Month: August 2021

Bank stocks gain over 2% as Nifty crosses 16,900, BFSI News, ET BFSI

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Indian benchmark indices started the week on a positive note, hitting fresh record highs of 16,931. Traders took encouragement as foreign direct investment (FDI) into the country rises. Asian shares perked up and the dollar fell to a two-week low, today after the US Federal Reserve chairman’s speech.

Benchmark indices gained over 1% and closed at fresh record highs amid positive global cues. At close, the Sensex was up 1.36% at 56,889 and the Nifty was up 1.35% at 16,931.

The Nifty Bank Index ended 2.02% at 36,347. Amongst the top gainers were Axis Bank at Rs 784 adding 4.21% followed by RBL Bank at Rs 169 (4.02%), Bandhan Bank at Rs 285 (3.55%), SBI at Rs 422 (2.49%), ICICI Bank at Rs 713 (1.99%), PNB at Rs 36 (1.66%). All major indices ended in the green.

Nifty Financial Services ended higher at 17,843 adding over 1.85%. Amongst the biggest gainers were Chola Invest. at Rs 548 adding 4.46% followed by Indiabulls Hsg at Rs 227 (3.61%), Bajaj Finance at Rs 7,165 (2.86%), Power Finance at Rs 129 (2.77%), Bajaj Finserv at Rs 16,560 (2.25%).

Buzzing stocks

Axis Bank share price gained over 2% as the private lender began issuing debt securities under a Rs 35,000-crore debt raise plan.

The bank said on August 30 it started issuing securities under the debt-raise plan announced earlier this year. The private sector lender’s board had in April approved a capital-raise proposal of up to Rs 35,000 crore by issuing various debt instruments in Indian or foreign currency in domestic/overseas markets in one or more tranches.

Other key takeaways

Q1FY22 GDP prints likely to be released on August 31

India’s April-June quarter (Q1) GDP numbers are likely to show a significant surge owing to the lower base of last year’s first quarter and a rebound in consumer spending post the second wave of COVID-19.

Experts believe that even though May had seen a slowdown due to the lockdowns, there was a sharp recovery in June and that the economic impact of the second wave has been much more muted than the first wave . According to a Reuters poll, the country’s Q1FY22 GDP growth might have touched a new record.

SBI research report Ecowrap suggests that the country’s Q1FY22 GDP is expected to grow at around 18.5 per cent. However, it is lower than the Reserve Bank of India’s GDP growth projection of 21.4 per cent for the June quarter.

Bank of India extends term of P R Rajaqopal as executive director

The company has extended the term of office P R Rajagopal, Execurive Director of Bank for a period of two years beyond his currently notified term which expires on 28.02.2022, or until further orders, whichever is earlier. Bank of India shares rose 0.97% to Rs 68.00.

FPIs net buyers invest Rs 986 cr in equities in August

Foreign portfolio investors (FPIs) pumped in a net of just Rs 986 crore in Indian equities during August, as cautiousness continued to persist among overseas investors.

According to data from depositories, FPIs bought equities worth Rs 986 crore and invested Rs 13,494 crore in the debt segment during August 2-27. This translated into a total net investment of Rs 14,480 crore.

Gold prices continue to shine

Gold prices rose from a low of USD 1,785.20 on Friday and continued their upward trend on Monday, reaching a high of USD 1826.3 in the early morning session. Gold prices are expected to rise due to a drop in the dollar index and Fed Chair Powell’s dovish tone.

Gold prices are likely to continue solid when trading above the 20-day EMA’s important support level of USD 1797.56, but they may confront significant resistance between USD 1834- USD 1850.

Dollar hit a fresh two-week low

In overnight trade on Wall Street, US stocks surged as US Treasury yields fell on Friday after Federal Reserve Chair Jerome Powell indicated the US central bank could begin scaling back its bond buying programme by year-end but did not give a firm timeline. The Dow Jones Industrial Average rose 0.69%, the S&P500 index gained 0.88% and the Nasdaq Composite added 1.23%.

Held back by the message from the US Federal Reserve chief that there is no hurry to dial back massive stimulus, the dollar hit a fresh two-week low at 92.595 before steadying around 92.66, still a touch lower on Monday.



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Reserve Bank of India – Press Releases

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The Reserve Bank of India today released the data showing daily merchant and inter-bank transactions in foreign exchange for the period July 05 – July 09, 2021.

