Month: August 2021

UCBs: RBI may nix norm to constitute Board of Management

Banking & Finance

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The Reserve Bank of India (RBI) may do away with the stipulation that requires Urban Co-operative Banks (UCBs) to constitute a Board of Management (BoM) as the September 2020 amendment to the Banking Regulation Act, 1949, gives the central bank full control over their functioning.

The lack of regulatory and supervisory powers, which the top officials of the RBI cited in the past as affecting the central bank’s ability to take prompt corrective action in case of irregularities in UCBs, has been addressed through the amendment to the BR Act.

Therefore, there is no need to create an organisational tier under the BoD, say co-operative banking experts.

Dual control

Before this amendment, UCBs were under the dual control of the RBI and respective State governments or Central government (in the case of multi-state cooperative banks), constraining timely regulatory action against weak banks.

To address the vexed issue of dual control, the central bank had, in December 2019, issued a circular, directing UCBs to constitute BoM, in addition to the Board of Directors.

As per this circular, the RBI has powers to remove any member of BoM and/ or the CEO if the person is found to be not meeting the criteria prescribed by it, or acting in a manner detrimental to the interests of the bank or its depositors or both. Further, it can also supersede the BoM if its functioning is found unsatisfactory.

Functional problems

The National Federation of UCBs and Credit Societies (NAFCUB) had, in January 2020, flagged the operational and functional problems due to the BoM stipulation and also the issue of accountability of BoM members with RBI Governor Shaktikanta Das. In a letter to the Governor, the federation had also expressed concern regarding availability of a large number of members having special knowledge or practical experience in areas such as accountancy, agriculture and rural economy, banking, co-operation, finance, law, and IT, among others, for appointment as BoM.

The central bank’s December 2019 notification directs every UCB with deposit size of ₹100 crore and above to put in place a BoM. As of March-end 2020, of the 1,539 UCBs in the country, 663 fell under this category.

The BoM (excluding CEO) should have a minimum of five members, and the maximum number of members should not exceed 12.

So, UCBs with deposit size of ₹100 crore and above, will need to collectively appoint between 3,315 to 7,956 professionally qualified members, depending on the numbers they chose to appoint as per the regulatory criteria.

BoM will increase the administrative expenses for UCBs for sure as members have to be paid sitting fees. These banks are already paying sitting fees to members of BoD.

The federation has vehemently opposed the linkage of expansion of area of operation and opening new branches by UCBs to them constituting BoM.

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Top 5 Best High Rated Mutual Fund SIPs From Canara Robeco Fund House

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Top 5 Best Ranked Mutual Fund SIPs From Canara Robeco Fund House

Fund name 1-Year Returns 3-Year Returns Ratings
Canara Robeco Equity Tax Saver Fund 58.31% 20.63% Morningstar: 5 Star ValueResearch: 5 Star

CRISIL: 5 Star

Canara Robeco Emerging Equities Fund 60.20% 17.31% Morningstar: 5 Star ValueResearch: 5 Star CRISIL: 4 Star Canara Robeco Bluechip Equity Fund 47.00% 18.56% Morningstar: 5 Star ValueResearch: 5 Star CRISIL: 5 Star Canara Robeco Equity Hybrid Fund 37.00% 16.28% Morningstar: 5 Star ValueResearch: 5 Star CRISIL: 4 Star Canara Robeco Conservative Hybrid Fund 15.78% 11.93% Morningstar:5 Star ValueResearch:5 Star CRISIL: 5 Star

Canara Robeco Equity Tax Saver Fund

Canara Robeco Equity Tax Saver Fund

The assets under management (AUM) of Canara Robeco Equity Tax Saver Direct-Growth is Rs 2,343 crores. The fund’s fee ratio is 0.75 percent, which is lower than the expense ratios charged by most other ELSS funds. NAV of the fund as of August 5, 2021 is 200.86. Canara Robeco Equity Tax Saver Direct has a 1-year growth rate of 58.30 percent. Since its inception, it has averaged 16.95 percent annual returns. The fund has a 5 Star rating from ValurResearch, Morningstar, and CRISIL rating agency.

