Reserve Bank of India – Press Releases
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Ajit Prasad Press Release: 2021-2022/412 |
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Month: June 2021
ED, BFSI News, ET BFSI
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NEW DELHI: The debts recovery tribunal (DRT) has sold shares worth over Rs 5,800 crore of United Breweries Limited (UBL) that were earlier attached under the anti-money laundering law as part of an alleged bank fraud probe against fugitive liquor baron Vijay Mallya, the Enforcement Directorate said on Wednesday.
Further realisation of Rs 800 crore by sale of shares is expected by June 25, the central probe agency said in a statement.
Recently, it said, the agency had transferred shares attached by it (worth about Rs 6,600 crore) to the SBI-led consortium as per order of the special Prevention of Money Laundering Act (PMLA) Mumbai.
“Today, DRT on behalf of SBI-led consortium, has sold shares of United Breweries Limited for Rs 5,824.50 crore,” the ED said.
Mallya, 65, has lost the case against his extradition to India and he has “been denied permission to file appeal in the UK Supreme Court.”
“His extradition to India has become final,” the ED said.
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Financial services turn investor darlings as m-cap jumps Rs 157 lakh crore, BFSI News, ET BFSI
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Financial services are the clear winners in the stock market with Rs 157 lakh crore increase in their market cap during the past one year IT is another major sector whose market value has increased significantly, followed by oil and gas, consumer goods, automobiles, metals and pharma, according to an SBI Ecowrap report.
The report said that the share of savings in shares and debentures to total household financial savings at 3.4 per cent in FY20 is likely to increase in FY21 to 4.8-5.0 per cent or 0.7 per cent of GDP from 0.4 per cent of GDP in FY20.
Infrastructure play
The market capitalization of Sensex has increased by 1.8 times its value one year ago. However, sector-wise 1-year return in Indian stock markets indicates that IT and Materials have performed better and IT. This clearly indicates the movement in Indian stock markets is increasingly being clearly interlinked with a supposed infrastructure power play in the coming days, the report said.
The increasing retail participation, if it becomes the norm, could also enable a larger resource pool for financing India’s infrastructural requirements, the report said.
Retail investors
The number of individual investors in the market has increased by a whopping 142 lakh in FY21, with 122.5 lakh new accounts at CDSL and 19.7 lakh in NSDL. Furthermore, another 44.7 lakh retails investor accounts have been added during the two months of this fiscal. Also, the share of individual investors in total turnover on the stock exchanges has risen to 45% from 39% in March 2020.
Within retail, the maximum allocation has been to financials, followed by consumer staples, energy and IT.
Lower rates in other saving avenues amidst the low-interest rate regime has led to greater interest by individuals in the stock market. Another reason could be the significant increase in global liquidity. Additionally, the pandemic which has resulted in people spending more time in their homes might also be another reason for individuals’ tilt towards the stock market trading, the report said. However, it is yet to be seen if this increasing retail participation is transitory or the beginning of long term behavioural change.
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Reserve Bank of India – Press Releases
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Today, the Reserve Bank released the preliminary estimates of Household Financial Savings for Q3: 2020-21 and Household Debt-GDP Ratio at end-December 2020 on its website under the tab “Statistics” => “Data Releases” => “Quarterly”. Highlights:
(Yogesh Dayal) Press Release: 2021-2022/411 |
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Incentives India Inc. Is Offering To Covid 19 Vaccinated Individuals
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1. FD deposits earning higher interest rate by few banks:
Central Bank of India in a bid to encourage Covid 19 vaccination in April this year launched a scheme Immune India Deposit Scheme with a maturity of 1111 days. Here the incentive is 25 bps higher return or interest rate than applicable otherwise.
Likewise another state-run lender has run a unique FD scheme that is paying 30 bps higher return on FDs of 999 days. This is for those who have taken at least one dose of Covid 19 vaccination.
