Reserve Bank of India – Press Releases
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Author: root
SGX Nifty up 10 points; here’s what changed for market while you were sleeping, BFSI News, ET BFSI
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Domestic stocks are likely to open on a tepid note on Thursday amid a lack of directional cues from global markets. Asian peers were trading mostly higher in morning trade. Wall Street stocks settled mixed. The dollar was trading around a multi-week low ahead of US jobs data while oil prices declined on concerns over rising supply. Here’s breaking down the pre-market actions:
STATE OF THE MARKETS
SGX Nifty signals a flat start
Nifty futures on Singapore Exchange traded 10 points, or 0.06 per cent, higher at 17,109.50, signaling that Dalal Street was headed for a tepid start on Thursday.
- Tech View: Nifty50 on Wednesday formed a bearish candle on the daily scale. Analysts said the index is likely to see short-term consolidation and advised traders to buy on dips.
- India VIX: The fear gauge eased over 2 per cent to 14.18 level on Wednesday over its close at 14.52 on Tuesday.
Asian stocks gain in early trade
Asian markets opened mostly higher on Thursday in cautious trade after a mixed close on Wall Street, with investors looking ahead to US jobs data due this week. MSCI’s broadest index of Asia-Pacific shares outside Japan was up by 0.28 per cent.
- Japan’s Nikkei added 0.05%
- China’s Shanghai gained 0.15%
- Hong Kong’s Hang Seng up 0.86%
- Korea’s Kospi declined 0.52%
- Australia’s ASX200 shed 1.06%
US stocks settled mixed
The Nasdaq closed Wednesday at a record high, with the S&P 500 ending near its previous peak, as September kicked off with renewed buying of technology stocks and private payrolls data, which supported the case for dovish monetary policy.
- Dow Jones shed 0.14% to 35,312.53
- S&P500 inched up 0.03% to 4,524.09
- Nasdaq zoomed 0.33% to 15,309.38
Dollar hovers at multi-week low
The dollar loitered around multi-week lows on Thursday, pressured by softer-than-expected US labour data as traders awaited a fuller jobs readout, which is expected to guide the timing of Federal Reserve’s pullback in bond buying.
- Dollar index fell to 92.497
- Euro gained to $1.1857
- Pound edged up to $1.3770
- Yen rose to 109.97 per dollar
- Yuan at 6.4613 against the greenback
Oil falls as OPEC+ sticks to raising supply
Oil prices fell on Thursday after OPEC+ agreed to keep its policy of gradually returning supply to the market at a time when coronavirus cases around the world are surging and many US refiners, a key source of crude demand, remained offline. Brent crude was down by 52 cents, or 0.7 per cent, at $71.07 a barrel. US oil fell 56 cents, or 0.8 per cent, to $68.03 a barrel.FPIs buy shares worth Rs 667 crore
Net-net, foreign portfolio investors (FPIs) turned buyers of domestic stocks to the tune of Rs 666.66 crore, data available with NSE suggested. DIIs were sellers to the tune of Rs 1,287.87 crore, data suggests.
MONEY MARKETS
Rupee: The rupee snapped its four-session winning run to close 8 paise lower at 73.08 against the US dollar on Wednesday as muted domestic equities and a strengthening greenback overseas weighed on the market sentiment.
10-year bond: India 10-year bond yield eased 0.26 per cent to 6.20 after trading in 6.20 – 6.23 range.
Call rates: The overnight call money rate weighted average stood at 3.18 per cent on Wednesday, according to RBI data. It moved in a range of 2.00-3.40 per cent.
DATA/EVENTS TO WATCH
- IN Balance of Trade Prel AUG (5:50 am)
- IN Exports Prel AUG (5:50 am)
- IN Imports Prel AUG (5:50 am)
- AU Balance of Trade JUL (7 am)
- AU Home Loans MoM JUL (7 am)
- AU Imports MoM JUL (7 am)
- US Balance of Trade JUL (6 pm)
- US Nonfarm Productivity QoQ Final Q2 (6 pm)
- US Initial Jobless Claims 28/AUG (6 pm)
- US Jobless Claims 4-week Average AUG/28 (6 pm)
- US Continuing Jobless Claims 21/AUG (6 pm)
- US Factory Orders MoM JUL (7:30 pm)
MACROS
Economic recovery on track
India’s economic recovery remained on track in August with goods and services tax (GST) collections staying in excess of Rs 1 lakh crore while automakers sold more cars than in the year earlier despite a semiconductor and parts shortage. Petrol and diesel demand increased 14% and 16%, respectively, the railways carried 16.9% more freight and electricity demand rose 18.6%, suggesting greater movement of goods and people in the just concluded month.
