Month: July 2021

Airtel Payments Bank hopeful of break-even in FY22; logs surge in biz volumes amid pandemic, BFSI News, ET BFSI

Banking & Finance

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New Delhi: Airtel Payments Bank has seen a surge in business volumes in FY21 as lockdown curbs and migrants heading back to villages spurred new accounts as well as transactions, and the company is eyeing a break-even this fiscal, a top official said. Factors like growth in revenues, expanded scale of operations, and higher realisation per user from cross selling of products are expected to drive break-even in the current financial year.

The pandemic and subsequent lockdown curbs fuelled uptake as customers, both in rural interiors and urban cities, sought banking solutions closer home, opting for convenient and secure digital payment options. The bank witnessed a strong traction for its diversified product offerings such digital payments, money transfers, insurance, direct benefit transfer credits, Aadhaar-enabled payment system and collection management services.

A senior company official, who did not wish to be named, said Airtel Payments Bank is “confident” of a break-even this year, having reached the “right level of scale” with its large base of users.

A mail sent to the company did not elicit a response.

Meanwhile, the official said the company has build an adequate infrastructure, backed by investments in technology, to serve consumers and hence fixed costs and incremental investments are expected to remain in check.

The current user base of 5.5 crore reflects a large distributed cost base across customers for the company, the official said noting that the losses too have nearly halved in Q4 of FY21, compared to the year ago period.

Losses for full year FY21 were at about Rs 420 crore, while the fourth quarter losses stood at nearly Rs 70 crore. The company logged over 32 per cent growth in revenue at almost Rs 627 crore for FY21 from Rs 474 crore in previous fiscal.

COVID induced movement restrictions and curfews in different parts of the country had made it difficult for those living in villages as also migrants returning to their hometowns, to access conventional bank branches located some distance away to withdraw money.

Airtel Payments Bank – which has one of largest retail networks with over 500,000 neighbourhood banking points – saw marked increase in new accounts opening during the FY21, as transactions too rose, the company official said. At present, one in six villages in the country is being served by Airtel Payments Bank.

The company expects the digital payment momentum to continue, even accelerate in coming times, the official said.

Earlier this year, Airtel Payments Bank announced its customers will get an increased interest rate of six per cent per annum on savings account deposit of over Rs 1 lakh. The move, announced in May this year, followed Airtel Payments Bank becoming the first payments bank to implement an enhanced day-end savings limit of Rs 2 lakh, as per the Reserve Bank of India (RBI) guidelines. The interest rate is at 2.5 per cent per annum for a deposit up to Rs 1 lakh.



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3 Stocks To Buy According To Broking Firm Sharekhan

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Laurus Labs Ltd

Sharekhan has said to buy the stock of Laurus Labs with a price target of Rs 750, as against the current market price of Rs 677.85.

Laurus Labs works with the top 10 generic pharmaceutical companies in the world. The company sells Active Pharmaceutical Ingredients in 56 countries and its major focus areas include anti-retroviral, Hepatitis C and Oncology drugs.

Among the numerous reasons why the firm likes the stock of Laurus Labs includes robust growth prospects, sturdy capex, likely market share gains would support the management’s target of achieving a topline of $1 billion in the next two years.

“The company’s key focus areas for sustainable growth include – leveraging cost advantages in API business to integrate into fixed dosages, develop synthesis business, capitalise on leadership in select high-growth Active Pharmaceutical Ingredients, expansion of Active Pharmaceutical Ingredients portfolio to other therapeutic areas and lastly, ESG integration,” the broking firm has said.

Laurus Labs: Valuations Are Inexpensive

Laurus Labs: Valuations Are Inexpensive

“Laurus has targeted $1 billion in revenues by FY2023E. At the current market price, the stock trades at 29x/22.7x its FY22E/FY23E Earnings Per Share. Over the past six months, the stock price has outperformed the BSE Sensex and Healthcare index by 79% and 71% respectively and given the strong growth prospects, visibility on earnings, healthy return ratios and low debt-equity, outperformance is likely to sustain. We retain our Buy recommendation on the stock of Laurus Labs with a revised price target of Rs. 750,” the brokerage has said.

