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☕ 15.07.2020: Today's Banking / Financial News at a Glance
🍒 SBI to institute work-from-anywhere infrastructure, hopes to save Rs 1,000 crore : Amid COVID-19 induced disruption, the country's largest lender State Bank of India (SBI) will institute work-from-anywhere infrastructure and expects to save Rs 1,000 crore from this measure, Chairman Rajnish Kumar said. Speaking to shareholders at the bank's 65th annual general meeting on Tuesday, he said the focus going forward will be on cost reduction, rationalisation and reskilling of workforce, improving staff productivity and redeployment of workforce from admin offices to sales roles."Following global best practices, the bank will institute work-from-anywhere (WFA) infrastructure to facilitate work from any location, while taking care of social aspects of work-life balance. "The measure is expected to save Rs 1,000 crore through cost optimization and will be a key component of our business continuity during times of COVID-19," Kumar said. As the COVID-19 pandemic is still playing out, FY21 will be a challenging year for the bank like any other bank or financial institution, he said. The bank is well prepared to deal with such challenges. He said the lender has stepped up monitoring of all projects under implementation, and expects to tide over COVID-19 impact in the short to medium-term. "Bank will maintain a constant vigil on the emerging stress and take proactive action to help our borrower customers and maintain asset quality," he noted. - economic times
🍒 SBI to focus on cost reduction, rationalisation to mitigate Covid-19 impact: Rajnish Kumar : State Bank of India (SBI) will focus on cost reduction, rationalization and reskilling of workforce and improve staff productivity by redeploying workforce from administration offices to sales roles as it mitigates the impact of the Covid 19 pandemic on its business, chairman Rajnish Kumar said in his address to shareholders. India's largest lender by assets and branch network plans to save Rs 1,000 crore through such cost optimization Kumar told shareholders at the bank's 65th Annual General Meeting (AGM) which was held through video conferencing due to the pandemic."Bank will maintain a constant vigil on the emerging stress and take proactive action, to help our borrower customers and maintain asset quality...The Bank has stepped up its monitoring of all the projects under implementation and expects to tide over COVID impact in the short to medium term," Kumar said. The SBI chairman's three year term ends later this year. He said that the fiscal 2021 will be a challenging year due to the Covid 19, however SBI's strong liability franchise with a customer base of over 44 crores, diversified loan portfolio, digital banking channels and identified legacy stress will help it to navigate this period. - economic times
🍒 PNB and UBI seek to set off accumulated losses : Union Bank of India (UBI) and Punjab National Bank (PNB) are seeking to set off their accumulated losses amounting to Rs 32,758 crore and Rs 28,708 crore, respectively, following the recent amalgamation of two public sector banks (PSBs) each with them. These banks are planning to do this by utilising the balance standing to the credit of their Share Premium Account in order to present a true and fair view of their financial position. If shareholdersapprove the setting off of the accumulated losses of UBI (including erstwhile Andhra Bank and Corporation Bank) and PNB (including erstwhile Oriental Bank of Commerce and United Bank of India) as of March-end 2020, the balance in their Share Premium Account will, accordingly, stand reduced to ₹17,348 crore and ₹40,762 crore, respectively, during the FY21. Following the amalgamation of Oriental Bank of Commerce and United Bank of India with it with effect from April 1, PNB is now the country’s second largest public sector bank (PSB). - Business Line
🍒 Yes Bank garners ₹4,500 cr from anchor investors ahead of FPO : Private sector lender Yes Bank on Tuesday raised ₹4,500 crore from anchor investors ahead of its follow-on public offer that opens on Wednesday, investment banking sources said. The company has fixed the price band at ₹12-13 per equity share for its follow-on public offer (FPO) which will be open for subscription from July 15-17.Yes Bank is aiming to raise ₹15,000 crore through the issue to ensure adequate capital to support its growth and expansion, including enhancing its solvency, capital adequacy ratio, and evolving regulatory requirement. According to investment banking sources, several investors including FPIs have been allocated shares at ₹12 per share in the anchor portion. - Business Line
🍒 ‘FY21 will be a challenging year for SBI’ : State Bank of India Chairman Rajnish Kumar said on Tuesday that FY21 will be a challenging year for the bank like any other bank or financial institution as the pandemic is still playing out. However, SBI is well prepared to deal with such challenges, he told shareholders in a speech at the bank’s annual general meeting.“A strong liability franchise with a customer base of over 44 crores, a diversified loan portfolio with strong capabilities to originate, digital leadership across channels, and legacy stress fully identified and suitably provided are some of the key strengths that your bank will rely upon in the post-Covid scenario,” said Kumar. The SBI chief observed that the bank has stepped up its monitoring of all the projects under implementation, and expects to tide over Covid impact in the short to medium term. - Business Line
🍒 City Union Bank board approves raising Rs 1,100 cr through equity, debt : Private sector City Union Bank on Monday said its board has approved the proposal to raise up to Rs 1,100 crore through equity and debt. The lender will seek shareholders' approval for the fundraise plan at its upcoming AGM next month.The board of directors in a meeting held on July 13, 2020 fixed August 14, 2020 as the date of ensuing annual general meeting (AGM) by way of video conferencing/other audio visual means, City Union Bank said in a regulatory filing. The board of directors will seek approval of members in the AGM for "Raising further capital through QIP (Qualified Institutional Placement) route to the tune of Rs 600 crore (including premium). As done in previous years, this year also we are seeking the approval of shareholders by way of enabling resolutions," said the private sector lender. - Business Standard
