Month: September 2021

Gold prices flat as markets await Fed tapering timeline, BFSI News, ET BFSI

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Gold prices were flat on Tuesday as investors adopted a risk-averse stance amid caution ahead of US Federal Reserve‘s policy meeting where the central bank is expected to provide cues on when it will begin tapering its asset purchases.

Bullion is considered as a hedge against inflation and currency debasement likely resulting from the widespread stimulus. A hawkish move by the Fed would diminish gold’s appeal, while an eventual interest rate hike would also raise the opportunity cost of holding the non-interest bearing asset.

FUNDAMENTALS
Spot gold was steady at $1,763.60 per ounce, as of 0123 GMT.

Prices had recovered on Monday from an over one-month low on safe-haven demand as China’s Evergrande debt woes fuelled sharp sell-off in stocks worldwide.

US gold futures were flat at $1,764.40.

Worries about the fallout from property developer Evergrande’s solvency issues spooked financial markets and lifted the dollar index, which hit a near one-month peak on Monday. A firmer dollar generally makes bullion more expensive for other currency holders.

Fed is likely to provide an outlook on how soon and how often they think the economy will need interest rates rises over the next three years when they release new forecasts at their policy meeting on Wednesday.

The volume of the European Central Bank‘s bond purchases is becoming “less important” as the economic outlook improves and the money-printing scheme becomes a tool for guiding rate expectations, ECB board member Isabel Schnabel said on Monday.

Russia’s gold reserves stood at 73.8 million troy ounces as of the start of September, the central bank said on Monday.

Silver edged up 0.1% to $22.26 per ounce, having hit a more than nine-month low of $22.01 in the previous session.

Palladium climbed 0.6% to $1,896.30 after slumping to its lowest level since June 2020 on Monday.

Platinum rose 0.5% to $915.05, having touched a 10-month low on Monday.



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Buy And Sell: Intra-Day Stock Ideas For Sept 21 From Experts

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Investment

oi-Sunil Fernandes

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Investors are cautious ahead of Federal Reserve and ECB meeting this week, awaiting indications as to when the central bank will start withdrawing its monetary stimulus and start raising interest rates eventually. This along with worry over slower economic growth and rising Delta variant cases globally continue to keep market nervous. Even valuations are not comfortable and hence could lead to bouts of profit booking.

Thus traders should adopt stock specific approach while investors could tap this opportunity to accumulate quality stocks, says Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

Buy And Sell: Intra-Day Stock Ideas For Sept 21 From Experts

Here are a few stock trading ideas for intra-day traders for Sept 21 from analysts and experts.

1) Dr. Ravi Singh, Founder and Director, DRS Advisory
Havells: Sell at Rs1406, Target Rs 1350, Stop Loss Rs 1425
Tata Motors DVR: Buy Rs 146.50, Target Rs 155, Stop Loss Rs 142

2) Manoj Dalmia, Founder and Director, Proficient Equities Private Limited

Summit Sec: Buy at Rs 815, Target Rs 880, Stop Loss Rs 780

3) Ravi Singhal, Vice chairman, GCL Securities Limited

PEL: Sell at Rs 2503, Target Rs 2470, Stop Loss Rs 2522

4) Kapil Goenka, Founder at Eternity Financial Services

Sona BMW: BUY at Rs 566, Target Rs 588, Stop loss Rs 550



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Goldman Sachs, BFSI News, ET BFSI

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Mumbai: New initial public offerings (IPOs) will help add $400 billion to the overall market capitalisation over the next three years, an American brokerage said on Monday. The estimate comes on the back of a surge in IPO activity in the last few months, which has seen companies raise $10 billion from public markets since the beginning of the year — higher than the money raised in the three years prior to that, Goldman Sachs said.

“We expect the IPO pipeline to remain robust over the next 12-24 months, based on recent announcements from ‘new economy’ unicorns and our objective framework for estimating new listings,” it said.

The number of such ‘unicorns’, which are companies having a valuation of $1 and above, has surged in India in recent years, enabled by the rise of the internet ecosystem, availability of private capital and favourable regulatory environment, it said.