According to Sharekhan the key risks for the company would be a delay in product approvals or any negative outcome of facility inspections by the USFDA can affect earnings prospects.

The shares of Laurus Labs were last seen trading at Rs 665 on the NSE.

UPL

UPL

Sharekhan also has a buy on the stock of UPL with a price target of Rs 930 on the stock as against the current market price of Rs 799. UPL is a producer of crop protection products, intermediates, specialty chemicals and other industrial chemicals.

Among the main reasons Sharekhan is suggesting to buy the stock, include an aim to double revenue from biosolutions to $700 million by FY24-25. The firm also sees the strong R&D pipeline (peak revenue potential of $4-4.5bn) and tie-ups with FMC and Meiji for launch of a new formulations as big positives.

“It makes us confident that UPL can achieve the higher end of long-term revenue growth guidance of 7-10%. Q1FY22 outlook – Strong mid double-digit growth for India, Latin America and Rest of World while the US and Europe may witness flat-to-moderate growth, with price hikes on cards across regions. Focus on deleveraging balance sheet to continue with a plan to further reduce debt by $500 million Financial Year 2022,” the brokerage has said.

UPL: Good potential for the stock to rally

UPL: Good potential for the stock to rally

According to Sharekhan, UPL’s recent collaboration with MNCs for new products and target to achieve 50% of revenue from differentiated & sustainable solutions) would improve margin/ earnings profile and drive sustainable growth.

“Valuations are attractive at 12.6x FY2023E its EPS and 10.8x FY2024E EPS. Hence, we maintain a Buy rating on UPL with a revised target price of Rs. 930,” the broking firm has said.

Among the key risks that the firm sees for the company are a slowdown in the global agrochemical industry and delay in the flow of benefits from Arysta’s integration might impact performance.

“Currency fluctuations might impact the company, as UPL has a significant presence in various geographies,” it has said.

The shares of UPL were last seen trading at Rs 799 on the NSE.

Buy Sumitomo Chemical, says Sharekhan

Buy Sumitomo Chemical, says Sharekhan

Sumitomo Chemical India is another stock that Sharekhan has suggested investors to buy. The firm has set a price target of Rs 450 on the stock as against the current market price of Rs 395.

Among the many reasons the firm sees to buy the stock, includes a focus on high margin PGRs/herbicides, rising share of specialty chemicals and further synergies from Excel Crop Care, which is to drive 346 basis points expansion in margins and take EBITDA margins to 22% in FY24.

Sumitomo Chemical India: A decent price target

Sumitomo Chemical India: A decent price target

Sharekhan has said that it maintains its Buy rating on the stock of Sumitomo Chemical India with a revised target of Rs 448 as massive contract manufacturing opportunity from parent provides superior growth prospects and expect SCIL to enjoy premium valuation over domestic peers.

Disclaimer

Disclaimer

All of the above stocks are picked from the report of brokerage firm Sharekhan. Investing in stocks are risky and investors should do their own research. The author, the brokerage firm or Greynium Information Technologies Pvt Ltd is 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.



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Gold loans — a win-win for banks, customers

Banking & Finance

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Loans against gold jewellery seem to have become a veritable gold mine for banks, going by the rapid growth in their portfolio in FY21.

This is underscored by the fact that the portfolio of banks swelled 81.6 per cent year-on-year (y-o-y) to ₹60,464 crore as on March 26, 2021, against ₹33,303 crore as on March 27, 2020, as per Reserve Bank of India (RBI) data.

One can liken the growth in banks’ loans against gold jewellery portfolio to gold rush.

The portfolio clocked 33.9 per cent y-o-y growth as on March 27, 2020, over the March 29, 2019, outstanding figure of ₹24,866 crore.