Confusion over crypto tax
The tax department as well as investors are in a quandary over how to calculate gains on cryptocurrency for taxation purposes, especially since tax laws flounder and conflict against certain regulations and tax is calculated on the value declared by the assessee. The main problem for taxation is that there is no clarity on what cryptocurrencies are. That is, whether they are currency, asset, commodity or something else. Till that is articulated, investors and traders will be able to get around taxation. The other problem is that tax rates may also differ for someone who is an investor and someone who trades for a living.
Sebi plans norms for digital gold trades
The Securities and Exchange Board of India (Sebi) plans to regulate online trades in digital gold now sold by various fintech firms and brokerages, two people with direct knowledge of the matter told ET. The capital-markets watchdog is seeking to fill the regulatory vacuum in an asset class that’s becoming increasingly popular with new-age investors.
RBI to set up panel on NUE licences
The Reserve Bank of India (RBI) will set up a committee to scrutinise applications and give recommendations on new umbrella entity (NUE) licences, ET reported. NUEs will establish their own payment infrastructure to compete with National Payments Corp. of India (NPCI).
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Equitas SFB launches digital FDs on Google Pay in tie-up with Setu
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According to a bank release, customers can through the Google Pay app, book high interest rate FDs fully digitally.
Equitas Small Finance Bank (SFB) has launched an initiative enabling customers to book fixed deposits (FDs) on Google Pay in under two minutes without having to open a bank account. The offering was made possible by connecting application programming interfaces (APIs) built by fintech infrastructure provider Setu. To start with, this functionality will be available for Google Pay users who access the app from Android.
According to a bank release, customers can through the Google Pay app, book high interest rate FDs fully digitally — without having to open a savings account with Equitas Bank on its own spot integrated with the Google Pay platform.
“Google Pay users can book FDs from the comfort of their homes ensuring an easy, safe and hassle-free experience. On maturity, principal and interest of the FD go directly to the Google Pay user’s existing bank account, which could be in any bank in India,” it said.
As an RBI scheduled commercial bank, deposits in Equitas are covered by a deposit guarantee of up to Rs 5 lakh per depositor. Customers can enjoy returns of up to 6.35% for an FD of one year.
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Zerodha gets Sebi’s approval to set up an AMC, BFSI News, ET BFSI
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Zerodha has received a licence from capital markets regulator, the Securities and Exchange Board of India (Sebi), to set up an Asset Management Company (AMC).
The in-principle approval from Sebi will allow the Bengaluru-based startup to launch its own mutual funds, founder and chief executive Nithin Kamath tweeted on Wednesday.
Zerodha is India’s largest retail broker by registered users.
“So, we just got an in-principle approval for our AMC (MF) license. I guess now comes the hard part (sic),” Kamath tweeted.
So, we just got our in-principle approval for our AMC (MF) license. I guess now comes the hard part. https://t.co/g35YH60ksC
— Nithin Kamath (@Nithin0dha) 1630503476000
Zerodha had applied to the capital market regulator in February 2020, just months after Sebi allowed fintech firms to enter the MF business.
A spokesperson for Zerodha did not offer comment.
Flipkart cofounder Sachin Bansal’s fintech venture Navi has also received regulatory approval to launch its own AMC.
In December 2019, Sebi eased regulations for fintech startups planning to enter the MF industry. It said entities with a net worth of Rs 100 crore and five years of being profitable were eligible to sponsor MFs.
AMCs should also maintain their minimum net worth continuously and not only towards the end of the year.
Earlier, entrants needed to have five years of experience in the financial services business and demonstrate three years of profitability, as well as maintain a net worth of Rs 50 crore.
