Reserve Bank of India – Press Releases
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Ajit Prasad Press Release: 2021-2022/1164 |
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Ajit Prasad Press Release: 2021-2022/1164 |
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The brokerage has set a target price of Rs 1900 of Muthoot Finance.
According to Motilal Oswal the PAT (in line) grew by 11% YoY and 2% QoQ to INR9.94b. Despite higher-
than-estimated provisions, lower-than-estimated interest expenses (driven by lower CoB), and benefits of lower operating expenses led to an in line
performance.
Also, the brokerage believes that the NPAs in Gold financing are largely technical in nature, without any
significant write-offs. This deterioration – with gold prices remaining stable in 2QFY22 – suggests that Muthoot Finance is granting its customers (who would have perhaps borrowed at the peak of gold prices in Aug-Sep’20) leeway to repay their loans rather than rushing to auction the gold.
Although Muthoot Finance has reported a deterioration in asset quality over the past two
quarters, it does not pose a significant concern. MUTH has aggressively avoided auctioning of gold until now.
This is driven by Muthoot’s inherent philosophy of
granting customers time to repay their loans, rather than rushing to auction their gold. Gold prices have remained stable for the last two quarters, but the
risk of a default by customers (who would have borrowed at the peak of gold prices in Aug’20) persists.
“The RoA/RoE is likely to remain robust (6%/23%) over the medium term. We cut our FY22E/FY23E EPS estimate by 2%/1% to factor in slightly higher credit costs. We reiterate our Buy rating with a target price of INR1,900/share (3.1x Sep’23E BVPS),” the brokerage has said.
Motilal Oswal believes the stock of Sun TV Network can reach a price of Rs 670. Sun TV reported in-line nos – revenue/PAT was up 10%/14% YoY, with ad revenues reaching pre-pandemic (2QFY20) levels and delayed benefit from the IPL offering spillover. This was offset by a sluggish subscription revenue run-rate.
“Sun TV’s healthy liquidity, with net cash of over Rs 32.3 billion presently, offers room to intensify investments in the linear as well as OTT space – along with high dividend payout potential (45-85% payout policy) and low valuation offer support. Furthermore, adjusted for the recent high auction price from the newIPL teams, the stock is at below 10x on a Sep’23E basis,” the brokerage has said.
“However, an inherent risk is that while investments in movie production have delayed OTT investments by two years (now guided for FY23), the monetization
of the existing library remains a key concern as it has a risk of further delay.
We value the stock on P/E of 14x on Sept’23E to arrive at Target Price of Rs 670. We maintain a Buy rating,” the brokerage has said.
The above stocks are picked from the brokerage report of Motilal Oswal Institutional Equities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Please also do exercise some caution as markets are trading at record highs.
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Senior citizens looking for ways to save tax before the end of the financial year are advised to avoid any life insurance product. Life insurance is vital only in your accumulation phase, you are in the accumulation phase when you are the main earner, and you have responsibilities towards the dependent members of your family. However, when you are retired and a senior citizen, your duties are automatically transferred to dependents.
Your priorities during this stage of life will be capital security, regular income generation, and managing expenses related to healthcare and retirement. Thus, while searching for schemes to save tax, always keep these top priorities in mind to properly meet your liquidity requirements. You can go with plans either having a short lock-in period or with one that offers decent returns with regular returns.
If we take a look at tax-saving plans that are available for senior citizens, Equity Linked Savings Scheme (ELSS) also known as tax-saving mutual funds shines brighter with its least lock-in period of 3 years. ELSS also has the potential to offer good market-linked returns over the period of 3 years, thus you can choose an ELSS fund carefully after considering several quantitative and qualitative factors.
Compared to other fixed income tax-saving plans like National Savings Certificate (NSC), tax-saver bank FD, Public Provident Fund, etc, ELSS has the potential to yield better market-linked returns in 3 years. However, a retiree should avoid the Systematic Investment Plan (SIP) way to invest in ELSS, because each of your SIP installments will be subject to a lock-in period of three years. Instead, consider making a lump sum investment in ELSS.
When the lock-in period in ELSS will be complete you can, the amount can be withdrawn via the Systematic Withdrawal Plan (SWP). This is a facility offered by mutual fund houses, which generates a cash inflow stream to meet retirement expenses.
Apart from ELSS, having investment in 5-year Tax-saver Bank FD as well as in Senior Citizen Savings Scheme (SCSS) will also be a great option for stability and diversification purposes. Tax saving FDs cannot be prematurely encashed before completion of at least 5 years from the date of receipt. But this lock-in is good in a way to keep the funds safe and stable.
