Month: April 2021

State Bank of India’s Business Activity Index is now at a 5-month low at 86.3 in the week ended April 19. All indicators have shown a dip with maximum decline in Apple mobility, weekly food arrival at mandis, and RTO revenue collection, according to SBI’s ERD.

This is in line with Nomura India Business Resumption Index (NIBRI), which indicated that the pace of economic activity has dipped to 83.8 for the week ending April 18 versus 88.4 in the previous week (revised down from 90.4) This suggests that the economy is ~16.2pp below its pre-pandemic normal, and at levels last seen in October-end.

“A key reason behind the fall in NIBRI is a deterioration in mobility indicators in response to the restrictions and cautious consumer behaviour. Google retail and recreation and workplace mobility indicators have fallen by 1.3pp and 3.6pp from the previous week, respectively, while the Apple driving index has dropped by a significant 19pp, particularly in the cities of Maharashtra. The Traffic Congestion Index (TCI) has also fallen further to 7.5 as of April 18 versus ~10 as of April 13, and down from 16 a month earlier, although above the levels (of 2) a year earlier,” sais Nomura on April 19.

GDP growth forecast

SBI’s Economic Research Department has also revised its real GDP growth forecast downwards from 11 per cent to 10.4 per cent in FY22 in view of the pandemic-related partial/ local/ weekend lockdown in almost all States.

The ERD estimated the total monetary impact (total loss) of current lockdown in various States at ₹1.5-lakh crore. Of this, Maharashtra, Madhya Pradesh and Rajasthan account for 80 per cent.

“Maharashtra has put up a stringent lockdown among all States. Being the economically biggest and most industrialised State in India, this lockdown will have huge impact on growth.

“Currently we estimate loss of around ₹82,000 crore for Maharashtra (accounts for 54 per cent of the total loss), which will definitely increase if restrictions are further tightened,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.

Migration of labour

As per ERD’s presentation, ‘Thwarting the Second Wave: Rapid Vaccination Should be the Primary Tool and Not Lockdown’, migration of labour is continuing unabated.

According to the data provided by Western Railways (headquarters, Mumbai; for the period April 1-12), almost 4.32 lakh people have returned to States such as Uttar Pradesh (UP), West Bengal (WB), Bihar, Assam and Odisha from Maharashtra.

“Of 4.32 lakh, around 3.23 lakh reverse migrated to UP and Bihar alone. From Central Railways our estimate indicates that around 4.7 lakh reverse migrated to northern and eastern states from Maharashtra,” said the presentation.

The ERD’s model suggests that the estimated peak time is 96 days from February 15, indicating the peak happening in the third week of May.

“It may be noted that we are incrementally adding around 15,000 more cases over peak of previous day as of today, though such numbers are difficult to predict.

“Uttar Pradesh and Maharashtra achieved peak before national peak in first wave. Now, new cases in Maharashtra seem to be stabilising but the share of cases in total of various other States (Chhattisgarh, Madhya Pradesh, Gujarat) has increased in the current second wave and these are showing increase in daily new cases,” said Ghosh.

So, if other States also implement strict actions and control the spread, then national peak may come within two weeks after Maharashtra peak, he added.

The Reserve Bank of India has approved the appointment of Atanu Chakraborty as part-time Chairman of HDFC Bank.

In a regulatory filing on Friday, the private sector lender said the appointment is for three years with effect from May 5, 2021, or the date of his taking charge, whichever is later.

“A meeting of the board of directors of the bank will be convened in due course to inter alia consider the appointment of Atanu Chakraborty as the part time Chairman and additional independent director of the bank,” said HDFC Bank.

A 1985 batch IAS officer of Gujarat cadre, Chakraborty retired as Secretary, Department of Economic Affairs, in April 2020. Previously, he also served as Secretary, Department of Investment and Public Asset Management (DIPAM).

The board of HDFC Bank had, in December last year, submitted its recommendation to the RBI for the approval of part-time Chairman. The term of its previous Chairperson Shyamala Gopinath came to an end on January 1 this year.

Chakraborty graduated as a Bachelor in Engineering from NIT-Kurukshetra. He holds a Diploma in Business Finance (ICFAI, Hyderabad) and a master’s degree in Business Administration from the University of Hull, UK.

Surabhi

Private sector lenders, led by ICICI Bank and SBI Cards, have seen robust growth in credit card issuances between December 2020 and February 2021, coinciding with the temporary halt on HDFC Bank sourcing new cards.

Data with the Reserve Bank of India reveal that the outstanding credit cards of ICICI Bank stood at 1.03 crore as on February 28, 2021, registering a 4.68 per cent jump since December 2020 when it was at 99.1 lakh.

Outstanding credit cards of SBI Cards, too, grew 2.18 per cent to 1.17 crore as on February 28, 2021, from 1.14 crore as on December 31, 2020.

RBL Bank’s outstanding credit cards jumped 2.47 per cent to 28.9 lakh as of February-end 2021.

Meanwhile, Axis Bank’s outstanding credit cards grew 2.39 per cent in the same period to 70.36 lakh as on February 28, 2021, from 68.7 lakh at December-end 2020.

In contrast, outstanding credit cards of HDFC Bank fell marginally to 1.51 crore at February-end this year from 1.53 crore as on December 31, 2020.

HDFC Bank, however, continues to maintain its market leadership in the credit card segment.

Outages

Concerned by outages in its mobile and net banking services, the RBI had, on December 2 last year, directed HDFC Bank to temporarily halt the sourcing of new credit card customers as well as launches of digital business-generating activities planned under its proposed Digital 2.0 programme.

Despite the temporary stop, HDFC Bank’s credit card advances grew by 12.3 per cent to ₹64,674 crore for the quarter ended March 31, 2021, against ₹57,575 crore in the fourth quarter of 2019-20.

“Within the credit card space, SBI and ICICI have been able to bite into the market share of HDFC Bank as the latter’s new card acquisition has been suspended by the RBI,” said a recent report by Emkay Financial Services, based on a call with Kaushik Mehta, Founder and CEO of RULoans Distributions.

There were a total of 6.16 crore outstanding credit cards as on February end this year compared to 6.03 crore at the end of December 2020.

The India Digital Payments Report 2020 by Worldline had revealed that 15 banks account for 95 per cent of credit cards issued in the country.