“It’s a great move, no question. Zerodha had also applied for a licence, but Covid-19 slowed the market. We need more players to come to this market to foster innovation,” Kamath told ET in an interview in January, on Sebi’s relaxations.
“The entry barrier has stopped many (from entering the MF industry). The problem with mutual funds today is that they are very complex for retail investors. With newer players coming in, I think the products will become simpler and innovative,” Kamath had said.
The move comes at a time when Sebi has given approvals to firms such as Bajaj Finserv and discount broker Samco to launch MFs.
Navi recently applied to Sebi to launch as many as 10 new MFs, all of which are set to be passively managed. These funds mirror the performance of an underlying index and typically do not need a fund manager.
Zerodha has led the pack of new-age fintech brokers including Groww, Upstox and Paytm Money, which have seen strong traction on their platforms by retail investors as millions of Indians flocked to stock investments, attracted by the Nifty and the Sensex recording peaks repeatedly since the onset of the Covid-19 pandemic.
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Bank, realty, pharma may continue to outperform now, BFSI News, ET BFSI
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After a strong move of over 400 points on the upside, Nifty on Wednesday did consolidate on the expected lines. However, it showed a lot of internal strength. The index opened on a modestly positive note and got stronger in the first hour of the trade.
Just when it looked as if the market was continuing with its unabated rise, some profit taking kicked in on the anticipated lines. Nifty came off over 175 points from the intraday high point. While Nifty did not display any extraordinary weakness, it ended the day with a net loss of 55.95 points, or 0.33 per cent.
The weekly options expiry falls on Thursday and options data is showing a mixed picture. On one hand, very high Call OI open addition was seen at 17,000 level even as the 17,100 level held the highest Call OI. On the other hand, strike price 17,000 not only saw the addition of highest Put OI, but it also held the maximum PUT Open Interest as well. This means unless there is a tactical change on either side, the market may stay capped in a limited range.
Volatility declined as was evident from INDIA VIX coming off 2.30 per cent to 14.1850.
A steady but soft start for the market is expected on Thursday. The 17,100 and 17,145 levels may act as immediate resistance points, while supports will come in at 17, 010 and 16,970 levels.
The Relative Strength Index (RSI) on the daily chart stood at 78.57. RSI stays in the overbought territory. However, it remains neutral and does not show any divergence against the price. The daily MACD remains bullish and continues to trade above the Signal Line.
A Black Body occurred on the candle. This was the result of the market closing below its opening level. Apart from this, no other important formation was noticed. Banking stocks put up a resilient performance. Along with them, realty stocks also performed strongly. This is a classic case of the sectors that have relatively underperformed Nifty in the recent past trying to play catchup. This fabric of the market is likely to persist for some more time.
We expect banking, realty and pharma stocks to continue to show improved relative performance in the coming days. Since the possibility of a range-bound consolidation is not ruled out now, we recommend staying highly defensive while approaching the market. While shorts may be avoided as the market undercurrent remains strong, all profits on the long side should be vigilantly protected.
(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae and is based at Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)
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Google Pay users can take FD benefits of Equitas SFB without bank account, BFSI News, ET BFSI
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New Delhi, Sep 1 (PTI) Google Pay users can take the benefits of fixed deposit rates offered by Equitas Small Finance Bank by booking FD on the payments platform without opening a bank account. The bank said it has been offering this initiative by connecting APIs built by fintech infrastructure provider Setu for Equitas Bank.
In an industry-first, consumers can through the Google Pay app book high-interest rate FDs fully digitally, without needing to open a savings account with Equitas Bank on its spot integrated with the Google Pay platform, Equitas SFB said in a release.
The lender said that customers can earn returns of up to 6.35 per cent for an FD of one year, substantially higher than many other savings options.
As an RBI scheduled commercial bank, deposits in Equitas are covered by a deposit guarantee of up to Rs 5 lakh per depositor, it added.
To book an FD on Google Pay, the user will have to search for the Equitas Bank spot under the ‘Business and bills’ segment.
