ABN Amro Bank NV plans to cut about 2,800 jobs over four years as the Dutch lender retreats from large parts of its investment bank and digitization allows it to operate with a smaller staff. The company plans to reduce costs by about 700 million ($840 million) by 2024 to 4.7 billion euros. The workforce will shrink by about 15%, with most reductions to start in 2022, Chief Executive Officer Robert Swaak said in an investor update on Monday. In August, Swaak announced plans to cut a third of the lender’s business with corporate clients, dropping company finance outside of Europe and exiting trade and commodity financing altogether. ABN Amro posted losses in the first half after taking hits on individual corporate clients before returning to profit in the third quarter. - Live Mint

🍒 Government waives penalty for non-compliance with QR code provisions for B2C transactions : The Centre has waived penalty for non-compliance with QR code provisions for business-to-consumer (B2C) invoices generated by businesses till March 31, 2021. However, it would be mandatory for businesses to follow the QR code provisions from April 1, 2021 to avail this penalty waiver. The requirement of printing dynamic QR code on B2C invoices is being implemented from December 1. Quick Response code or QR code helps users verify the details in digitally signed e-invoices. Under the Goods and Services Tax (GST), companies with a turnover of over Rs 500 crore have to generate e-invoices for B2B (business-to-business) transactions from October 1. However, it is not yet mandatory for B2C transactions. - moneycontrol.

🍒 Six debt schemes of Franklin Templeton get ₹1,895 cr : The six suspended debt schemes of Franklin Templeton has received ₹1,895 crore in the fortnight ended Friday, with inflows from pre-payment alone accounting for ₹1,664 crore, while maturities and coupon payments added up to the rest. With this, the overall inflow in November was about ₹2,836 crore. In all, the six schemes have received ₹11,576 crore from maturities, pre-payments, and coupon payments since it was first suspended in April. - Business Line

🍒 Five of top 10 most valued firms lose together ₹91,699 cr m-cap; RIL worst hit : The combined market valuation of five of top-10 most valued firms declined by ₹91,699 crore last week, with heavyweight Reliance Industries emerging as the worst hit. While Reliance Industries Ltd (RIL), Infosys, HDFC, ICICI Bank and Bharti Airtel suffered losses in their market valuation, Tata Consultancy Services (TCS), HDFC Bank, Hindustan Unilever Limited, Kotak Mahindra Bank and Bajaj Finance were the gainers. RIL's market valuation tumbled by ₹60,829.21 crore to ₹12,23,416.97 crore. The market capitalisation of HDFC plummeted ₹13,703.75 crore to ₹4,05,996.11 crore. Bharti Airtel's valuation declined ₹11,020.23 crore to ₹2,52,755.97 crore and that of ICICI Bank went lower by ₹5,090.54 crore to ₹3,26,225.04 crore. The market capitalisation of Infosys dipped by ₹1,055.27 crore to ₹4,68,779.17 crore. In contrast, HDFC Bank added ₹20,482.86 crore to ₹7,93,336.55 crore. Bajaj Finance's market capitalisation rose by ₹11,181.01 crore to ₹2,95,466.65 crore. - Live Mint

🍒 Gold price slips below Rs 48,000/10 gm, down 6% in November; Silver down Rs 1,039/kg : Gold prices fell below Rs 48,000 per 10 gram in the Indian market tracking feeble global cues despite weakness in the US dollar. The Indian commodity market opened in the evening session as it was shut in the morning session on the eve of Guru Nanak Jayanti. The domestic market retail market was closed today. The price had settled at Rs 48,807 per 10 gram on Friday. Silver prices declined Rs 1,039 to Rs 59,220 per kg from its closing on November 27.

30.11.2020: Today's Banking / Financial News

30.11.2020: Today's Banking / Financial News at a Glance

🍒 RBI likely to maintain status quo for 3rd straight time on inflation concerns : The Reserve Bank is likely to keep the benchmark interest rates unchanged in its next monetary policy review in view of heightened retail inflation which has persistently remained above its comfort level, feel experts. However, with the economic growth continuing to remain in the negative territory for the second consecutive quarter ending September, the central bank is likely to continue with the accommodative monetary stance keeping the hope alive for a rate cut as and when needed. The six-member Monetary Policy Committee (MPC) headed by RBI Governor is scheduled to meet for two days starting December 2. The resolution of the sixth bi-monthly MPC meeting would be announced on December 4. - Business Line

