Month: August 2021

Pandemic lifts home loan demand, rise up to 14% despite restrictions, BFSI News, ET BFSI

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As the pandemic raged, people took to the safety of homes, literally.

Banks home loan portfolios jumped up to 14% in the first quarter despite a rise in Covid cases and restrictions due to the pandemic.

The home loan portfolio of the State Bank of India increased 11 per cent to Rs 5,05,473 crore in the first quarter of the current fiscal ended June 30, 2021, compared with ₹4,55,443 crore in the year-ago period. It forms constituting 23 per cent of the bank’s total domestic advances.

Home loans at Canara Bank increased 13.15 per cent during the first quarter to Rs 65,136 crore. In the previous year, the growth in the portfolio was only 10.6 per cent. Punjab National Bank saw a 6.1 per cent growth in home loans.

Rising ticket size

HDFC saw its average loan size jump from Rs 27 lakh to Rs 29.5 lakh during the Covid pandemic as borrowers sought larger homes with many companies shifting to work-from-home mode.

Even as the average property value purchased by borrowers during the pandemic rose, the affordability of loans for borrowers improved to a 25-year high.

The affordability is measured as the number of years of income required to buy a house.

The affordability improved to 3.2 years of income as against 3.3 years in FY20 and 2.5 years in FY19. This was largely because the annual income of borrowers rose from Rs 15 lakh to Rs 16 lakh even as property values remained at FY18 levels. The average age of the borrower also dipped from 39 years to 38 years.

Growing competition

ICICI Home Finance has launched an on-the-spot home loan for workers and self-employed who do not have income tax returns (ITR) to show their earnings.

Under the ”Big Freedom Month”, ICICI Home Finance aims to assist home loan seekers who do not have income tax returns proof to buy their dream home, it said in a statement.

Carpenters, plumbers, electricians, tailors, painters, welders, auto mechanics, and auto taxi drivers, among others, can avail of the spot home loan by submitting PAN card, Aadhaar card and bank account statement of the past six months.

Prospective homebuyers can visit the ICICI HFC branch to get free consultation from experts.

SBI is also focusing on home loans. It announced a 100 per cent waiver on processing fees till August 31. Before the offer, the processing fee was 0.40 per cent.



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Reserve Bank of India – Press Releases

Press Releases

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April 14, 2015




Dear All




Welcome to the refurbished site of the Reserve Bank of India.





The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.




With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.




The site can be accessed through most browsers and devices; it also meets accessibility standards.



Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.



Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.



Thank you for your continued support.




Department of Communication

Reserve Bank of India


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ICICI, HSBC, Standard Chartered strike India’s first swaption deals, BFSI News, ET BFSI

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Two years after RBI allowed them, ICICI Bank, HSBC and Standard Chartered Bank have cut the first swaption deals, giving new risk management tools to borrowers in rapidly changing interest rate scenarios.

The ‘swaption’ interest-rate derivative product helps both local borrowers and investors to rein in funding costs in a rising rate scenario and retain investment returns in a falling rate scenario. In June, 2019, the Reserve Bank of Indiaissued guidelines for ‘swaption’ deals.

What is swaption?

A swaption contract gives the buyer the right, but not the obligation, to enter into an interest-rate swap deal.

If a borrower raises local bonds with a ‘put’ option, investors could well surrender those papers in a rising rate scenario, forcing a borrower to issue new bonds at higher rates. This is where the utility of the instrument is evident for the borrower.

If the borrower buys a swaption contract, the instrument will protect the borrower against any losses from rate movements in the event of investors exercising their put options.

Similarly, if a borrower raises bonds with call options, and exercises them in a falling interest market, the investor has to invest at lower rates. If s/he buys a swaption contract, it will shield for any rate losses.

The transaction

ICICI Bank and the two overseas lenders transacted ‘swaptions’ on Overnight Index Swap (OIS) for a total notional sum, which formed a significant majority of the total worth of transactions reported on day one. Trading in the instrument began Tuesday on a Clearing Corporation of India (CCIL) platform, which showed six separate deals for a total notional sum of Rs 700 crore.

The demand for interest rate swaptions from domestic clients to increase in the short to medium term as the proportion of external benchmark linked lending by banks continues to rise.



