Month: February 2021

First book bank for underprivileged children to come up in Lucknow, BFSI News, ET BFSI

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The humane side of men in khaki will again be on display when Lucknow Police sets up a book bank in the city to provide textbooks, competitive exam notes and free study material to underprivileged students. A brainchild of joint commissioner of police, law and order, Naveen Arora, the initiative is part of community policing. “We have other duties towards society as well, not just tackling crime,” said Arora. If a little help can help those from disadvantaged sections of society to expand knowledge and attain academic and career goals, why not make it to happen, he said.

“We held talks with schools, unaided private school associations to lend support to our endeavour. A jeweller has promised to give space in Khurramnagar for setting up the first such book bank,” he said.

Soon underprivileged students from any class and even those preparing for competition exams can access books for free. “An Aadhaar card or an ID-card of the institute where they are enrolled would be required for membership. Students will have the option of keeping the books or returning it after use,” the officer said.

“Books will be sourced from NGOs and publishers, who print specimen copies,” the police officer said. The library science department has agreed to pitch in for upkeep of books and will train cops on ways to handle the library.

A vigorous campaign about the book bank will be spearheaded on social media and through door-to-door campaign to motivate people to donate notebooks and study material on important occasions like birthdays and wedding anniversaries.



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Reports, BFSI News, ET BFSI

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The central government may lift the blanket suspension of the Insolvency and Bankruptcy Code (IBC) to accelerate resolving stressed assets, reported Business Standard quoting sources. The government in December 2020 had postponed the suspension of the IBC till March 24, 2021, owing to stress in various sectors due to covid-19 pandemic. Earlier, it was done for six months effective from March 24, 2020.

“We are exploring two options — one, removing the suspension and allowing the resolution process in view of the rise in the number of fresh cases of default this fiscal year; second, bringing in some provisions to the IBC to exclusively deal with distressed sectors,” said a senior government official privy to the matter, told BS.

It was reported that to discuss the options, officials of the Ministry of Finance, Ministry of Corporate Affairs, and Insolvency and Bankruptcy Board of India (IBBI), along with other stakeholders, will meet this week.

“We don’t want to delay it because we aim to make the final decision by March 15,” the official said.

It is expected the government may also consider giving relief to some of the worst-affected sectors.



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Nureca IPO Opens Today: Should You Bet On This B2C Company IPO?

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oi-Roshni Agarwal

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Amid IPO frenzy, today another public issue by B2C company into the area of wellness and healthcare will open its Rs. 100 crore IPO for public subscription. And ahead of the issue, the company aggregated close to Rs. 45 crore from anchor investors last Friday.

Issue details: The issue closes for subscription on February 17, 2021. And the price band has been fixed in the range of Rs. 396-400. Investors can bid for a minimum of 35 shares and in multiples of 35 shares thereafter.

Nureca IPO Opens Today: Should You Bet On This B2C Company IPO?

Company details: The company offers solutions to track one’s health and its products and solutions gained traction amid the pandemic and now as with the roll out of the vaccine, things are normalizing, in the long run there shall be difficulty in sustaining the performance. Nonetheless, the company’s technology adoption will help scale its business.

Valuation of the issue: IPO is valued at 5.6x annualized earnings report in 1HFY21, which looks to be attractively valued given high asset turnover and return ratio of the company,” Jain of Reliance Securities said. And in view of the attractive valuations, the brokerage has given a ‘subscribe’ rating to the issue.

SMC Global Securities Ltd is of the belief that considering the P/E valuation, on the upper end of the price band of Rs 400, the stock is priced at pre issue P/E of 46.91x on its FY20 EPS of Rs 8.53. Post issue, the stock is priced at a P/E of 62.55x on its EPS of Rs 6.40. Looking at the P/B ratio at Rs 400 the stock is priced at a P/B ratio of 5.81x on the pre issue book value of Rs 68.86 and on the post issue book value of Rs 187.83 the P/B comes out to 2.13x. While on the lower end of the price band of Rs 396 the stock is priced at pre issue P/E of 46.44x on its FY20 EPS of Rs 8.53.

