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Lenders slap personal insolvency cases on promoters of defaulting firms, BFSI News, ET BFSI

Banking & Finance

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Banks are approaching the National Company Law Tribunal for invoking personal guarantees of defaulting promoters armed by the Supreme Court go-ahead for such action.

The latest data released by the Insolvency and Bankruptcy Board of India (IBBI) show that 56 new cases were filed in the first quarter ended June, almost half of the total 128 cases filed in the whole of fiscal 2021, as banks stepped up their recovery efforts from personal guarantors.

These include cases filed against promoters of Punj Lloyd, Amtek Auto, Videocon, DHFL, ABG Shipyard, Videocon, Varun Shipping, and Lanco Infratech.

Overall, a total of 201 cases have been registered against personal guarantors since the new law came into force in December 2019, 184 of which have been filed by financial creditors while 17 have been voluntarily filed by debtors.

Data from the IBBI show that creditors are chasing a total debt of Rs 36,014 crore through the personal insolvency process, which has been backed by personal guarantees of Rs 33,294 crore. Individual debtors have filed a relatively lower Rs 1,848 crore of claims backed by guarantees of Rs 791 crore.

The challenge

Anil Ambani, Kapil Wadhawan, Venugopal Dhoot had challenged proceedings against them under the Insolvency and Bankruptcy Code (IBC) to recover loans for which they had given personal guarantees.

They had argued that the resolution process would discharge them of all personal liabilities and guarantees and that the government was wrong to issue a notification that permitted lenders to initiate separate insolvency proceedings against them.

The guaranteed debt

According to an estimate, the top 10 personal guarantors have guaranteed debt of over Rs 1.6 lakh crore. Among the big names, former promoters of Bhushan Steel and Power Sanjay Singhal and his wife Aarti Singhal had furnished personal guarantees worth up to Rs 24,550 crore to take loans from a consortium of bank led by State Bank of India (SBI).

The former promoter of Reliance Communications, Anil Ambani, has also given a personal guarantee against the loan taken. Erstwhile promoter Wadhawan stands guarantee to loans taken by DHFL, which is sitting on debt of about Rs 90,000 crore, while Dhoot has also given a personal guarantee to a portion of Rs 22,000 crore loan to Videocon.

The Supreme Court order

The Supreme Court in May had held that the November 15, 2019 government notification allowing creditors, usually financial institutions and banks, to move against personal guarantors under the Insolvency and Bankruptcy Code (IBC) was ‘legal and valid’.

Post the judgement, a senior official of a public sector bank said banks are assessing the level of involvement of those directors who pledged their personal guarantee against the loan.

Banks have started receiving calls from some of the promoters for the exclusion of their personal guarantee from the non-performing assets. Some of them are coming forward to resolve bad loans to save their personal wealth.

Most of the promoters thought that once their case is admitted under IBC, their past obligations cease.

However, the order has generated fear among the promoters and directors who pledged their personal guarantee of losing their personal wealth as part of the resolution process.

The personal guarantees are likely to expedite the resolution process as the guarantor stands the risk of losing personal property.

The hurdle

Many of these promoters are being investigated for fraud and their assets are already attached by the investigative agencies. Getting these assets released from the law agencies will take time.

SBI action

SBI was one of the respondents to the 74 petitions and challenges by promoters on invocation of personal guarantees. It has been in the forefront of invoking guarantees of promoters of defaulting companies. It had invoked Rs 1200 crore of guarantees given by Ambani for defaulting companies Reliance Communications and Reliance Infratel.

SBI had also approached the Mumbai bench of the NCLT to initiate guarantees by the Videocon Industries Dhoot brothers totalling Rs 11,500 crore.

It had also taken Bhushan Power & Steel promoter Sanjay Singal to court to recover Rs 12,276 crore dues to the bank for which he was a guarantor. All these promoters had challenged these actions in court.



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Reserve Bank of India – Press Releases

Press Releases

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In the underwriting auctions conducted on September 09, 2021 for Additional Competitive Underwriting (ACU) of the undernoted Government securities, the Reserve Bank of India has set the cut-off rates for underwriting commission payable to Primary Dealers as given below:

(₹ crore)
Nomenclature of the Security Notified Amount Minimum Underwriting Commitment (MUC) Amount Additional Competitive Underwriting Amount Accepted Total Amount underwritten ACU Commission Cut-off rate
(paise per ₹100)
5.63% GS 2026 11,000 5,502 5,498 11,000 0.48
GoI FRB 2034 3,000 1,512 1,488 3,000 0.39
New GS 2035 10,000 5,019 4,981 10,000 0.49
6.67% GS 2050 7,000 3,507 3,493 7,000 0.74
Auction for the sale of securities will be held on September 09, 2021.