All Figures are in USD Millions
Position Date MERCHANT INTER BANK
FCY / INR FCY / FCY FCY / INR FCY / FCY
Spot Forward Forward Cancel Spot Forward Forward Cancel Spot Swap Forward Spot Swap Forward
Purchase
05-07-2021 1,747 753 657 161 102 106 7,983 5,436 831 2,566 616 99
06-07-2021 2,519 1,259 1,008 282 263 316 9,984 11,651 776 4,007 1,744 199
07-07-2021 3,019 966 1,192 274 194 385 7,950 8,278 388 2,793 1,547 169
08-07-2021 3,651 1,669 978 167 211 199 8,409 8,319 389 3,393 1,215 75
09-07-2021 5,660 1,452 690 238 210 111 11,499 13,606 1,124 2,868 1,574 79
Sales
05-07-2021 1,105 1,084 382 162 127 106 8,564 4,965 929 2,555 618 99
06-07-2021 3,475 1,921 370 284 282 317 9,876 12,059 441 3,953 1,890 200
07-07-2021 2,484 1,696 436 268 190 385 8,458 9,859 787 2,793 1,637 169
08-07-2021 2,403 2,273 347 167 198 199 8,513 8,918 1,076 3,393 1,248 75
09-07-2021 3,135 3,690 577 258 220 111 12,457 13,376 1,001 2,821 1,580 79
(Provisional Data)

Ajit Prasad
Director   

Press Release: 2021-2022/774

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HSBC Asia appoints former SBI Chairman Rajnish Kumar as an Independent Director, BFSI News, ET BFSI

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The Hongkong and Shanghai Banking Corporation Ltd (HSBC) on Monday announced the appointment of Rajnish Kumar as an Independent Non-Executive Director. Kumar will also be a member of The Hongkong and Shanghai Banking Corporation Limited‘s Audit Committee and Risk Committee of its Asian operations.

The Indian operation is a branch of this Asian entity. HSBC is also listed in the UK as a separate entity called HSBC Plc. Rajnish Kumar retired in October 2020 after a 40-year career at the SBI. His international tenure included stints at SBI’s UK and Canada operations.

“Rajnish‘s depth and breadth of experience across India‘s financial industry will be an invaluable addition to the Board of the Group‘s flagship Asian entity as HSBC directs its focus towards the region. The opportunities presented by its 1.4 billion population, 18 million non-resident Indians and 40,000 MNCs make India a key component of HSBC‘s growth strategy” said Peter Wong, Chairman of the Board, HSBC.

Rajnish Kumar was formerly Chairman of the State Bank of India (SBI), until he retired in October 2020 following a distinguished 40-year career with the SBI. In addition to his extensive background with regulatory authorities, investors and businesses in India, Kumar has strong experience of global business and financial markets from his work with the SBI in the UK and Canada. During his tenure as Chairman of the SBI, he also led the strengthening of the bank‘s digital banking platform.

He is also currently a director of India’s Lighthouse Communities Foundation, an independent director of Larsen & Toubro Infotech, a senior advisor of Baring Private Equity Asia Pte Ltd in Singapore and an advisor of Kotak Investment Advisors Ltd in Mumbai.



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Ola picks banks for $1 billion IPO, may file papers in October, BFSI News, ET BFSI

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Ride-hailing startup Ola has selected banks including Citigroup Inc. and Kotak Mahindra Bank Ltd. to manage its Mumbai initial public offering that could raise about $1 billion, according to people familiar with the matter.

The company, backed by SoftBank Group Corp. and Tiger Global Management, has also picked Morgan Stanley for the listing, said the people, who asked not to be named as the information is private. The Bangalore-based startup could seek a valuation of more than $8 billion in the IPO and could lodge a filing as soon as October, one of the people said.

The 11-year-old Ola would be joining a strong pipeline of Indian startups that are ready to tap the IPO market in the coming months. Paytm, the country’s leader in digital payments, Flipkart, the Indian e-commerce giant controlled by Walmart Inc., and digital education startup Byju’s are also preparing for their first-time share sales, Bloomberg News has reported.

Details of Ola’s IPO including size and timeline could still change as deliberations are ongoing, the people said. More banks could be added later, they said. A representative for Citi declined to comment, while representatives for Kotak Mahindra, Morgan Stanley and Ola didn’t immediately respond to requests for comment.