SIPs in the fund can be set up with a minimum investment of Rs. 500, whereas lump sum payments require a minimum investment of Rs. 5000. The fund’s Rs. 10,000 monthly SIP for 3 years will be currently worth Rs. 5.73 lakh.

The fund is invested in Indian stocks to the tune of 97.27 percent, with 59.35 percent in large cap stocks, 15.83 percent in mid cap stocks, and 6.31 percent in small cap stocks. This fund is for investors who want to put their money into anything for at least three years and want to save money on taxes in addition to getting a better return.

The majority of the money in the fund is invested in the financial, technology, construction, automobile, and engineering industries.

Canara Robeco Emerging Equities Fund

Canara Robeco Emerging Equities Fund

Canara Robeco Emerging Equities Fund Direct-Growth is a Canara Robeco Mutual Fund Large & MidCap mutual fund strategy. The fund manages a total of $9,633 crores in assets (AUM). The fund has a 0.64 percent cost ratio, which is lower than most other Large & MidCap funds. Canara Robeco Emerging Equities Fund Direct-Growth returns have been 60.20 percent during the last year. It has returned an average of 23.06 percent per year since its inception.

The Financial, Automobile, Healthcare, Technology, and Chemicals sectors account for the majority of the fund’s holdings. HDFC Bank Ltd., Infosys Ltd., ICICI Bank Ltd., Axis Bank Ltd., and Bajaj Finance Ltd. are the fund’s top five holdings.

The fund’s Rs. 10,000 monthly SIP for three years would be worth Rs. 5.67 lakh at the moment.

The fund has a 5 Star rating from ValurResearch, Morningstar and a 4 Star from the CRISIL rating agency.

Canara Robeco Bluechip Equity Fund

Canara Robeco Bluechip Equity Fund

Canara Robeco Bluechip Equity Fund Direct-Growth is a Canara Robeco Mutual Fund Large Cap mutual fund scheme. This fund has been around for 8 years and 7 months. The assets under management (AUM) of Canara Robeco Bluechip Equity Fund Direct-Growth is 3,308 crores. The fund’s expense ratio is 0.42 percent, which is comparable to the expense ratios charged by most other Large Cap funds.

The fund’s Rs. 10,000 monthly SIP for three years would be worth Rs. 5.43 lakh at the moment.

Canara Robeco Bluechip Equity Fund Direct-Growth is a Canara Robeco Mutual Fund equity mutual fund scheme. It has an AUM of 3,308.09 crores, and the most recent NAV declared is 43.150. Canara Robeco Bluechip Equity Fund Direct-Growth returns have been 47.37 percent over the last year. It has returned an average of 15.93 percent every year since its inception.

The majority of the money in the fund is invested in the financial, technology, energy, construction, and automobile industries. HDFC Bank Ltd., Infosys Ltd., ICICI Bank Ltd., Reliance Industries Ltd., and Tata Consultancy Services Ltd. are the fund’s top five holdings.

Canara Robeco Equity Hybrid Fund

Canara Robeco Equity Hybrid Fund

Canara Robeco Equity Hybrid Fund Direct-Growth is a Canara Robeco Mutual Fund Aggressive Hybrid mutual fund plan. The fund manages a total of 5,636 crores in assets (AUM). The fund’s expense ratio is 0.67 percent, which is lower than the expense ratios charged by most other Aggressive Hybrid funds. The fund currently has a 73.25 percent stock allocation and a 23.02 percent debt allocation.

The financial, technology, healthcare, automobile, and construction industries make up the majority of the fund’s equity holdings. Infosys Ltd., HDFC Bank Ltd., ICICI Bank Ltd., Reliance Industries Ltd., and GOI are the fund’s top five holdings.

The fund’s Rs. 10,000 monthly SIP for three years would be worth Rs. 5.1 lakh at the moment.

ValurResearch and Morningstar have given the fund a 5-star rating, while CRISIL has given it a 4-star rating.

