Month: August 2021

RBI partially lifts ban on HDFC Bank, allows it to sell new credit cards, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Eight months after barring the country’s largest private sector lender HDFC Bank from selling new credit cards, the Reserve Bank of India (RBI) has lifted the ban.

However, the ban on launching new technology initiatives remains.

In December last year, the RBI had come out with an unprecedented action implementing both the bans, after repeated instances of technological outages at the lender, which is the market leader in the credit cards segment.

Rivals ICICI Bank and SBI Cards seized the opportunity to narrow the gap with HDFC Bank.

The bank’s existing users were not impacted by the ban and it had 1.48 crore credit card customers as of June.

The impact

On July 17, the bank’s Chief Executive and Managing Director Sashidhar Jagdishan had said it has complied with 85 per cent of the RBI’s requirements on the improvements desired, and the ball is now in the regulator’s court to re-allow the bank.

Earlier, its technology and credit card vertical had said the time off the market has been utilised to re-draw processes and the teams are raring to go.

Jagdishan had said a technology audit is also over and the RBI will now be “independently” taking a view on when to lift the penal actions taken against the bank.

“We have given a milestone to the regulator in terms of what are the things we are doing on technology, complying with their advisories and directives.

The progress

“We have covered a significant portion as we speak. Almost 85 per cent of what we had to do has been covered,” Jagdsihan, who has been with the lender for over two decades and worked as the ‘change agent’ in the years leading to his elevation, said.

He added that the ball is in the regulator’s court. “As they deem fit, as they see that we are on the right track, I am sure at some point of time, they will lift the embargo.”

Acknowledging that the bank has lost market share in the credit card segment due to the ban, Jagdsihan said tech outages are a global phenomenon but it is the time taken to recover from a setback where the bank erred, leading to the “rap on the knuckles” from the regulator.

The action against HDFC Bank has been followed with a ban on card companies Mastercard and American Express from selling any new cards because of a failure to adhere to data localisation rules.

Also read : HDFC Bank episode shows that digital banking is not easy



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

4 Stocks To Buy Now In August From Angel Broking For Potential Upside Of Up To 42%

Personal Finance

[ad_1]

Read More/Less


1. Dalmia Bharat:

Angel Broking is bullish on the country’s leading cement company for gains of 42% as it has set the target price of Rs. 2650. As per the brokerage, the company is a play on the ramp up in volumes owing to its new additional capacities in East and West. The company is in the process of augmenting its capacity by approximately ~8MTPA (~5.4MTPA in FY22E and ~2.6MTPA in FY23E, mostly in East & Murli) which would drive volume growth going forward.

Well defined capital allocation policy, robust demand environment will aid future price performance

“Moreover, the company has laid out a clear capital allocation policy and has plans to grow its capacity by 15% CAGR and reach 110-130MTPA by FY30”, said the brokerage report. The brokerage is of the view that the demand environment is likely to remain strong given the impetus on infrastructure spend. “We expect cement volume CAGR of around 12% over FY21- 23E on the back of strong demand and capacity absorption”, added the report.

2. Safari Industries:

2. Safari Industries:

Brokerage firm gives a ‘Buy’ rating on the leading luggage company, Safari Industries. The company commands a leadership position in the mass segment and the transition from unorganized sectors to organized space would be advantageous for the luggage maker.

Wide distribution network, focused product strategy and diversified product mix to aid growth:

The company’s distribution reach is commendable and to complement it, Safari has a focused product strategy and diversified product mix that will facilitate and strengthen growth going forward. Angel Broking believes “Safari will report strong top-line as well as bottom-line growth on the back of strong growth in the organized sector, wide distribution network, strong brand & promoter initiatives”, said the brokerage in its report.

3. Galaxy Surfactants:

3. Galaxy Surfactants:

The brokerage firm Angel Broking bets on Oleo-chemical-based surfactants market leader, Galaxy Surfactants and recommend a ‘BUY’ with a target price of Rs. 3594, implying an upside of over 18% from the last traded price as on august 17, 2021.

Focus on Increasing its share of high margin specialty care products, strong association with MNCs to drive growth

The company has been gearing up to increase the share of its high margin specialty care products that now accounts for around 40% of the company’s revenues while the remaining is contributed by the performance surfactant business. Further it caters to global MNCs not only in India but also supplies raw material to them in the US, EU and MENA region. “We expect revenues to register a strong growth from FY22 onwards given the company’s exposure to the personal and home care segment and recovery in the specialty segment”, noted the broking major.