In Tax Saver FD you can invest a minimum amount of ₹ 100 or its multiples, with a maximum limit of ₹ 1.50 lakh in a financial year. Noticeable thing is that the interest rate varies among banks.
A retiree can consider the Quarterly Interest Payout Plan or Monthly Interest Payout Plan as per liquidity needs and fund retirement expenses. The deposit can be made in one name or jointly, but the noticeable thing is that, if it is held in a joint holding, the section 80C deduction benefit is available only to the first holder who has a PAN (Permanent Account Number).
Similarly, the Senior Citizen Savings Scheme (SCSS) is also a good tax-saving option for retirees. It is government-backed, and specifically designed for the empowerment and financial security of senior citizens. Additionally, it offers an interest rate of 7.40% per annum. It can be opened in an individual capacity or jointly with your spouse. The nomination facility is available before and after opening the account.
The maximum lump sum deposit allowed under SCSS is ₹ 15 lakh and the minimum is ₹ 1,000. It is also eligible for deduction up to ₹ 1.50 lakh per annum under section 80C and interest earned under SCSS is payable on a quarterly basis and is exercisable from the date of deposition till March 31st / June 30th / September 30th / December 31st. However, make sure to claim the interest on time to earn extra.
While the interest earned is taxable, interest earned on bank deposits is exempt up to ₹ 50,000 annually, as per the provisions of section 80 TTB. For senior citizens having age between 60-80 exemption limit is ₹ 3 lakh, for over 80 years it is ₹ 5 lakh.
Citizens aged 75 years and above don’t have to file their income tax return after Union Budget 2021 if pension and interest income is their only source of annual income. For a better tax-saving portfolio, you can follow 80:20 or 75:25 allocation to ELSS and the non-market linked tax-saving plans.
You can also take a health insurance cover, meanwhile, there are certain diseases and disorders, you can avail a deduction of Section 80DDB of ₹ 1 lakh or the actual amount spent, whichever is less. Similarly, for those who are engaged in charity, you can avail of deduction under section 80G of the Income Tax Act, 1961. Thus, Plan your tax-saving investment wisely.
It’s a very thoughtful process to choose your retirement plans and for the senior citizens, it should be a very serious decision, as it would be very important for the life coming ahead.
Amit Gupta is the Co-Founder and MD, SAG Infotech
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Senior citizens looking for ways to save tax before the end of the financial year are advised to avoid any life insurance product. Life insurance is vital only in your accumulation phase, you are in the accumulation phase when you are the main earner, and you have responsibilities towards the dependent members of your family. However, when you are retired and a senior citizen, your duties are automatically transferred to dependents.
Your priorities during this stage of life will be capital security, regular income generation, and managing expenses related to healthcare and retirement. Thus, while searching for schemes to save tax, always keep these top priorities in mind to properly meet your liquidity requirements. You can go with plans either having a short lock-in period or with one that offers decent returns with regular returns.
If we take a look at tax-saving plans that are available for senior citizens, Equity Linked Savings Scheme (ELSS) also known as tax-saving mutual funds shines brighter with its least lock-in period of 3 years. ELSS also has the potential to offer good market-linked returns over the period of 3 years, thus you can choose an ELSS fund carefully after considering several quantitative and qualitative factors.
Compared to other fixed income tax-saving plans like National Savings Certificate (NSC), tax-saver bank FD, Public Provident Fund, etc, ELSS has the potential to yield better market-linked returns in 3 years. However, a retiree should avoid the Systematic Investment Plan (SIP) way to invest in ELSS, because each of your SIP installments will be subject to a lock-in period of three years. Instead, consider making a lump sum investment in ELSS.
When the lock-in period in ELSS will be complete you can, the amount can be withdrawn via the Systematic Withdrawal Plan (SWP). This is a facility offered by mutual fund houses, which generates a cash inflow stream to meet retirement expenses.
Apart from ELSS, having investment in 5-year Tax-saver Bank FD as well as in Senior Citizen Savings Scheme (SCSS) will also be a great option for stability and diversification purposes. Tax saving FDs cannot be prematurely encashed before completion of at least 5 years from the date of receipt. But this lock-in is good in a way to keep the funds safe and stable.
In Tax Saver FD you can invest a minimum amount of ₹ 100 or its multiples, with a maximum limit of ₹ 1.50 lakh in a financial year. Noticeable thing is that the interest rate varies among banks.