Ajit Prasad
Director   

Press Release: 2021-2022/835

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Fabindia appoints five bankers to raise up to $1 bn via IPO, BFSI News, ET BFSI

Banking & Finance

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New Delhi: Ethnic wear retailer Fabindia Overseas is gearing up for its initial stake sale as it has hired five investment banks to raise up to $1 billion through the primary offering, said sources.

According to people familiar with the matter, the fabric maker has hired ICICI Securities, SBI Capital Markets, JP Morgan, Credit Suisse and Nomura as investment bankers for its planned IPO.

Fabindia is the latest player intending to capitalize on the buoyant investor sentiments in the primary and secondary market as benchmark indices are at record highs.

The company is expected to file the draft paper with market regulator Sebi in next two months, the sources added. It is expected to seek a valuation of about $2 billion and sell 25-30 per cent stake in the IPO.

Azim Premji’s private equity fund, PremjiInvest, is among investors who will sell partial stakes in the company. Infosys co-founder Nandan Nilekani and his wife Rohini Nilekani are also shareholders.

Over three dozen companies have hit the primary market so far this year, raising more than Rs 60,000 crore.



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Social commerce platform Coutloot raises $8 million from Ameba Capital, 9Unicorns and others

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Coutloot, an offline-to-online (O2O) social commerce platform, raised $8 million in a pre-series round led by venture capital firm Ameba Capital.

Other investors such as SOSV, 9Unicorns, Astarc Ventures also participated in the round, including existing investor Venture Catalysts.

The new funding is a precursor to a bigger $25 million round to be closed soon, the company said.

Fund deployment

Coutloot plans to use the funds for launching more services for retailers such as working capital solutions, video-stories commerce features, scaling its B2B supply chain, and stepping-up hiring activities across verticals, including tech, marketing and leadership roles.

Founded by Jasmeet Thind and Mahima Kaul, the company is aiming to build an online buying and selling platform in India, replicating the success of platforms such as Alibaba Group’s Taobao.

It is a platform that allows buyers and sellers to bargain while shopping. It helps sellers list non-MRP (non-fixed-price), unbranded local market products across fashion, electronics, home decor, sports and other boxed categories that account for 75 per cent of India’s retail sector at present.

Its app also allows buyers to chat in their preferred language, which gets translated into the seller’s preferred language.

Jasmeet Thind, Co-founder and CEO at Coutloot, said, “We are here to humanise e-commerce in India that is still just 10 per cent of the total retail and FMCG sector. Most commerce still happens offline for various reasons, including low trust and bargain.”

“Coutloot helps sellers and buyers with that power to decide the prices after a bargain on the chat. We are trying to create Coutloot as India’s Taobao, which is one of fascinating e-commerce success stories around the world,” Thind said.

The company has grown 11 times during the pandemic and has been growing at a CAGR of 300 per cent over the last three years. Coutloot is looking to clock a platform GMV of ₹1,000 crore in 2022 on the back of rising demand coming from smaller towns.

The company’s best-performing sellers come from smaller towns like Nagaon in Assam, Basai near Gurugram, Korba in Chhattisgarh, Surat in Gujarat, and Ludhiana in Punjab. The platform has a quarterly seller retention rate of 42 percent.

Top sellers on Coutloot are making upto ₹8 lakh a month while an average seller makes around ₹14,650.

It provides business opportunities to over 5,00,000 offline retailers, mom-and-pop stores, home sellers, and street hawkers, the company said. It has over 20 million listings on its app, which has been downloaded over 7.2 million times.

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Byju’s IPO: 3 Major Things To Know About Most Valuable Startup

Personal Finance

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Byju’s – Acquisitions

So far, Byju’s has purchased a total of 15 businesses. On August 4, 2021, Byju’s bought the last company, Whodat Tech. Byju’s purchased Toppr, an e-learning platform for competitive test preparation, and Great Learning, an Edtech app, on July 24, 2021. Vedantu, an online tutoring platform, is close to being acquired by Byju’s. The Edtech behemoth has already had a busy year of acquisitions, with eight announced so far in 2021, and is expected to make more.

Aakash Educational Services, a brick-and-mortar test prep service provider, was acquired by Byju’s in a nearly $1 billion deal, one of the largest in the local edtech market. In July, the corporation paid $600 million for edtech start-up Great Learning and another $500 million for US-based kids digital reading platform Epic.