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SBI Platinum FD Vs SBI Regular FD Vs SBI WeCare FD: Latest Interest Rates Compared

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SBI Platinum Deposit Scheme

SBI has recently introduced a Platinum Deposits Scheme for retail investors to commemorate the 75th anniversary of the country’s independence. This scheme is valid from August 15, 2021 to September 14, 2021. Deposits can be made for platinum 75 days, platinum 525 days, or platinum 2250 days under this scheme. Domestic Retail Term Deposits, comprising NRE and NRO Term Deposits of less than Rs 2 crore, New and Renewal Deposits, Term Deposit and Special Term Deposit products only, and NRE Deposits (for 525 and 2250 days only), according to SBI, are eligible deposits.

Senior Citizens and SBI Pensioners, according to SBI’s official website, would continue to receive benefits under the SBI WECARE Scheme for a period of 5 years and above, with no additional benefit under Platinum Deposits. Interest is paid at monthly/quarterly intervals, and premature withdrawal is allowed as applicable for Term / Special Term Deposits. This special fixed deposit can be opened through a branch, INB, or YONO channel.

SBI Platinum Deposit Interest Rates

SBI Platinum Deposit Interest Rates

Here is the interest rate chart of SBI Platinum Deposit Scheme, according to the official website of the lender.

Tenor ROI for Public ROI for Senior Citizens
Existing Proposed Existing Proposed
Platinum 75 days 3.90% 3.95% 4.40% 4.45%
Platinum 525 days 5.00% 5.10% 5.50% 5.60%
Platinum 2250 days 5.40% 5.55% ROI applicable under SBI WECARE Scheme (6.20%)
Source: SBI

SBI Regular Deposit For The General Public

SBI Regular Deposit For The General Public

For a deposit amount of less than Rs 2 Cr, SBI is currently offering an interest rate ranging from 2.9% to 5.4% to general customers across 7 days to 10 years of maturity period. Here are the most recent interest rates of SBI for the general public which are in force from 8 January 2021.

Tenor Regular Interest Rates In %
7 days to 45 days 2.90
46 days to 179 days 3.90
180 days to 210 days 4.40
211 days to less than 1 year 4.40
1 year to less than 2 year 5.00
2 years to less than 3 years 5.10
3 years to less than 5 years 5.30
5 years and up to 10 years 5.40
Source: SBI

SBI Fixed Deposit For Senior Citizens

SBI Fixed Deposit For Senior Citizens

SBI also offers a “WECARE” deposit scheme for senior citizens with a maturity period of 5 years to 10 years. Under this special fixed deposit scheme, senior citizens will get an additional premium of 30 bps (over and above the existing premium of 50 bps). A senior citizen will get an interest rate of 6.20% if he or she opens this special fixed deposit scheme for a period of 5 years to 10 years. Here are the latest interest rates on fixed deposits for senior citizens provided by the bank.

Tenor Interest Rate for Senior Citizens In %
7 days to 45 days 3.40
46 days to 179 days 4.40
180 days to 210 days 4.90
211 days to less than 1 year 4.90
1 year to less than 2 year 5.50
2 years to less than 3 years 5.60
3 years to less than 5 years 5.80
5 years and up to 10 years 6.20
Source: SBI



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Will be “back with a bang” on credit card rollout, says HDFC Bank, BFSI News, ET BFSI

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Private lender HDFC Bank on Tuesday said that all preparations are in place to be back with a bang on credit cards and new schemes will be rolled out soon. The bank had earlier stated that it has lined up a series of new card launches in anticipation of RBI lifting its ban.

Eight months after a ban was imposed, in a letter to the HDFC Bank board on Monday, the RBI communicated that it has decided to lift restrictions on launching new credit cards while the restrictions on launching new projects under digital 2.0 was still in place. Last month the lender’s chief Sashidhar Jagdishan had stated that the bank has complied with 85% of the requirements of RBI on the technology front.

“All the preparations and strategies that we have put in place to ‘come back with a bang’ on credit cards will be rolled out in the coming time,” the lender said in a press statement. “We would like to inform all that the Reserve Bank of India has lifted the restriction placed on sourcing of new credit cards. We thank the regulator for this. The board has taken note of the same and the bank is committed to full compliance of the regulatory directions.”

The bank added that it will continue to engage with the regulator and ensure compliance on all parameters, so that the restrictions imposed on new launches of the Digital Business generating activities planned under Digital 2.0 could be lifted soon.

The RBI has asked the bank to submit a board-approved letter indicating continued compliance with its IT examination report.