Prospects of the issue -listing wise: Amid strong market momentum, we might see over-subscription as the issue is a small one and this might help in decent listing of the issue.

GoodReturns.in



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Nureca IPO Opens Today: Should You Bet On This B2C Company IPO?

Personal Finance

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Investment

oi-Roshni Agarwal

|

Amid IPO frenzy, today another public issue by B2C company into the area of wellness and healthcare will open its Rs. 100 crore IPO for public subscription. And ahead of the issue, the company aggregated close to Rs. 45 crore from anchor investors last Friday.

Issue details: The issue closes for subscription on February 17, 2021. And the price band has been fixed in the range of Rs. 396-400. Investors can bid for a minimum of 35 shares and in multiples of 35 shares thereafter.

Nureca IPO Opens Today: Should You Bet On This B2C Company IPO?

Company details: The company offers solutions to track one’s health and its products and solutions gained traction amid the pandemic and now as with the roll out of the vaccine, things are normalizing, in the long run there shall be difficulty in sustaining the performance. Nonetheless, the company’s technology adoption will help scale its business.

Valuation of the issue: IPO is valued at 5.6x annualized earnings report in 1HFY21, which looks to be attractively valued given high asset turnover and return ratio of the company,” Jain of Reliance Securities said. And in view of the attractive valuations, the brokerage has given a ‘subscribe’ rating to the issue.

SMC Global Securities Ltd is of the belief that considering the P/E valuation, on the upper end of the price band of Rs 400, the stock is priced at pre issue P/E of 46.91x on its FY20 EPS of Rs 8.53. Post issue, the stock is priced at a P/E of 62.55x on its EPS of Rs 6.40. Looking at the P/B ratio at Rs 400 the stock is priced at a P/B ratio of 5.81x on the pre issue book value of Rs 68.86 and on the post issue book value of Rs 187.83 the P/B comes out to 2.13x. While on the lower end of the price band of Rs 396 the stock is priced at pre issue P/E of 46.44x on its FY20 EPS of Rs 8.53.

Prospects of the issue -listing wise: Amid strong market momentum, we might see over-subscription as the issue is a small one and this might help in decent listing of the issue.

GoodReturns.in



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‘Max Life to up its cloud game as it goes more digital’

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Max Life Insurance, a private life insurer, plans to ramp up investments on cloud and analytics as it goes about taking its digital journey to the next higher trajectory, said a top official.

As part of its aim to become a differentiated player and an innovative digital organisation over the next three years, the company will also create an omni channel-consistent experience for customers by increasing focus on digitisation, Prashant Tripathy, Managing Director & CEO, Max Life Insurance, told BusinessLine.

By an omni channel-consistent experience, Tripathy was referring to the aspect of using digitisation to give customers the same experience irrespective of the channel they choose for their product purchases. “We are reasonably digital. Now, we want to make it more sophisticated, more penetrated, and make it more robust. Cloud penetration for us must go up. The theme of digitisation and innovation is what we want to pursue rapidly,” he said.

Already, about 80 per cent of customer transactions are digital and 100 per cent of in-force policies are digital, he added.

For the just-concluded December quarter, Max Life Insurance had reported a net profit of ₹220 crore, up 43 per cent over the same quarter last fiscal. Gross written premium had recorded 19 per cent growth at ₹4,629 crore.

For the nine months ended December 31, 2020, Max Life’s margins went up to 25.9 per cent from 21 per cent in same period last year. The Value of New Business (VNB) written during the first nine months stood at ₹788 crore, reflecting a 37 per cent increase on a year-on-year basis.

“Our margins have gone up because we made smart changes in product mix. We have increased the share of protection and rebalanced the portfolio, did better underwriting. Throughout the year we maintained consistent pipeline of innovative designs which has helped. We got the tailwind of the market. Protection grew 55 per cent and online channel grew very significantly at 50 per cent. There is a tailwind towards protection that we have managed to leverage because of our strategy,” he added.

Till December-end 2020 this fiscal, Max Life reported a 11 per cent growth on individual adjusted basis. Tripathy said that January, too, was a good month for the company and expects to also ride on the base effect for March.