Ola currently partners with about 1.5 million drivers across 250 cities in India, Australia, New Zealand and the U.K. The Uber Technologies Inc.’s rival in July raised $500 million from investors including Temasek Holdings Pte and an affiliate of Warburg Pincus.



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SBI to float At-1 bonds in domestic market, will mufual funds buy?, BFSI News, ET BFSI

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After HDFC Bank and Axis Bank successfully raised Additional Tier 1 (AT1) bonds from overseas investors, the State Bank of India is set to test the local market this week with such bonds.

State Bank of India plans to raise up to Rs 4,000 crore selling AT-1 in the local market, first by a lender in this fiscal.

The At-1 market was almost dead after the Securities and Exchange Board of India earlier this year changed the valuation rules, which were partially rolled back later.

If the issue is successful, other lenders may tap the local market rather than the overseas market.

HDFC Bank and Axis Bank have eschewed the local market this year raising funds via the AT1 route in the overseas market.

SBI bonds

SBI bonds are expected to be up for bidding on Wednesday on the electronic debt bidding platform of stock exchanges. The bonds may offer between 7.90% and 8.10% with a five-year call option, which allows investors an exit route.

AT1, or perpetual bonds, do not have any fixed maturity.

The bonds are compliant with Basel-III, an international capital standard.

SBI Capital Markets is helping the bank raise the money. It has reached out to several local investors including private banks, corporate treasuries, bond houses, retirement bodies, wealth managers and insurers.

AT1 bonds are billed as quasi-equity securities that bear a higher risk of capital losses. These are generally rated three-to-four notches lower than an issuer’s corporate credit rating.

Local rating firms Crisil and India Ratings have graded the SBI’s paper AAplus with a stable outlook.

The mutual fund position

Mutual funds, which once used to buy heavily in AT1 bonds, are lukewarm about this asset class after the banking regulator last year ordered that these instruments be written off in Yes Bank’s state-sponsored bailout. Also, on March 10, Sebi had ordered mutual funds to cap ownership of bonds with special features at 10% of the assets of a scheme and value them as 100-year instruments from next month, potentially triggering a redemption wave. Later, the capital markets regulator eased valuation rules but with some riders after the finance ministry asked it to withdraw the directive to mutual funds.

The muted response by MFs had prompted the lenders to tap the overseas market

Perpetual bond sales by banks have nearly halved to Rs 18,772 crore in FY21 from Rs 34,860 crore three years earlier.



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Govt extends tenure of Bank of India executive director PR Rajagopal by two years

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State-run Bank of India on Monday said the government has extended the term of its executive director PR Rajagopal by two years.

The central government vide notification dated August 26, 2021 extended the term of office of PR Rajagopal, Executive Director of the bank for a period of two years, beyond his currently notified term or until further orders, whichever is earlier, the bank said in a regulatory filing.

His current term was to expire on February 28, 2022.

The government last week extended the term of executive directors of various public sector banks. It also extended the terms of MD & CEOs of Punjab National Bank and Bank of Maharashtra.

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Axis Bank begins issuing debt securities under ₹35,000 crore-debt raise plan

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Axis Bank on Monday said it has started issuing debt securities under its ₹35,000 crore-debt raise plan announced earlier this year.

In April, the private sector lender had said that its board had approved capital raise proposal up to ₹35,000 crore by issuing various debt instruments in Indian or foreign currency in domestic/overseas markets in one or more tranches.

Shareholder approval

The shareholders of the bank had approved the proposal in the annual general meeting held in July.

“The bank has initiated the process of issuing of the debt instruments, in the form of the additional tier 1 notes (notes) in foreign currency, subject to market conditions,” Axis Bank said in a regulatory filing.

This will be a sustainable bond under the sustainable financing framework of the bank.

The issuance is part of the existing global medium term notes (GMTN) programme of the bank, it said.

The lender said the offering under the GMTN has been informed to Singapore Exchange (SGX) and the International Securities Market (ISM).

“The notes will not be offered or sold in India under the applicable laws,” it added.