A retiree can consider the Quarterly Interest Payout Plan or Monthly Interest Payout Plan as per liquidity needs and fund retirement expenses. The deposit can be made in one name or jointly, but the noticeable thing is that, if it is held in a joint holding, the section 80C deduction benefit is available only to the first holder who has a PAN (Permanent Account Number).
Similarly, the Senior Citizen Savings Scheme (SCSS) is also a good tax-saving option for retirees. It is government-backed, and specifically designed for the empowerment and financial security of senior citizens. Additionally, it offers an interest rate of 7.40% per annum. It can be opened in an individual capacity or jointly with your spouse. The nomination facility is available before and after opening the account.
The maximum lump sum deposit allowed under SCSS is ₹ 15 lakh and the minimum is ₹ 1,000. It is also eligible for deduction up to ₹ 1.50 lakh per annum under section 80C and interest earned under SCSS is payable on a quarterly basis and is exercisable from the date of deposition till March 31st / June 30th / September 30th / December 31st. However, make sure to claim the interest on time to earn extra.
While the interest earned is taxable, interest earned on bank deposits is exempt up to ₹ 50,000 annually, as per the provisions of section 80 TTB. For senior citizens having age between 60-80 exemption limit is ₹ 3 lakh, for over 80 years it is ₹ 5 lakh.
Citizens aged 75 years and above don’t have to file their income tax return after Union Budget 2021 if pension and interest income is their only source of annual income. For a better tax-saving portfolio, you can follow 80:20 or 75:25 allocation to ELSS and the non-market linked tax-saving plans.
You can also take a health insurance cover, meanwhile, there are certain diseases and disorders, you can avail a deduction of Section 80DDB of ₹ 1 lakh or the actual amount spent, whichever is less. Similarly, for those who are engaged in charity, you can avail of deduction under section 80G of the Income Tax Act, 1961. Thus, Plan your tax-saving investment wisely.
It’s a very thoughtful process to choose your retirement plans and for the senior citizens, it should be a very serious decision, as it would be very important for the life coming ahead.
Amit Gupta is the Co-Founder and MD, SAG Infotech
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Human Resource Management Department (HRMD), Reserve Bank of India (RBI), Central Office, 20th Floor, Central Office Building, Shahid Bhagat Singh Marg, Fort, Mumbai – 400 001 invites bids through e-Tendering process from for printing and supply of the Bank’s House Journal “Without Reserve” to be brought out by the Bank for the period, January 01, 2022 – December 31, 2022. The Printers intending to bid for the same should submit bids online as per the Tender document which may be may downloaded from RBI website (https://rbi.org.in) or MSTC website (http://www.mstcecommerce.com/eprochome/RBI). The tender document shall not be issued by any other means under any circumstances whatsoever. Corrigenda or clarifications, if any, shall be hosted on the above-mentioned websites only. RBI reserves the right to accept or reject any tender without assigning any reasons therefor. Last date for submission of tender: 1600 hrs of December 02, 2021 CGM-in-Charge |
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Vikram Pandit, the Indian-born former CEO of Citigroup Inc and co-founder of Orogen Group, has said that banks and traditional financial institutions will soon start thinking of offering cryptocurrencies.
Pandit aired his view on the future of cryptocurrencies in an interview at a Singapore Fintech Festival. Vikram Pandit noted that in a few years to come large banks and other financial institutions will start offering crypto services directly to their customers.
“In one to three years, every large bank and, or securities firm is going to actively think about ‘shouldn’t I also be trading and selling cryptocurrency assets?”, he asked.
Vikram Pandit is a popular investor and a long-time admirer of cryptocurrencies, he has previously largely invested in one of the leading cryptocurrency exchanges, Coinbase.
The investor expects the introduction of digital assets to be an upgrade to the paper-based banking system to make the exchange process more suitable.
Banks bet on crypto
Meanwhile, banks and other financial institutions are already taking steps and seeking ways to enter the crypto industry.
As per a recent report, banks are now paying a 50% premium to employ crypto talents. The banks are making this move because they risk losing their customers to other banks or financial institutions that offer these crypto services.
According to data collected by Revelio Labs, a workforce intelligence company, Wells Fargo, Goldman Sachs, Citibank, and Morgan Stanley are among the companies hiring these crypto talents.
Coinfomania reported last week that Australia’s Commonwealth Bank (CBA) is set to become the first banking institution in the country to offer crypto services to its clients.
The bank noted that it will allow its customers the ability to buy, sell and hold digital assets, directly via the CommBank app.