FDI cap increase

Asked if Max Life Insurance will see some capital structure rejig now that the government has announced a hike in FDI limit in insurance sector from 49 per cent to 74 per cent, Tripathy replied in the negative. “We don’t have any immediate plans. FDI limit increase for insurance sector creates more depth in the market. There is nothing specific on any plans we have. It’s going to be same like we are now following. At a long term basis, Max Financial and Axis Bank will be our shareholders,” he said. He also expressed confidence over getting IRDAI nod by end March for the recent Axis transaction.

ULIP taxation

Asked about the Budget announcement on Unit Linked Insurance Plan (ULIP) taxation, Tripathy said it would have negligible impact in terms of attractiveness of ULIP. “We get nearly 40 per cent of our revenues (sales) from ULIP and the rest from traditional products. The Budget proposal on ULIP taxation will at the most bring it down 2-3 per cent — nothing more than that,” he added.

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Thinking To Invest In Gold: This Can Be The Safest And Simplest Way-Know All About The Option

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Investment

oi-Roshni Agarwal

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After phenomenal gains in the previous year i.e. 2020 owing to lot of uncertainties in the world to the tune of 28% from gold, you may expect gains to come in, yes you are right, analysts also expect the precious yellow metal to reap in good return this year too but probably not of the same scale as last year’s.

And other than the gains, there is one more reason that you may be pushed to invest in the yellow metal at this point in time, as global central banks are resorting to push liquidity and with there is a threat of inflation. And to beat this inflation risk, gold serves as a good hedge. Of late amid easing of US inflation, there was seen some softness in gold.

So, now it has been over 5 years time, since the government has been promoting financial investment into gold with the introduction of Sovereign gold bonds or SGBs, there is another investment option in gold i.e. Gold ETFs is gaining interest among investors. And after a precise offloading from the investment option, again in the January month, there has been seen record inflows into Gold ETFs as per the data by AMFI. During this time there was correction seen in gold prices, which anticipating better returns, entered into the precious metal.

Gold functions as a strategic asset in an investor’s portfolio, given its ability to act as an effective diversifier, and alleviate losses during tough market conditions and economic downturns. This is where it draws its safe-haven appeal, as has been evident since 2019, said Morning Star’s Srivastava.

Now here is all that you need to know about Gold ETFs:

Now here is all that you need to know about Gold ETFs:

If you want high liquidity from your gold investment, you can take on to Gold ETFs which can be purchased if you maintain a demat account. Also, for the convenience of investors, they are also allowed an option to invest in them as SIPs.

Why Gold ETFs ?

Why Gold ETFs ?

At present, personal finance experts when advising gold investment highly recommend SGBs for the interest component besides capital appreciation and other benefits. Nonetheless, what comes into play in the case of Gold ETFs is that it offers high liquidity similar to physical gold and with a longer tenure offers a good return.

Gold ETFs- taxation aspect

Gold ETFs- taxation aspect

The ideal situation or to reap the best from the gold ETFs, investors should ideally hold it for a period of 3 years and more as if held for less than 3 years, it attracts short term capital gains tax implications. While for a period of over 3 years, there arises long term capital gains tax implication. Here we cannot ignore the SGBs that come with an advantage, i.e. proceeds from the investment if held until maturity i.e. 8 years term, there is no capital gains tax liability on it.

Pointers that can optimize your returns from Gold ETFs:

Pointers that can optimize your returns from Gold ETFs:

1. Note that the ETF you are investing into is not a small fund with low liquidity: So other than the expense ratio of the Gold ETF, you need to also factor in the fund size. Such that you are offer good liquidity, one of the few important reasons because of which you invested into Gold ETF.

2. Gold ETFs should be purchased at market price: Investors need not place several bids for the instrument and maintain their overall allocation into gold not over 15%.

GoodReturns.in



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Thinking To Invest In Gold: This Can Be The Safest And Simplest Way-Know All About The Option

Personal Finance

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Read More/Less


Investment

oi-Roshni Agarwal

|

After phenomenal gains in the previous year i.e. 2020 owing to lot of uncertainties in the world to the tune of 28% from gold, you may expect gains to come in, yes you are right, analysts also expect the precious yellow metal to reap in good return this year too but probably not of the same scale as last year’s.