Further, they will have to select an amount and tenure for the fixed deposit, provide their personal and KYC (know your customer) details, and complete the payment using Google Pay UPI.
“On maturity, the proceeds will automatically go to the Google Pay user’s existing Google Pay linked bank account,” it said.
Users can track their deposits, add new ones and place an order for premature withdrawals.
In case, a user wants to prematurely withdraw the deposit, the proceeds will reach their bank account as quickly as the same day, Equitas Bank said.
To begin with, the Equitas Bank fixed deposit facility will be available for Google Pay users on the Android app.
As the bank is all set to celebrate its 5th anniversary on September 5, 2021, this collaboration is a dedication to the digital world, it said.
“Equitas has been one of the early adopters of digital banking and Neo banking in particular. This programme provides a true digital FD booking experience; we have made efforts to ensure that the experience is as simple and seamless as possible.
“We hope to increase the financial inclusion by encouraging a savings culture, at the same time making the FD booking process simple and easy,” Murali Vaidyanathan, Senior President and Country Head, Equitas SFB said.
Sahil Kini, CEO and Co-founder of Setu, said bank FDs are India’s favourite savings instrument and booking an FD should be as simple as making a UPI payment.
“But, most banks require customers to open a savings account and then book an FD. By partnering with Setu, Equitas SFB has been able to make standalone FDs available on Google Pay,” Kini said. PTI KPM BAL BAL
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Who wanted to own Adani Green and Axis Bank offshore bonds?, BFSI News, ET BFSI
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MUMBAI: Global investors including Blackrock, Lombard, Washington State Investment Fund, China Asset Management, Fidelity Investment, Goldman Sachs Private Bank were among others to bid selectively for offshore bonds, launched by Adani Green Energy and Axis Bank Wednesday.
Both the issuances obtained multiple times higher subscriptions with funding costs tightening by 30-33 basis points.
Axis Bank decided to retail about $600 million out of an estimated $2.3 billion subscription bids until publication of this report, sources said. Adani Green raised $750 million out of total bids estimated at $3.5 billion.
While Axis Bank sold Additional Tier 1 papers with ‘sustainable’ or ESG tag, Adani Green mopped up funds for capital investments.
“The issuer shall use the proceeds towards eligible green project categories and eligible social project categories set out in the issuer’s sustainable financing framework,” said the Axis Bank term sheet, seen by ET.
Adani was offering three-year securities with initial price guidance of 4.7 per cent. Axis perpetual papers were initially guided to offer 4.4 per cent, with a five-year call.
Adani Green yielded 4.375 percent finally, and Axis bonds likely settled at 4.10 percent, dealers said.
Oppenheimer, Emirates NBD, HSBC Asset Management L&R Capital, China Everbright Securities bid for Axis Bank papers. Besides, Credit Suisse AG and Hong Kong-based Gaoteng wanted to own Adani papers.
Adani Green will likely use the proceeds for “onward lending to issuer’s subsidiaries for capital expenditure requirements to fund the development of utility green projects”.
Both pricings are likely to be tighter by 20 basis points from initial guidance, executives said.
Last month, ET reported on both issues.
The bank is seeking to raise up to $1 billion, while Adani Green is attempting to garner about $700 million.
Global Rating company Moody’s assigned B1(hyb) or (B+ in simple rating terminology) grade to Axis bonds. The rating rank is three notches lower than the bank’s general creditworthiness.
On August 26, ET wrote that Axis Bank was planning to raise up to $1 billion via offshore AT1 bonds, also known as perpetual papers.
HSBC, Citi, MUFG, JP Morgan, Bank of America, BNP Paribas, Standard Chartered and Societe Generale are among others that are helping the bank sell those bonds to international investors.
This issue is the second after HDFC Bank tapped global investors for the first time raising AT1 securities for $1 billion.
On August 9, ET wrote that Adani Green Energy was set to raise about $600 million through overseas bonds to quicken the execution of renewable projects in the next two years.
Barclays, MUFG, DBS Bank, BNP Paribas, Standard Chartered, and Mizuho are among the investment bankers working on the deal.
Individual investment banks, investors and issuers could not be immediately reached.