These numbers are based on the Reserve Bank of India’s data on bank credit collected from select 33 scheduled commercial banks (SCBs), which account for about 90 per cent of the total non-food credit deployed by all SCBs.

A Covid-positive

The demand for gold loans surged after the outbreak of the pandemic in March 2020 as the economy reeled under its impact, leading to job losses, salary cuts, and mounting emergency health expenses.

Small businesses used these loans, post the six-month Covid-related moratorium period, to either ensure continued operations or re-start operations that had to be shut down temporarily due to lockdowns.

These loans have helped individuals and small businesses keep their head above water during these stressful times.

Moreover, the RBI, too, played its part by liberalising rules, which saw banks double down on the gold loan portfolio.

To mitigate the economic impact of the pandemic on households, entrepreneurs and small businesses, the central bank, in August 2020, increased the Loan To Value (LTV: loan amount to asset value ratio) for loans against the pledge of gold ornaments and jewellery for non-agricultural purposes from 75 per cent to 90 per cent till March 31, 2021.

Elevated gold price

With a higher LTV and elevated gold price, borrowers could get more loan per gram of gold pledged.

Competitive interest rate was the icing on the cake, with public sector banks such as Bank of Maharashtra and State Bank of India charging 7.35 per cent and 7.50 per cent, respectively.

The aforementioned factors aided banks in making deeper inroads into a business segment, traditionally dominated by gold loan companies such as Muthoot Finance and Manappuram Finance.

For example, in FY21, State Bank of India’s portfolio of general purpose personal loan against pledge of gold ornaments soared 465 per cent year-to-date (y-t-d) to ₹20,987 crore as on March 31, 2021, from ₹3,715 crore in the beginning of the financial year.

Bank of Maharashtra’s retail gold loan portfolio grew about 11 times in FY21 to about ₹1,370 crore.

Bank of Baroda’s retail gold loan portfolio more than doubled from ₹436 crore as on March 31, 2020, to ₹1,101 crore as on March 31, 2021.

The overall gold loan advances of Federal Bank and CSB Bank shot up 70 per cent y-o-y (to ₹15,816 crore) and 61 per cent y-o-y (₹6,131 crore), respectively, in FY21. However, details of growth in retail gold loans were not readily available.

Immediate liquidity

AS Rajeev, MD and CEO, Bank of Maharashtra (BoM), observed that the full potential of gold loans was not explored by his bank in the past. So, the Bank revamped the gold loan scheme to make it more convenient, competitive and customer-friendly.

“Considering the testing times, when many of the individuals and small businesses were cash starved, gold loan was instrumental in providing immediate liquidity.

“Our (overall) gold loan portfolio rose (about 7 times in FY21) to ₹1,939 crore by March-end 2021, and it stands at more than ₹2,100 crore as on date,” he said. Rajeev added BoM’s portfolio is expected to grow to ₹5,000 crore by the end of this fiscal.

C VR Rajendran, MD and CEO, CSB Bank, in a recent earnings call, emphasised that a major chunk of his bank’s incremental advances in FY21 came from gold loans. About 76 per cent of the advance growth was contributed by growth in gold loans.

“Last time our gold loan growth was so good because NBFCs were not at all active in the field. Once the customer comes out of NBFC and comes to a bank, he will not go back to the NBFC because the value proposition in a bank is better, the rates are very good.

“So, whatever we gained during that period, we will retain. Probably this pandemic will also help us acquire more new clients from the higher interest segment which should be good for us. It is a good value proposition for the borrower; it’s a win-win situation,” said Rajendran.

Zero capital requirement

Given that gold loan is fully secured, has less default risk and zero capital charge, it is an attractive product for lenders.

Banking expert V Viswanathan noted that as gold is an eligible cash collateral, there is zero capital requirement for loans against gold ornaments and jewellery. Further, as these loans are fully secured, they can be recovered (without court intervention) through auction.