🍒 RBI needs to be a super regulator if corporates are allowed to open banks : The key issue to monitor or prevent camouflaged or connected lending lies with the supervisory powers of the Reserve Bank of India (RBI). The current laws do not provide such powers to the regulator. As evident from the YES Bank case, there is nothing wrong in a bank lending to a particular entity so there is no way RBI inspectors could raise a flag. “The issue here is once you allow the conglomerates then only supervising the banks will not be sufficient,” said SS Mundra, former deputy governor of RBI. According to Mundra, supervision should be done at two levels – one on the non-operative financial holding company level and also on the group level.“You will have to supervise all the activities of the conglomerates. And for that you need a consolidated supervision. Consolidated supervision means if the group has an insurance arm or a broking business – various regulators should be together and there should be one lead regulator. There has to be a format, there has to be a system. That is one,” Mundra who was in-charge of supervision of banks and non-banks as deputy governor said. “The second is, since there will be a group involved, which may not be under the holding company, then supervisory capabilities are needed to know the flow of transactions, that is, from the bank whether it is going to related parties – not only in a direct way, sometimes these things happen indirectly also. So that kind of supervision will have to be maintained,” Mundra added. The existing laws need to be amended to provide those special powers to the Reserve Bank of India. The IGW has said that necessary amendments to the Banking Regulation Act, 1949 would be required, to prevent connected lending. - Deccan Herald

🍒 Madras HC tells DBS Bank to create reserve fund for LVB shareholders : The Madras High Court has asked DBS Bank India (DBIL) to create a reserve fund if it (the court) orders that the Lakshmi Vilas Bank (LVB) shareholders be compensated for the loss they have suffered in the process of amalgamation with DBIL. The court’s Division Bench, consisting of Justice Vineet Kothari and Justice M S Ramesh, on Friday passed an interim order on a writ petition filed by Kolkata-based AUM Capital Market.Senior Counsels P S Raman and Arvind Datar, representing the company, have asked for a stay on the amalgamation of LVB with DBIL. The amalgamation came into effect on November 27. AUM Capital holds a little less than 0.50 per cent in LVB. While refusing to give the stay, the Bench said no prejudicial action by DBIL should be taken against the shareholders of LVB without the court’s permission. - Business Standard.

🍒 ‘MPC likely to keep rates steady’ : The rate-setting Monetary Policy Committee (MPC) is likely to stand pat on the policy repo rate as retail inflation continues to remain sticky above its upper tolerance level of 6 per cent, even as the economy is showing signs of mending from the impact of Covid-19. The MPC, which is scheduled to meet from December 2 to December 4, left the policy repo rate unchanged at 4 per cent in its previous two meetings as retail inflation has been above the tolerance band for several months. Since the outbreak of the pandemic in India in March, the MPC has cut the repo rate cumulatively by 115 basis points in two tranches – from 5.15 per cent to 4.40 per cent on March 27 – and from 4.40 per cent to 4 per cent on May 22. - Business Line

🍒 RTGS payments to be available round the clock starting Dec 1. : In a bid to boost the adoption of digital payments, the Reserve Bank of India has allowed the transfer of funds through Real-Time Gross Settlement (RTGS) round-the-clock, 365 days a year from December 1. Under the current rules, the transfers can be made between 7 am and 6 pm on all working days except for the second and fourth Saturday of the month and on Sundays. - Timesnow.

🍒 Finance Ministry asks PSU general insurers to rationalise branches, other expenses: Sources : The Finance Ministry has asked public sector general insurance firms, especially National Insurance, Oriental Insurance and United India Insurance, to rationalise branches and cut down avoidable expenses to improve their financial health, sources said. Earlier this year, the Union Cabinet decided to halt the merger process of three state-owned general insurance companies due to their weak financial positions. Instead, the government approved fund infusion of ₹12,450 crore to meet regulatory parameters. The Finance Ministry has asked these companies to cut the flab by rationalising branches and rein in other avoidable expenses like guest houses, etc, sources said. Besides, sources said, they have been asked to expand their business through digital medium. - Business Line

🍒 NBFCs planning to seek CRR, SLR breather on net demand, time liabilities : Leading non-bank financial companies (NBFCs) have got cracking on their banking ambitions a week after the Reserve Bank of India’s (RBI’s) internal working group suggested that those with an asset size of Rs 50,000 crore or more may consider converting into a bank. A clutch of four large groups with shadow banks in their fold have held extensive internal consultations and are set to make a formal representation to the banking regulator (which sources said may well be within a fortnight) seeking the grandfathering of reserve norms – the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) in December on their net demand and time liabilities (NDTL). According to highly placed sources, these NBFCs plan to seek exemptions on the CRR and SLR front on their existing NDTL and that these be mandated on the fresh liabilities which would accrue upon conversion into a bank. If permitted, the move will benefit some of the large NBFCs such as HDFC Ltd, Bajaj Finance (held through Bajaj Finserv), Tata Capital, Shriram Capital (which is the holding company for Shriram Transport Finance and Shriram City Union Finance), and Mahindra & Mahindra Financial Services (subsidiary of automobile major, Mahindra & Mahindra). - Business Standard