And other than the gains, there is one more reason that you may be pushed to invest in the yellow metal at this point in time, as global central banks are resorting to push liquidity and with there is a threat of inflation. And to beat this inflation risk, gold serves as a good hedge. Of late amid easing of US inflation, there was seen some softness in gold.

So, now it has been over 5 years time, since the government has been promoting financial investment into gold with the introduction of Sovereign gold bonds or SGBs, there is another investment option in gold i.e. Gold ETFs is gaining interest among investors. And after a precise offloading from the investment option, again in the January month, there has been seen record inflows into Gold ETFs as per the data by AMFI. During this time there was correction seen in gold prices, which anticipating better returns, entered into the precious metal.

Gold functions as a strategic asset in an investor’s portfolio, given its ability to act as an effective diversifier, and alleviate losses during tough market conditions and economic downturns. This is where it draws its safe-haven appeal, as has been evident since 2019, said Morning Star’s Srivastava.

Now here is all that you need to know about Gold ETFs:

Now here is all that you need to know about Gold ETFs:

If you want high liquidity from your gold investment, you can take on to Gold ETFs which can be purchased if you maintain a demat account. Also, for the convenience of investors, they are also allowed an option to invest in them as SIPs.

Why Gold ETFs ?

Why Gold ETFs ?

At present, personal finance experts when advising gold investment highly recommend SGBs for the interest component besides capital appreciation and other benefits. Nonetheless, what comes into play in the case of Gold ETFs is that it offers high liquidity similar to physical gold and with a longer tenure offers a good return.

Gold ETFs- taxation aspect

Gold ETFs- taxation aspect

The ideal situation or to reap the best from the gold ETFs, investors should ideally hold it for a period of 3 years and more as if held for less than 3 years, it attracts short term capital gains tax implications. While for a period of over 3 years, there arises long term capital gains tax implication. Here we cannot ignore the SGBs that come with an advantage, i.e. proceeds from the investment if held until maturity i.e. 8 years term, there is no capital gains tax liability on it.

Pointers that can optimize your returns from Gold ETFs:

Pointers that can optimize your returns from Gold ETFs:

1. Note that the ETF you are investing into is not a small fund with low liquidity: So other than the expense ratio of the Gold ETF, you need to also factor in the fund size. Such that you are offer good liquidity, one of the few important reasons because of which you invested into Gold ETF.

2. Gold ETFs should be purchased at market price: Investors need not place several bids for the instrument and maintain their overall allocation into gold not over 15%.

GoodReturns.in



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Gold loans: A place to be in, for banks

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Gold loans stood out in banks’ loan portfolio in the first nine months of the current financial year, both in terms of growth and asset quality.

Banks aggressively expanded their loan against pledge of gold ornaments and jewellery (jewel loans) portfolio in the wake of the Covid-19 pandemic.

Gold loans shine as small businesses, borrowers look for ready cash

During the first nine months of FY2021, banks preferred to lend either against highly liquid collateral such as gold or Government guarantee as they feared the economic downturn would affect customers’ ability to repay loans.

State Bank of India’s (SBI) personal gold loan book jumped four times in six months (up to December-end 2020) to stand at ₹17,492 crore.

Mobile app for gold loan launched in Kochi

Gross non-performing assets (GNPAs) of India’s largest bank was only at 0.04 per cent of its gold loan portfolio, per the bank’s analyst presentation. The bank, however, did not disclose the size of its agriculture gold loan in the presentation.

Bank of Baroda’s (BoB) agriculture gold loan portfolio was up 29 per cent year-on-year (yoy) to ₹21,116 crore as at December-end 2020 (₹16,325 crore as at December-end 2019).

“When we look at the agriculture side, nearly 40 per cent of the growth that we see in agriculture has come from gold loans. Gold loans are 20-21 per cent of our total agriculture book.

“…And we do hope that going ahead, 40-50 per cent of agricultural growth will come from gold loans,” Sanjiv Chadha, MD & CEO, BoB, told analysts last month.

Risk-averse market

The gold loan portfolio of Thrissur (Kerala) headquartered CSB Bank jumped about 60 per cent yoy to ₹5,644 crore as at December-end 2020 (₹3,523 crore).