2. Godrej Appliances offer extended warranty:
On the Facebook page of the company, the company in a post has stated that we are committed to support Covid 19 vaccination drive. Further the post read “We applaud consumers who have taken at least 1 dose of the COVID-19 vaccine and offer them a 6-month free extended warranty on the purchase of any of our appliances.”.
3. Indigo airlines offers discount for vaccinated passengers:
Statement from the low-frill air-carrier said that starting Wednesday the airline will offer 10% discount to all those passengers who have taken at least one dose of vaccination against the lethal Covid 19 virus. Further as per the terms of the offer, the discount shall be offered on the base offer and it is part of the ‘limited inventory’ offer.
Also, even after passengers have availed the offer, they will be required to produce the vaccination certificate at the boarding gate as also the airport check-in counter.
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10 Rules To Follow To Reactivate Your Inactive PPF Account
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Planning
oi-Vipul Das
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When it comes to debt instruments or debt investments, Public Provident Fund (PPF) is the most preferred option to bet for long-term investors. It is among the most prominent small savings scheme of post office, with one of the highest interest rates in its sector as well as a longer maturity period of 15 years. The present interest rate on a PPF savings account is 7.1 per cent, which is compounded on an annual basis, and it is set by the government on a quarterly basis.
A PPF account allows an individual to deposit up to Rs 1.5 lakh per year and an initial deposit of Rs 500. PPFs are classified as EEE (Exempt, exempt, exempt), which implies that the deposit amount interest earned, and maturity amount are all tax-free, which makes it more appealing to debt-oriented investors. Apart from all the discussed perks, a PPF account can be inactive if you do not follow certain rules. So let’s start discussing in brief that why a PPF account becomes inactive and how to reactivate it.
1. If you don’t deposit the mandatory amount of Rs 500 every financial year, your PPF account will be classified as “inactive.”
2. To keep a PPF account active, it is recommended that you deposit Rs 500 by March 31 of each financial year cycle.
3. Withdrawal and loan facilities will be unavailable to depositors with inactive or dormant accounts.
4. In the event that a PPF account is inactive, the overall deposit for the year must include deposits made in prior financial years’ default years.
5. PPF accounts that have been inactive cannot be extended. However, after reactivating a PPF account, a depositor can continue to make deposits and make one withdrawal every fiscal year, up to a maximum of 60% of the amount at the time of maturity in a 5-year block.
6. A discontinued account can be reopened during its maturity period with a penalty of fifty rupees plus arrears of five hundred rupees in minimum contribution for each year of delinquency.
7. The outstanding or remaining balance in a discontinued account that is not revived by the depositor before the account’s maturity date continues to earn interest at the scheme’s prevailing rate.
8. A discontinued account holder will not be allowed to open a new account until the discontinued account has been closed upon maturity.
9. To activate an inactive PPF account, the responsible account holder will have to submit a written application to the concerned bank or post office.
10. The application for reactivating a PPF account must be submitted at any time throughout the account’s or scheme’s 15-year tenure.
Story first published: Wednesday, June 23, 2021, 12:43 [IST]
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Govt kicks of IDBI Bank stake sale, but doesn’t disclose quantum, BFSI News, ET BFSI
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The government has invited bids from transaction advisors and legal firms for assisting in the strategic sale of IDBI Bank.
The Cabinet had in May given in-principle approval for IDBI Bank’s strategic disinvestment along with transfer of management control.
The central government and LIC together own more than 94 per cent equity of IDBI Bank. LIC, currently having management control, has 49.24 per cent stake, while the government holds 45.48 per cent. Non-promoter shareholding stands at 5.29 per cent.
The last date for submission of bids by both transaction advisor and legal advisors is July 13, the Department of Investment and Public Asset Management (DIPAM) said.
Transaction advisor
The transaction advisor would be required to advise and assist the government on modalities of disinvestment and the timing; recommend the need for other intermediaries required for the process of sale/disinvestment and also help in identification and selection of the same with proper Terms of Reference.
The transaction advisor will also assist in the preparation of all documents like Preliminary Information Memorandum (PIM), organise roadshows to generate interest among the prospective buyers and suggest measures to fetch the optimum value.