So far this year, the corporation has spent almost $2 billion on acquisitions, including Indian rival Toppr, which has yet to be officially acknowledged.

Whodat Tech, Great Learning, Epic, Toppr, Gradup, Vidyartha and Aakash Educational Services are some of the aquisitions of Byju’s.

BYJU's - Revenue and Valuation

BYJU’s – Revenue and Valuation

In FY 2017-2018, BYJU recorded revenue of Rs 490 crore, which grew to Rs 1,430 crore in FY 2018-2019. The firm’s income for the fiscal year 2019-2020 was ultimately published on September 1, 2021, with an 81 percent increase in revenue to Rs 2,434 Cr (FY20).

Valuation

After a recent $150 million round of fundraising, BYJU’s valuation was assessed at $16.87 billion in September 2021.

After a recent round of fundraising from UBS Group, Eric Yuan, Blackstone, and others, BYJU was valued at $16.5 billion and became India’s most valuable company in June 2021.

November 2020 – BYJU’s recent $200 million round of fundraising headed by BlackRock valued the company at $12 billion.

BYJU's - Funding

BYJU’s – Funding

According to reports, Byju’s total fundraising to date is roughly $2.85 billion, with the latest funding coming from three investors. This round of funding was spearheaded by ARK Ncore, Asmaan Ventures, and Mirae Asset. In its most recent round of fundraising, BYJU was valued at $16.87 billion. The Edtech behemoth appears to be on a fundraising binge, having raised $1.65 billion in 2021 alone. It previously raised $350 million from UBS Group, Blackstone, and IIFL and Maitri Edtech, as well as roughly $50 million from IIFL and Maitri Edtech.

BYJU’s was the first Asian startup to get money from the Chan-Zuckerberg Initiative, which was founded by Facebook founder Mark Zuckerberg and his wife Priscilla Chan in 2016.

Byju's- List of Funding

Byju’s- List of Funding

The table below contains information about BYJU’s major funding.

Date Stage Funding Lead Investors
September 8, 2021 – $150 Million Asmaan Ventures, Mirae Asset, ARK Ncore
June 21, 2021 Series F $50 Million IIFL and Maitri Edtech
June 12, 2021 Series F $350 Million UBS Group, Eric Yuan, Blackstone
March 29, 2021 Series F $460 Million MC Global Edtech Investment Holdings
September 8, 2020 Private Equity Round $500 Million Silver Lake
August 26, 2020 Venture Round $122 Million DST Global
June 26, 2020 Venture Round $100 Million Bond
January 9, 2020 Private Equity Round $200 Million Tiger Global Management
July 10, 2019 Venture Round $150 Million Qatar Investment Authority
March 22, 2019 Private Equity Round $31 Million General Atlantic & Tencent Holdings
December 11, 2018 Venture Round $ 540 Million Prosus & Naspers
August 2017 Corporate Round $40 Million Tencent Holdings
March 2017 Series F $30 Million Verlinvest
December 2016 Series E $15 Million IFC Venture Capital Group & InnoVen Capital
September 2016 Series D $50 Million Chan Zuckerberg Initiative & Sequoia Capital India
March 2016 Series C $75 Million Sequoia Capital India & Sofina



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ADB, India government sign loans for projects in Maharashtra and Jharkhand, BFSI News, ET BFSI

Banking & Finance

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The Asian Development Bank (ADB) and government of India have signed two loans worth $412 million for projects in Maharashtra and Jharkhand.

ADB has signed an additional loan of $300 million for Maharashtra to ramp up rural connectivity projects. The lender had approved $200 million in August 2019.

The additional financing of $300 million for the ongoing Maharashtra Rural Connectivity Improvement Project will improve an additional 1,100 rural roads and 230 bridges for a total length of 2,900 km in 34 districts.

Rajat Kumar Mishra, additional secretary in Department of Economic Affairs, signed the loan, along with ADB India Director Takeo Konishi.

“With additional financing, the overall project will improve the condition and safety of 5,000 km of rural roads and over 200 bridges connecting rural communities with productive agricultural areas and socioeconomic centres in Maharashtra,” Mishra said.

The project is expected to generate around 3.1 million person-days of employment for local communities, of which at least 25% is for women.

For Jharkhand, ADB and the government of India signed a loan of $112 million.