🍒 IT Dept finds Rs 450 cr undisclosed income during search across four cities : A recent search conducted by the Income Tax (IT) Department's in 16 premises across Chennai, Mumbai, Hyderabad and Cuddalore, resulted in the detection of an undisclosed income of more than Rs 450 crore. The search was conducted in the case of an IT SEZ developer, its ex-director and a "prominent" stainless-steel supplier from Chennai. The Department did not disclose the names. According to the Department, an unaccounted assets worth Rs 100 crore accumulated by the ex-Director and his family members in the past three years were unearthed during the search. Besides, the IT SEZ developer claimed bogus work-in-progress expenses of about Rs 160 crore in an under-construction project, capital expenses of Rs 30 crore on account of bogus consultancy fees in an operational project and inadmissible interest expense of Rs 20 crore. - Business Standard

🍒 IndoStar Capital to exit corporate lending business by Mar 2022, to focus on retail segment : Alternative asset manager Brookfield and private equity player Everstone promoted non-banking finance company IndoStar Capital Finance is looking to fully exit from corporate lending business by March 2022, its executive vice-chairman and chief executive R. Sridhar said. The company has been reducing its corporate book over the last two years, and has brought down the portfolio by close to ₹3,500 crore. "From a portfolio size of ₹6,000 crore in 2018, the corporate book is down to ₹2,500 crore as of date, which is a reduction of around 60% (We have collected ₹3,500 crore). By March 2022, the wholesale and corporate book will become zero," Sridhar told PTI in an interaction. The company will continue to focus on and expand its retail segment, he said. - Live Mint

🍒 Indiabulls Housing Finance sells part of its stake in OakNorth Holdings, raises Rs 93 crore : Indiabulls Housing Finance Ltd (IHFL) on November 29 announced that it had raised approximately Rs 93 crore by selling a portion of its stake in OakNorth Holdings Ltd. "The sale proceeds will be accretive to the regulatory net worth and the CRAR of the company," the mortgage lender said in a regulatory filing. The firm has raised a total of Rs 2,670 crore as fresh equity in the month of September, October, and November 2020 - Rs 683 crore through QIP and Rs 1,987 crore through the sale of a stake in OakNorth - adding to the regulatory equity capital of the company, it added. - moneycontrol.

🍒 EPFO subscribers up 45 lakh in FY21, big indicator of job creation: Apurva Chandra, Labour Secretary : India could look at a minimum contribution of about Rs 1,000 annually from gig workers towards their social security with the balance to be contributed by the platform they are associated with, said labour secretary Apurva Chandra in an interview with ET. Chandra said there was net addition of over 45 lakh Employees Provident Fund Organisation (EPFO) subscribers in the fiscal year so far, an indicator of new employment generation. - economic times

🍒 Big relief for mid-scale companies, government postpones QR code requirements to March end next year : In what is set to give relief to several companies, the government has postponed the requirement of generating QR code under the Goods and Services Tax (GST) framework. The government on Sunday said that it is postponing the requirement to generate and then use QR code for all business to customer (B2C) transactions. Companies would now be required to be prepared with the QR code compliance by March end next year. Abhishek Jain, Tax Partner, EY said, “The Central government has provided the much required relaxation for the businesses by waiving the penalty for non-compliance with QR code requirement till March 2021 for B2C transactions. As many of the industry players were not ready, this waiver would give the requisite time for the industry to be ready for this compliance.” - economic times

29.11.2020: Today's Banking / Financial News

29.11.2020: Today's Banking / Financial News at a Glance

🍒 Government opposes further loan moratorium : The government on Friday cited constraints imposed by the country’s economic situation and the uncertainty over the Covid-19 pandemic to oppose any further Supreme Court relief by way of extending the loan moratorium scheme to other affected sectors. The government, through Solicitor General Tushar Mehta, told a bench led by Justice Ashok Bhushan that it had already extended the loan moratorium scheme for small borrowers and waived interest on interest. “Any such relief sector-wise would be a problem under Article 32,” he said. “There is already a mechanism (restructuring). Let them work out things under the mechanism,” the SG said. “Given the economic position of the country and the pandemic… no one knows when this situation will end,” he said. Further relief would be difficult to extend to all affected sectors, including big borrowers, he argued. Justice M R Shah wondered if the government was saying that there was a line that must not be crossed. Justice Bhushan insisted that the bench would take a call on this once it had heard out all the other petitioners in the court, including Credai, the power producers, mall owners and jewellery shop owners. - economic times