🍒 Banks to resume wage revision talks with trade union leaders on July 22 : Banks will resume talks with trade union leaders on the much-delayed revision in wages, on July 22 — a first such meeting after the pandemic impacted economic activities in India. The Indian Banks’ Association (IBA), which represents the managements of banks, is scheduled to hold a meeting of its negotiating committee with associations of workers and officers, in Mumbai.The last such bi-partite meeting took place on February 29, before a two-month national lockdown was enforced in March to manage the Covid-19 pandemic. What makes the talks significant is that the impact of the pandemic on banks’ finances will be factored in. The current wage revision for public sector banks or PSBs, as well as some private lenders, is due from November 2017 for five years — up to October 2022. Rajkiran Rai G, managing director and chief executive officer of Union Bank of India, is chairman of the negotiating committee, while bank employees will be represented by the United Form of Bank Unions. - Business Line
🍒 SBI board to meet tomorrow for tier-I and II capital raising plans : The country’s largest lender, State Bank of India, is seeking the go-ahead from its board tomorrow (Wednesday) to raise capital through additional tier-1 (AT1) and tier-II bonds from markets in FY21. This capital is expected to to strengthen its capacity to grow business and create buffers. The lender did not indicate the amount of capital it plans to raise through these bonds. SBI may issue AT1 and Tier-2 capital by way of issuance of Basel III-compliant debt instruments in dollars and rupees this financial year.Analysts said at present AT1 bonds do not find much favour in the market after Yes Bank wrote down such bonds worth Rs 8,415 crore. While the write-down was in line with the rules framed by Reserve Bank of India for this capital instrument, it also meant investors had to forget about getting their investments back. SBI’s the Capital Adequacy Ratio (CAR) stood at 13.06 per cent as on March 31, 2020, with tier-I at 11 per cent. The bank holds capital above the regulatory requirements. - Business Standard
🍒 Analysts see bad loans rising by year end: ‘Banks’ fundraise rush signals likely surge in defaults’ : The rush by Indian banks to raise capital signals an anticipated surge in defaults that will erode capital and crimp growth, according to some analysts, who see bad loans rising by the year end as the coronavirus pandemic and the lockdown effect play out. The banks, which have announced fund-raising plans of more than Rs 1 lakh crore, say it’s just prudence, in line with recent central bank advice. State-run lenders are yet to firm up capital-raising plans in the expectation that the federal government will address this sooner rather than later. “Capital raising reflects a combination of defensive and offensive approaches. Defensive approach stems from uncertainty in the environment, reflecting a high level of moratorium, strength of economic recovery and future liquidity stress,” said Prakhar Sharma, equity analyst, Jeffries India. “Our assessment shows that 82% of the capital being raised is accounted for by financiers that are either weak or of moderate strength.” The Reserve Bank of India (RBI) announced a moratorium on loan repayments that ends August to help borrowers hit by the Covid-19 crisis. ICICI Bank, Axis Bank, Yes Bank and Punjab National Bank lead the pack with fund-raising exercises of Rs 10,000-15,000 crore each planned. According to a Fitch Ratings estimate, Indian banks are likely to require about ₹4.5 lakh crore ($60 billion) in a high-stress situation in which the domestic economy fails to recover from the coronavirus-related disruption. - economic times
🍒 Probe on vehicle finance lending practices will not cause any loss: HDFC Bank : Largest private sector lender HDFC Bank on Tuesday said the probe on vehicle finance lending practices does not have any bearing on loan book, and will not cause any loss to the bank. "It is... important to clarify here that this matter is not related in any manner whatsoever to the lending aspect of the business. Therefore there's no question of this having any bearing on 'loan book' or causing any loss to the bank," a bank spokesperson said.The bank on Monday initiated a probe on the lending practices following allegations against the conduct of a key executive in the auto lending business.The allegations pertained largely to the professional conduct which raised issues about possible conflicts of interest, sources had said. - economic times
🍒 Banks continue to park money under reverse repo despite meagre returns : n a bid to disincentive banks from parking their excess funds with the RBI under the reverse repo window, the central bank slashed reverse repo rate to 3.35 per cent, a fall of 155 basis points so far this year. This is higher than the 115 bps point reduction in policy repo rate. Reverse repo rate is the rate at which banks lend short-term funds to the RBI, while repo rate is the rate at which banks borrow short term funds from the central bank. The steep fall in reverse repo rate to decadal low levels has not dissuaded banks from parking surplus funds with the RBI. According to the RBI’s latest July report, average deposit of funds in the overnight reverse repo window increased more than three times – from an average of ₹2.4-lakh crore during the March quarter to ₹7-lakh crore during the June quarter. In the month of May, banks parked nearly ₹8-lakh crore under reverse repo on daily average basis. - Business Line
