Reserve Bank of India – Press Releases
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Ajit Prasad Press Release: 2021-2022/251 |
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Month: May 2021
2 Brokerages That Have Raised Their Target Price On Indian Oil Shares
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Investment
oi-Sunil Fernandes
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Brokerages are raising their targets on the share price of Indian Oil post the quarterly numbers. Indian Oil Reported a standalone EBITDA Rs147 billion, for the quarter ending March 31, 2021. This was up 4x yoy/53% qoq with a 40% beat, driven by higher Gross Refining Margins and Petchem margins.
Net profits at Rs 87.8 billion (up 79% qoq) was a 40% beat, with lower ETR of 20% offsetting higher interest, lower other income and impairment.
“We cut FY22E/23E EPS by 10% each as we factor in lower marketing margins due to volatile oil prices. We raise target price by 18% to Rs 130, after lowering our net debt estimate based on reported FY21 numbers. Maintain Buy rating on IOCL with an EW stance in sector EAP,” Emkay Global has said.
Another brokerage that has buy rating on the stock of Indian Oil is Motilal Oswal. In fact, the brokerage has set an even better price target of Rs 152 on the stock of IOCL.
“IOCL trades at 5.7x consolidated FY23E EPS of Rs 18.3 and 0.8x FY23E PBV. IOCL has traded at a huge discount in the recent past decade due to its capex cycle and CPSE-led liquidity. We value it at 1.1x FY23 PBV to arrive at Target Price of Rs 152,” brokerage firm Motilal Oswal has said.
Lockdowns spurred by the second COVID wave in India have impacted demand for petroleum products – down 33% to 35% for petrol/diesel in May’21 (v/s 2019); Refinery utilization at 84% in May’21.
“Factoring in the same, we lower our FY22E EPS estimates by 11% weighed by the impact in 1QFY22. SG GRMs that have been trending above USD2.5/bbl thus far in 1QFY22 have fallen to sub USD2/bbl levels – amid the emergence of COVID cases globally over the past few days. In line with the company guidance, we believe the lifting of the COVID lockdowns across the globe would boost demand, driving an uptrend in GRM. We maintain Buy, with combined dividend yield of 15.3% over FY22-23E,” the brokerage has said.
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Reserve Bank of India – Press Releases
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In the underwriting auctions conducted on May 21, 2021 for Additional Competitive Underwriting (ACU) of the undernoted Government securities, the Reserve Bank of India has set the cut-off rates for underwriting commission payable to Primary Dealers as given below:
Ajit Prasad Press Release: 2021-2022/250 |
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Banks should bring social media experience to customers, says Taimur Baig of DBS Bank, BFSI News, ET BFSI
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Banks and financial institutions must take a leaf out of social media companies’ book to provide digital and seamless experience beyond the core banking facilities, said Taimur Baig, MD & Chief Economist, DBS Bank Singapore.
“It is no longer about bank branch, site, doing certain transactions is not enough. Customer demand and want more. banks can introduce robo-advisory, that does not require face to face interaction and is a simple model to use,” Baig said while delivering the keynote address at the ETBSI Virtual Summit, Baig spoke about the four pillars which can hold banks and the financial sector in a good state.
Listing augmented, open, cognitive and automation banking as the four pillars that can hold banks in a good state, he said, “New ways of interacting with customers will provide value to customers and bring them joy, hence they will continue to come back.”
Augmented banking
Under augmented banking, banks can introduce robo-advisory, that does not require face to face interaction and is a simple model to use.
“They can eliminate handmade signatures and enable biometric signatures. They can enable digital onboarding allowing customers to upload PDFS and do digitally and seamlessly. They can provide intelligence services like newsletters, articles through apps, websites etc,” he said.
Open banking
Open Banking is allowing banks within the banking system as well as the broader financial sector to come with pipes, so that the information, payment instructions can move freely and cheaply across the financial sector. “Combine the services you offer as a bank with other vendors, banks. For example, bank tying up with food service, taxi service company as a result payment services, information can move freely providing value and convenience to customers which translates into higher revenues for banks,” he said.
Citing marketplace for api, credit, reserve management, cross border payments as other areas for open banking, he said, “Having marketplaces where other participants can come and work as a peer providing better services to customers, institutional customers across retail and wholesale will be critical.” No discussion of open banking is not complete is without blockchain.
Underscoring the importance of blockchain in open banking, Baig said, “Normally when we have cross border transactions, we have many parties, companies, Banks, many payments companies in the middle, all of those can be brought into transparent context.”