🍒 Bankers hope retail, SME segment will sustain credit offtake in H2 : Bankers are optimistic about tempo of credit offtake and some easing of risk of slippages in current fiscal on the back of the narrower GDP contraction in the second quarter. Ashwani Bhatia, Managing Director (MD), State Bank of India (SBI) said things do not look bad so far. "With the (Q2 GDP) numbers, the double-digit dip in FY21 may not be there and we could see positive growth. This would have a beneficial effect on the credit side. However, much of the credit growth will be seen retail (auto, housing and personal loans) and SME segment," he said. Bank credit grew by 5.7 per cent year-on-year till early November 2020, shows Reserve Bank of India data. "The risks of slippages are within control for now. Yet, we have to be watchful of some large exposures in airports and SME segment," Bhatia added. - Business Standard

🍒 Delhi High Court stays RBI's show cause notice to UVARCL :  The Delhi High Court on Friday stayed a Reserve Bank of India notice warning of possible cancellation of UV Asset Reconstruction Company Ltd’s (UVARCL) registration, over what the central bank termed an illegal bankruptcy resolution proposal moved by the ARC for telecom firm Aircel. Mere submission of a resolution plan cannot be held illegal, Justice Navin Chawla held on a petition filed by UVARCL, while seeking response from the RBI, Ministry of Corporate Affairs, Insolvency and Bankruptcy Board of India (IBBI) and the union government within 15 days.  The RBI had in a notice last week warned UVARCL that its certificate of registration could be cancelled unless it explained by this weekend why it did not inform the bankruptcy court that the regulator had rejected its resolution plan for Aircel. UVARCL approached the court against the show-cause notice this week.- economic times

🍒 Write-off of Lakshmi Vilas Bank's debt to sting small lenders : India’s smaller banks will likely face higher funding costs and reduced investor appetite for their bonds just as non-performing loans spread, after the central bank moved to write off debt of an ailing lender. The Reserve Bank of India on late Thursday said Rs3.18 billion ($43 million) of Tier 2 bonds of Lakshmi Vilas Bank Ltd. will be fully written down as DBS Group Holdings Ltd. acquires the lender. The announcement comes as a surprise after the RBI-appointed administrator said last week DBS would take over all obligations, including bonds. “Financing costs may inch up and the appetite shall be lower especially for the lower-rated private and small finance banks," said Ajay Manglunia, managing director and head at JM Financial Products Ltd. “Such lenders will have to rely more on equity raise as investors shall be a bit more skeptical to take risk now." - Live Mint

🍒 EPFO extends deadline to submit life certificate by pensioners till February 28 : Retirement fund body EPFO has extended the deadline for submission of life certificates by pensioners till February 28, a move which would benefit over 35 lakh persons who could not submit the document by November due to coronavirus pandemic. The pensioners who could not submit their life certificates till November 30 deadline, would get pension every month till February. "In view of the ongoing COVID-19 pandemic and the vulnerability of elderly population to coronavirus, the Employees' Provident Fund Organisation (EPFO) has extended the time limit up to 28th February 2021 for submission of Life Certificate (Jeevan Pramaan Patra-JPP) in respect of the Pensioners drawing pension under EPS 1995 (Employees' Pension Scheme-1995) and whose Life certificate is due in any month till February 28, 2021," a labour ministry statement said. - economic times

🍒 Let us declare NPAs, banks to Supreme Court; govt pleads against sector-specific relief : The Indian Banks’ Association on Friday made a strong case for vacation of the Supreme Court order that restrained banks from classifying accounts as NPA. Senior counsel Harish Salve, appearing for IBA, vehemently urged a Bench led by justice Ashok Bhushan to vacate its order of September 3 that directed banks against declaring loan accounts that were not NPAs prior to August 31. Solicitor general Tushar Mehta, appearing for the Centre, urged the apex court not to delve into the issue of sector-specific loan repayment reliefs and the issue should be left to be resolved between lender banks and borrowers. The apex court had last week asked RBI to respond to the power producers’ demands for various benefits, including restructuring of their loans, under the recent central bank circular on debt recast. - financial expresss