🍒 How surplus liquidity, RBI’s actions have led to short-term rates falling below the repo rate : Substantial liquidity infusion via open market operations (OMO) and term repos, various policy actions taken by the RBI to ease liquidity conditions for NBFCs/HFCs, long-term repo operations, reduction in repo and reverse repo rate — have all led to a steep fall in short-term interest rates over the past few months. In fact, most of the rates are below the prevailing repo rate of 4 per cent; even close to or below the reverse repo rate of3.35 per cent in some cases. According to the RBI’s July report, the weighted average call money rate has fallen 37 basis points below repo rate during April-June 2020 (from 17 bps below repo rate during January-March 2020). Importantly yields on commercial papers (CPs) issued by NBFCs/HFCs that had shot up post the IL&FS fiasco in late 2018, have also fallen sharply in the past few months. The yields on 3-month CPs for All India Financial Institutions (AIFIs) and HFCs, have dropped below the policy repo rate in June. - Business Line
🍒 Retail payments report recovery in May, jump 23% to Rs 24.22 trillion : After seeing a plunge in April amid the lockdown, retail payments reported a recovery in May, jumping 23 per cent to Rs 24.22 trillion in value terms, against Rs 19.66 trillion in April, the Reserve Bank of India monthly bulletin data showed. In March, retail payments in value terms were to the tune of Rs 36.03 trillion. Total payments that include digital payments and payments made via paper-based instruments rose 12.5 per cent to Rs 94.64 trillion in May, against Rs 84.10 trillion in April.Digital payments saw 11.6 per cent rise to Rs 92.03 trillion in May, against Rs 82.46 trillion in April. While card payments posted over 60 per cent recovery, ATM cash withdrawals in value terms rose to Rs 1.96 trillion in May, against Rs 1.29 trillion in April. - Business Standard
🍒 Liquidity measures help reduce financing cost in corporate bond mkt: RBI : Abundant surplus liquidity in the system provided by the Reserve Bank amid Covid-19 related dislocations in the financial market has helped reduce financing cost in the corporate bond market to decadal lows, according to an article published in the RBI Bulletin. The article has been prepared by Radha Shyam Ratho and Pradeep Kumar of the Financial Markets Operations Department of Reserve Bank of India (RBI).RBI deployed several conventional and unconventional tools to restore orderly conditions in financial markets and maintain normal functioning of financial intermediaries, the article published in RBI's monthly bulletin for July showed.Abundant liquidity provided through generic (LTROs) as well as targeted instruments (TLTROs), and other policy measures announced by RBI in the backdrop of dislocations observed in the financial markets, have brought down financing costs in the corporate bond market to decadal lows, eased the access of non-AAA rated entities, and led to record primary issuances, the article said. Yields have dropped and the spreads have compressed despite foreign portfolio investment (FPI) outflows of around $3 billion from corporate bonds in 2020, it said. - Business Standard
🍒 Digital lenders focus on existing customers as uncertainty continues : Digital lending startups which started disbursing new loans in June, are now focusing on existing customers instead of acquiring new ones due to business uncertainty. As loan disbursal volumes for digital lenders climb back to almost 50% of pre-covid levels, nearly 80%- 90% of these new disbursals as well as increase in loan limits are to existing customers.“Banks and NBFCs (non-banking financial companies) are now taking low-risk bets and are focusing on borrowers which have a steady income flow. This would mean choosing salaried persons working at MNCs with more job security versus self-employed professionals. Lenders are now pushing existing customers to draw more capital and utilise the full loan amount given to them," said Bhavik Hathi, managing director, Alvarez and Marsal (India), a management consultancy. “We have been looking at how we can protect our balance sheets. For us new customer acquisition continues has taken a hit, as we are cautious about whom we are giving new loans to. But there’s demand from our existing customer base, since they want to hold on to the line of credit provided to them, for any emergencies, in these uncertain times," said Anuj Kacker, co-founder and COO, MoneyTap, a digital consumer credit line provider. - Live Mint
🍒 Yes Bank denies its executives mis-sold AT-I perpetual bonds : The ongoing court room drama over the contentious Additional Tier-I bond (AT-I) write-down by Yes Bank just got even more dramatic, with the bank denying allegations of mis-selling and asserting that investors were fully aware about the risks involved. In the counter-affidavit filed in the Madras High Court recently, Yes Bank’s RBI-appointed managing director and chief executive officer , Prashant Kumar, submitted that investors purchased these perpetual bonds with “eyes open”. “The claim of violation of natural justice is denied. The petitioner had purchased the AT1 bonds with eyes open, knowing all the risks attached with the purchase,” said Prashant Kumar. The petition was filed by 63 Moons Technlogies Ltd, one of the investors. The firm, founded by Jignesh Shah, who invested Rs 300 crore in 3,000 bond units. - Moneycontrol.com
🍒 Health insurance start-up Plum raises ₹7 crore in seed funding : Plum, a Bengaluru-based group health insurance start-up, providing modern health benefits to corporates, has raised ₹7 crore in seed funding. The round was led by Incubate Fund with participation from Gemba Capital and Tracxn Labs along with angel investors including Abhijit Gupta and Ram Sahasranam of Praxify Health; Sudheendra Chilappagari of Belong.co; Nitin Jayakrishnan of Pando and Alvin Tse of Xiaomi. Abhishek Poddar, co-founder and CEO, Plum, said, “When we look at other countries like the US, we see that a high percentage of the population is covered under employer-provided health insurance. We believe that India too will move in that direction, where a significant portion of its population will rely on employer-sponsored health insurance. With Plum, we want to enable every last company in India to provide a high-quality health cover to their employees, no matter how small or big they are. We want to be the de-facto platform for employee health insurance, initially in India, and later in other developing markets like SE Asia and Latam.” - Business Line