The advisor would also be supporting IDBI Bank in setting up an e-data room and assisting in the smooth conduct of the due diligence process.
The extent of shareholding to be divested by the central government and LIC shall be decided at the time of structuring of transaction in consultation with the RBI, the government had earlier said.
Insurance giant LIC had acquired a controlling stake in IDBI Bank in January 2019.
Finance Minister Nirmala Sitharaman in her Budget for 2021-22 had said the process of privatisation of IDBI Bank would be completed in the current fiscal.
The government aims to mop up Rs 1.75 lakh crore in the current fiscal from minority stake sale and privatisation.
Of the Rs 1.75 lakh crore, Rs 1 lakh crore is to come from selling government stake in public sector banks and financial institutions, and Rs 75,000 crore through CPSE disinvestment receipts.
Under PCA
Under the PCA imposed by RBI in 2017, the bank’s balance-sheet shrank as it could not extend loans to corporates and was not allowed to open branches.
It used the four years of PCA to restructure its business, cut exposure to large loans and bulk deposits and create verticals for various lending businesses to speed up turnaround time.
The bank has worked for the last four years on various parameters, done recoveries and raised its provision coverage ratio to 97%.
The lender was looking at Rs 4,000 crore of recoveries in this fiscal.
Retail loans
The share of corporate loans, which was about 67% four years back when it went under PCR, has shrunk to 40% now with 60% loans being retail. The bank is now targeting 55% loan book as retail and rest corporate. It wants to maintain low costs retail deposits at 48% of total deposits.
As a result, the institution has transformed from a project financier to a retail lender.
The company is looking to target the mid-corporate segment and will now avoid overexposure to certain industries and grow the business in a calibrated manner.
It sees over 12% growth in retail loans and an 8-10% rise in corporate loans.
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CoC of DHFL vote against redistribution proposal
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The Committee of Creditors (CoC) of Dewan Housing Finance Corporation Ltd (DHFL) are understood to have voted against the proposal for redistribution of funds to small deposit holders.
Sources said a majority of financial creditors including fixed deposit holders have voted against the proposal.
This will mean that the current distribution pattern for DHFL will continue. The Committee of Creditors is expected to move the National Company Law Tribunal on June 24 to apprise it of the voting results.
NCLT recommendation
Based on the NCLT recommendation, the CoC had proposed higher distribution of funds to small investors including fixed deposit and NCD holders and pension funds.
According to the proposal, the entire admitted claim of ₹39 crore of Army Group Insurance Fund, ₹72.93 crore of Air Force Group Insurance Society and Navy Children School of ₹2.54 crore would be paid fully in cash.
Also read: DHFL lenders begin voting on proposals to redistribute funds
Further, it was proposed that all fixed deposit holders will be paid additional amounts in cash in order to ensure that the entire amount paid to them is about 40 per cent of the admitted claims, similar to the recovery to secured financial creditors.
Unsecured NCD holders with investments up to ₹10 lakh were proposed to be repaid 40 per cent of the admitted claims like in the case of fixed deposit holders.
The total outgo for lenders of DHFL on these proposals would have been ₹1,853.21 crore.
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Soon, PSBs may appoint specialists to manage NPAs, professionalise boards, BFSI News, ET BFSI
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After the mega mergers, it’s time for an overhaul at public sector banks.
The government is looking to measures to strengthen corporate governance and human resource practices in nationalised
banks. It plans a diversified board structure, strengthening of board-level committees and a robust performance management system for employees.
The government wants to further professionalise the boards of PSBs and bring experts in risk management, information technology and human resource management.
The key proposals include longer tenure for executive directors, hiring of specialists in areas such as NPA management and fast track promotion for high performers.
Leadership plan
These discussions may be further taken up with the Banks Board Bureau to formulate a long-term strategy.
One of the key mandates of BBB is to help banks to develop a robust leadership succession plan for critical positions and advise the government on evolving suitable training and development programmes for management personnel.