“The ban has come before the festive season which starts from September onwards in India, so the juggernaut can roll with full force and launch credit cards, attractive schemes within their ecosystem partners and be a force to reckon with,” said Suresh Ganapathy, associate director, Macquarie Capital.

As per Macquarie’s analysis, HDFC Bank lost nearly 180 basis points of market share as of May 2021 since end of November 2020 when the ban on launch of new credit cards came into effect. Their market share slipped to 24% while ICICI Bank and SBI Cards gained 130bps and 37bps to 17.4% and 19.2%, respectively.

The lender also has vast ground to gain and can easily capture back the space it lost after it added 36.5 lakh liability accounts from January to June 2021,1.5-2 lakh credit cards per month pre-Covid.

“Overall, lifting of RBI restrictions before the beginning of festive season is a positive development as HDFC Bank has usually been aggressive during festive season and offers various discounts on consumer products,” said Nitin Aggarwal, research analyst, Motilal Securities.



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HDFC Bank ready with strategy on credit cards after RBI revokes ban

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Private sector lender HDFC Bank on Wednesday said it is ready with strategies to ‘come back with a bang’ in the credit card space.

“As stated earlier, all the preparations and strategies that we have put in place to ‘come back with a bang’ on credit cards will be rolled out in the coming time. We are happy that we will be able to serve our customers again with the same dedication and humility,” it said in a statement.

Noting that the restrictions on all new launches of the digital business generating activities planned under Digital 2.0 will continue till further review by the regulator, the bank said it will continue to engage with the regulator and ensure compliance on all parameters.

Also read:Reserve Bank allows HDFC Bank to sell new credit cards

The statement comes after the Reserve Bank of India (RBI) relaxed curbs on the private sector lender on sourcing new credit cards. “…the RBI vide its letter dated August 17, 2021 has relaxed the restriction placed on sourcing of new credit cards. The Board of Directors of the Bank has taken note of the said RBI letter,” HDFC Bank said in a stock exchange filing.

The RBI had in December last year directed HDFC Bank to temporarily halt sourcing of new credit card customers as well as launches of digital business generating activities planned under its proposed programme‐Digital 2.0.

HDFC Bank is the largest credit card issuer with 1.48 crore outstanding cards as of June 2021. The temporary halt on sourcing of cards had to some extent, impacted its business and also enabled competitors such as ICICI Bank and SBI to increase their market share.

Analysts said the RBI decision before the beginning of festive season is a positive development. “…lifting of RBI restrictions before the beginning of festive season is a positive development as HDFC Bank has usually been aggressive during festive season and offers various discounts on consumer products,” Motilal Oswal said in a research note.

Also read: New credit cards: RBI partially lifts curbs on HDFC Bank

It pointed out that HDFC Bank had nearly lost about 6 lakh cards since the date of embargo. On the other hand, ICICI Bank, SBI Cards and Axis Bank almost added 13 lakh, 7.5 lakh and 3 lakh cards respectively over the similar period.

“Other players such as ICICI Bank and SBI Cards have sharply ramped up their incremental market share at about 49 per cent and 28 per cent during this period,” it said.

During recent quarters HDFC Bank has reported moderation in fee income/NII, due to the RBI restriction on credit cards sourcing as this segment contributes about 25 per cent to 33 per cent of the total fee income for the bank. HDFC Bank scrip was up 1.83 per cent in morning trade at BSE.

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3 Stocks To Buy For Potential Gains Up To 52%, Says ICICI Securities

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3 Stocks To Buy For Potential Gains Up To 52%, Says ICICI Securities

Company Recommendation Target Price Upside Potential
Time Technoplast BUY Rs 100 25%
Sagar Cements BUY Rs 390 26%
Triveni Engineering BUY Rs 270 52%

Buy Time Technoplast with 25% potential gain

Buy Time Technoplast with 25% potential gain

ICICI Securities is bullish on the Time Technoplast for gains of 25% as it has set the target price of Rs 100. With 34 manufacturing locations in 11 countries, Time Technoplast is a prominent manufacturer of polymer-based packaging and composite products.

Revenue growth led by easing of lockdown restrictions

As per the brokerage, increased utilisation, incremental demand for composite goods, and better EBITDA margin are driving revenue and PAT CAGRs of 17 percent and 50 percent in FY21-23E, respectively. According to the company’s management, demand for type IV composite cylinders has surged, and revenue potential in this category might be as high as Rs 2,200 crore each year.