🍒 Mumbai bench of the income tax appellate tribunal rules in favour of HSBC Bank : The Mumbai bench of the income tax appellate tribunal (ITAT) has ruled that interest income of Rs 1,498 crore earned by HSBC Bank during the assessment year 2015-16 from foreign currency loans and debt securities would not be eligible to tax in India. The tribunal dismissed the revenue department’s appeal in the case where the department wanted to tax the amount in India on the grounds that the interest income was not taxable under the India-Mauritius double taxation avoidance agreement (DTAA).“We concur with the view of the Tribunal that interest received by the assessee, pursuant to Article 11(3)(c) of the India-Mauritius tax treaty would not be eligible to tax in India, respectfully follow the same,” members NK Pradhan and Ravish Sood said in the order dated July 8. “Resultantly, finding no merit in the appeal of the revenue, we dismiss the same,” they added. - economic times
🍒 Mumbai court strikes down Rakesh Wadhawan's bail plea in Rs 4,335-crore PMC Bank scam case : A PMLA court in Mumbai on Tuesday rejected the bail plea of HDIL promoter Rakesh Wadhawan, accused in the Rs 4,355-crore Punjab & Maharashtra Cooperative (PMC) Bank scam case. Wadhawan had sought bail claiming he had not violated any banking regulation and also urged court to consider his plea since he had tested positive for coronavirus inside jail. Special Judge Prashant P Rajvaidya rejected his plea. - economic times
🍒 Foreign brokerages see RBI slashing 50-75 bps more by October as inflation seen plunging to 2-2.5% : Foreign brokerages are betting on aggressive rate cuts by the Reserve Bank -- to the tune of 50-75 bps by October -- as they see retail inflation plunging to 2-2.5 per cent by December as all the fundamentals of the economy are very weak. While Wall Street major Bank of America (BofA) expects the RBI to slash up to 75 bps -- 25 bps on August 6 and another 50 bps in October, if the COVID-19 is brought under control by October. Swiss major UBS sees the central bank slashing 50 bps before the end of the fiscal as it expects inflation to plunge to 2.0-2.5 per cent by December. At 6.1 per cent, retail inflation in June was much above market expectations of 5.2 per cent. But the number is lower than the previous two months -- at 6.3 per cent in May and still higher 7.2 per cent of April. It is expected to print in at 6.4 per cent in July. "We expect inflation to slip to 2.5 per cent in the second half of the fiscal,” BofA said in a note citing the “very weak fundamental drivers” of the economy such as a contracting GDP, tight money supply, good rains, limited imported inflation and limited fiscal slippage. - Moneycontrol.com
🍒 NCLAT directs Bharti Airtel, Bharti Hexacom to pay Rs 112 crore to Aircel : The National Company Law Appellate Tribunal (NCLAT) has asked private telecom operator Bharti Airtel and Bharti Hexacom to pay Rs 112 crore to Aircel. A three-member NCLAT bench on Monday set aside the order of the Mumbai bench of the National Company Law Tribunal (NCLT), which on May 1, 2019, granted a set-off of Rs 112 crore to Bharti Airtel and Bharti Hexacom in their Rs 453 crore Spectrum Trade Agreement with Aircel and Dishnet Wireless. Bharti Airtel and Bharti Hexacom had paid Rs 341 crore to Aircel and Dishnet Wireless but had retained Rs 112 crore to set off the dues owed by Aircel entities to Airtel entities. - Moneycontrol.com
🍒 Gold price slips marginally to Rs 49,117 per 10 gram on weak global cues : Gold prices declined Rs 207 to Rs 49,117 per 10 gram in the Mumbai bullion market on rupee depreciation and weak global cues. Gold prices have fallen below $1,800/oz on profit-booking by investors but rising US-China tension kept the downside limited. The rate of 10 gram 22-carat gold in Mumbai was Rs 44,991 plus 3 percent GST, while 24-carat 10 gram was Rs 49,117 plus GST. The 18-carat gold quoted at Rs 36,838 plus GST in the retail market. Silver prices eased Rs 425 to Rs 51,355 per kg from its closing on July 13.
🍒 Sensex plunges 661 points in line with global sell-off : Equity benchmark Sensex plunged 661 points on Tuesday, dragged by losses in financial stocks amid a sell-off in global markets. After toching a low of 35,877.42, the 30-share BSE Sensex settled 660.63 points, or 1.80 per cent, lower at 36,033.06. Likewise, the NSE Nifty fell 195.35 points, or 1.81 per cent, to 10,607.35. Shares of the HDFC duo led the fall in the indices, shedding up to 2.94 per cent, after HDFC Bank said it has launched a probe into its auto lending practices following allegations against the conduct of a long-time executive who retired on March 31 this year. IndusInd Bank, Axis Bank, Maruti, Bajaj Finserv, PowerGrid and SBI were among the other major laggards. On the other hand, Titan, Bharti Airtel and Bajaj Auto closed with gains.
🍒 Rupee skids 23 paise to close at 75.42 against dollar : The Indian rupee tumbled 23 paise to settle at 75.42 (provisional) against the US dollar on Tuesday as risk appetite remained weak amid heavy selling in domestic equities and a strengthening American currency. The rupee, which had opened at 75.33 at the interbank forex market, lost ground and settled at 75.42 against US dollar, down 23 paise over its last close. It had settled at 75.19 against the US dollar on Monday.
🍒 Shares of Central Bank of India in Stock Market : 50% of moneycontrol users recommend buying Central Bank of India Shares. In BSE, Shares closed at Rs.16.65 against Prev Close Rs.16.65. In NSE, shares closed at Rs.17.25 against Prev Close Rs.17.25..