He suggested that banks should consider introducing a ‘simple cash flow statement’ for one year to determine the repayment period and affordable Equated Monthly Instalments (EMIs). If inflows are low, they should sanction gold loan with interest repayment only and renew principal annually.

Viswanathan said borrowers can overcome liquidity mismatches via gold loans at low interest rates. There is no need to follow-up for getting loans. Further, there is no pressure to find money to pay as gold covers the loan.

In FY22 so far, growth in loans against gold jewellery relatively slowed down to 33.8 per cent y-o-y as on May 21, 2021, against 86.3 per cent y-o-y as on May 22, 2020.

Given the spectacular growth in the loans against gold jewellery portfolio in FY21, it remains to be seen if bankers continue to have the Midas touch with the portfolio in FY22, too.

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A call to preserve the ‘value’ of MSMEs at any cost

Banking & Finance

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Swaminathan Gurumurthy, member of the Board of the Reserve Bank of India, is an original thinker who follows the ‘Third Way’ propounded by the likes of Deendayal Upadhyaya and the labour movement leader Dattopant Thengdi when it comes to questions of finance and economics.

Recently, he wrote about how lenders should prevent illiquidity from leading to insolvency for enterprises, particularly in the MSME sector.

From a banker’s perspective, there is no better way to encapsulate what lenders should do under the current conditions for borrowers.

The primary focus

Even though fresh investments and new units ought to be supported, the primary focus now should be on protecting the units already working because the negative demonstration effect of MSMEs collapsing will be disastrous.

Gurmurthy’s construct assumes relevance here. If bankers can internalise this spirit and implement the government’s and RBI’s schemes for MSMEs – tailoring /customising them appropriately – MSMEs can weather the Covid impact.

As one of the world’s few full-service regulators, RBI Governor Shaktikanta has been admirably proactive right from January 2019 in supporting all MSME units facing financial stress through a restructuring scheme (without it resulting in downgradation of the asset as is the norm).

After board-level discussions on November 18, 2018, the first of these instructions were issue on January 1, 2019, valid up to March, 2020.

Restructuring

The special provision encouraging banks to offer restructuring to all eligible unitswas extended soon after the Covid-induced lockdown in April 2020, and now in the wake of the second wave impact, again up to September 30, under the Covid2.0 resolution framework.

Coupled with the Modi government’s Emergency Credit Line Guarantee Scheme, increased from ₹3- lakh crore to ₹4.5-lakh crore last week, the attempt is to ensure that money is available to all eligible units.

The RBI has also been supporting the liquidity requirements of banks by giving three-year money under its Long Term Repo Operations. Consequently, the average daily liquidity in the system is of ₹4 lakh crore.

Enough cheap money to go around, the government stepping in to guarantee loans, the regulator permitting a liberal restructuring of debt – banks cannot ask for more to support MSMEs and negotiate their cash flow problems.

What needs to be done?

So what are the practical steps to be taken up by banks? The following could be a 12-point template for this process. 1) Considering that the only condition stipulated by RBI is that the maximum moratorium as part of the restructuring should not exceed 2 years, a liberal restructuring scheme should be implemented forthwith.

2) The primary skill needed will be the ability to take a call on the intrinsic viability of the business and whether with support, the business will survive.

3) While all efforts are worth taking to keep the business afloat, in the very rare cases where the borrower is seen as unable to carry on activities even with additional support, it is better to take a decision early not to support. One of the fundamental principles of credit is that a ‘no’ today is often better than a ‘yes’ five/six months later.

4) The RBI has advised that the process of restructuring should be implemented and completed within 90 days of application by the borrower.

5) The usual tool kit of restructuring like conversion of erosion of working capital loan into a Working Capital Term Loan, conversion of unpaid interest into a Funded Interest Term Loan, rephasement of unpaid Term Loan instalment, additional need-based working capital loans, a term loan for meeting further cash losses for one year, and reduction in interest rates, along with moratorium on all repayments, should be extended to all requiring this assistance.