🍒 Manappuram Finance mulls options to raise funds via borrowings : NBFC Manappuram Finance on Friday said it is considering various options for raising funds through borrowings for expansion of business. The Kerala-based lender has reported a good growth in its gold loan portfolio, with consolidated assets under management increasing 18.6% year-on-year to Rs 26,902.73 crore. The lender in a regulatory filing with the exchanges said the company may consider and approve issuances of debt securities during December. Based on the prevailing market conditions, the board of directors may consider and approve issuances of various debt securities in onshore or offshore securities market by public issue on a private placement basis, or through issuing commercial papers, the company said. Average borrowing costs for the standalone entity declined 26 basis points during the second quarter to 9.13%. The lender, which operates a home loan, microfinance and commercial vehicle leasing subsidiary, has reported a standalone net profit of Rs 405.56 crore in the gold loan business, compared with Rs 336.17 crore in the year-ago period. - financial express

🍒 Paytm to not charge any fee on wallet payments for merchants; move to benefit 1.70 crore users : In an effort to de-clutter the digital payments ecosystem and augment the use of online payments, Paytm has announced that merchants will now be allowed to receive unlimited payments through its Paytm Wallet at a 0% fee, along with UPI and Rupay Cards. “With this, we aim to benefit more than 17 million (1.7 crore) merchants who can enjoy a 0% fee on all their digital payments with direct settlement in their bank accounts,” paytm said in a blog on its website. Paytm is one of the largest payment solutions providers in the country with a large customer base. Of the 17 millions merchants that use Paytm, Goldman Sachs recently said, a massive 70% are active.  Paytm said that its move to allow merchants to receive unlimited payments through Paytm Wallet will provide them with a single point of reconciliation for all their payments, not requiring them to use multiple QRs codes. “All they need is Paytm ‘All-In-One QR’ to accept payments from Paytm wallet, Paytm UPI, or any other UPI app,” Paytm said. This All-in-one QR code will enable merchants to receive payments from any bank account or any rupay card, along with paytm wallets at zero fee charged by the company.- financial express

🍒 Rupee likely to trade in narrow range of 73.68-74.24 next week, deploy short Iron Butterfly : The United States Dollar/Indian Rupee (USD/INR) witnessed mild profit booking after hitting the stiff resistance zone of 74.50- 74.60 per US dollar and closed with the mild loss of approximately 10 paise on a week on week basis at 74 per US dollar. The currency pair failed to breakout and fall back in the previous trading range of 73.10 to 74.60 per US dollar. In an upcoming trading week, traders can expect the recent fall to get abated for the time being and the sideways move in a narrow range could be seen. The bullish 'Harami' candlestick pattern formed on November 26, suggesting that bears have booked profit at lower levels. The momentum indicators are locked in a sideways zone and no major move is expected in an upcoming truncated week. - moneycontrol.

🍒 Why traditional banks need to partner with fintech firms for delivering essential banking solutions : The gap between what customers expect and what traditional banks currently deliver has never been wider. Still, it now is the right time for banks to catch up from front to back-end to offer the best customer experience,” this is one of the key messages delivered in the World Fintech Report 2020 by Capgemini. The report urges a rethink of the execution of collaborations between incumbent finance players and the new up-and-coming players, both of which stand to benefit from collaboration. Capgemini’s Open X Readiness Index Report says that banks already leading in a revitalised approach to collaboration are those who have designated a dedicated and autonomous start-partnership team and who “demonstrate a fail-fast innovation approach” to determine the value and cut losses quickly. Frontrunners will also invest in emerging technologies and have little dependency on legacy systems, making FinTech integration easier. And to keep up with ever-changing customer expectations in today’s marketplace, incumbent banks must transform into Inventive Banks with collaborative support from qualified FinTech partners. To remain attractive and competitive, banks must shift to becoming customer-centric and inventive. - financial express.

28.11.2020 : Today's Banking / Financial News

28.11.2020 : Today's Banking / Financial News at a Glance

🍒 Lending institutions have returned Rs. 4300 crore in compound interest: SC on RBI loan moratorium case : The Supreme Court on Friday recorded in a judgment that lending institutions have returned over Rs. 4300 crore in compound interest collected from small borrowers during the moratorium period.  The ex-gratia payments have been made into 13.12 crore bank accounts across the country as of November 13, 2020, the court noted the submission made by Solicitor General Tushar Mehta for the government. The payments were made in compliance to a government pay-back scheme introduced on October 23 to waive the difference in the compound interest and simple interest charged between March 1 and August 31 (moratorium period) for eight categories of loans worth up to Rs. 2 crore. - Business Line