Have a Good day.
☕ 15.07.2020: Today's Banking / Financial News at a Glance
🍒 SBI to institute work-from-anywhere infrastructure, hopes to save Rs 1,000 crore : Amid COVID-19 induced disruption, the country's largest lender State Bank of India (SBI) will institute work-from-anywhere infrastructure and expects to save Rs 1,000 crore from this measure, Chairman Rajnish Kumar said. Speaking to shareholders at the bank's 65th annual general meeting on Tuesday, he said the focus going forward will be on cost reduction, rationalisation and reskilling of workforce, improving staff productivity and redeployment of workforce from admin offices to sales roles."Following global best practices, the bank will institute work-from-anywhere (WFA) infrastructure to facilitate work from any location, while taking care of social aspects of work-life balance. "The measure is expected to save Rs 1,000 crore through cost optimization and will be a key component of our business continuity during times of COVID-19," Kumar said. As the COVID-19 pandemic is still playing out, FY21 will be a challenging year for the bank like any other bank or financial institution, he said. The bank is well prepared to deal with such challenges. He said the lender has stepped up monitoring of all projects under implementation, and expects to tide over COVID-19 impact in the short to medium-term. "Bank will maintain a constant vigil on the emerging stress and take proactive action to help our borrower customers and maintain asset quality," he noted. - economic times
🍒 SBI to focus on cost reduction, rationalisation to mitigate Covid-19 impact: Rajnish Kumar : State Bank of India (SBI) will focus on cost reduction, rationalization and reskilling of workforce and improve staff productivity by redeploying workforce from administration offices to sales roles as it mitigates the impact of the Covid 19 pandemic on its business, chairman Rajnish Kumar said in his address to shareholders. India's largest lender by assets and branch network plans to save Rs 1,000 crore through such cost optimization Kumar told shareholders at the bank's 65th Annual General Meeting (AGM) which was held through video conferencing due to the pandemic."Bank will maintain a constant vigil on the emerging stress and take proactive action, to help our borrower customers and maintain asset quality...The Bank has stepped up its monitoring of all the projects under implementation and expects to tide over COVID impact in the short to medium term," Kumar said. The SBI chairman's three year term ends later this year. He said that the fiscal 2021 will be a challenging year due to the Covid 19, however SBI's strong liability franchise with a customer base of over 44 crores, diversified loan portfolio, digital banking channels and identified legacy stress will help it to navigate this period. - economic times
🍒 PNB and UBI seek to set off accumulated losses : Union Bank of India (UBI) and Punjab National Bank (PNB) are seeking to set off their accumulated losses amounting to Rs 32,758 crore and Rs 28,708 crore, respectively, following the recent amalgamation of two public sector banks (PSBs) each with them. These banks are planning to do this by utilising the balance standing to the credit of their Share Premium Account in order to present a true and fair view of their financial position. If shareholdersapprove the setting off of the accumulated losses of UBI (including erstwhile Andhra Bank and Corporation Bank) and PNB (including erstwhile Oriental Bank of Commerce and United Bank of India) as of March-end 2020, the balance in their Share Premium Account will, accordingly, stand reduced to ₹17,348 crore and ₹40,762 crore, respectively, during the FY21. Following the amalgamation of Oriental Bank of Commerce and United Bank of India with it with effect from April 1, PNB is now the country’s second largest public sector bank (PSB). - Business Line
🍒 Yes Bank garners ₹4,500 cr from anchor investors ahead of FPO : Private sector lender Yes Bank on Tuesday raised ₹4,500 crore from anchor investors ahead of its follow-on public offer that opens on Wednesday, investment banking sources said. The company has fixed the price band at ₹12-13 per equity share for its follow-on public offer (FPO) which will be open for subscription from July 15-17.Yes Bank is aiming to raise ₹15,000 crore through the issue to ensure adequate capital to support its growth and expansion, including enhancing its solvency, capital adequacy ratio, and evolving regulatory requirement. According to investment banking sources, several investors including FPIs have been allocated shares at ₹12 per share in the anchor portion. - Business Line
🍒 ‘FY21 will be a challenging year for SBI’ : State Bank of India Chairman Rajnish Kumar said on Tuesday that FY21 will be a challenging year for the bank like any other bank or financial institution as the pandemic is still playing out. However, SBI is well prepared to deal with such challenges, he told shareholders in a speech at the bank’s annual general meeting.“A strong liability franchise with a customer base of over 44 crores, a diversified loan portfolio with strong capabilities to originate, digital leadership across channels, and legacy stress fully identified and suitably provided are some of the key strengths that your bank will rely upon in the post-Covid scenario,” said Kumar. The SBI chief observed that the bank has stepped up its monitoring of all the projects under implementation, and expects to tide over Covid impact in the short to medium term. - Business Line
🍒 City Union Bank board approves raising Rs 1,100 cr through equity, debt : Private sector City Union Bank on Monday said its board has approved the proposal to raise up to Rs 1,100 crore through equity and debt. The lender will seek shareholders' approval for the fundraise plan at its upcoming AGM next month.The board of directors in a meeting held on July 13, 2020 fixed August 14, 2020 as the date of ensuing annual general meeting (AGM) by way of video conferencing/other audio visual means, City Union Bank said in a regulatory filing. The board of directors will seek approval of members in the AGM for "Raising further capital through QIP (Qualified Institutional Placement) route to the tune of Rs 600 crore (including premium). As done in previous years, this year also we are seeking the approval of shareholders by way of enabling resolutions," said the private sector lender. - Business Standard