“Time Technoplast’s share price has grown by ~2.3x over the past year. We maintain our BUY rating on the stock Target Price & valuation: We roll over our valuation on FY23E and value Time Technoplast at Rs 100 i.e. 5x EV/EBITDA on FY23E EBITDA.

By FY25, the business intends to generate revenues of Rs 5000 crores. During the same period, the value-added product (20 percent of revenue) will witness a 16 percent CAGR”, the brokerage has said.

Buy Sagar Cements with potential upside of 26%

Buy Sagar Cements with potential upside of 26%

Sagar Cement‘s shares were divided on August 17, 2021 (ex-date) as a result of board and shareholder approvals issued on July 1, 2021, and July 28, 2021, respectively, for sub-division of shares.

“We expect revenue and EBITDA CAGR of 30.8% and 27.3%, respectively, in FY21-23E. At the current market price of Rs 311/share, the stock is still trading at attractive valuations of 6.4x FY23E EV/EBITDA leaving decent scope for further upside. Hence, our target price has also been revised upwards to Rs390/share (i.e. by raising multiple to 8.0x FY23E EV/EBITDA) vs. earlier target price of Rs 340/share. Accordingly, we continue to reiterate our BUY rating on the stock,” the brokerage said in its research report.

ICICI Securities recommend a ‘BUY’ with a target price of Rs. 390, implying an upside of over 26%.

Buy Triveni Engineering with a upside potential of 52%

Buy Triveni Engineering with a upside potential of 52%

ICICI Securities recommends a ‘Buy’ on the stock of the Triveni Engineering company with a potential upside of 52%.

The company reported significant earnings growth. EBITDA was Rs. 149.6 crore, down 3.9 percent year on year, with 13.5 percent margins. With decreased tax provisioning, PAT was at Rs 92.3 crore, up 10.2 percent YoY.

Distillery expansion, surging sugar prices to drive PAT

“TEL’s share price has gone up 3.2x in the last five years. We expect 2.1x increase in distillery volumes to boost earnings with CAGR of 24.2% during FY21-24E. We continue to maintain our BUY rating on the stock Target Price and Valuation: We maintain our target price on the stock at Rs 270, valuing the business at 13x FY23 PE.

With distillery capex, TEL would be able to increase its ethanol volumes 2.1x to 22 crore litre by FY24. Distillery sales may witnessed 35% CAGR to Rs1248.6 crore in FY21-24E, which would be 25% of total revenues, the brokerage said in its research report.

Disclaimer

Disclaimer

The stocks listed in the article are taken from the brokerage report of ICICI Securities and need not be construed as investment advice. The company and the author will not be held responsible for any losses on any investment call taken based on this report.



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Reserve Bank allows HDFC Bank to sell new credit cards

Banking & Finance

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HDFC Bank on Wednesday said Reserve Bank of India (RBI) has relaxed the restrictions placed on the bank to issue new cards.

RBI had issued orders in December and February to HDFC Bank on certain incidents of outages in the internet banking /mobile banking/payment utilities of the bank over the past two years.

“As a further update to the above intimations, we wish to inform you that the RBI vide its letter dated August 17, 2021, has relaxed the restriction placed on sourcing of new credit cards,” it said in a regulatory filing.

Also read:New credit cards: RBI partially lifts curbs on HDFC Bank

The board of directors of the bank has taken note of the said RBI letter, it said. HDFC Bank said the restrictions on all new launches of the digital business generating activities planned under Digital 2.0 will continue till further review by RBI.

“We will continue to engage with RBI and ensure compliance on all parameters,” the bank said. Stock of HDFC Bank traded 2.06 per cent up at ₹1,546.00 apiece on BSE.

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WhatsApp brings new ‘payments backgrounds’ feature in India, BFSI News, ET BFSI

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Designed in partnership with the National Payments Corporation of India (NPCI), on the Unified Payment Interface (UPI), the payments feature on WhatsApp enables transactions with over 227 banks.

In a bid to strengthen its payment services offering in India, instant messaging platform WhatsApp has introduced ‘Payments Backgrounds feature on the platform.

“Built for India, this new feature is relevant, exciting, and memorable as it helps people easily convey a feeling along with sending money,” said a company statement on Tuesday.