🍒 RBI has set precedence in LVB bond write-off, will hurt other banks: Report : The write-off of Rs 318-crore tier-II bonds by Lakshmi Vilas Bank (LVB) ahead of its merger with DBS Bank is a precedent set by the Reserve Bank of India (RBI) and will hurt the private sector lender's peers, according to a report. During the Yes Bank rescue earlier this year also, there was an over Rs 7,000-crore bond write-off, but that involved a different instrument called additional tier-I bonds. In the case of LVB, which is being merged with DBS in a scheme proposed by the RBI, investments of Rs 318.20 crore in bonds issued by LVB will be written-off, the lender informed the exchanges late Thursday night. "RBI has set a precedence with the proposed write-off as it's first time a tier-II bond is being written off," ratings agency ICRA said in the report on Friday. - Economic Times

🍒 Madras HC refuses to stay LVB-DBS Bank merger, adjourns AUM Capital plea : The Madras High Court has refused to stay the merger of Lakshmi Vilas Bank (LVB) with DBS Bank India. The court adjourned the plea moved by AUM Capital Market Pvt Ltd challenging the merger to January 21. It may be noted, on Thursday, the Bombay High Court refused to grant stay on the final scheme of amalgamation between DBS bank and Lakshmi Vilas Bank which will come into effect on Friday. Today, a division bench of the Madras High Court consisting of Justice Vineet Kothari and Justice M S Ramesh said "no blanket interim order can be granted against the merger as the scheme has already come to operation". They said the Centre and RBI are free to proceed further with the merger as per the scheme. The bench adjourned the hearing to January 21 and asked the Centre and the RBI to file counters, while rejecting RBI and DBS India request to keep in abeyance the order not to take any further actions prejudicial to the shareholders of LVB for three weeks.  - Business Standard

🍒 Court rejects ED intervention plea against closure report in MSC Bank case : A court here on Thursday rejected the Enforcement Directorate's plea seeking to intervene in the hearing on a closure report of Mumbai Police in the alleged Rs 25,000 crore Maharashtra State Co-operative Bank scam. Maharashtra Deputy Chief Minister Ajit Pawar had been named as an accused in the case. The Economic Offences Wing (EOW) of city police filed a closure report in September before the special Anti- Corruption Bureau (ACB) court. The EOW claimed that its special investigation team found no criminal aspect to the case. The ED contended that the probe was flawed, and sought to intervene in the hearing, demanding that the closure report be rejected. Special ACB judge Ajay Champaklal Daga, however, rejected the central probe agency's intervention plea. Hearing on the closure report will go on. - economic times

🍒 Adani tops DHFL bid, says its bid gives maximum to lenders; rivals want it out of race : Billionaire Gautam Adani's roads-to-mining group outbid US-based Oaktree with a Rs 33,000 crore bid for collapsed housing lender, DHFL, but rival bidders want it out of the race for allegedly missing the deadline - a charge Adani Group denies saying it followed due process and the "cartel" wants to prevent value maximisation. Four entities - Adani Group, Piramal Group, US-based asset management company Oaktree Capital Management and SC Lowy - submitted bids for DHFL in October, sources with DHFL lenders and industry said. But lenders, who are getting DHFL auctioned to recover unpaid loans, wanted suitors to revise their bids as original offers were low. - Economic Times

🍒 DHFL suitors get time till Dec 10 to submit bids : The lenders to troubled Dewan Housing Finance Corporation Ltd (DHFL) have extended the timeline for submission of bids to December 10 as they look to trim their losses. This comes even as a section of lenders to DHFL want to examine the Binani Cement resolution case where a late bid from Aditya Birla group was allowed since it was higher. The CoC of DHFL led by State Bank of India has called for revised bids after Adani Enterprises submitted a revised bid for the whole book of the housing finance company as against its earlier bid of just the wholesale and SRA portfolio, which led to a protest from Piramal Enterprises. - Business Line

🍒 Wadhawan moves NCLT against CoC, Administrator : DHFL’s erstwhile Director Kapil Wadhawan has moved the National Company Law Tribunal with a plea that it direct the housing finance company’s Administrator, the Committee of Creditors and the Reserve Bank of India to consider the draft resolution plan prepared by the company last year for its revival . In the alternative to the above, Wadhawan (Applicant), who is currently in judicial custody, has sought the Tribunal’s direction that DHFL’s resolution plan be submitted to an independent expert appointed by the Tribunal along with the bids received from the other Resolution Applicants. Further, he prayed that the expert be directed to submit a report giving opinion to the Tribunal with regard to the most appropriate plan to be considered in the interest of all stakeholders. - Business Line