4) There may be need to conduct crash courses for loan officers as the average ticket size of the loans requiring recasting will be low and there will be knowledge/skill gaps at those levels. Terms like WCTL/FITL/Dimunition in Fair Value (a key factor in restructuring) and the Right of Recompense may be alien to many officials.

5) There is need to advertise and publicise this restructuring facility. Many borrowers and, sometimes branch officials, may not be aware of the scheme, its import and intent.

6) There will be requirement for hand holding by Chartered Accountants in preparing reasonable projections so that these units do not end up in another cul de sac again. Most often, banks do not receive the detailed workings required to put up restructuring proposals.

7) Often, it is found that date-keeping of the process is not proper. Borrowers need to be aware of their rights too as per RBI directions.

8) The RBI has instructed that “a register/ electronic record should be maintained by the bank wherein the date of receipt, sanction/rejection/disbursement with reasons thereof, etc. should be recorded. Banks should provide acknowledgement for loan applications received under priority sector loans”. This will apply to all restructuring requests, too.

9) It may be a good idea to build in the provision for sanction of a ‘Standby Cashflow Mismatch Credit Facility’ (with suitable margin stipulations) as part of all fresh loans both for working capital and term loans initially itself – akin to a proxy Debt Service Reserve – as most often, after a loan account has started exhibiting signs of stress, no officer wants to recommend/sanction additional finance for fear of being pulled up in accountability studies later on.

10) Declining of any credit facility, whether fresh or for rephasement, should be only with the approval of the next higher authority in banks.

These 12 points could form the basis for a genuine and whole-hearted approach to support MSMEs.

MSMEs represent entrepreneurship at its best and are our Swadeshi Start-ups. Indeed, the Union government has done well in now including retail and wholesale trade as part of MSMEs for priority sector lending. An executive order of the government of India in 2017 had excluded trade from MSMEs.

Clearly, a liquidity problem is bugging most MSME units now. We owe it to our next generation to tune our collective approach to value-preservation and not value-negation of these entrepreneurs. It is worth remembering that today’s MRF started as a toy-balloon manufacturing unit in 1946. That is the promise and the prospect MSMEs hold.

 

 

(The author is a Chief General Manager with a leading Public Sector Bank)

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LIC’s auditor appointment made a board process, ahead of IPO

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The Centre has taken one more step towards making Life Insurance Corporation (LIC) ‘IPO ready’ by turning the statutory auditor appointment into a board driven process, in line with SEBI’s listing requirements. Hitherto, the statutory auditor for central office and zones required the Centre’s approval.

The Finance Ministry’s Department of Financial Services has amended the LIC Rules, 1956 for a new framework on the selection of auditors.

No longer will the government appoint the auditor, but it will be the shareholders at the Annual General Meeting, according to LIC observers.

Under the new process, LIC’s Audit Committee will recommend to the board for adoption a policy for selection of auditors. On the Board adopting this policy, the Audit Committee will draw up a panel of auditors and recommend to the board an individual or a firm for appointment. The board will then place the matter before shareholders for their approval at the AGM.

 

SN Ananthasubramanian, former ICSI President and practising company secretary, said: “The amendments to the LIC Rules which introduce various aspects of board-monitored governance, are essentially to make LIC IPO ready.”

Ashok Haldia, former CA Institute Secretary, said that the overhaul in auditor appointment provisions, “together with other amendments to the LIC Act/Rules is a step that could enhance corporate governance and transparency, giving more comfort to investors looking to come on board LIC,”

The Centre has brought made 27 amendments to the LIC Act through this year’s Finance Act. It is expected to issue later this month a request for proposals/expression of interest for appointment of merchant banks for the mega LIC IPO, which is set to mop-up at least ₹1-lakh crore for the government. While retaining its ‘corporation’ status, the government is moving to align the LIC Act’s corporate governance provisions with SEBI’s listing requirements. Recently, the government tweaked Securities Contracts Rules to enable public float of large issuers (like LIC), eyeing post listing market capitalisation of over ₹1-lakh crore.