Cognitive banking
Cognitive banking as the name suggests is about the intelligent ways of coming up with customer solutions for clients. “It is like the way when you surf tTik Tok, Facebook or Instagram. The algorithm of particular apps will know about your usage history and will provide you with set of content made just for you,” he said.
“Why cannot we do it as banks. We have a lot of data with us. Why don’t we make use of these data and develop tailor-made solutions for them?Cannot we create a recommendation engine for our clients based on that, Baig asked.
Automated banking
Automated banking is about automating bank’s services such as organisational resources, fraud analysis, anti-money laundering aml-cft type work, AI, audit tracing, loans approval. “All of those things should not be subject to many days of process, many human interaction, lot of errors in decision making. This should be a part of seamless process done automatically, very very cheaply but using data, using cutting edge machine learning and AI,” he said.
Learnings from the pandemic
Fifteen months into the pandemic we could confidently say that banks all over the world have held themselves well, Baig said. “The Indian bank system has had a tough time in last 5-6 years in terms of bad loans, they themselves did not fall into a significantly deeper hole because of pandemic happening last year or so, he said.
Even though it looks very bleak right now, this will pass, he said.
“We know better it is also about the economic dimension. We know how to help people in need, we know how to bring assistance to them, and it was fairly successful. We know how to keep factories growing, agriculture growing even if there is an outbreak. Because given last one year experience we know how to keep this activity going even if the statistics show alarming numbers of outbreak.”
It will be tough going this quarter and perhaps also next quarter, but this time there are certain factors different from the last time.
The call for the wholesale downfall is premature, downfall risk has increased but still there are know-how protocols which will allow to rise through this storm, he said.
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Reserve Bank of India – Press Releases
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WazirX Customers Can No More Use Paytm Option To Buy And Sell Crypto Coins
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Planning
oi-Sneha Kulkarni
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If you use the WazirX cryptocurrency exchange app in India to buy and sell Bitcoins and other cryptocurrencies, you should know that one payment option will not be available from now. Paytm Payments Bank will stop dealing with cryptocurrency exchanges and will no longer allow cryptocurrency transactions on its platform.
The decision comes as cryptocurrency prices are plummeting around the world, with Bitcoin leading the charge and smaller players like Ethereum not far behind.
Following an “informal” Reserve Bank of India (RBI) order, banks announced on May 20 that they would no longer deal with crypto exchanges such as WazirX, BuyUCoin, and Zebpay.
In an email to all WazirX users, the platform explained that their Paytm Bank account will be unavailable for the time being, which means that bank transfers using NEFT or IMPS transfers from your bank account will be unavailable.
This is the opening twist in the ongoing story of cryptocurrency trading in India and banking institutions’ unwillingness to work with crypto exchanges. Because of this, WazirX, CoinSwitch Kuber, and CoinDCX are currently unable to provide UPI payments as a payment option to users.
📢 Important update
WazirX will not accept INR deposits to PayTM Bank account from 11:59 PM IST tonight, 20th May 2021.
If you make any INR deposit via IMPS/NEFT/RTGS to our PayTM Bank account after that, it will revert to your source bank account within 7-10 business days.
— WazirX: Bitcoin & Cryptocurrency Exchange in India (@WazirXIndia) May 20, 2021
WazirX in a tweet mentioned “WazirX will not accept INR deposits to PayTM Bank account from 11:59 PM IST tonight, 20th May 2021. If you make any INR deposit via IMPS/NEFT/RTGS to our PayTM Bank account after that, it will revert to your source bank account within 7-10 business days”.
While we work with our partners to add more INR deposit options, we recommend you to use WazirX P2P to buy/sell USDT with INR. Thank you for your support, added further.
WazirX P2P is the only alternative available, and it allows you to buy and sell USDT directly with other buyers and sellers. Following your selection of the amount of USDT you want to exchange, the app matches you with sellers or buyers who are looking to make a trade at that moment.
The Indian National Payments Corporation operating the UPI real-time payment system has however rejected a ban on crypto-monetary transactions in India. Rather, they requested banks to establish their own cryptocurrency policies.
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IRDAI Slaps Rs 24 lakh Penalty on Policybazaar: Here is Why
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Insurance
oi-Sneha Kulkarni
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Policy aggregator Policybazaar has been fined Rs 24 lakh by the Insurance Regulatory and Development Authority of India (IRDAI) for breaching advertising norms in relation to SMSs sent to customers last year regarding increases in term insurance policy premiums.