Canara Robeco Conservative Hybrid Fund

Canara Robeco Conservative Hybrid Fund

Canara Robeco Conservative Hybrid Fund Direct-Growth is a Canara Robeco Conservative Hybrid mutual fund plan. The fund manages a total of 655 crores in assets (AUM). The fund’s expense ratio is 0.61 percent, which is lower than the expense ratios charged by most other Conservative Hybrid funds. The fund now has a 22.84 percent equity allocation and a 69.68 percent debt allocation.

The equity element of the fund is predominantly invested in the Financial, Automobile, Services, Healthcare, and Technology industries. GOI, Reserve Bank of India, Housing Development Finance Corpn. Ltd., Tamilnadu State, and Rural Electrification Corpn. Ltd. are the fund’s top five holdings.

Disclaimer

Disclaimer

The views and investment tips expressed by authors or employees of Greynium Information Technologies, should not be construed as investment advise to buy or sell stocks, gold, currency or other commodities. Investors should certainly not take any trading and investment decision based only on information discussed on GoodReturns.in We are not a qualified financial advisor and any information herein is not investment advice. It is informational in nature. All readers and investors should note that neither Greynium nor the author of the articles, would be responsible for any decision taken based on these articles. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in GoodReturns.in.



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Indian Bank signs MoU with IIM-B incubation arm, to disburse exclusive loans to start-ups, BFSI News, ET BFSI

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CHENNAI: Indian Bank has signed a Memorandum of Understanding (MoU) with the incubation arm of Indian Institute of Management-Bangalore (IIM-B) for extending exclusive credits to start-ups.

The incubation arm of the IIM-B, NSRCEL, is a platform, which brings together the start-ups, industry mentors and eminent academicians and researchers from the parent institution for continuous interaction.

As per the MoU, the NSRCEL will identify start-ups and MSMEs based on their credentials and past experience and refer them to the bank for financial assistance.

The bank will extend loans of up to Rs 50 crore to these start-ups under its ‘Ind Spring Board’ scheme, which is exclusively tailored for the task.

While announcing the development, Padmaja Chunduru, Managing Director and Chief Executive Officer of Indian Bank, highlighted the start-ups’ unique needs and requirement of suitable counselling and training for tapping equity and debt funding.

The Indian Bank also has a business mentoring programme, MSME Prerana, to empower such entrepreneurs through skill development and capacity building workshops in local languages.



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Axis Bank Crosses 1 Million Registrations On WhatsApp Banking: Here’s How To Register

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Planning

oi-Vipul Das

|

Axis Bank, which started offering banking services via WhatsApp in January 2021, recently announced on August 5, 2021 that it had surpassed the 1 million customer record on its WhatsApp Banking platform, with an astounding 6 million requests so far. Sameer Shetty, President and Head – Digital Business & Transformation, Axis Bank, commented on the milestone that “With Axis Bank’s ‘Dil Se Open’ philosophy, we are commited to build sharper customer focus and greater convenience through constant innovation in our offerings. We are thrilled to have achieved the milestone of 1 million+ customers in a such a short time on our WhatsApp Banking channel, with enhanced customer engagement and minimised turn-around time providing a personalized experience, while ensuring complete data security and privacy.

The adoption that we are seeing here shows that the Indian customer is always evolving and our objective is to re-define the role we can play in their lives, by elevating and simplifying digital banking to new domains of customer engagement.” The bank has also stated on its official website that “With WhatsApp Banking, customers can initiate a simple chat with Axis Bank’s registered WhatsApp number 7036165000 and get banking services and FAQ’s handled instantly. This simple and convenient form of banking has seen a great adoption amongst customers with an average Daily Active User count of more than 13,000, while the average Monthly Active User count goes up to 0.2 million.” Here’s all you need to know about WhatsApp Banking Service provided by Axis Bank.

Axis Bank WhatsApp Banking Services

Axis Bank WhatsApp Banking Services

WhatsApp Banking is accessible 24 hours a day, 7 days a week at Axis Bank. Customers and non-customers of the bank will be able to use this service securely on an end-to-end encryption basis. According to the bank’s official website, the following is a list of services available through WhatsApp Banking.