“We estimate nearly $400 billion of market cap could be added from new IPOs over the next 2-3 years. India’s market cap could increase from $3.5 trillion currently to over $5 trillion by 2024, making it the 5th largest market by capitalization,” it said.

Last week, India surpassed France to be the country with the sixth highest market capitalisation.

At present, Indian equity indices are among the ‘oldest’ in the region with the average listing age exceeding 20 years and dominated by old-economy sectors.

However, as the large digital IPOs get included, the new economy sector’s exposure could rise from 5 per cent to 12 per cent (at 50 per cent float) and 16 per cent (full inclusion) over the next 2-3 years, it said.

Among the companies which have debuted on the stock markets is Zomato, while others like the fintech player Paytm are in the fray.

While Indian equities have done well this year (trading 26 per cent up since January), being the best performing market regionally has prompted overheating concerns, the brokerage said, but added that it is overweight on expectations of a strong cyclical recovery and supportive flows.

Additionally, the strong thematic appeal and growth potential of the new economy sectors lend support to the medium-term view.

“Investors can find attractive return opportunities, as long as they don’t overpay for growth, as evidenced by significant outperformance of China’s new economy stocks over the past decade. Financial intermediaries may have substantial revenue opportunities from growth in issuance-related activities,” it added.



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AU Small Finance Bank issues over 40,000 credit cards since inception, BFSI News, ET BFSI

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AU Small Finance Bank (SFB) on Monday said it has issued over 40,000 credit cards since its launch a few months back, and more than half of them are first time users. “AU Small Finance Bank, the first SFB in India to launch its own range of credit cards, has issued 40,000 plus credit cards,” AU SFB said in a release.

Of the total credit card issued, over 50 per cent of customers are first time users in more than 150 districts of the country since launch, it added.

The Jaipur based lender said it is the first SFB to enter semi-urban and rural areas with its own credit cards.

It also offers a special Altura plus credit card to empower women to experience a limitless living.

In future, the bank is also working on bringing out its limited-edition cards, featuring the bank’s brand ambassadors Aamir Khan and Kiara Advani.

“With our credit cards, besides the suave urban populace, we aim to empower the customers at rural and semi-urban locations.

“Having enrolled more than 50 per cent of customers as first-time credit card users in such a short span, I believe we are on our way to a new beginning,” Mayank Markanday, Chief of Credit Cards, AU Small Finance Bank said.

The bank offers credit cards in four variants: Altura, Altura Plus, Vetta and Zenith.



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RBI deputy governor stresses on need to mainstream green finance, BFSI News, ET BFSI

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There is a need to mainstream green finance and devise ways for incorporating environment impact into commercial lending decisions, RBI deputy governor M Rajeshwar Rao has said.

Addressing climate risk in the financial sector should be the joint responsibility of stakeholders as it would affect the resilience of the financial system in the long run, he said.

Rao made these comments while speaking at the CAFRAL Virtual Conference on Green and Sustainable Finance) recently.

“As the risks and opportunities and financial impact arising from climate change vary across jurisdictions, this poses unique considerations for emerging economies like India.

“The challenge before us is to mainstream green finance and think of ways to incorporate the environmental impact into commercial lending decisions while simultaneously balancing the needs of credit expansion, economic growth and social development,” Rao said.

He noted that the global understanding of systemic impact of climate change on the economy and the financial system as also its resultant impact on financial stability is evolving and, accordingly, the responses of central banks and supervisors around the world have also been developing.

“The private and the public sector need to build on our early progress, both by recognising what we do know and urgently filling in the gaps around what we do not,” Rao said.

He further said the impact of climate risk transcends across the national borders and continents.

“Let us be aware that even the countries which are not major contributors will also be equally impacted by these risks. We all are in it together,” he said.

Climate-related financial risk refers to the risk assessment based on analysis of the likelihoods, consequences and responses to the impact of climate change.

Thus, climate-related financial risks may arise not just from climate change but also from efforts to mitigate these changes, Rao said.

A report of the ministry of earth sciences, government of India released last year concluded that since the middle of the 20th century, India has witnessed a rise in average temperature, a decrease in monsoon precipitation, a rise in extreme temperature, droughts, and sea levels, as well as increase in the intensity and frequency of severe cyclones.