With the country’s financial watchdog looking into the regulatory implications of the bank’s move, CBA has said it would welcome clear regulatory guidelines for crypto assets.
However, while these traditional financial systems are offering clients exposure to crypto assets, none of them has decided to trade crypto directly to their clients, and that is about to change soon, according to Pandit.
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Credit card spends are seen hitting record highs in October and November as the COVID-19 wave ebbs and festive euphoria sets in. As per trends, it has grown 17 per cent in October and 11 per cent in November.
Spending traction is evident from the record absolute spends and the ratio of credit card to debit card spend, which stands at 1.28x. October is likely to be 15-18% better than September while November’s first-week run rate has been better than October, according to ICICI Securities.
September jump
Credit card spends jumped 60 per cent year-on-year (YoY) in September, helped by the onset of the festive season. However, on a sequential basis the growth slowed down to 3 per cent at Rs 80,500 crore in September.
Spends grew strongly at 60% year on year (+16% on a two-year CAGR basis). Kotak Mahindra Bank reported the highest growth (27% MoM) in September, followed by IndusInd Bank and ICICI Bank (13% each).
Other major players reported growth in the +-4% range. On a two-year CAGR basis, spends for ICICI Bank grew 58%, IndusInd 33%, Kotak Mahindra Bank 29%. HDFC Bank and SBI Cards posted growth of 10–15% and Axis Bank and SCB 2–3%. On the other hand, Citi and Amex saw declines of 8% and 26% respectively. ICICI Bank surpassed SBI Cards to become the second-largest player in spends, with market share of 19.3% over 6MFY22.
Outstanding credit cards up 10.8%
The total number of outstanding credit cards in the system grew 10.8% YoY to 65 million in September 2021 – the highest in the past 11 months. Among the major players, ICICI Bank reported strong growth of 26.1% YoY, followed by IndusInd Bank (15.6%), SBI Cards (14.3%). Foreign players such as American and Citi witnessed decline of 10% and 5% respectively. SBI Cards and ICICI Bank continued to perform strongly, resulting in a 59–218 bps YoY increase in market share to 19.3% and 18.0% respectively in September.
ICICI Bank added close to 2 million new cards in the past 10 months, taking its credit card base to 11.6 million as of September. Despite a 247 bps year on year decline, HDFC Bank remained the largest player with a market share of 23.0%.
Around 10.91 lakh new cards were added to the system in September with HDFC Bank being the largest acquirer at 2.44 lakh cards.
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Namdev Finvest Pvt Ltd (NFPL) is eyeing an eight-fold increase in its assets under management (AUM), to touch at least ₹2,000 crore, by March-end 2024 even as it expects the recent $4.7-million fund raise to lead to a rating upgrade.
Once the Jaipur-based non-banking finance company (NBFC) — which is focused on the micro, small and medium enterprises (MSME) sector — attains the targeted AUM, it will be better placed for co-lending tie-ups with large banks, its top officials said. Its current AUM value is about ₹270 crore.
Jitendra Tanwar, MD and CEO, said the company’s USP is providing funding on time to existing as well as new entrepreneurs in the MSME segment.
NBFCs: No need to press the panic button yet
“Our turnaround time is 7-10 days. So, within 10 days we disburse money to the customer.
“We also educate our customers about the importance of using banking facilities, as far as possible, avoid cash transactions, and route payments through digital payment apps,” he said.
Tanwar said NFPL encourages those at the bottom of the pyramid to start their business and grow it.
According to CARE Ratings, the NBFC’s loan portfolio is moderately diversified with the ‘loan against property’ portfolio and SME loans (secured) comprising 80 per cent, two-wheeler loans 16 per cent, new or used four-wheeler loans 3 per cent and gold loans 1 per cent.
NBFC regulation needs to be strengthened
NFPL received private equity investment (A series) of around $4.7 million in September 2021 from Belgium-based Incofin Investment Management, via its India Progress Fund.
The company, which has operations in Rajasthan, Punjab, Delhi and Gujarat, expects CARE Ratings to take into account the capital infusion when it updates its rating, which is currently at ‘BBB-’. An ‘A’ rating will help NFPL tap the debt capital market, said a company official.
On the importance of reaching the ₹2,000-crore milestone, PH Ravikumar, Director, said that co-lending becomes meaningful when there is a minimum monthly loan origination.
“When it comes to microfinance or MSMEs, the ability of specialised NBFCs like Namdev Finvest to spot, manage and contain the risk is much better than that of large banks. NBFCs have the skill sets, local focus, and local intelligence,” he said.