Fixed Deposit

  • Generate List of Fixed Deposits
  • View your FD details
  • Open Express FD

Account

  • Get your Account Balance
  • Generate Account/Mini Statement
  • Order Cheque Book, Open Video KYC Instant Savings Account
  • Block Debit Card

Credit Card

  • Get your Outstanding Amount, Available Credit Limit
  • Summary of Credit Card, Bill Payment details
  • Block your Credit Card

More

  • Ask anything related to your queries
  • Get Pre-Approved Personal Loans in WhatsApp
  • Apply for our Banking Products
  • Locate Axis Bank Branches/ATM

How to subscribe to Axis Bank WhatsApp Banking Service?

How to subscribe to Axis Bank WhatsApp Banking Service?

Customers and non-customers who want to subscribe can simply send a message to 7036165000 on WhatsApp to sign up for Axis Bank WhatsApp Banking. Upon successful subscription, customers can experience a plethora of banking services such as Accounts/Cheques, Credit Cards, Term Deposits, and Loans. Customers who are not affiliated with Axis Bank can use services such as ‘Apply for Products’ and ‘Find Nearest ATM/Branches/Loan Centers’.

Non-financial service enquiries, such as locating ATMs or checking for third-party offers available on Credit/Debit Cards, can also be made through the WhatsApp Banking service of the bank. Customers can use WhatsApp to inspect for any information using Axis Aha, the bank’s chatbot. You can discover more about Axis Bank’s WhatsApp Banking by visiting https://www.axisbank.com/bank-smart/axis-whatsapp-banking. You can register for WhatsApp Banking service by visiting https://axisbank.com/whatsapp.

How to get started with WhatsApp Banking Service of Axis Bank?

How to get started with WhatsApp Banking Service of Axis Bank?

In order to get started with WhatsApp Banking Service of Axis Bank, customers need to visit https://application.axisbank.co.in/Webforms/Whatsappbanking/Whatsappbanking.Aspx?pid=misc&c=axis-whatsapp-banking&text=signup and enter their registered mobile number and the required CAPTCHA code. Then they need to accept the terms and conditions and click on ‘Submit’ for registration. Customers can also type “Starr” and send it to 7036165000 or they can give a missed call on “7036165000” for successful registration of WhatsApp Banking service of the bank.

Following successful subscription, you will get a congratulatory message from the bank’s Business Account through WhatsApp. It will be labelled as a “Verified Business” with a green mark on the account. This will validate your subscription registration and you will get a confirmation message from 7036165000. You need to save this number and send a “Hi” on WhatsApp to start a session with Axis Bank using your WhatsApp account.



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Central Bank of India enters into strategic co-lending partnership with Dhanvarsha Finvest

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Central Bank of India (CBoI) has entered into a strategic co-lending partnership with Dhanvarsha Finvest Ltd (DFL) to offer loans against gold ornaments under priority sector to Micro, Small and Medium Enterprise (MSME) borrowers at competitive rates.

Under this partnership, DFL will originate and process loans against gold ornaments as per jointly formulated credit parameters and eligibility criteria and CBoI will take into its book 80 per cent of the gold loans under mutually agreed terms, as per the public sector bank’s stock exchange filing.

DFL will service the loan account throughout the life cycle of the loan.

The participation by both the entities in this co-lending arrangement will result in greater expansion of portfolio by CBoI and DFL, the Bank said.

Dhanvarsha Finvest is a BSE-listed non-banking finance company providing credit to the MSME sector. It has branches in Maharashtra, Delhi NCR and Madhya Pradesh.

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Net profit dips 57% to Rs 34 crore, BFSI News, ET BFSI

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New Delhi: DCB Bank on Saturday reported over 57 per cent decline in net profit at Rs 33.76 crore for June quarter 2021-22. The bank had posted a net profit of Rs 79.38 crore in the year- ago period. The profit was also down from Rs 77.91 crore in previous March quarter.