The Insurance Regulatory and Development Authority of India (Irdai) charged Policybazaar with three charges: sending false information about price increases via SMS, and violating regulations 11 and 9 of the advertising and disclosure norms.
The issue involves Policybazaar sending SMS to its customers without specifying its full registered name in the message between March 15, 2020, and April 7, 2020. The web aggregator sent SMS to around 10 lakh customers, informing them that life insurance rates would rise on April 1 and that they could save up to Rs 1.65 lakh by purchasing a term plan.
On April 7, 2020, Irdai requested an explanation from Policybazaar. It requested that the messages be stopped immediately and that the basis for the advertising be given.
HDFC Life, Tata AIA Life, and ICICI Prudential have all told Policybazaar that their term insurance premiums will rise in April 2020.
In regards to sending SMS without using the company’s full registered name, Policybaazar explained that the Trai regulation only allows for six characters, so the header of the SMS must-read ‘POLBAZ’.
“Considering that the SMS was sent to about 10 lakh specific customers of Policybazaar and has the potential to cause avoidable panic among the customers, they are cautioned to be more circumspect when sending such communications in future,” read the order.
Policybazaar claimed that the SMS was sent to keep customers informed and not to deceive them. They also reported that they immediately stopped sending SMS after receiving the Authority’s communication, according to Irdai.
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7 Listed Tax Free Bonds To Invest For Tax Free Income
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Why to buy tax free bonds in India?
Let us say that your are in the 20 and 30 per cent tax brackets and you earn an interest rate of 50,000 from your bank deposits. Those in the higher tax bracket would end up paying almost 15,000 as taxes on interest income, thus reducing your yields. Take a look at the list of tax free bonds that have decent interest rates and where the interest is tax free.
| Name | Interest rate | Interest payment | Expiry of bonds |
| HUDCO N2 Series | 8.2% | March every year | March 2027 |
| HUDCO N5 Series | 7.51% | Feb every year | Feb 2028 |
| IRFC N9 Series | 8.48% | Feb every year | Feb 2024 |
| IRFC NA series | 8.65% | Feb every year | Feb 2029 |
| RECN6 Series | 8.46% | Sept every year | Sept 2028 |
| RECNF Series | 8.88% | March every year | March 2029 |
| NHAI N6 Series | 8.75% | Feb every year | Feb 2029 |
Do not go by the interest rates on these bonds alone?
Remember these interest rates are on the original bond price of Rs 1,000. Now, if you have to buy these bonds they are listed on the stock exchanges and have to be purchased from there. Most of these bonds were issued at a face value of Rs 1,000.
Let’s take an example. The original subscriber to the Indian Railways Finance Corporation (IRFC) N9 series bond paid only Rs 1,000 and is today getting a solid returns of 8.48% coupon. However, since interest rates have fallen since these bonds were issued, he is going to sell at a higher rate than Rs 1,000.
The IRFCN9 Bonds are now traded at Rs 1,250, which means your returns would drop, as you would buy lesser amount of bonds. So, an individual needs to work the right price to buy these bonds. Those in the highest tax bracket should at least aim for post tax returns of 6 per cent or else it is now worth buying the bonds.
Safety and security of tax free bonds
These bonds are highly secure as they are backed by Government of India owned institutions. Some of the bonds mentioned above have a long tenure. You can sell these bonds on the stock exchanges just as you buy them. However, it is pertinent to note that in some cases the volumes of trading could be thin. Say for example, if you wish to buy 1,000 bonds at a certain price, it may not be available. In some cases they may not be traded at all. We suggest you look for ones that are closer to maturing. The above list that we have provided of tax free bonds is not exhaustive by any means. Apart from tax free bonds, there is the PPF and the ULIPs where the interest or the returns as the case maybe are free from tax. Of course, we also have the EPF and the VPF where after a 5-year period of continuous work, the interest earned is tax free in the hands of investors.
About the author
Sunil Fernandes has spent 26 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains stocks, mutual funds and tax planning.
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DBS can fund $2 billion bid for Citi India unit, Bernstein says, BFSI News, ET BFSI
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By Chanyaporn Chanjaroen
DBS Group Holdings Ltd. has sufficient capital to bid for Citigroup Inc.’s consumer assets in India valued at S$2.7 billion ($2 billion) without needing to raise additional funds, Sanford C. Bernstein & Co. analysts said.
It’s a case of “either go big or go home” for DBS to further expand in India where the Singapore-based bank also acquired Lakshmi Vilas Bank Ltd. in November, Bernstein analysts led by Kevin Kwek wrote in a report Thursday. DBS Chief Executive Officer Piyush Gupta last month said he is interested in the U.S. bank’s assets that are for sale in the South Asian country, as well as in China, Taiwan and Indonesia.