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Reserve Bank of India – Press Releases

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(Amount in ₹ crore, Rate in Per cent)
  Volume
(One Leg)		 Weighted
Average Rate 		Range
A. Overnight Segment (I+II+III+IV) 0.00 – –
     I. Call Money 0.00 – –
     II. Triparty Repo 0.00 – –
     III. Market Repo 0.00 – –
     IV. Repo in Corporate Bond 0.00 – –
B. Term Segment      
     I. Notice Money** 0.00 – –
     II. Term Money@@ 0.00 – –
     III. Triparty Repo 0.00 – –
     IV. Market Repo 0.00 – –
     V. Repo in Corporate Bond 0.00 – –
  Auction Date Tenor (Days) Maturity Date Amount Current Rate /
Cut off Rate
C. Liquidity Adjustment Facility (LAF) & Marginal Standing Facility (MSF)
I. Today’s Operations
1. Fixed Rate          
     (i) Repo          
     (ii) Reverse Repo Sun, 29/08/2021 1 Mon, 30/08/2021 3,406.00 3.35
     (iii) Special Reverse Repo~          
     (iv) Special Reverse Repoψ          
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo          
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo          
3. MSF Sun, 29/08/2021 1 Mon, 30/08/2021 46.00 4.25
4. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs)£          
5. Net liquidity injected from today’s operations
[injection (+)/absorption (-)]*		       -3,360.00  
II. Outstanding Operations
1. Fixed Rate          
     (i) Repo          
     (ii) Reverse Repo Sat, 28/08/2021 2 Mon, 30/08/2021 12,438.00 3.35
  Fri, 27/08/2021 3 Mon, 30/08/2021 5,47,098.00 3.35
     (iii) Special Reverse Repo~ Fri, 27/08/2021 13 Thu, 09/09/2021 6,574.00 3.75
     (iv) Special Reverse Repoψ Fri, 27/08/2021 13 Thu, 09/09/2021 611.00 3.75
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo Fri, 27/08/2021 13 Thu, 09/09/2021 3,00,027.00 3.42
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo          
3. MSF Sat, 28/08/2021 2 Mon, 30/08/2021 4.00 4.25
  Fri, 27/08/2021 3 Mon, 30/08/2021 2.00 4.25
4. Long-Term Repo Operations# Mon, 17/02/2020 1095 Thu, 16/02/2023 499.00 5.15
  Mon, 02/03/2020 1094 Wed, 01/03/2023 253.00 5.15
  Mon, 09/03/2020 1093 Tue, 07/03/2023 484.00 5.15
  Wed, 18/03/2020 1094 Fri, 17/03/2023 294.00 5.15
5. Targeted Long Term Repo Operations^ Fri, 27/03/2020 1092 Fri, 24/03/2023 12,236.00 4.40
  Fri, 03/04/2020 1095 Mon, 03/04/2023 16,925.00 4.40
  Thu, 09/04/2020 1093 Fri, 07/04/2023 18,042.00 4.40
  Fri, 17/04/2020 1091 Thu, 13/04/2023 20,399.00 4.40
6. Targeted Long Term Repo Operations 2.0^ Thu, 23/04/2020 1093 Fri, 21/04/2023 7,950.00 4.40
7. On Tap Targeted Long Term Repo Operations€ Mon, 22/03/2021 1095 Thu, 21/03/2024 5,000.00 4.00
  Mon, 14/06/2021 1096 Fri, 14/06/2024 320.00 4.00
8. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs)£ Mon, 17/05/2021 1095 Thu, 16/05/2024 400.00 4.00
  Tue, 15/06/2021 1095 Fri, 14/06/2024 490.00 4.00
  Thu, 15/07/2021 1093 Fri, 12/07/2024 750.00 4.00
  Tue, 17/08/2021 1095 Fri, 16/08/2024 250.00 4.00
D. Standing Liquidity Facility (SLF) Availed from RBI$       23,295.80  
E. Net liquidity injected from outstanding operations [injection (+)/absorption (-)]*     -7,59,154.20  
F. Net liquidity injected (outstanding including today’s operations) [injection (+)/absorption (-)]*     -7,62,514.20  
G. Cash Reserves Position of Scheduled Commercial Banks
     (i) Cash balances with RBI as on 29/08/2021 6,25,873.00  
  28/08/2021 6,28,975.91  
     (ii) Average daily cash reserve requirement for the fortnight ending 10/09/2021 6,28,268.00  
H. Government of India Surplus Cash Balance Reckoned for Auction as on¥ 27/08/2021 0.00  
I. Net durable liquidity [surplus (+)/deficit (-)] as on 13/08/2021 11,32,933.00  
@ Based on Reserve Bank of India (RBI) / Clearing Corporation of India Limited (CCIL).
– Not Applicable / No Transaction.
** Relates to uncollateralized transactions of 2 to 14 days tenor.
@@ Relates to uncollateralized transactions of 15 days to one year tenor.
$ Includes refinance facilities extended by RBI.
& As per the Press Release No. 2019-2020/1900 dated February 06, 2020.
* Net liquidity is calculated as Repo+MSF+SLF-Reverse Repo.
# As per the Press Release No. 2020-2021/287 dated September 04, 2020.
^ As per the Press Release No. 2020-2021/605 dated November 06, 2020.
€ As per the Press Release No. 2020-2021/520 dated October 21, 2020, Press Release No. 2020-2021/763 dated December 11, 2020 and Press Release No. 2020-2021/1057 dated February 05, 2021.
¥ As per the Press Release No. 2014-2015/1971 dated March 19, 2015.
£ As per the Press Release No. 2021-2022/181 dated May 07, 2021.
~ As per the Press Release No. 2021-2022/177 dated May 07, 2021.
ψ As per the Press Release No. 2021-2022/323 dated June 04, 2021.
Ajit Prasad
Director   
Press Release: 2021-2022/773