Total income during April-June 2021-22 was up at Rs 965.67 crore from Rs 950.70 crore in the year-ago period , DCB Bank said in a regulatory filing.

While the bank’s treasury income rose during the quarter, the corporate and retail banking income fell from the year-ago period.

Expenditure of the bank was higher during the quarter at Rs 764.48 crore as against Rs 759.56 crore.

Bad loans of the bank rose with gross non-performing assets (NPAs) jumping to 4.87 per cent of gross loans as of June 30, 2021 from 2.44 per cent by June 2020. Sequentially also, it was higher from 4.09 per cent at March-end 2021.

Net NPAs rose to 2.82 per cent from 0.99 per cent at June-end 2020 and 2.29 per cent by end of March 2021.

Provisions for bad loans and contingencies were raised significantly to Rs 155.54 crore in the quarter from Rs 83.69 crore in the year-ago period.



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DoT engages with banks to find solution to stress in telecom sector, BFSI News, ET BFSI

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The Department of Telecommunications (DoT) has initiated discussions with banks to address financial stress in the telecom sector, particularly Vodafone Idea Ltd (VIL) that urgently requires fund infusion to stay afloat.

There was a meeting of DOT officials and senior bankers on Friday on the issue of Vodafone, sources said, adding that banks have been asked to look for a solution within the prudential guidelines.

According to sources, senior officials from the country’s biggest lenders State Bank of India and Bank of Baroda were also present among others in the meeting.

More such meetings are expected to take place in the coming days, they said.

Meanwhile, the finance ministry has asked public sector banks to collate and submit data related to their debt exposure to the telecom sector in general and VIL in particular.

Lenders, both public and private, stare at a loss of Rs 1.8 lakh crore in case VIL collapses. A large part of the loans to the lender is in the form of guarantees with public sector banks having a lion’s share of the debt. Among the private sector lenders, Yes Bank and IDFC First Bank may be impacted the most. As a precursor, some private lenders with a funded exposure have already started making provisions.

For example, IDFC First Bank has marked the account of VIL as stressed and has made provisions of 15 per cent (Rs 487 crore) against the outstanding exposure of Rs 3,244 crore (funded and non-funded).

“This provision translates to 24 per cent of the funded exposure on this account. The said account is current and has no overdues as of June 30, 2021,” the lender said in its Q1 FY’22 investor presentation, referring to the account as “one large telecom account”.

According to official data, VIL had an adjusted gross revenue (AGR) liability of Rs 58,254 crore out of which the company has paid Rs 7,854.37 crore and Rs 50,399.63 crore is outstanding.

The company’s gross debt, excluding lease liabilities, stood at Rs 1,80,310 crore as of March 31, 2021. The amount included deferred spectrum payment obligations of Rs 96,270 crore and debt from banks and financial institutions of Rs 23,080 crore apart from the AGR liability.

In a backdrop of such a large liabilities, both the promoter Vodafone Plc (45 per cent stake) and Aditya Birla Group (27 per cent stake) expressed their inability to bring in additional capital.

Writing a letter to Cabinet Secretary Rajiv Gauba in June, Aditya Birla Group Chairman Kumar Mangalam Birla said investors are not willing to invest in the company in the absence of clarity on AGR liability, adequate moratorium on spectrum payments and most importantly floor pricing regime being above the cost of service.

“It is with a sense of duty towards the 27 crore Indians connected by VIL, I am more than willing to hand over my stake in the company to any entity-public sector/government /domestic financial entity or any other that the government may consider worthy of keeping the company as a going concern,” Birla said in the letter.

Birla has quit the post of non-executive chairman post of the floundering telecom giant last week.

Giving relief to Vodafone on one front, the government has proposed to withdraw all back tax demands on companies with passage of ‘The Taxation Laws (Amendment) Bill, 2021’.