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MF staff under 35 get two years to comply with the 20% norm

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Market regulator SEBI has eased the ‘skin-in-the-game’ norm for mutual fund employees by allowing those below 35 years to comply with the rules over the next two years.

Junior members of fund management teams can invest 10 per cent of their salary in the schemes they manage between October 1, 2021 and September 30, 2022 and 15 per cent from October 1, 2022 to September 30, 2023. After October 2023, they will need to invest 20 per cent of their income.

However, other designated employees, who are older than 35, have to invest from October 20 per cent of their annual salary in the scheme they manage.

In April, SEBI had mandated that a minimum of 20 per cent of the salary of key employees should be paid in the form of units of the mutual fund schemes in which they have a role or oversight, with the allotments locked for three years.

While the new norm is intended to align employees’ interest with that of unitholders, industry players had raised concerns over rising wage costs. The industry also sought more time to implement it, and the regulator had postponed the implementation to October instead of the earlier notified deadline of July 1. Now, SEBI has also allowed fund managers to set-off their current investments against the mandatory investment to be made under the new regulation.

Investment in MF units have to be made on the salary day and the previous month’s closing AUM will be taken for apportioning the investment across eligible schemes. All non-cash benefits and perks, excluding superannuation benefits and gratuity, will be added to the salary for calculating the 20 per cent investment level, SEBI said.

Designated employees can set off their existing investments against the fresh investments as required in the same schemes but the three-year lock-in will be applicable from the day of set-off.

After the expiry of lock-in period, employees can roll their investment for further commitment and the new investment will be locked for three years.

Implementation issues

No mutual fund offered a comment, but a senior MF executive said the new norm will make life difficult not only for MF employees but also for AMCs as it will make compliance cumbersome.

“Since the value of the compensation will be market-linked and changing on a daily basis, it is not clear how it will be used to issue the units and calculate the monthly tax outgo of these executives. If a fund manager is handling several schemes, it becomes even tougher to compute the percentage of salary to be given in units and the tax on them,” he said.

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Arohan Financial looks to expand its footprint in newer markets

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Arohan Financial Services Ltd, which has been witnessing a steady improvement in disbursements and collections in the second quarter of this fiscal over Q1, has firmed up expansion plans to grow its portfolio further.

The company, which is looking to expand its footprint in newer geographies and strengthen presence in some of the existing towns and cities, is waiting for its capital raising plan to fructify to push ahead with the expansion programme.

IPO plan

The NBFC-MFI, which is a part of the Aavishkaar Group, had filed draft red herring prospectus for its proposed initial public offer (IPO). It plans to raise around ₹850 crore primary through the issue apart from secondaries.

“Q 1 of 2021-22 especially May’21 was slightly difficult period with the localised lockdowns but we managed well and we will be filing an updated DRHP soon. Q2 is turning out to be much better. We are seeing an increased demand for credit with the festival season round the corner,” Manoj Nambiar, MD, Arohan Financial Services, told BusinessLine.

Arohan currently provides microcredit to borrowers with a focus on underpenetrated States including Assam, Meghalaya,Tripura, Manipur in the North East; West Bengal, Bihar, Jharkhand and Odisha in the east; Madhya Pradesh, Chhatisgarh, Uttar Pradesh & Uttarakhand in central India.

The company plans to expand its presence in three more States including Rajasthan, Punjab and Haryana once its IPO is complete. It also plans to strengthen its presence in Uttar Pradesh and Madhya Pradesh by setting up more branches.

“We had entered UP and MP markets about two years back. Both of these are very big markets and we haven’t yet covered fully. We are also looking to enter newer markets contiguous to our existing operations. Our expansion plan is ready and it will all depend on the raising of additional capital,” he said.

Talking about the overall credit demand in the industry he said, demand is high and all clients are working towards a return to “normalcy” soon as people would require additional credit to restart their business. Credit demand had witnessed a dip in May this year following the regional lockdowns announced in several parts of the country and the slowdown induced by the second wave of Covid. Starting first half of June (when opening up started) things have started showing signs of improvement and each month has been better than the previous one for the industry, he said and added that the credit demand would increase further supported by the requirements of the upcoming festive season.