4. Jindal Steel & Power:

4. Jindal Steel & Power:

Angel Broking recommends a ‘Buy’ on the stock of the country’s largest iron and steel company, Jindal Steel & Power. The global steel cycle like other commodities has seen a turnaround owing to demand normalization in developed countries as economies there have opened up after the Covid threat. Now with the huge demand surge, prices of steel in the international markets have scaled to record highs.

Deleveraging by Jindal Steel makes the company a ‘Re-rating’ candidate

The company posted good set of numbers for the June ended quarter of FY22 owing to firm steel prices in the local markets. This is even when the company has exhausted all-low cost iron ore from Sarda mines. The company’s debt is expected to significantly come to around Rs. 8000 crore by FY2022 which should lead to a rerating in the stock. “At current levels the stock is trading at EV/EBIDTA of 4.0xFY2022 EBIDTA and offers value given the upturn in global steel cycle”, said the brokerage report.

Disclaimer:

Disclaimer:

The stocks listed in the article are taken from the brokerage report of Angel Broking 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.

GoodReturns.in



[ad_2]

CLICK HERE TO APPLY

Leave a comment

RBI article, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


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.

The article further said that “the USD 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.

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.”



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

RBI says inflation is on track to meet projections, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Inflation is likely to remain within the Reserve Bank of India‘s (RBI) projected levels for the rest of the year, it said on Tuesday while highlighting that inflation containment comes at the cost of economic growth.

Earlier this month the RBI raised its 2021/22 inflation forecast to 5.7% from 5.1% and reiterated that it will continue to keep monetary policy accommodative as long as necessary to revive and sustain growth on a durable basis.

The retained stance and increased inflation forecast started a debate over whether monetary policy has forsaken its primary mandate of price stability in the face of the continuing COVID-19 pandemic.

The RBI is mandated to bring down retail inflation to 4% over the medium term while keeping it within a range of 2-6%, a band it has breached twice this year.

Inflation is on the central bank’s envisaged trajectory and likely to stabilise over the rest of the year, the RBI said of what it described in Tuesday’s bulletin as “a credible forward-looking mission statement for the path of inflation”.

“The MPC demonstrated its commitment and ability to anchor inflation expectations around the target of 4% during 2016-2020. The once-in-a-century pandemic ratcheted up inflation all over the world and India was not immune,” it added.

“Our MPC is India-focused; it has to be. It must choose what is right for India, emulating none, not emerging nor advanced peer,” the bulletin said.

A reduction in the rate of inflation can be achieved only by reduction in growth; an increase in growth is only possible by paying the price of an increase in inflation, always and everywhere, the RBI said.

Easing of pandemic-related restrictions and ongoing vaccination programme has helped to boost demand conditions while improving monsoon and rising agricultural sowing activity is improving supply conditions in the economy.

“The MPC voted to give growth a chance to claw its way back into the sunlight,” the RBI said.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

RBI, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


Mumbai: The economy is gaining traction with gradual pick up in manufacturing activity and moderation in contraction of services, spurred by comfortable liquidity conditions, an RBI article on Tuesday said.

Observing that the retreat of the second wave of coronavirus pandemic has been slow, the RBI in an article on the ‘State of Economy’ said, the aggregate demand conditions are buoyed by the release of pent-up demand post unlock, while the supply situation is improving with the monsoon catching up to its normal levels and sowing activity gaining pace.

“Reaffirming the traction that the economy is gaining, the manufacturing activity is gradually turning around, while contraction in services has moderated. Spurred by comfortable liquidity conditions, financial conditions stay benign and supportive of the recovery,” it said.

The article notes that with the cautious unwinding of restrictions by states, human mobility has risen to levels last seen in February 2021, prior to the onset of the second wave. Electricity generation readings, too, have recovered to peak levels seen in April 2021 and are closing on to the pre-pandemic level (July 2019).

It has been authored by 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 RBI. E-way bill collections rose to their highest level in the last four months, clocking a growth of 17.3% sequentially over June 2021. Normalised to February 2020 levels, E-way bills, both intra-state and interstate, surpassed pre-pandemic levels. In August so far (up to August 8, 2021), daily average E-way bills declined sequentially by 5.8%, with implications for GST collections going forward.

Also toll collections rebounded in July, nearing the March 2021 record when Fastag was made mandatory. As per the article, fuel consumption recorded an uptick in July 2021. While the consumption of petrol reached pre-pandemic levels and aviation turbine fuel (ATF) recorded a sequential improvement, diesel consumption slipped marginally.