🍒 Banks to resume wage revision talks with trade union leaders on July 22 : Banks will resume talks with trade union leaders on the much-delayed revision in wages, on July 22 — a first such meeting after the pandemic impacted economic activities in India. The Indian Banks’ Association (IBA), which represents the managements of banks, is scheduled to hold a meeting of its negotiating committee with associations of workers and officers, in Mumbai.The last such bi-partite meeting took place on February 29, before a two-month national lockdown was enforced in March to manage the Covid-19 pandemic. What makes the talks significant is that the impact of the pandemic on banks’ finances will be factored in. The current wage revision for public sector banks or PSBs, as well as some private lenders, is due from November 2017 for five years — up to October 2022. Rajkiran Rai G, managing director and chief executive officer of Union Bank of India, is chairman of the negotiating committee, while bank employees will be represented by the United Form of Bank Unions. - Business Line
🍒 SBI board to meet tomorrow for tier-I and II capital raising plans : The country’s largest lender, State Bank of India, is seeking the go-ahead from its board tomorrow (Wednesday) to raise capital through additional tier-1 (AT1) and tier-II bonds from markets in FY21. This capital is expected to to strengthen its capacity to grow business and create buffers. The lender did not indicate the amount of capital it plans to raise through these bonds. SBI may issue AT1 and Tier-2 capital by way of issuance of Basel III-compliant debt instruments in dollars and rupees this financial year.Analysts said at present AT1 bonds do not find much favour in the market after Yes Bank wrote down such bonds worth Rs 8,415 crore. While the write-down was in line with the rules framed by Reserve Bank of India for this capital instrument, it also meant investors had to forget about getting their investments back. SBI’s the Capital Adequacy Ratio (CAR) stood at 13.06 per cent as on March 31, 2020, with tier-I at 11 per cent. The bank holds capital above the regulatory requirements. - Business Standard
🍒 Analysts see bad loans rising by year end: ‘Banks’ fundraise rush signals likely surge in defaults’ : The rush by Indian banks to raise capital signals an anticipated surge in defaults that will erode capital and crimp growth, according to some analysts, who see bad loans rising by the year end as the coronavirus pandemic and the lockdown effect play out. The banks, which have announced fund-raising plans of more than Rs 1 lakh crore, say it’s just prudence, in line with recent central bank advice. State-run lenders are yet to firm up capital-raising plans in the expectation that the federal government will address this sooner rather than later. “Capital raising reflects a combination of defensive and offensive approaches. Defensive approach stems from uncertainty in the environment, reflecting a high level of moratorium, strength of economic recovery and future liquidity stress,” said Prakhar Sharma, equity analyst, Jeffries India. “Our assessment shows that 82% of the capital being raised is accounted for by financiers that are either weak or of moderate strength.” The Reserve Bank of India (RBI) announced a moratorium on loan repayments that ends August to help borrowers hit by the Covid-19 crisis. ICICI Bank, Axis Bank, Yes Bank and Punjab National Bank lead the pack with fund-raising exercises of Rs 10,000-15,000 crore each planned. According to a Fitch Ratings estimate, Indian banks are likely to require about ₹4.5 lakh crore ($60 billion) in a high-stress situation in which the domestic economy fails to recover from the coronavirus-related disruption. - economic times
🍒 Probe on vehicle finance lending practices will not cause any loss: HDFC Bank : Largest private sector lender HDFC Bank on Tuesday said the probe on vehicle finance lending practices does not have any bearing on loan book, and will not cause any loss to the bank. "It is... important to clarify here that this matter is not related in any manner whatsoever to the lending aspect of the business. Therefore there's no question of this having any bearing on 'loan book' or causing any loss to the bank," a bank spokesperson said.The bank on Monday initiated a probe on the lending practices following allegations against the conduct of a key executive in the auto lending business.The allegations pertained largely to the professional conduct which raised issues about possible conflicts of interest, sources had said. - economic times
🍒 Banks continue to park money under reverse repo despite meagre returns : n a bid to disincentive banks from parking their excess funds with the RBI under the reverse repo window, the central bank slashed reverse repo rate to 3.35 per cent, a fall of 155 basis points so far this year. This is higher than the 115 bps point reduction in policy repo rate. Reverse repo rate is the rate at which banks lend short-term funds to the RBI, while repo rate is the rate at which banks borrow short term funds from the central bank. The steep fall in reverse repo rate to decadal low levels has not dissuaded banks from parking surplus funds with the RBI. According to the RBI’s latest July report, average deposit of funds in the overnight reverse repo window increased more than three times – from an average of ₹2.4-lakh crore during the March quarter to ₹7-lakh crore during the June quarter. In the month of May, banks parked nearly ₹8-lakh crore under reverse repo on daily average basis. - Business Line