🍒 Small lenders to pay the price as RBI writes off debt of Lakshmi Vilas Bank : India’s smaller banks will likely face higher funding costs and reduced investor appetite for their bonds just as non-performing loans spread, after the central bank moved to write off debt of an ailing lender. The Reserve Bank of India on late Thursday said Rs 3.18 billion ($43 million) of Tier 2 bonds of Lakshmi Vilas Bank Ltd. will be fully written down as DBS Group Holdings Ltd. acquires the lender. The announcement comes as a surprise after the RBI-appointed administrator said last week DBS would take over all obligations, including bonds. b“Financing costs may inch up and the appetite shall be lower especially for the lower-rated private and small finance banks,” said Ajay Manglunia, managing director and head at JM Financial Products Ltd. “Such lenders will have to rely more on equity raise as investors shall be a bit more skeptical to take risk now.” ‘ - Business Line

🍒 Risk premiums for Tier-2 Bonds may go up for weaker private banks’ : Risk premiums for Basel-III complaint Tier-2 Bonds could go up for weaker private banks following the Reserve Bank of India’s (RBI) advice to  Lakshmi Vilas Bank (LVB) to write down these bonds aggregating ₹318.2 crore before its amalgamation with DBS India Ltd (DBIL) comes into effect. The amalgamation comes into force on the appointed date – November  27. All branches of the troubled LVB will function as branches of DBIL, which is awholly-owned subsidiary of DBS Bank, Singapore, with effect from Friday.  Anil Gupta Sector Head – Financial Sector Ratings, ICRA, said the RBI has set a precedence with the proposed write down as it is the first time that a Tier II bond is being written off. He opined that investors should factor in the risk in Basel III instruments, as these instruments can be completely written down in case a bank gets into trouble.- Business Line

🍒 Private banks’ average lending rate on new loans move up nearly 40 bps in October : With the RBI’s next policy meet around the corner and the market debating over the possibility of further rate cuts, the sudden jump in average lending rate of private banks may need some attention.  According to the latest data released by the RBI on banks’ lending rates, the weighted average lending rate on fresh loans for private banks have gone up by 36 bps in October to 9.02 per cent from 8.66 per cent in September. With the lending rates on new loans for foreign banks too moving up by about 30 bps, the overall weighted average lending rate on fresh loans for all banks has gone up by about 9 bps in October. The RBI had last cut its key policy repo rate in May by 40 bps to 4 per cent and since then held rates owing to rise in inflation. While banks’ tardiness to cut lending rates sharply may be understandable — as the RBI is expected to remain in a pause mode in the near term — lending rates moving up at a time when the economy is starting to recover could be worrisome. - Business Line

🍒 Bank credit to industry recorded negative growth in October: RBI : Non-food credit growth of scheduled commercial banks (SCBs) decelerated to 5.6 per cent in October from 8.3 per cent in October 2019, mainly due to contraction in credit to industry and deceleration in personal loans growth. Credit to industry contracted by 1.7 per cent as compared with 3.4 per cent growth in October 2019, according to Reserve Bank of India’s data on sectoral deployment of bank credit. This data has been collected from select 33 SCBs which account for about 90 per cent of the total non-food credit deployed by all SCBs. - Business Line

🍒 IRDAI okays Bharti AXA, ICICI Lombard deal : The Insurance Regulatory and Development Authority of India (IRDAI) has given in-principle approval to the acquisition of non-life insurance business of Bharti AXA by ICICI Lombard General Insurance. “IRDAI ... has granted in-principle approval under Section 35 to 37 of the Insurance Act, 1938 read with IRDA (Scheme of Amalgamation and Transfer of General Insurance Business) Regulations, 2011 with respect to the said transaction,” ICICI Lombard General Insurance said in a regulatory filing on Friday. The two companies had announced the proposed merger on August 21 this year. “ICICI Lombard is progressing applications for receipt of requisite approvals from other concerned regulators for the transaction,” the insurer said in the statement. - Business Line

🍒 NPCI expands its shareholding pie : Retail payments body National Payments Corporation of India (NPCI) has completed private placement of 4.63% of its equity shares worth ₹81.64 crore, allowing small finance and payment banks as well as fintechs to be shareholders in the entity, it said on Thursday. 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. 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 thus joined NPCI’s shareholding with up to 0.44% each in the retail payment entity. There are a total of 67 shareholder entities for NPCI now.  - Live Mint

🍒 SC directs govt to ensure implementation of decision to forego interest during loan moratorium period : The Supreme Court Friday directed the government to ensure that all steps be taken to implement its decision to forego interest on eight specified categories of loans paid upto Rs two crore in view of the coronavirus pandemic. A bench headed by Justice Ashok Bhushan said the COVID-19 pandemic has not only caused serious threat to the health of the people but has also cast its shadow on the economic growth of the country as well as other countries in the entire world. The eight categories of loans are MSME (Micro, Small & Medium Enterprises), Education, Housing, Consumer durable, Credit card, Automobile, Personal and Consumption.  “Due to lockdown imposed by the Government of India in exercise of powers under the Disaster Management Act, 2005, there can be no denial that most of the businesses including private sector as well as public sector has been adversely affected.  - financial express           