The company had a total loan outstanding of close to ₹4,800 crore as on March 2021.

Digital push

Arohan has digitalised the entire customer lifecycle and the post sales support touchpoints to enhance its offerings. With a clear focus on being ‘Cashless at the front and Paperless at the back’, the company aims to serve its customers better with limited paper work and in the process also reduce operational cost for both the customers as well as the company. Client origination is paperless and 100 per cent of the disbursements are now into the bank accounts of the client.

It has launched “meraArohan”- an automated lending solution designed to completely digitise the loan lifecycle from end-to-end. It has recently also launched “apnaArohan” app for customers. The app, which is available in regional languages, uses facial recognition to validate the login and helps customers view their loan details, including a complete ledger with details of payments made, call for any service request.

Customers can also make digital payments through the payment gateway provided.

According to Nambiar, an internal study shows that close to 61 per cent of the company’s customers have access to smartphone and close to 40 per cent had done cashless transactions during the Covid pandemic.

Such digitisation initiatives will help the company by ensuring better management of portfolio, better service and reduced time as compared to manual offerings. “The cost benefit will accrue over a period with business growth and better utilisation of the field employee time” he said explaining the rationale behind ramping up its digital offerings.

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Climate risks can impact the financial sector: RBI Deputy Governor

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Both climate change and the transition to a carbon-neutral economy have the potential to affect the economy and by extension, general welfare of the people, according to M Rajeshwar Rao, Deputy Governor, Reserve Bank of India (RBI).

Hence, there is a clear benefit to acting early and ensuring an orderly transition.

“While transition costs may be higher in the short term, they are likely to trend much lower in the long run when compared to the costs of unrestrained climate deterioration.

“It is thus, vital to make the financial system more resilient in the face of the potential costs of extreme weather events,” Rao said at a recent CAFRAL Virtual Conference on Green and Sustainable Finance.

Climate risks can impact the financial sector through two broad channels — physical and transition risks, he added.

Physical risks mean economic costs and financial losses resulting from the increasing severity and frequency of extreme weather events and long-term climate change.

Transition risks arise in the process of adjustment towards a low-carbon economy.

“It is, therefore, important to understand these risk drivers which are likely to affect the financial firms,” the Deputy Governor said.

Rao observed that the challenge before the RBI is to mainstream green finance and think of ways to incorporate the environmental impact into commercial lending decisions while simultaneously balancing the needs of credit expansion, economic growth and social development.

Recently, RBI set up a Sustainable Finance Group (SFG) within the Department of Regulation to spearhead its efforts and regulatory initiatives in the areas of sustainable finance and climate risk.

The Group will be advising regulated entities to have a strategy to address climate change risks and appropriate governance structures to effectively manage them from a micro-prudential perspective and exploring forward looking tools like climate scenario analysis and stress testing for assessing climate-related risks, among others.

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Reserve Bank of India – 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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Reserve Bank of India – Press Releases

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The Reserve Bank of India (RBl) has imposed, by an order dated September 20, 2021, a monetary penalty of ₹13,000/- (Rupees Thirteen Thousand only) on The Bhandara District Central Co-operative Bank Limited, Bhandara, Maharashtra (the bank) for contravention of /non-compliance with the provisions of the Credit Information Companies (Regulation) Act, 2005 (CIC Act) and RBI directions on membership of Credit Information Companies by Co-operative Banks. This penalty has been imposed in exercise of powers vested in RBI under the provisions of section 25 (1) (iii) read with section 23 (4) of the CIC Act, taking into account the failure of the bank to adhere to the provisions of the aforesaid Act.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Background

The inspection report of the bank based on its financial position as on March 31, 2019, revealed, inter alia, contravention of /non-compliance with the provisions of the CIC Act and RBI directions on membership of Credit Information Companies by Co-operative Banks. Based on the same a Notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the provisions of the CIC Act.

After considering the bank’s replies, RBI came to the conclusion that the aforesaid charge of non-compliance with the provisions of the CIC Act was substantiated and warranted imposition of monetary penalty.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/892

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