19.03.2024 : Today’s Banking / Financial News at a Glance
🍒 Public sector banks told to spell out 3-year business plans by March-end : The government has directed state-owned banks to submit their business plans till 2026-27 by the end of this month, officials said, adding that these plans will be assessed on a quarterly basis by the government-nominated directors on the boards of the banks. The business plans will cover strategies to increase low-cost deposits, raise capital, resolve bad loans, improve cybersecurity and undertake financial inclusion outreach, said a senior government official. “In addition to the quarterly review by the government nominee, there will be mid-year and annual reviews by the finance ministry to assess the performance of the lenders and ensure corrective course correction,” said the official, who did not wish to be identified. – economic times.
🍒 Insurance sector attracted Rs 54,000 crore FDI in last 9 years: DFS Secretary : The insurance sector has received close to Rs 54,000 crore as foreign direct investment (FDI) in the last 9 years on the back of further liberalisation of overseas capital flow norms by the government, Financial Services Secretary Vivek Joshi has said. The government increased the permissible FDI limit from 26 per cent in 2014 to 49 per cent in 2015 and then to 74 per cent in 2021, he told PTI in an interview. However, he said, the permissible FDI limit for insurance intermediaries was increased to 100 per cent in 2019. As a result, Rs 53,900 crore of FDI was received in insurance companies between December 2014 and January 2024, he said. – economic times.
🍒 HDFC Bank’s Arvind Kapil to join Poonawalla Fincorp as MD and CEO : HDFC Bank’s head of mortgage portfolio Arvind Kapil is set to join Poonawalla Fincorp as the MD and CEO, the NBFC said in a release. “As we continue to develop new business verticals and move towards our long-term vision of being the best-in-class organisation, we are pleased to share that Arvind Kapil would be joining us as MD and CEO, to spearhead this transformation to the next level of growth,” said Adar Poonawalla, Chairman Poonawalla Fincorp. Kapil currently manages a loan book of over ₹7-lakh crore at HDFC Bank and had handled the merger of erstwhile HDFC with the bank. – Business Line.
🍒 IL&FS moves NCLAT, seeks protection for group Cos from wilful defaulter tag : The newly appointed board of debt-ridden IL&FS has moved an urgent application before the appellate tribunal NCLAT to restrain 11 public sector lenders from initiating proceedings to declare its group companies as “wilful defaulters”. In its petition, IL&FS said it is aggrieved by the “blatant violation and disregard” of previous NCLAT orders by the banks. IL&FS also charged banks of taking procedural action under the garb of the RBI guidelines, and harassing the Directors of the IL&FS companies”. The banks are “issuing show cause notices, calling for a personal hearing before the Wilful Defaulter Identification Committee, threatening initiation of criminal proceedings, including initiating proceedings as well as and for declaring IL&FS companies and their current Directors as Wilful Defaulters, as well as getting issued Look Out Circulars,” it submitted. – moneycontrol.
🍒 SBI Smallcap Fund can meet 25% redemption in 4 days based on ‘available liquidity’ instead of AMFI formula, says CIO : If redemption is tackled based on available liquidity, meaning using the cash first, then unwinding index futures, and then the liquid component such as some of the large-cap stocks, 25 percent of redemption in SBI Mutual Fund Small Cap Fund can be met in four days flat as against the AMFI formula-based reported number of 30 days, said SBI Mutual Funds’ CIO Equities, R Srinivasan in an exclusive interview with Moneycontrol. 50 percent of the portfolio can be redeemed in 17 days as against the reported 60 days, he added. Besides, he said, the liability profile of the fund is highly distributed with the Top 10 investors owning just 0.61 percent of the fund. “This is very important because this forms the basis to assess the extent and probability of redemption we could potentially face,” Srinivasan said. The AMFI disclosure, however, does not capture the liquidity gradient between a 0 to 25 percent redemption which is the more likely redemption scenario, he said. – moneycontrol.