The 2012 legislation, commonly referred to as the retrospective tax law, was enacted after the Supreme Court in January that year rejected proceedings brought by tax authorities against Vodafone International Holdings BV for its failure to deduct withholding tax from USD 11.1 billion paid to Hutchison Telecommunications in 2007 for buying out its 67 per cent stake in a wholly-owned Cayman Island incorporated subsidiary that indirectly held interests in Vodafone India Ltd.

The Finance Act 2012, which amended various provisions of the Income Tax Act, 1961 with retrospective effect, contained provisions intended to tax any gain on transfer of shares in a non-Indian company, which derives substantial value from underlying Indian assets, such as Vodafone’s transaction with Hutchison in 2007 or the internal reorganisation of the India business that Cairn Energy did in 2006-07 before listing it on local bourses.

Using that law, tax authorities in January 2013 slapped Vodafone with a tax demand of Rs 14,200 crore, including principal tax of Rs 7,990 crore and interest. This was in February 2016 updated to Rs 22,100 crore plus interest.

A similar demand was also slapped on Vedanta Ltd, which bought Cairn’s India business in 2011. Both Cairn and Vodafone challenged the demand under bilateral investment treaties India has with UK and the Netherlands, and they both got favourable rulings recently.

Vedanta, from whom no tax recovery was made, too initiated arbitration to challenge the tax demand under the India-UK treaty. That arbitration award has not come yet.



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‘E-pass on time helped MSMEs in lockdown’, BFSI News, ET BFSI

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Kolkata: Timely issuance of e-pass helped the MSME sector to continue its operations uninterruptedly during the Covid-19 lockdown period, said Chandranath Sinha, state minister for department of micro, small and medium enterprise (MSME) and textiles.

Speaking at a semi-virtual session organised by the Bengal National Chamber of Commerce & Industry (BNCCI), the minister added that during the first and second wave of the Covid-19 pandemic, the MSME department left no stone unturned to boost the supply of PPE Kits, masks, gloves, sanitisers and oxygen cylinders.

He highlighted a number of strategic initiatives undertaken by the state government to facilitate ease of doing business amid a challenging environment.

In an attempt to protect the health and livelihood of labourers who work day and night to ensure the continuous operations of industrial units, the MSME department has made efforts to provide free vaccination to both permanent and contractual workers and other stakeholders in the sector, said Swaroop Udayakumar, director, Directorate of MSME and textiles.

The process issuing of pollution licence for MSMEs in West Bengal has been made online and the time period for the issuance of this licence has been reduced from 14 days to 72 hours to facilitate ease of doing business.

Moreover, a quasi-judicial forum called MSME Facilitation and Arbitration Council has been formed to allow MSMEs to file complaints if they fail to get payment from a buyer within 45 days, thereby helping them clear a backlog of payments. “In a matter of two hours, we settled almost 8-10 crores of arbitration claims,” Udayakumar added.

Read more:

The government and the central bank push to support MSMEs during the pandemic through credit measures like the emergency credit line guarantee scheme (ESLGS) saw lending to them jumping to Rs 9.5 lakh crore in the pandemic-hit FY21 from Rs 6.8 lakh crore in FY20, while the asset quality deteriorated to 12.6 per cent as of March 2021 from 12 per cent in December 2020.



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7 firms in race for transaction advisor, BFSI News, ET BFSI

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As many as seven firms, including JM Financial, Ernst and Young and Deloitte, have bid for managing the strategic sale of IDBI Bank.

These firms would make a virtual presentation before the Department of Investment and Public Asset Management, which is handling the sale process, on August 10, according to a notice by DIPAM.

The firms that have bid for acting as transaction advisor are Deloitte Touche Tohmatsu India LLP, Ernst and Young LLP, ICICI Securities, JM Financial Ltd, KPMG, RBSA Capital Advisors LLP and SBI Capital Markets.

DIPAM would appoint one transaction advisor for the strategic sale of IDBI Bank, in which the central government and LIC together own more than 94 per cent.

LIC, currently having management control, has a 49.24 per cent stake, while the government holds 45.48 per cent in the bank. Non-promoter shareholding stands at 5.29 per cent.

The exact quantum of stake dilution would be decided later.