This will be utilised for developing water supply infrastructure and capacity of urban local bodies for improved service delivery in four towns in the state. In these towns, four water plants with a combined capacity of 275 million litres per day will be established, along with 940 kilometers of water distribution network that will supply to around 115,000 households.

This is ADB’s first urban project in the state. The bank said that low-income states could look up to this model for continuous water supply.



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Suryoday Small Finance Bank Revises Interest Rates On FD: Latest Rates Here

Personal Finance

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Investment

oi-Vipul Das

|

Suryoday Small Finance Bank offers fixed deposit schemes with attractive interest rates to both regular citizens and senior citizens. The bank requires a minimum deposit amount of Rs 1000 and thereafter in multiples of Rs. 1/- to open a fixed deposit account for a maturity period ranging from 7 days to 10 years. Suryoday SFB offers multiple benefits on its fixed deposit schemes such as cumulative/re-investment plans, auto-renewing of FD, premature withdrawal option, additional interest rate for senior citizens, and so on. With effect from 9th September 2021, the bank has revised interest rates on domestic fixed deposits of less than Rs 2 Cr which are as follows.

Suryoday Small Finance Bank Revises Interest Rates On FD: Latest Rates Here

Suryoday Small Finance Bank Interest Rates On Regular Deposits

For a deposit amount of less than Rs 2 Cr and with effect from 9th September 2021, Suryoday Small Finance Bank is currently offering the following interest rates to the general public on their deposits.

Period Interest Rate (p.a.) Annualized Yield (p.a.)
7 days to 14 days 3.25% 3.25%
15 days to 45 days 3.25% 3.25%
46 days to 90 days 4.25% 4.25%
91 days to 6 months 4.75% 4.75%
Above 6 months to 9 months 5.25% 5.35%
Above 9 months to less than 1 Year 5.75% 5.88%
1 Year to 1 Year 6 Months 6.50% 6.66%
Above 1 Year 6 Months to 2 Years 6.50% 6.66%
Above 2 Years to less than 3 Years 6.25% 6.40%
3 Years 7.00% 7.19%
Above 3 Years to less than 5 Years 6.50% 6.66%
5 Years 6.75% 6.92%
Above 5 years to 10 years 6.00% 6.14%
Source: Bank Website, W.e.f. September 9, 2021

Suryoday Small Finance Bank FD Interest Rates For Senior Citizens

Suryoday Small Finance Bank is presently offering the following interest rates on deposits of less than Rs 2 crore to Senior Citizens / Retired Personnel aged 60 years or above.

Period Interest Rate (p.a.) Annualized Yield (p.a.)
7 days to 14 days 3.25% 3.25%
15 days to 45 days 3.25% 3.25%
46 days to 90 days 4.25% 4.25%
91 days to 6 months 4.75% 4.75%
Above 6 months to 9 months 5.25% 5.35%
Above 9 months to less than 1 Year 5.75% 5.88%
1 Year to 1 Year 6 Months 6.75% 6.92%
Above 1 Year 6 Months to 2 Years 6.75% 6.92%
Above 2 Years to less than 3 Years 6.50% 6.66%
3 Years 7.30% 7.50%
Above 3 Years to less than 5 Years 6.50% 6.66%
5 Years 7.00% 7.19%
Above 5 years to 10 years 6.00% 6.14%
Source: Bank Website, W.e.f. September 9, 2021

Story first published: Thursday, September 9, 2021, 11:21 [IST]



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4 SIPs To Invest That Are Rated 5-Star By Morningstar

Personal Finance

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Axis Midcap Fund

As the name suggests, Axis Midcap Fund tends to invest its assets under management in midcap stocks. This makes the returns more volatile, as midcaps tend to fluctuate more than largecaps.

Investors can start an SIP, with a minimum sum of Rs 500. The returns from the fund has been fantastic over the long and short term as well. In the short term period of 1-year, Axis Midcap Fund has given a returns of 66%, while in the 5-year returns from the fund is over 20% on an annualized basis.

The fund has exposure to stocks like Cholamandalam Investment, Coforge, ICICI Bank etc. Currently, the net asset value of the fund has been pegged at Rs 68.49 under the growth plan. As mentioned, this scheme is for those willing to take a risk.

Canara Robeco Emerging Equities Fund

Canara Robeco Emerging Equities Fund

Canara Robeco Emerging Equities Fund generates returns by investing in a diversified portfolio of large and mid-cap stocks. This gives come flexibility to the fund manager when investing and could be a good proposition. Mirroring the returns of the markets, the fund has given good returns.