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Aceware Fintech launches Acemoney UPI/QR code payments in Kerala

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Aceware FinTech Services, a fintech start-up mentored by the Kerala Start-up Mission and registered with Start-up India, has launched QR-based unified payments interface (UPI) payments in Kerala. Aceware FinTech Services, a subsidiary of Aceware, is the first Kerala-based company to launch UPI/QR payments.

Registered in 2020, the Kochi-based start-up offers ATM to home and neobanking services, beside UPI/QR payments. Aceware FinTech Services plans to take on its larger counterparts by providing better services and cashback offers to the merchants as well as the public.

“In case of other UPI/QR payments, settlement with the merchant is done only on the next day. But we offer the same day, two times a day, settlement to the merchants. Also, we offer coupons to the merchants for every ten payments made by customers using Acemoney QR code. The merchant can redeem the coupons when he makes a purchase from the wholesale dealer as we have tied up with some of the leading wholesale dealers in Kerala,” said Nimisha J. Vadakkan, Managing Director, Aceware FinTech Services.

Also read: Aceware launches first neobank in Kerala

For the personal users, the company has been offering cashback offers. “One of our main highlights is that the customers can redeem the cashback from any of the partner merchants within his or her 10 km radius,” she said.

Customer service points

Positioned as Kerala’s own UPI system, Aceware FinTech Services, is planning to set up Acemoney customer service points (CSPs) at all the 972 panchayats in the State by December this year. The company already has its CSPs in 120 panchayats. “One of the main issues faced by the merchants as well as individual customers is stuck payment. If a payment is stuck, both the merchant and the public do not know whom to contact. In our case, the individual customer and merchants can approach CSPs in their panchayat for resolving the issue,” Vadakkan said.

Aceware Fintech Services is also planning to provide loans to the merchants depending on the number of transactions they have made using Acemoney UPI/QR payments. The company is also the authorised partner of PM Street Vendor’s Atma Nirbhar Nidhi (PM SVANidhi), a special micro-credit facility for street vendors.

Acemoney Neo Bank

Acemoney Neo Bank, which was launched in April this year, has been mainly targeting retail customers. The company has been offering value added services such as door step pick-up and delivery of cash. “We are offering cash pick-up and delivery services for our customers from 9am to 9pm. Under the service a merchant can deposit his daily collection after closing the shop every day. Our customer executive will collect the cash and deposit the amount in the merchant’s neobank account in his presence itself,” she added.

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Axis Bank begins issuing securities under Rs 35,000 crore-debt raise plan, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: Axis Bank on Monday said it has started issuing debt securities under its Rs 35,000 crore-debt raise plan announced earlier this year.

In April, the private sector lender had said that its board had approved capital raise proposal up to Rs 35,000 crore by issuing various debt instruments in Indian or foreign currency in domestic/overseas markets in one or more tranches.

The shareholders of the bank had approved the proposal in bank’s annual general meeting in July.

“The bank has initiated the process of issuing of the debt instruments, in the form of the additional tier 1 notes (notes) in foreign currency, subject to market conditions,” Axis Bank said in a regulatory filing.

This will be a sustainable bond under the sustainable financing framework of the bank.

The issuance is part of the existing global medium term notes (GMTN) programme of the bank, it said.

The lender said the offering under the GMTN has been informed to Singapore Exchange Limited (SGX) and the International Securities Market (ISM).

“The notes will not be offered or sold in India under the applicable laws,” it added.



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