Designed in partnership with the National Payments Corporation of India (NPCI), on the Unified Payment Interface (UPI), the payments feature on WhatsApp is an India-first, real-time payment system that enables transactions with over 227 banks, it said.

Manesh Mahatme, Director of WhatsApp Payments said: “WhatsApp is a safe space where people share their thoughts and feelings with their friends and family. With Payments Backgrounds, our effort is to bring excitement to everyday payments through WhatsApp and enable our users to express themselves if they wish, through a range of emotive themes denoting celebrations, affection, warmth or fun.”

“We believe that sending and receiving money is so much more than just a transaction. Often, it’s the stories behind the exchanges that are priceless. We look forward to creating more features and functionalities and continue making payments on WhatsApp an interesting and interactive experience,” he added.

Conversations around payments

Conversations involving payments are often imagined to be simply transactional. WhatsApp has created this thematic range of artful expressions to complement sending payments on birthdays, holidays, or for gifts and travel, the company said.

As per WhatsApp, the core idea of this feature update is to create a more personalised experience for the sender as well as the receiver by adding an element of expression when friends and family exchange money.

“Whether it is friends splitting the bill after a meal, sending money to near and dear ones as a token of your love or gifting your sister on the occasion of Rakshabandhan, payment backgrounds make sending money personal and brings alive the story behind every payment,” the statement said.

WhatsApp has been trying hard to make a mark in the already crowded online payments segment in India with strong incumbents including Paytm, Google Pay, PhonePe, Amazon Pay already having consolidated their position.



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RBI lauds Paytm IPO, says 2021 may turn out to be India’s year of IPO, BFSI News, ET BFSI

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The $ 2.2 billion proposed listing by a payment and financial services app symbolises investor excitement surrounding India’s digitalisation – digital payment solutions; e-commerce; logistics, says an RBI article.

The year 2021 could turn out to be India’s year of IPO with the domestic unicorns through their public issues setting “domestic stock markets on fire and global investors in a frenzy”, an RBI article said on Tuesday.

The successful Initial Public Offerings (IPOs) by new age companies in the recent months are a reflection of bullishness about Indian technology, it said.

“…growth impulse is igniting financial markets. 2021 could well turn out to be India’s year of the IPO. Debut offerings by Indian unicorns – unlisted start-ups – kicked off by a food delivery app’s stellar IPO that was oversubscribed 38 times, have set domestic stock markets on fire and global investors in a frenzy,” the central bank said in an article on the ‘State of Economy’.

The article has been authored by a team lead by RBI Deputy Governor Michael Debabrata Patra. The central bank said views expressed in the article are those of the authors and do not necessarily represent the views of the Reserve Bank.

The RBI article was referring to the IPO of Zomato which got oversubscribed 38 times.

Paytm IPO

The article further said that “the $ 2.2 billion proposed listing by a payment and financial services app symbolises investor excitement surrounding India’s digitalisation – digital payment solutions; e-commerce; logistics”.

Noting that the IPO of a specialty chemical manufacturing exporter was subscribed 180 times, the RBI said “these IPOs of new age companies arrive as bullishness about India mounts, especially around Indian tech”.

India’s tech boom, it added, has been long awaited, with strong global and domestic appetite for what are widely believed to be world class businesses in the pipeline, notwithstanding initial losses that have largely stemmed from the deep discount business models adopted by them.

These listings coincide with a broader rush by Indian companies to tap the market and the fomo (fear of missing out) factor driving investors, which have taken the benchmark indices to records, the RBI article said.

“A new era has clearly begun. It is estimated that India has 100 unicorns (Credit Suisse, 2021), with 10 new ones created in 2019, 13 in 2020 in spite of the pandemic and 3 a month in 2021 so far. They do not rely on inherited wealth or dependence on bank loans or extra-business connections, but on talent and innovative ideas. These are the children of liberalisation, not of the wealthy,” it said.

Maharaja Mac

Referring to the recent update by the UK-based The Economist of its Big Mac Index, an informal guide to currency valuation, the RBI article said that in terms of Maharaja Mac, India is currently the fourth-largest economy in the world.

“…we decided to give the Big Mac’s currency valuation powers a go by and turned it on its head. Looking at affordability or how many burgers can a currency buy relative to the US dollar, we measure how much a country’s GDP is valued in purchasing power terms,” the article said.

“Voila! The results uphold conventional wisdom – in terms of the Maharaja Mac, India is currently the fourth-largest economy in the world after China, the US and Japan.”



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