On the price rise front, the article said the headline CPI inflation for July 2021 came in at 5.6%, down 70 bps from 6.3% a month ago and “reinforcing the view that the recent upsurge has peaked and the worst would be behind us”. Further, high frequency food price data from the department of consumer affairs indicate an uptick in cereal prices in August so far. Prices of pulses, on the other hand, continue to soften. Edible oil prices are seeing some pressures. Among key vegetables, prices of potatoes, onions and tomatoes saw some seasonal increase in prices, it said. On the the recent enactment of amendments to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, the article said it is a major step towards ameliorating depositor distress. agencies



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Thai cenbank revises bank capital rules for better risk management, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


BANGKOK, – Thailand’s central bank said on Tuesday it had revised some capital rules to help banks to manage risks and capital adequacy and to promote sustainable finance.

The adjusted rules, effective in January 2022, were not a response to the pandemic, however, but were planned beforehand in line with international standards, Assistant Governor Jaturong Jantarangs told a news conference.

Under the Pillar 2 rules, banks must have sound risk management framework and processes to assess their capital adequacy, relative to all risks and conduct proper stress testing.

Thai banks are still strong with higher capital buffers than the minimum requirements to cover risks and handle volatility in the economy, Jaturongs said.

The new rules https://bit.ly/2UtceHQ added to areas of information technology risk, legal and compliance risk as well as environment, social and governance, he added. (Reporting by Kitiphong Thaichareon and Satawasin Staporncharnchai Writing by Orathai Sriring; Editing by Martin Petty)



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Survey, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Safety and security is the most important factor for buyers looking for home, according to a survey by BASIC home loan, a fintech company.

Over 52% of the respondents said that they trust family and friends while finalising a property and connectivity to schools and hospitals are the most important aspect they look at while finalising the property.

Nearly 47% of people prefer availing loans from public sector banks rather than private ones for buying a house, according to the study.

“Every bank is unique, be it a public or private sector one. Usually, public sector banks offer better rates in processing charges and prepayment restrictions while with private banks, there’s an advantage of quick turnaround time and better technology through the disbursal process,” said Atul Monga, Co-founder and CEO, BASIC Home Loan.

The homebuyers’ survey was conducted to understand the buying behavior and preferences of people amidst the pandemic, and took responses from 1,000+ participants.

The survey gathered responses from people across the rural and urban cities in India, and captured data from 25 cities.

“However, the borrowers tend to go with a product whose cost is low both in the long and short term. This decision is also based on the perception that a borrower has of a bank, the reference from a friend or family member, as well their eligibility for the loan,” added Monga.

Of the 1,000+ participants surveyed, nearly 470 people placed faith in public sector banks for their home loan needs, while only 270 of them said they preferred availing a home loan from a private bank.

During the pandemic period, the public sector banks reduced the interest rates on new loans by 0.68% while the private banks reduced the same by 1.34%

The survey also revealed that around 24% of the participants preferred to use their savings to build a house, while as low as 1% people would like to finance through a non-institutionalised private money lender.

Around 36% of the people, the survey also found out, preferred to inspect the quality of the property by themselves rather than depending on a professional builder or realtors.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

RBI paper, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The newly created small finance banks (SFB) are serving the intended marginalised and under-served people, and doing so profitably, an analysis by RBI officials has revealed. This category of banks was started in 2017, and a bulk of the entities are microfinance institutions, which converted themselves into lenders, which gave them access to public deposits.

“The SFBs have been provided license with the objective to serve the under-served and marginalised sections of the society…preliminary analysis reveals SFBs to be leading in serving the priority sector,” the paper by Nitin Kumar and Sarita Sharma said.

The study contains an initial assessment of the performance of SFBs for early policy inputs, it said, stressing that its assessment should not be considered as the view of the central bank.

A basic examination reveals a relatively high credit deposit ratio of SFBs and most of them displayed healthy profitability with further improvements in recent quarters, it said.

The study went into operational financials between March 2017 and March 2020 and indicated that bank-level factors like efficiency, leverage, liquidity and banking business are significant in determining SFBs’ profitability during this early period of operation.

It can be noted that the first quarter of the FY22 was a difficult time for many of the SFBs, as the collection efficiencies declined because of the second wave of the pandemic.

Meanwhile, another paper in the RBI bulletin for August on the targeted long term repo operations said that non-bank lenders, which accessed funds through the route, have displayed an improvement in their short-term liquidity buckets compared to others.

As NBFCs were finding their footing after the IL&FS default, the COVID-19 pandemic started a chain of adverse reactions, which exacerbated their liquidity position, the paper by KM Neelima, Nandini Jayakumar, and Jibin Jose said.

The RBI and government swung into action to address the stress through a slew of measures, including the TLTRO scheme that aimed at providing targeted liquidity to sectors and entities, which were experiencing liquidity constraints and restricted market access, it added.

Banks were provided funds at the repo rate and were directed to invest in investment-grade papers of corporates, including NBFCs, it said.