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According to the brokerage core to Angel’s growth strategy has been its customer acquisition initiatives wherein it has targeted the Millennial and GenZ population in tier 2 and tier 3 towns. As a result, the share of tier 2 and tier 3 towns in its gross customer additions has surged from 85% in 1QFY20 to 94% in 2QFY22. Also, the median age of these customers has declined from 34 years in 1QFY20 to 29 years in 2QFY22.
The brokerage has said Angel’s market share in F&O has jumped up from 3.3% in 1QFY20 to 21.1% in 2QFY22. While the cash segment witnessed some pressure post the margin norms implementation (market share fell from 18.2% in 3QFY21 to 13.6% in 2QFY22), the F&O segment contributes to 98% of the total retail industry ADTO has witnessed a sustained increase.
The brokerage has reported that “Angel’s market share in the F&O ADTO segment has increased sharply from 3.3% in 1QFY20 to 23.8% in 1QFY22. During 2QFY22, its market share fell to 21.1%, and the company is confident of recovering a large portion of the market share loss in due course. In the cash segment, the company’s market share increased from 13.7% in 1QFY20 to 18.4% in 2QFY21 before declining to 13.6% in 2QFY22.”
Motilal Oswal has reported in its research report that “During 1HFY22, Angel reported revenues of INR10b as compared to INR7.2b in FY20. We estimate the company to record a revenue CAGR of 34% for FY21-24E. The EBITDA margin is expected to remain steady at around 50% as the company has guided for sustained investments in technology and marketing with a focus on acquiring more customers and improving its activation rates.”
The brokerage has further claimed that “Over the next three years, we expect Angel’s revenues to grow at 34% CAGR and C/I ratio to remain steady at 51%. As a result, the company should deliver 38% PAT CAGR to INR7.8b in FY24E. Angel’s business is largely capital-light, and its entire revenues are cash-flow based (no accrual income). We initiate coverage with a Buy rating and a TP of INR1750 (20x Sep’23E EPS).”
The brokerage says the stock trades at FY24E P/E of 13.1x, which we find attractive in view of the company’s strong earnings growth profile. Angel’s RoE is expected to remain healthy in the range of 34-42% over the next three years.
The above stock has been picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
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Bitcoin rose as high as $68,564 in Asian afternoon trade and ether, the second-biggest cryptocurrency by market value, earlier hit $4,825.
Both have more than doubled since June and added nearly 70% against the dollar since the start of October.
“We’re getting the feeling that the market has shifted,” said Matthew Dibb, chief operating officer at Singapore-based crypto asset manager Stack Funds, pointing to a sharp pick up in demand from large investors and even pension funds.
“People are now figuring out that not having any exposure, even a small amount, is probably not a good thing moving forward, so they’re having to allocate at this price,” he said.
Market momentum has been gathering since last month’s launch of a futures-based bitcoin exchange-traded fund in the United States raised expectations of flow-driven gains.
Inflows into bitcoin products and funds have hit a record $6.4 billion so far this year, data from digital asset manager CoinShares showed, and totaled $95 million last week.
Other pieces of positive news have also helped, including plans by Grayscale, the world’s largest digital currency manager, to convert its flagship bitcoin trust into a spot-bitcoin exchange traded fund. Last week Grayscale also applied to list a “future of finance” fund that would track companies involved in the growing digital economy.
“Crypto is where the fast money is at,” said Chris Weston, head of research at brokerage Pepperstone. “(Ether) is trending like a dream and I’d be long and strong here,” he added.
“Clients are net long, with 79% of open positions held long, and I can sense the $5k party could get going soon.”
Others flagged cause for some near-term caution on bitcoin, however, as the cost of funding long positions has crept higher in recent days, according to trading platform BitMEX – sometimes a precursor to a pullback.
Still, the moves so far have carried the token more than 1680% higher from its March 2020 lows and helped lift the total market capitalisation of cryptocurrencies above $3 trillion, according to crypto price and data aggregator CoinGecko.
CoinMarketCap put it slightly lower at $2.94 trillion. Either way true believers, or “hodlers” in crypto markets terminology, have felt vindicated and remain bullish.
“They threw everything at the beast and still it moves,” said payments strategist and sometimes host of the Around the Coin podcast, Brian Roemmele, on Twitter. “Next stop: #Bitcoin $72000.”
(This story corrects spelling to Roemmele in final paragraph)
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