The government in June invited bids from reputed professional consulting firms / investment bankers / merchant bankers / financial institutions / banks, for facilitating/assisting DIPAM in the process of strategic disinvestment of IDBI Bank Ltd. along with transfer of management control, till completion of the transaction. The last date for bid submission was July 13, which was later extended till July 22.

The Transaction Advisor would be required to advise and assist the government on modalities of disinvestment and the timing; recommend the need for other intermediaries required for the process of sale/disinvestment and also help in identification and selection of the same with proper Terms of Reference; preparation of all documents like Preliminary Information Memorandum (PIM), organise roadshows, suggest measures to fetch optimum value.

The advisor would also be supporting IDBI Bank in setting up of the e-data room and assisting in the smooth conduct of the due diligence process, will help position the divestment of GoI equity in IDBI Bank to organize roadshows and to generate interest among the prospective buyers.

The Cabinet in May had approved the strategic sale of the entire stake of the government and Life Insurance Corporation (LIC) in IDBI Bank Ltd.

In response to queries received from potential transaction advisors in IDBI Bank, the DIPAM had last month clarified that since LIC’s stake would be sold along with that of the government’s, a single transaction advisor would manage the entire share sale process.

The quantum of stake dilution would be declared before RFP (Request for Proposal) stage of the transaction.

Finance Minister Nirmala Sitharaman in her Budget for 2021-22 had said the process of privatisation of IDBI Bank would be completed in the current fiscal. The government aims to mop up Rs 1.75 lakh crore in the current fiscal from minority stake sale and privatisation.

Of the Rs 1.75 lakh crore, Rs 1 lakh crore is to come from selling government stake in public sector banks and financial institutions while Rs 75,000 crore would come as CPSE disinvestment receipts.

So far in the current fiscal the government has mobilised Rs 7,648 crore as disinvestment receipts.



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ECB must tighten policy if needed to counter inflation, Weidmann says, BFSI News, ET BFSI

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FILE PHOTO: German Bundesbank President Jens Weidmann attends the 29th Frankfurt European Banking Congress (EBC) at the Old Opera house in Frankfurt, Germany November 22, 2019. REUTERS/Ralph Orlowski/File Photo

BERLIN, – The European Central Bank must tighten monetary policy if it needs to counter inflationary pressures and cannot be put off from doing so by the financing costs of euro zone states, ECB policymaker Jens Weidmann told the Welt am Sonntag newspaper.

Euro zone countries have ramped up their borrowing to cope with the coronavirus pandemic, potentially leaving them exposed to increased debt servicing costs if the central bank tightens policy to counter upward pressure on prices.

“The ECB is not there to take care of the solvency protection of the states,” said Weidmann, whose role as president of Germany’s Bundesbank gives him a seat on the ECB’s policymaking Governing Council.

Should the inflation outlook rise sustainably, the ECB would have to act in line with its price stability objective, Weidmann said. “We have to make it clear again and again that we will tighten monetary policy if the price outlook calls for it.

“We cannot then take into account the financing costs of the states,” he added.

After its July 22 policy meeting, the ECB pledged to keep interest rates at record lows for even longer to boost sluggish inflation, and warned that the rapidly spreading Delta variant of the coronavirus posed a risk to the euro zone’s recovery.

“I do not rule out higher inflation rates,” the paper quoted Weidmann as saying. “In any case, I will insist on keeping a close eye on the risk of an excessively high inflation rate and not only on the risk of an excessively low inflation rate.”

The euro zone economy grew faster than expected in the second quarter, pulling out of a pandemic-induced recession, while the easing of coronavirus curbs also helped inflation shoot past the ECB’s 2% target in July, hitting 2.2%.

When the ECB decides it is time to tighten policy, Weidmann expected the central bank would first end its PEPP emergency bond purchase programme before scaling back its APP purchase plan.

“The sequence would then be: first we end the PEPP, then the APP is scaled back, and then we can raise interest rates,” he said. (Writing by Paul Carrel Editing by David Holmes)



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