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With rise in hospital bills, demand for high-value cover goes up

Banking & Finance

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Worries over high medical costs for Covid-19 treatment are pushing a number of people to look at high-value health insurance covers of as much as ₹1 crore.

Insurers say that while the overall average sum insured for health insurance has increased to at least ₹5 lakh, many are even taking up policies of ₹1 crore.

“Of late, there is demand for ₹1 crore sum-insured health insurance covers. Earlier, there was not so much of demand. With the kind of expenditure incurred in Covid-19 treatment, many people are looking at such policies. Also, there isn’t a huge increase in premium if a person moves from a ₹20 lakh policy to ₹1 crore cover,” said Rakesh Goyal, Director at Probus Insurance. There are also additional features in such high net policies with global insurance cover. This is not a mass market product, he further said.

Also read: Insurers settle Covid claims worth over ₹15,000 cr

Vivek Gambhir, Senior Vice-President and Product Head – Accident and Health at Tata AIG General Insurance also said there is a move towards higher sum-insured with the average size being between ₹5 lakh and ₹10 lakh.

“Some companies are also offering ₹1 crore policies,” he said.

Higher medical inflation

Gambhir, however, attributed this high sum insured to not only Covid -19 but also to increased medical inflation over the last four to five years. “Covid has had an impact but in the last four to five years, the average room rent has increased significantly. So, average claim size also increases,” Gambhir added.

While many first-time customers are purchasing health covers of ₹1 crore, others with existing policies are also going for a top-up cover.

“In severe Covid cases, often long duration on a ventilator or even ECMO is needed. A high value policy can take care of such expenditure,” noted an executive with another insurance company, pointing out that many insurers were offering such covers even in the past.

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Investments into Neobanking space dip

Banking & Finance

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While the Neobanking space in India has been abuzz in 2020 with many pureplay lending and wealth management start-ups diversifying their offerings to enter the segment, funding activity plunged 70.57 per cent as compared to a sudden jump in 2019.

Total funding raised in 2020 across the neobanking sector stood at $32.2 million over 7 deals against $109.4 million raised through 13 deals in 2019, according to data from Tracxn. Investment in the sector picked up in 2018, wherein $31.9 million was raised across nine deals as compared to just $9.6 million across four deals.

In 2021, year-to-date, there has been seven deals so far raising $22.2 million.

 

Sujith Narayanan, co-founder and CEO, of neobanking start-up, Fi told BusinessLine said a number of neobanks, including Fi, launched in 2019 so a lot of the early funding flowed into the space that year. “It takes time to build a full-service neobanking platform. Unlike creating a UPI payment app which would take two-three months, here you are working with banking partners and have to build the whole gamut of services including KYC, onboarding, statements, debit cards – you are creating the entire infrastructure stack and that takes time. The gestation period is much longer, around 18 months, for neobanking start-ups as it has never been done before in India,” Narayanan explained.

Rightly so, around 16 new neobanks or digital banks were launched in 2019, 10 in 2020 and at least two in 2021.

Fi launched its first product a savings suggesting bot in May 2021. The platform has a few lakh users on its waitlist and has been signing up 1,000 customers per day. In the next 24 months, it plans to have two million customers.

“When it comes to millennials, inertia is a big issue in investing and saving. We have created an automated bot which makes it easy to save. For instance, every time you order from Swiggy or shop from Amazon, the bot will ask you to keep ₹50-100 aside as savings,” he said.

The Big Fish

Most of the Neobanks are targeting working professionals in the age group of 21-35 years. Top investors in India in the space include Matrix Partners India, Sequoia Capital, Better Capital, Rainmatter Technology and AngelList.