The 1-year returns from the fund has been 64%, while the 3-year returns is more like 18% on an annualized basis. One can invest through the SIP route, where the investment is Rs 1,000 at the very least.

We would not advise investors to invest through the lumpsum route and the SIP route is the best way forward at the moment.

Kotak Equity Opportunities Fund

Kotak Equity Opportunities Fund

This fund is also rated 5-star by Morningstar. Again, like Canara Robeco Emerging Equities Fund, the scheme aims to invest in a mix of large and mid cap stocks across sectors.

Over the last few years, thanks to the markets rallying the fund has performed very well. It has generated returns of almost 60% in 1-year and 15% in the last 5-years on an annualized basis. The assets under management of the fund is as high as Rs 7,311 crores.

An SIP in the fund can be started with a small sum of Rs 1,000. For those looking at long term this is a good fund to invest. We wish to inform readers that markets have gine up sharply in the last 1-year and hence, even if you invest in SIPs now, you are investing at very high net asset values. Therefore, even your SIP amounts can be small, and if the markets gain, you can increase the quantum.

L&T Money Market Fund

L&T Money Market Fund

The L&T Money Market Fund is for those looking to take zero risks. Since these funds mostly invest in government dated securities, they are considered as safe. A sum of Rs 1,000 can be used to start an SIP.

Disclaimer

Disclaimer

Investing in mutual funds poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies and the author not liable for any losses caused as a result of decisions based on the article. The above article is for informational purposes only.



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Global index inclusion to bring turning point for India, says Morgan Stanley

Banking & Finance

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India is likely to be added to the global bond indexes by the first quarter of 2022, which would lure $40 billion of inflows to the country’s debt market in the next two years, according to Morgan Stanley.

“Foreign ownership of Indian government bonds has been declining, but 2022 would be the turning point that could bring an acceleration of bond inflows,” Morgan Stanley strategists led by Min Dai, wrote in a note. The inclusion in global bond indexes should bring $18.5 b in inflows every year over the next decade, compared to just $36.4 b in the last ten years.

India has been striving to get its sovereign bonds included in the famed global bond indexes to lure foreign inflows and reduce the chronic budget deficit, which widened to a record in the fiscal year-ended March as the coronavirus weighed on the economy.

The global bond inclusion “will push India’s balance of payments into a structural-surplus zone, indirectly create an environment for a lower cost of capital and ultimately be positive for growth,” according to Morgan Stanley.

Potential flattening of yield curve

Structural surplus in balance of payments and better productivity could drive 2 per cent appreciation per year in the rupee’s real effective exchange rate. Foreign inflows could flatten India’s sovereign bond curve by 50 bps, recommend going long 10-year bonds, targeting 5.85 per cent yield level.

“A historically steep curve suggests enough risk premium being in the price and foreign demand could drive the curve flatter,” it said.

The inflows would also reduce India’s borrowing cost and improve its debt sustainability, helping retain its investment grade rating. Banks will benefit from stronger growth and lower borrowing costs and private banks, particularly large ones, should be the key beneficiaries. Among non-bank financials, potential beneficiaries are likely to be HDFC, Bajaj Finance, SBI Cards, Mahindra Finance and Cholamandalam Finance.

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Bank Board Bureau recommends Atul Kumar Goel for PNB MD post, BFSI News, ET BFSI

Banking & Finance

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Banks Board Bureau (BBB) on Wednesday recommended Atul Kumar Goel for the post of Managing Director of Punjab National Bank.

Currently, Goel heads UCO Bank, which was removed from Prompt Corrective Action (PCA) restrictions. He will succeed SS Mallikarjuna Rao, who was recently given an extension till January 2022.

BBB interviewed 11 candidates for the post of MD and CEO of PNB – the country’s second-largest public sector lender. BBB is headed by former secretary of the Department of Personnel and Training BP Sharma.

“Keeping in view their performance at the interface, their overall experience and the extant parameters, the Bureau recommends Atul Kumar Goel for the position of MD and CEO of PNB,” BBB said in a statement.

The incoming managing director and chief executive will hold office for a term of three years from the date of entering office.

The name of the selected candidate would go for final approval to the Appointments Committee of Cabinet (ACC), headed by the Prime Minister.

The secretary of the Department of Financial Services, secretary of Department of Public Enterprises and the RBI deputy governor in charge of banking are part of BBB.

In 2016, the government approved the constitution of BBB as a body of eminent professionals and officials to make recommendations for the appointment of whole-time directors as well as non-executive chairpersons of PSBs and state-owned financial institutions.



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