BBB will also maintain a database on performance of the officers of PSBs. This will have information regarding postings, placements, promotions and vigilance of senior officers.
Ease 4.0
Banks through Ease 4.0 may also take up these issues at their board level. Launched in January 2018, Enhanced Access and Service Excellence (Ease) is the common reform agenda for all public sector banks aimed at institutionalising clean and smart banking.
State-run banks will focus on co-lending with non-banking firms, digital agriculture financing, synergies and technological resilience for 24×7 banking as part of their reforms agenda for this fiscal.
This year PSBs will focus to introduce and promote new analytics-based offers to existing retail customers like pre-approved car loans, EMI offers on e-commerce purchases and also for existing MSME customers.
Such offers will be based on bank transactions, income tax and GST returns, transactions on e-commerce portals, and other operational data.
As per the reform agenda, banks will leverage partnerships with third parties, including agritech firms and strive to automate processing and sanction of agricultural loans based on field visits, borrower interaction, and risk assessment in states with digitised land records.
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Stocks To Buy For Returns Of Upto 51%
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IndusInd Bank
Emkay Global sees a 36% upside in the stock of IndusInd Bank and has recommended buying the stock with a target of Rs 1,375 in one-years time. The stock of IndusInd Bank as last seen trading at Rs 1014 on the NSE.
“IndusInd Bank scripted a major turnaround 1.0 since 2009/10, but faltered lately with higher corporate NPAs/deposit scare. The bank has largely rectified its past mistakes, built prudent capital/provisioning buffers and is preparing to build sustainable & digitally agile retail bank, delivering yesteryear’s superior RoA trajectory of 1.7-1.9% over FY23/24E.
Amid the ongoing pandemic, the bank intends to shore up contingent buffer (1% of loans) including counter-cyclical buffers given cyclical retail book to bring stability to earnings in long run. We believe that retailization of assets (55% vs. 52%)/liabilities (50% vs. 37%) should structurally improve NIMs/core-PPoP, while moderating LLP should drive-up RoAs,” the brokerage firm has said.
Indusind Bank: Reasonable on valuations
According to Emkay Global, IndusInd Bank assured that risk/governance standards have been strengthened while promoter interference has been virtually NIL, and its recent capital subscription at a premium should provide investor comfort.
“IndusInd Bank is waiting for holding company norms to enter into broking/AMC/non-life insurance business, and is open to strategic stake in fintech to strengthen digital offering. We believe a resurgent IndusInd with higher retail orientation/risk guards in place should be deliver sustainably higher return ratios, providing a good turnaround story to play on. Retain Buy with a target price of Rs 1,375 (vs. 1,175), now based on 2x Jun’23E ABV (1.7x earlier),” Emkay Global has said.
NTPC
Emkay Global sees a 51% upside on the stock of power generation company NTPC. The stock of NTPC was currently trading at Rs 118 and the broking firm has set a target of Rs 179 on the shares.
“NTPC is set to add 14GW of thermal and 14GW of RE capacity over the next 3-4 years. NTPC has raised its RE target to 60GW by 2032 from 30GW, and we believe given the huge opportunity in the country and low cost of funding for NTPC, the company is set to achieve it,” the broking firm has said.
According to it, low penetration of durables, various PLI schemes, focus on localization in defense and rising per capita income will all boost demand growth in the medium term.
NTPC: Upside potential of 51%
“We assume coverage on NTPC with a Buy rating and a target price of Rs 179, based on SoTP. We estimate RoE in FY21-FY24 to be 12.5% – 200bps higher than the last 5-year average. We believe that improving RoE profile is one of the most important factors for re-rating in Utilities. We also note that EPS CAGR in FY21-FY24E stands at 8%,” the broking firm has said.
The stock of NTPC was trading at Rs 118 on the NSE.
Disclaimer
The stocks mentioned above are based on the report of Emkay Global Financials. Investing in stocks are risky and investors should do their own research. The author, the brokerage firms or Greynium Information Technologies are not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as markets have run-up significantly. Please consult a professional advisor.
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