🍒 LIC shares down 10% in 5 sessions as 17% hike will raise wage bill to Rs 29,000 crore : Shares of Life Insurance Corporation of India (LIC) traded in the red, down more than 2 percent, on plans to raise wages by around 17 percent for its over 1.1 lakh employees. On March 15, LIC announced that it has received approval from the government for a wage revision for its employees, effective from August 1, 2022. This announcement benefits over 110,000 employees across the organization, LIC stated.The hike will impact LIC’s bottomline, with an estimated annual implication of around Rs 4,000 crore. Once the salary additions have been implemented, the state-run insurance behemoth could see its annual wage bill balloon to more than Rs 29,000 crore. For this fiscal year, arrears of around Rs 7,000 crore have to be included into the total wage bill, which will take the total wages paid out for FY24 to Rs 32,000 crore. – moneycontrol.
🍒 EMI bounce rate improves to a five-year low indicating no material signs of risk build-up : Bounce rates, or defaults in paying equated monthly instalments (EMIs), improved to a five-year low of 19.3% in February, suggesting no material signs of risk build-up and continued strong asset quality behaviour, according to an analysis of National Payments Corporation of India (NPCI) data by ICICI Securities. The current unsuccessful auto-debit requests, or bounce rate, is around 50% lower than the peak of 38.1% in June 2020 registered during the COVID-19 pandemic. Overall, in FY24-TD, the average bounce rate in value terms has fallen to 20.8% from 22% YoY. The EMI bounce rates peaked in June 2020 at 38.1% following the first COVID-19 wave that led to disruption in incomes amid restrictions on movement due to the lockdown. However, it has been on a declining path since then. – Live Mint.
🍒 RBI alerts banks on heightened cyber security threats, gives action plan to address vulnerabilities, says report : The Reserve Bank of India (RBI) has cautioned some banks, urging them to fortify their defences against potential cyber attacks, as per a Moneycontrol report citing industry sources. The warnings, issued to select banks, follow the central bank’s recent Cyber Security and Information Technology Examination (CSITE), wherein action points were provided to address identified vulnerabilities, the report added. Distinct from routine risk assessments, the CSITE, scrutinises banks’ disaster management readiness, internet and mobile banking platforms, and fraud detection mechanisms. It serves as an independent review, initiated several years ago, to bolster cyber security surveillance. “The RBI conducts a separate inspection to identify deficiencies in the cyber security capabilities of banks. This time, they met us and have given a list of action points where deficiencies need to be addressed,” one source told the publication. – Live Mint.
🍒 SBI to make complete disclosure of electoral bonds details by March 21: SC : In a third tongue-lashing to the State Bank of India, the Supreme Court on Monday told it to stop being “selective” and make “complete disclosure” of all details related to the electoral bonds scheme by March 21. The apex court said the details to be disclosed include the unique bond numbers that would reveal the link between the buyers and the recipient political parties. A five-judge Constitution bench headed by Chief Justice of India D Y Chandrachud said there is “no manner of doubt that the SBI is required to make complete disclosure of all the details” which are in its possession. The bench, also comprising Justice Sanjiv Khanna, Justice B R Gavai, Justice J B Pardiwala and Justice Manoj Misra, said the Election Commission shall forthwith upload on its website the details received from the SBI. – Business Standard
🍒 Retail investors garner a lion’s share of the Indian mutual fund industry in just over a decade! : The Indian mutual fund industry has seen its AUM (assets under management) more than double in the last four years to Rs 54.54 lakh crore in February 2024, as compared with Rs 23.16 lakh crore in February 2019. While there are several interesting factors that have contributed to this steady and exponential growth, one of the most significant of them is the story of retail participation. As on January 2024, retail or individual investors accounted for over 60 per cent of the industry’s AUM at Rs 31.79 lakh crore, this is in stark contrast to the scenario in 2013 when the industry barely had any retail footprint. – financial express