🍒 Over Rs 10 lakh crore loans under Mudra Yojana created 51 lakh entrepreneurs between 2015-18: Irani : Union Minister Smriti Irani on Thursday said over Rs 10 lakh crore has been leveraged under the Pradhan Mantri Mudra Yojana, thereby creating 51 lakh new entrepreneurs in the country between 2015 and 2018. Addressing an awards ceremony virtually, the Minister for Women and Child Development and Textiles also thanked Covid warriors, many of whom died in the line of duty across the country. She said from 2016 till today, the government recognised start-ups stand at over 32,000 in the country.  “A country which has seen decades where the poor were disenfranchised to receive access to banking credit and facilities today celebrates the fact that under the MUDRA Yojana over Rs 10 lakh crore has been leveraged, thereby giving birth between the year 2015 to 2018 (to) 51 lakh new entrepreneurs,” Irani said.  - financial express

🍒 RBI has set precedence in LVB bond write-off, will hurt other banks: Report : The write-off of Rs 318-crore tier-II bonds by Lakshmi Vilas Bank (LVB) ahead of its merger with DBS Bank is a precedent set by the Reserve Bank of India (RBI) and will hurt the private sector lender’s peers, according to a report.  During the Yes Bank rescue earlier this year also, there was an over Rs 7,000-crore bond write-off, but that involved a different instrument called additional tier-I bonds. In the case of LVB, which is being merged with DBS in a scheme proposed by the RBI, investments of Rs 318.20 crore in bonds issued by LVB will be written-off, the lender informed the exchanges late Thursday night. “RBI has set a precedence with the proposed write-off as it’s first time a tier-II bond is being written off,” ratings agency ICRA said in the report on Friday. - financial express

🍒 Sensex drops 110 points; RIL, IT stocks weigh : Equity benchmark Sensex ended 110 points lower after a choppy session on Friday, dragged by losses in index majors Reliance Industries, Infosys and TCS despite a positive trend in global markets. The 30-share BSE index closed 110.02 points or 0.25 per cent lower at 44,149.72. The broader NSE Nifty slipped 18.05 points or 0.14 per cent to 12,968.95.PowerGrid was the top laggard in the Sensex pack, shedding over 2 per cent, followed by HCL Tech, ONGC, M&M, Axis Bank, TCS, Reliance Industries and Infosys.On the other hand, Asian Paints, Titan, Tata Steel, Bajaj Finance and Bajaj Auto were among the gainers. 

🍒 Forex reserves rise to $575.29 b : The country’s foreign exchange reserves rose by $2.518 billion to a new record high of $575.29 billion in the week ended November 20. Since March-end, the reserves jumped by $97.48 billion. “Past data indicate it was only in FY08 that RBI had accumulated forex reserves more than this amount. In FY08, forex reserves increased from $200 billion to $309 billion,”according to SBI’s research report ‘Ecowrap’.  - business line

🍒 Rupee trading with a positive bias : The rupee (INR), which rallied to mark an intraday high of 73.74 on Thursday, gave up the gains and ended the session almost on a flat note at 73.88. On Wednesday, it had closed at 73.91. Nevertheless, the local currency has closed above the key barrier of 74, opening the door for further strengthening. Following this, INR opened with a gap-up at 73.78 today, thereby crossing over the resistance of 73.85. Further appreciation from the current level can take the rupee to 73.7 – a resistance level. Above that level, it can advance to 73.5. But if the domestic currency weakens, it can find support at 74. Support below that level can be spotted at 74.3.

🍒 Gold prices today fall for fifth day in a row, silver rates drop : Gold and silver prices in India edged lower today amid weak global trend. On MCX, gold futures dipped 0.03% to ₹48,501 per 10 gram while silver futures fell 0.5% to ₹59,570 per kg. In the previous session, gold prices had slipped 0.11% while silver had ended flat. In five days, gold rates in India have dropped nearly ₹1,700 per 10 gram, in line with a similar fall in global rates. In global markets, gold prices edged 0.3% lower to $1,810.44 an ounce. For the week, gold remains down over 3% as progress in Covid-19 vaccine development and US President-elect Joe Biden's transition to the White House bolstered risk sentiment. Among other precious metals, silver today fell 0.9% to $23.25 per ounce, while Platinum fell 0.1% to $961.18 and palladium was up 0.3% at $2,391.19. - Live Mint.

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.