Gold loans accounted for 40 per cent of the private sector bank’s total advances against 30 per cent in the year-ago quarter.

“We will not slow down the gold loan growth. We will increase the growth of the other products so that as a proportion (of total advances), gold loan will go down. I think, this (gold loan portfolio) is only about ₹6,000 crore. There is a big public sector bank, which has ₹70,000 crore of gold loans, so gold loan is a place to be in today,” C VR Rajendran, MD & CEO, CSB Bank, told analysts last month.

Federal Bank’s gold loan portfolio registered a y-o-y growth of 67 per cent and crossed ₹14,000 crore in the third quarter of FY2021, per its third quarter analyst presentation.

The proportion of gold loans in total advances in the case of Karur Vysya Bank (KVB) increased to 23 per cent as at December-end 2020 as against 17 per cent as at December-end 2019.

As at December-end 2020, KVB’s gold loan portfolio stood at ₹12,069 crore (₹8,580 crore)

Karthik Srinivasan, Group Head — Financial Sector Ratings, ICRA, observed that gold prices have been going up and this has been providing comfort to both lenders and borrowers.

“The market is still risk-averse. And banks, especially public sector banks, have been offering gold loans at relatively finer rates. So, that is an option that many people are availing,” he said.

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Srei reports whopping loss of Rs 3,810cr in Q3, BFSI News, ET BFSI

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Srei Infrastructure Finance Ltd on Sunday said it has posted a consolidated net loss of Rs 3,810 crore during the third quarter of the current fiscal on account of higher and accelerated provisioning as a prudent measure. The company had reported a net profit of Rs 60 crore in the year-ago period.

Its revenue from operations for the October-December period of the current fiscal stood at Rs 490 crore as against Rs 1,450 crore in the corresponding quarter last year.

The company said its total consolidated provisioning was at Rs 3,100 crore for the period under review and the net worth stood at Rs 296 crore as of December quarter of FY21.

The Kolkata-based company claimed that the COVID-19 pandemic had impacted its recovery, leading to an asset- liability mismatch.

“The current financial year has been one of the most challenging years in our history of more than three decades.

“The COVID-19 induced stress on our asset quality coupled with the credit squeeze in the NBFC sector has created an unprecedented situation. As a matter of prudence…we have decided to increase our provisions significantly,” Srei chairman Hemant Kanoria said.

The lender had in November 2020 said a special audit of the company and its subsidiary, Srei Equipment Finance Ltd, was undertaken by an auditor appointed by the Reserve Bank of India.

A special audit is typically undertaken if there is a sharp deterioration in the quality of a lender’s book.



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Finance Ministry to infuse Rs 3,000 crore in general insurance companies this quarter, BFSI News, ET BFSI

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The Finance Ministry will infuse Rs 3,000 crore capital into state-owned general insurance companies during the current quarter in a bid to improve their financial health. Last year, the Union Cabinet headed by Prime Minister Narendra Modi cleared proposal to provide capital support to National Insurance, Oriental Insurance and United India Insurance.

The cabinet had also decided to increase the authorised share capital of National Insurance Company Limited (NICL) to Rs 7,500 crore and that of United India Insurance Company Limited (UIICL) and Oriental Insurance Company Limited (OICL) to Rs 5,000 crore each to give effect to the capital infusion decision.

Recently, the government sought Parliament nod for gross additional expenditure of Rs 6.28 lakh crore for 2020-21 as part of second and final batch of supplementary demands for grants.

This included Rs 3,000 crore for providing additional funds towards recapitalisation of insurance companies.

The infusion will be done after the supplementary demands for grants is passed by Parliament which will reconvene on March 8.

The capital infusion will enable the three public sector general insurance companies to improve their financial and solvency position, meet the insurance needs of the economy, absorb changes and enhance the capacity to raise resources and improve risk management.

Finance Minister Nirmala Sitharaman in the Budget announced privatization of two public sector banks and one general insurance company in 2021-22 beginning April.

In 2017, state-owned companies New India Assurance Company and General Insurance Corporation of India went public.



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