🍒 Canara Bank remains bullish on gold loans : Even as the Department of Financial Services (DFS) has written to all public sector banks (PSB) asking them to review gold loan portfolios for any lack of regulatory compliance, Canara Bank, the largest gold loan provider amid PSBs, is confident of sustaining a higher double-digit loan growth in the segment, two senior officials told FE. “The DFS sought some data from us and other PSBs about a week back and we have submitted it already. This was an outcome of the issues at IIFL Finance and Bank of Baroda (BoB). However, we will continue to grow our gold loan book as we have implemented robust compliance measures,” a source said. – financial express
🍒 Tightening of compliance rules by RBI; banks to prefer big fintechs for co-branded cards : The tightening of compliance regulations by the Reserve Bank of India (RBI) may prompt banks to lean towards collaborating with larger fintech companies for co-branded card partnerships. Bankers cite the risk of non-compliance with the RBI regulations as the prime concern, fearing that smaller fintechs may lack the expertise and resources to fully understand and adhere to regulatory requirements. “The message is clear from the central bank that whether it partners with a fintech or non-fintech company, the bank will be held responsible for any compliance violations. Now, banks will prefer partnering with those fintechs which have flawless track records in adhering to RBI’s rules,” a senior official of a private bank told FE. “Banks will now avoid partnering with early-stage fintechs for co-branded cards.” – financial express.
🍒 Robust domestic fundamentals and global macro landscape supportive of a stronger rupee: BoB report : Robust domestic fundamentals and the global macro landscape are supportive of a stronger rupee, according to a report by Bank of Baroda’s economic research department. “Despite mixed macro readings, the US economy is in better shape than what was estimated at the beginning of the year. “This suggests that a Fed rate cut is just lurking around the corner and by market estimates, a June 2024 rate cut is most likely. This will provide further impetus to rupee,” BoB Economist Aditi Gupta said in a report. – Business Line.
🍒 SIDBI saw over 3.5x return on FFS scheme on early exits, says Chairman S Ramanan : Small Industries Development Bank of India (SIDBI), which operates the government’s Fund of Funds scheme (FFS) for startups, has recorded over 3.5x returns on some of its early exits, Sivasubramanian Ramann, Chairman of SIDBI, said. “The initial returns from some of the early exits gave us little more than 3.5 times the initial capital that was paid for most of the investments,” Ramann said during a session at the Startup Mahakumbh in Delhi. “Not an indicative number, but I am sure all startups are doing an excellent job and we will end up getting twice the principal investment.” Started in 2016, with a corpus of Rs 10,000 crore, SIDBI has become one of the popular limited partners (LPs) of the Indian startup ecosystem, investing via Alternate Investment Funds (AIFs). – moneycontrol.
🍒 Stock markets settle higher in volatile trade; metal, auto shares shine : Sensex, Nifty updates on 24th July 2023: Benchmark equity indices Sensex and Nifty closed marginally higher in a volatile trade on Monday as cautious investors preferred to remain on the sidelines ahead of the US Fed interest rate decision this week and rising crude oil prices. Top gainers included Tata Steel, JSW Steel, and TCS, while Adani stocks underperformed. Mid and small-cap indices also showed lackluster performance. “With the US Federal Reserve’s decision looming on Wednesday, market volatility is expected to intensify. Investors’ attention is also shifting towards the upcoming Lok Sabha polls,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd. – Business Line.
🍒 Rupee edges up 2 paise to 82.84 against US dollar in early trade : The rupee appreciated by 2 paise to trade at 82.84 against the US dollar in the opening session on Monday following foreign fund inflows. An uptick in crude oil prices and listless trade in domestic stocks capped rupee gains in opening trade, forex dealers said. The local currency moved in a narrow range of 82.83 to 82.84 against the dollar in early deals. The rupee closed at 82.86 on Friday. – Business Line.
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