A takeover of Citi’s India unit would be DBS’s largest acquisition since 2001, when the Singapore firm spent $5.4 billion buying the Hong Kong unit formerly known as Dao Heng Bank Group Ltd. Among the U.S. bank’s assets for sale, India stands out as “the crown jewel,” Kwek wrote. Its credit card and wealth business would be attractive to any bidder given the country’s economic growth rate and population size, he added.
DBS has pledged to make more income outside its home turf, where the bank derived 70 per cent of its S$4.7 billion profit in 2020.
DBS remains very disciplined on acquisitions and wouldn’t be drawn into any “bidding frenzy,” Gupta said April 30 when asked about his interest in Citi’s asset sale.
Citi plans to exit retail banking in 13 markets across Asia, Europe, the Middle East and Africa, as part of a strategy by CEO Jane Fraser, who took over in March.
In April, DBS said it would pay S$1.1 billion for a 13 per cent chunk in China’s Shenzhen Rural Commercial Bank Corp., and Gupta has indicated an interest to raise the size of that stake.
Including the amount spent on the Chinese bank, the Bernstein analysts assumed a total budget of S$4 billion for acquisitions this year, which would bring the bank’s common equity Tier 1 ratio down to 13.1 per cent, from 14.3 per cent as of March 30. While that would still be above the regulatory minimum requirements, it may impact the firm’s dividend payout for 2021, Kwek said.
“But to be fair, earnings momentum this year looks promising, and management rhetoric will likely be that it comes back later by way of earnings, and subsequently higher payouts,” Kwek said. “Investors should ask: what does DBS believe it can do better than Citi?”
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Financial Services continue to get bombarded with credential stuffing and web application attacks, BFSI News, ET BFSI
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Financial services industry is continues to get bombarded with credential stuffing and web application attacks, reveals a report by Akamai & WMC researchers
In its report Phishing for Finance it states that there has been a significant increase across the attack surfaces year over year from 2019 to 2020.
Two specific phishing kits are tracked: ‘Kr3pto’ and ‘Ex-Robotos’. Kr3pto has targeted customers of 11 UK banking brands, and Ex-Robotoshas aimed its scams at corporate employees.
In 2020, Akamai saw 193 billion credential stuffing attacks globally, with 3.4 billion hitting financial services organizations specifically — an increase of more than 45% year-over-year in the sector.
It also observed that there were nearly 6.3 billion web application attacks in 2020, with more than 736 million targeting financial services — which represents an increase of 62% from 2019. SQL Injection (SQLi) attacks remained in the top spot across all business types globally, making up 68% of all web application attacks in 2020, with Local File Inclusion (LFI) attacks coming in second at 22%.
However, in the financial services industry, LFI attacks were the number one web application attack type in 2020 at 52%, with SQLi at 33% and Cross-Site Scripting at 9%.
Over the past three years (2018-2020), DDoS attacks against the financial services sector grew by 93%, indicating that systemic disruption remains an objective for criminals, who target services and applications required for daily business.
“The ongoing, significant growth in credential stuffing attacks has a direct relationship to the state of phishing in the financial services industry,” said Steve Ragan, Akamai security researcher and author of the State of the Internet / Security report. “Criminals use a variety of methods to augment their credential collections, and phishing is one of the key tools in their arsenal. By targeting banking customers and employees in the sector, criminals increase their pool of potential victims exponentially.”
The Kr3pto phishing kit, which targets financial institutions and their customers via SMS, has been observed spoofing 11 brands in the UK, across more than 8,000 domains since May 2020. WMC Global tracked more than 4,000 campaigns linked to Kr3pto targeting victims via SMS messaging over 31 days in Q1 2021.
Ex-Robotos is a phishing kit that essentially sets a benchmark when it comes to corporate credential phishing. According to data from the Akamai Intelligent Edge Platform, there were more than 220,000 hits to the API IP address used for Ex-Robotos over a span for 43 days. In fact, traffic to that address reached a peak of tens of thousands of hits per day on average between January 31 and February 5, 2021.
“Kits like Kr3pto and Ex-Robotos are just two of the many kits targeting corporations and consumers today,” said Jake Sloane, Senior Threat Hunter at WMC Global. “It’s important to remember that employees are consumers too, and with the prevalence of work from home, as well as mobile device usage in corporate environments, criminals are not shy about attacking people no matter where they are, which explains the recent growth in SMS-based phishing attacks.”
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