The policy was beneficial in alleviating the liquidity stress faced by the treatment NBFCs in the period following COVID-19 and helped them navigate the tough times, the paper said, adding that this happened at a time when both banks and credit markets were averse to help such entities.

“The empirical exercise undertaken in this article, therefore, suggests that the Reserve Bank’s intervention for easing financial conditions proved to be timely and effective for the NBFC sector,” it noted.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

Robust Q1 earnings could brighten growth picture, says Axis Bank chief economist, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


NEW DELHI: The million-dollar question on every Indian economist’s mind is when the country shall return on a path of sustainable growth after the deep scars left by the COVID-19 crisis.

Saugata Bhattacharya, chief economist at Axis Bank, and a veteran when it comes to analysing the vicissitudes of economic cycles, believes that the proverbial glass is half full rather than half empty when it comes to India’s GDP growth.

“There are a few developments which could lend some upside to the forecast. First is the way the NSO estimates growth in the initial rounds. The Advance Estimates are constructed with significant inputs from corporate results,” Bhattacharya said in an interview with ETMarkets.com

“The financial results of manufacturing and services companies are adjusted with GDP deflators to arrive at real growth estimates. Obviously there are other quantity based indicators like IIP, freight, etc. which are also inputs. But a large contribution to the estimates comes from the corporate results. And corporate results in Q1 seem to be quite robust .Based on this, our sense is there might be an upside to this estimate of growth.”

The RBI has projected GDP growth of 9.5 per cent for the financial year 2021-22.

As the experience of the last year (and the myriad of growth downgrades emanating from entities like the RBI to the IMF) has shown, forecasting India’s growth amid a Black Swan event like COVID is no easy task.

Bhattacharya, however, bases his view on an analysis of certain high-frequency indicators.

“… signs from high-frequency indicators we track suggest that recovery has been better and deeper than what we had initially estimated,” he said.

“Automobile sales and numbers on the consumer durables – suggest demand resilience.”

The veteran economist did, however, flag concerns about the revival prospects of a large grouping of smaller companies.

“We are grappling with how much the degree of economic scarring due to the pandemic might have been, including a potential drawdown of savings, permanent reduction in incomes, etc.,” he said.

Bhattacharya maintained that at the current juncture, the most that policymakers – who are admittedly in a bind – can do is deal with the problems at hand at present, while prioritising the public health situation.

“The other economic variables are more exogenous. Be it inflation, funds flows, etc, much of those things are relatively exogenous to their control, the only thing really that policymakers, public health policy particularly, can control is vaccination.”



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

SC bench, which subjected banks to RTI, to hear fresh objections, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


New Delhi: The Supreme Court on Tuesday ordered listing of a bunch of petitions by mega banks including SBI and HDFC questioning a court mandate to provide customer and commercial information to RTI querists to a bench headed by Justice L N Rao, which had ruled that the RBI was bound to provide information sought about operations of banks under RTI.

Agreeing with advocate Prashant Bhushan, a bench of Justices S Abdul Nazeer and Krishna Murari ordered that since a bench headed by Justice Rao had dealt with the issue at length and returned a verdict, it would be in the fitness of things to list the fresh pleas by the banks before the same bench.

The leading banks have moved the SC questioning the efficacy of subjecting them to RTI and said, “banking operations and the financial transactions, including the details of individual accounts, are held in confidence by the banks and that the SC judgment would seriously jeopardise the confidential clauses applicable to the banking operations under various statutes.”

On April 29 this year, a bench headed by Justice L N Rao had dismissed applications by major banks, including SBI and HDFC, for recalling the SC’s six-year-old judgment directing the banking regulator RBI to provide information under RTI about functioning of banks under the Act. Solicitor general Tushar Mehta, senior advocate Mukul Rohatgi and K V Vishwanathan had argued –

“How can the bank breach the trust and faith of the account holder just because a RTI activist desires to know what another person’s bank balance is, or what credit lines he has sought for his business empire for a confidential future venture? No one is against transparency in banking operations.

But, why should the banks, mandated by statute to maintain confidentiality, reveal information in breach of account holders’ trust and reveal future business plans to rivals, who could get the information by employing an RTI activist’s services?”

“We know how and who would use the RTI to seek information about business rivals. If the banks reveal to which sector loans are being given, then there will be no commercial confidentiality for any future project envisioned by an industrial house. A nine-judge bench of the SC has ruled that individual privacy is a part of right to life. Should account holders in banks not enjoy privacy about their bank accounts,” they asked.

Bhushan strongly resisted the fresh move by banks to wriggle out of their obligations to provide information sought under RTI through the RBI.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,
1 … 55 56 57 58 59 … 121