🍒 How surplus liquidity, RBI’s actions have led to short-term rates falling below the repo rate : Substantial liquidity infusion via open market operations (OMO) and term repos, various policy actions taken by the RBI to ease liquidity conditions for NBFCs/HFCs, long-term repo operations, reduction in repo and reverse repo rate — have all led to a steep fall in short-term interest rates over the past few months. In fact, most of the rates are below the prevailing repo rate of 4 per cent; even close to or below the reverse repo rate of3.35 per cent in some cases. According to the RBI’s July report, the weighted average call money rate has fallen 37 basis points below repo rate during April-June 2020 (from 17 bps below repo rate during January-March 2020). Importantly yields on commercial papers (CPs) issued by NBFCs/HFCs that had shot up post the IL&FS fiasco in late 2018, have also fallen sharply in the past few months. The yields on 3-month CPs for All India Financial Institutions (AIFIs) and HFCs, have dropped below the policy repo rate in June. - Business Line
🍒 Retail payments report recovery in May, jump 23% to Rs 24.22 trillion : After seeing a plunge in April amid the lockdown, retail payments reported a recovery in May, jumping 23 per cent to Rs 24.22 trillion in value terms, against Rs 19.66 trillion in April, the Reserve Bank of India monthly bulletin data showed. In March, retail payments in value terms were to the tune of Rs 36.03 trillion. Total payments that include digital payments and payments made via paper-based instruments rose 12.5 per cent to Rs 94.64 trillion in May, against Rs 84.10 trillion in April.Digital payments saw 11.6 per cent rise to Rs 92.03 trillion in May, against Rs 82.46 trillion in April. While card payments posted over 60 per cent recovery, ATM cash withdrawals in value terms rose to Rs 1.96 trillion in May, against Rs 1.29 trillion in April. - Business Standard
🍒 Liquidity measures help reduce financing cost in corporate bond mkt: RBI : Abundant surplus liquidity in the system provided by the Reserve Bank amid Covid-19 related dislocations in the financial market has helped reduce financing cost in the corporate bond market to decadal lows, according to an article published in the RBI Bulletin. The article has been prepared by Radha Shyam Ratho and Pradeep Kumar of the Financial Markets Operations Department of Reserve Bank of India (RBI).RBI deployed several conventional and unconventional tools to restore orderly conditions in financial markets and maintain normal functioning of financial intermediaries, the article published in RBI's monthly bulletin for July showed.Abundant liquidity provided through generic (LTROs) as well as targeted instruments (TLTROs), and other policy measures announced by RBI in the backdrop of dislocations observed in the financial markets, have brought down financing costs in the corporate bond market to decadal lows, eased the access of non-AAA rated entities, and led to record primary issuances, the article said. Yields have dropped and the spreads have compressed despite foreign portfolio investment (FPI) outflows of around $3 billion from corporate bonds in 2020, it said. - Business Standard
🍒 Digital lenders focus on existing customers as uncertainty continues : Digital lending startups which started disbursing new loans in June, are now focusing on existing customers instead of acquiring new ones due to business uncertainty. As loan disbursal volumes for digital lenders climb back to almost 50% of pre-covid levels, nearly 80%- 90% of these new disbursals as well as increase in loan limits are to existing customers.“Banks and NBFCs (non-banking financial companies) are now taking low-risk bets and are focusing on borrowers which have a steady income flow. This would mean choosing salaried persons working at MNCs with more job security versus self-employed professionals. Lenders are now pushing existing customers to draw more capital and utilise the full loan amount given to them," said Bhavik Hathi, managing director, Alvarez and Marsal (India), a management consultancy. “We have been looking at how we can protect our balance sheets. For us new customer acquisition continues has taken a hit, as we are cautious about whom we are giving new loans to. But there’s demand from our existing customer base, since they want to hold on to the line of credit provided to them, for any emergencies, in these uncertain times," said Anuj Kacker, co-founder and COO, MoneyTap, a digital consumer credit line provider. - Live Mint
🍒 Yes Bank denies its executives mis-sold AT-I perpetual bonds : The ongoing court room drama over the contentious Additional Tier-I bond (AT-I) write-down by Yes Bank just got even more dramatic, with the bank denying allegations of mis-selling and asserting that investors were fully aware about the risks involved. In the counter-affidavit filed in the Madras High Court recently, Yes Bank’s RBI-appointed managing director and chief executive officer , Prashant Kumar, submitted that investors purchased these perpetual bonds with “eyes open”. “The claim of violation of natural justice is denied. The petitioner had purchased the AT1 bonds with eyes open, knowing all the risks attached with the purchase,” said Prashant Kumar. The petition was filed by 63 Moons Technlogies Ltd, one of the investors. The firm, founded by Jignesh Shah, who invested Rs 300 crore in 3,000 bond units. - Moneycontrol.com
🍒 Health insurance start-up Plum raises ₹7 crore in seed funding : Plum, a Bengaluru-based group health insurance start-up, providing modern health benefits to corporates, has raised ₹7 crore in seed funding. The round was led by Incubate Fund with participation from Gemba Capital and Tracxn Labs along with angel investors including Abhijit Gupta and Ram Sahasranam of Praxify Health; Sudheendra Chilappagari of Belong.co; Nitin Jayakrishnan of Pando and Alvin Tse of Xiaomi. Abhishek Poddar, co-founder and CEO, Plum, said, “When we look at other countries like the US, we see that a high percentage of the population is covered under employer-provided health insurance. We believe that India too will move in that direction, where a significant portion of its population will rely on employer-sponsored health insurance. With Plum, we want to enable every last company in India to provide a high-quality health cover to their employees, no matter how small or big they are. We want to be the de-facto platform for employee health insurance, initially in India, and later in other developing markets like SE Asia and Latam.” - Business Line