In terms of total funding raised till date, Niyo leads the pack having raised $49.35 million so far. This is followed by Avail Finance which raised $37.75 million, and Open at $36.24 million. However, all the three players have reported ballooning losses in the financial year (FY) ended 2020. Niyo’s losses stood at $12.4 million in FY20 up from $4.6 million in FY19. For the same period, revenue stood at $4.2 million in FY20 against $3.1 million in FY19.

For Open, losses increased to $6 million in FY20 from $984,400 in FY19. The startup clocked in revenue of $1.2 million up from $73,900 in FY19.

“We are still in the investment phase. During this period (FY19-20), we have launched multiple products, invested in technology and teams. We also acquired two other companies,” Virender Bisht, Co-founder & CTO, Niyo told BusinessLine. Founded in 2015, Niyo has till date serviced over two million customers and has around half a million active users.

Why Neobanks?

Unlike traditional banks, Neobanks have been focussing on a particular segments.

“Banks have been offering products and services with one size fits all. Online banking is used by someone who is 19 as well as a 70 year old. In contrast, Neobanks have a razorsharp focus on the segment they are focusing into,” said Narayanan.

“Neobanks are working with existing banks and trying to create a customer value layer. Companies like Niyo, Jupiter and Epifi (Fi) have partnered with incumbent banks offering more solutions to customers. Others like Open and RazorpayX are servicing SMEs and MSMEs. A few others are creating customer offering over a prepaid product,” Bisht explained.

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Should You Invest In Bitcoin That Has Moved Sharply Lower From Its All Time High Price Of Sub US$65K?

Personal Finance

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Bitcoin price volatility or ups and downs so far:

After having come into existence in 2009, bitcoin has been witness to major ups and downs.

Started trading in 2010– At a fraction of a cent

In 2011: $1 in price for the first time

In 2017: Price scaled to $5000 for the first time

On December 17,2017: Bitcoin prices hit an all time high of $19,783.06

December 6, 2020: Prices hit $20000 for the first time for a BTC

February 9, 2021: BTC scaled in price to $48,000 after Tesla purchased bitcoin worth $1.5 billion

March 13, 2021: New high of $61,701

April 13, 2021: Prices hit an all time high of $63,375 and then again a new high of $64863

April 18, 2021: biggest one day drop of 25% to $55000

May 23, 2021: Slides down in value to $31000 on environmental and other concerns such as China cryptocurrency clamdown.

July 4, 2021: Now as we write BTC quotes at a price of $34,455, which is a meaningful gain of 17.5% from January 1 price of $29411.

Considering the sharp volatility should you invest in Bitcoin?

Considering the sharp volatility should you invest in Bitcoin?

In nearly 10 years time, Bitcoin has sharply gained in value from $1 to in 2011 to close $34500 US dollar in July 2021. While the future of any asset for that matter is hard to predict, it is even harder for cryptocurrencies and some of the experts say that their longevity cannot be doubted as store of value and media of exchange. It is even being preached that in next 50 years time dollar or for that matter currency shall be more similar to crytocurrencies than gold or silver, so with the faster adoption and divergence towards digital modes, so investments in cryptos shall only accelerate.

Also, another use case of Bitcoin that shall enable it to strengthen in value over the time is its ability to facilitate payment across geographies with no cost, delay or even currency fluctuation. So it may likely be the case that down the years bitcoin can even become the reserve currency of the world.

Another concern that can be put in here is that bitcoin lost a great deal in value after coming into limelight due to the extent it uses energy and now as stakeholders have been looking at ways of minting them in a environmental friendly way, they will be relatively safer on this front going ahead.

Thus considering the above views, while there could be some corrections or crashes due to some imminent developments, the future of bitcoin looks strong.

What can be the safe ways to invest in Bitcoin?

What can be the safe ways to invest in Bitcoin?

1. You can bet in small portions: If you are optimistic on the bitcoin prospects going ahead, at best you can put in 2 percent of your overall financial allocation into it.

2. Stay invested or put for longer duration: The sharp volatility shall not push you to offload your position in BTC or for that matter in any of the cryptocurrency. For cryptocurrency volatility is an intrinsic or built in trait which the investor needs to be comfortable with.

3. Investors can also consider investment in stablecoin which are far more stable in value:

Those not comfortable with high volatility in cryptos can also consider investment in stablecoins that are backed by an asset and show stability in price.

4. Invest in company stocks that have good exposure in cryptos:

Good companies with good fundamentals and having some association with bitcoins or other cryptocurrencies can also be betted on as for eg: Tesla, Facebook, Microstrategy. One can even invest in trusts or funds for safer investment in cryptocurrencies.

5. Risk in cryptos can also be minimized by booking profits at frequent intervals:

As and when profit accrues in respect of your bitcoin holdings, it can be a good idea to book them. This is because with time, number of people and other stakeholders that have got into the asset class has only increased and with more of demand, considering the market forces factor, price of bitcoin have only increased.

Bullish Price Target for Bitcoin

Bullish Price Target for Bitcoin

The investment bank JP Morgan has set a long-term Bitcoin price target of $130,000. The idea behind the target is tat bitcoin’s volatility shall fall with that of gold. And this shall in turn get in support from institutional support. So, hence JPMorgan said “the above $130,000 theoretical Bitcoin price target should be considered as a long-term target.”

GoodReturns.in



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Banks’ exposure to airports doubles over last year

Banking & Finance

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The outstanding amount of gross bank credit by Indian airports has doubled to ₹9,464 crore as of May 2021 compared to ₹4,519 crore last year, according to data put out by the Reserve Bank of India.

Industry experts believe that the increase in bank credit is because of many airports facing a cash crunch due to the Covid-19 pandemic. Some airports may have taken credit to undertake expansion activities as well.

The domestic passenger traffic, which had started seeing a steady ramp-up post resumption of airport operations from May 25, 2020, reaching 64 per cent of the previous year levels in February 2021, had again suffered a setback due to the second wave of restrictions.

Expansion projects

But at the same time, major airports have been undertaking significant expansion projects. In Bangalore, there was a runway expansion. Hyderabad, too, has come up with a new terminal, significantly upping its capacity targeting close to over 30 million passengers. Delhi, too, is coming up with a fourth runway.

Post FY19, the debt in the airport sector was expected to rise as most airports had initiated large capital expenditure (capex) to increase their capacity. As these airports started using their past accruals towards the initial capex requirements, the overall debt started rising during the last 12-18 months, Vishal Kotecha, Associate Director at India Ratings explained. Some airports may also avail additional debt to shore up their liquidity due to the uncertainty in traffic patterns leading to cash flow mismatches, the experts said.

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Reserve Bank of India – Tenders

Tenders

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Reserve Bank of India, Guwahati intends to prepare a panel of suppliers/ stockists/ chemists for supply of medicines to dispensaries located in Guwahati. The panel is expected to remain operational from October 01, 2021 to March 31, 2024 subject to satisfactory performance.

The Bank invites application from such chemists who are interested for inclusion in the panel. Chemists who fulfill the eligibility criteria and agree to the other terms and conditions mentioned in the Request for Empanelment Document, should apply in the prescribed form to the Regional Director, Reserve Bank of India, Guwahati. Last Date for receipt of applications for empanelment is August 01, 2021. The Bank reserves the right to accept or reject any application received without assigning any reason.

Detailed Terms and Conditions and the Request for Empanelment Document can be downloaded from tender section of the Bank’s website www.rbi.org.in or can be collected from Samadhan Cell, Reserve Bank of India, 4th Floor, Station Road, Panbazar, Guwahati-781001. For any query / clarification in this regard please contact on email id: samadhanguwahati@rbi.org.in.

Sanjeev Singha
Regional Director
North Eastern States

Place: Guwahati
Date: 04 July 2021

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