🍒 Mumbai bench of the income tax appellate tribunal rules in favour of HSBC Bank : The Mumbai bench of the income tax appellate tribunal (ITAT) has ruled that interest income of Rs 1,498 crore earned by HSBC Bank during the assessment year 2015-16 from foreign currency loans and debt securities would not be eligible to tax in India. The tribunal dismissed the revenue department’s appeal in the case where the department wanted to tax the amount in India on the grounds that the interest income was not taxable under the India-Mauritius double taxation avoidance agreement (DTAA).“We concur with the view of the Tribunal that interest received by the assessee, pursuant to Article 11(3)(c) of the India-Mauritius tax treaty would not be eligible to tax in India, respectfully follow the same,” members NK Pradhan and Ravish Sood said in the order dated July 8. “Resultantly, finding no merit in the appeal of the revenue, we dismiss the same,” they added. - economic times
🍒 Mumbai court strikes down Rakesh Wadhawan's bail plea in Rs 4,335-crore PMC Bank scam case : A PMLA court in Mumbai on Tuesday rejected the bail plea of HDIL promoter Rakesh Wadhawan, accused in the Rs 4,355-crore Punjab & Maharashtra Cooperative (PMC) Bank scam case. Wadhawan had sought bail claiming he had not violated any banking regulation and also urged court to consider his plea since he had tested positive for coronavirus inside jail. Special Judge Prashant P Rajvaidya rejected his plea. - economic times
🍒 Foreign brokerages see RBI slashing 50-75 bps more by October as inflation seen plunging to 2-2.5% : Foreign brokerages are betting on aggressive rate cuts by the Reserve Bank -- to the tune of 50-75 bps by October -- as they see retail inflation plunging to 2-2.5 per cent by December as all the fundamentals of the economy are very weak. While Wall Street major Bank of America (BofA) expects the RBI to slash up to 75 bps -- 25 bps on August 6 and another 50 bps in October, if the COVID-19 is brought under control by October. Swiss major UBS sees the central bank slashing 50 bps before the end of the fiscal as it expects inflation to plunge to 2.0-2.5 per cent by December. At 6.1 per cent, retail inflation in June was much above market expectations of 5.2 per cent. But the number is lower than the previous two months -- at 6.3 per cent in May and still higher 7.2 per cent of April. It is expected to print in at 6.4 per cent in July. "We expect inflation to slip to 2.5 per cent in the second half of the fiscal,” BofA said in a note citing the “very weak fundamental drivers” of the economy such as a contracting GDP, tight money supply, good rains, limited imported inflation and limited fiscal slippage. - Moneycontrol.com
🍒 NCLAT directs Bharti Airtel, Bharti Hexacom to pay Rs 112 crore to Aircel : The National Company Law Appellate Tribunal (NCLAT) has asked private telecom operator Bharti Airtel and Bharti Hexacom to pay Rs 112 crore to Aircel. A three-member NCLAT bench on Monday set aside the order of the Mumbai bench of the National Company Law Tribunal (NCLT), which on May 1, 2019, granted a set-off of Rs 112 crore to Bharti Airtel and Bharti Hexacom in their Rs 453 crore Spectrum Trade Agreement with Aircel and Dishnet Wireless. Bharti Airtel and Bharti Hexacom had paid Rs 341 crore to Aircel and Dishnet Wireless but had retained Rs 112 crore to set off the dues owed by Aircel entities to Airtel entities. - Moneycontrol.com
🍒 Gold price slips marginally to Rs 49,117 per 10 gram on weak global cues : Gold prices declined Rs 207 to Rs 49,117 per 10 gram in the Mumbai bullion market on rupee depreciation and weak global cues. Gold prices have fallen below $1,800/oz on profit-booking by investors but rising US-China tension kept the downside limited. The rate of 10 gram 22-carat gold in Mumbai was Rs 44,991 plus 3 percent GST, while 24-carat 10 gram was Rs 49,117 plus GST. The 18-carat gold quoted at Rs 36,838 plus GST in the retail market. Silver prices eased Rs 425 to Rs 51,355 per kg from its closing on July 13.
🍒 Sensex plunges 661 points in line with global sell-off : Equity benchmark Sensex plunged 661 points on Tuesday, dragged by losses in financial stocks amid a sell-off in global markets. After toching a low of 35,877.42, the 30-share BSE Sensex settled 660.63 points, or 1.80 per cent, lower at 36,033.06. Likewise, the NSE Nifty fell 195.35 points, or 1.81 per cent, to 10,607.35. Shares of the HDFC duo led the fall in the indices, shedding up to 2.94 per cent, after HDFC Bank said it has launched a probe into its auto lending practices following allegations against the conduct of a long-time executive who retired on March 31 this year. IndusInd Bank, Axis Bank, Maruti, Bajaj Finserv, PowerGrid and SBI were among the other major laggards. On the other hand, Titan, Bharti Airtel and Bajaj Auto closed with gains.
🍒 Rupee skids 23 paise to close at 75.42 against dollar : The Indian rupee tumbled 23 paise to settle at 75.42 (provisional) against the US dollar on Tuesday as risk appetite remained weak amid heavy selling in domestic equities and a strengthening American currency. The rupee, which had opened at 75.33 at the interbank forex market, lost ground and settled at 75.42 against US dollar, down 23 paise over its last close. It had settled at 75.19 against the US dollar on Monday.
🍒 Shares of Central Bank of India in Stock Market : 50% of moneycontrol users recommend buying Central Bank of India Shares. In BSE, Shares closed at Rs.16.65 against Prev Close Rs.16.65. In NSE, shares closed at Rs.17.25 against Prev Close Rs.17.25..
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