Moody’s Investors Service assigned a Ba3 (or BB-) rating to the dollar-denominated debt securities of Adani Green.
While the Adani bonds will be listed on the Singapore Stock Exchange, Gujarat GIFT City is the fund-raising platform for Axis.
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Kotak Mahindra Bank sells 20 crore shares in Airtel Payments Bank for Rs 295 cr, BFSI News, ET BFSI
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New Delhi, Sep 1 (PTI) Kotak Mahindra Bank on Wednesday said it has completed the sale process of over an 8 per cent stake in Airtel Payments Bank to Bharti Enterprises for Rs 294.80 crore. On Tuesday, the bank had informed about entering into a share purchase agreement for the sale of 20 crore equity shares (nearly 8.57 per cent shareholding) of Airtel Payments Bank (APBL) to Bharti Enterprises.
“We now wish to inform you that the bank has completed the aforesaid transaction on August 31, 2021, for an aggregate sale consideration of Rs 294.8 crore,” Kotak Mahindra Bank said in a regulatory filing.
Kotak had bought these shares for Rs 200 crore in tranches during 2016 and 2017.
APBL was incorporated on April 1, 2010, and commenced operations as a payments bank from November 23, 2016. The company’s turnover was Rs 627.19 crore in FY20.
Shares of Kotak Mahindra Bank closed at Rs 1,745.80 apiece on BSE, down 0.49 per cent from the previous close.
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Credit to large industry falls for eleventh month in a row
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Analysts have attributed the shrinkage in credit to large industry to lower utilisation of sanctioned limits and reduction in exposures by banks.
The value of outstanding loans to large industries shrank for the 11th straight month in July 2021, showed data released by the Reserve Bank of India (RBI). Much of incremental growth in bank credit has been led by the retail segment as a trend of deleveraging among corporates continues.
Analysts have attributed the shrinkage in credit to large industry to lower utilisation of sanctioned limits and reduction in exposures by banks. In a report on Wednesday, ICICI Securities said under-utilisation of limits, a modest demand outlook and rundown of exposure in few sectors have resulted in a fall in bank credit to industry.
Last month, State Bank of India (SBI) chairman Dinesh Khara said sanctioned limits are still under-utilised to the extent of 25%. Similarly, banks with a significant presence in corporate lending, such as Bank of Baroda (BoB), have admitted to consciously running down some low-margin loans.
Sanjiv Chadha, MD & CEO of BoB, told FE in August that an abundance of liquidity has resulted in pricing pressure on the corporate side. “The only reason that growth was subdued in this quarter (Q1) was that we allowed some cheaply-priced corporate loans to run off because we believe that the liquidity scenario should start changing over the next few months,” he added.
Despite a low-interest rate environment, bank lending to corporates has not seen much traction. “Interest rate environment is quite favourable but spreads are still holding up at elevated levels suggesting that lenders are still reluctant to relax lending standards or borrowers are not comfortable to leverage, as yet,” Kotak Institutional Equities (KIE) said in a note on Wednesday.
There may be an improvement in corporate lending trends in the months ahead, though. ICICI Securities said the demand prospects are improving. “We believe India Inc, after undergoing a phase of deleveraging over the past few years, is now better positioned and confident to anvil on the path of re-leveraging,” the brokerage said, adding Indian financiers, too, have saddled themselves with ample liquidity and capital buffers to tap into the emerging opportunity.
Pricing trends, too, are likely to improve, according to BoB’s Chadha. “There is an opportunity to price corporate loans in a slightly better manner as compared to what was possible in the last 12 months,” he said, adding that there is a fair bit of activity in sectors like roads, city gas projects and renewable energy. Brownfield expansion is also going on, he said.
A steep decline in bond market rates till July 2020 had led to a narrowing of the spread between bank funding and bond rates, but bond yields seem to be trending upwards now, KIE analysts wrote in a report.
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RBI imposes penalty on Axis Bank, BFSI News, ET BFSI
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MUMBAI: The RBI on Wednesday said it has imposed a penalty of Rs 25 lakh on Axis Bank Limited for contravention of certain provisions of Know Your Customer (KYC) norms.
The RBI said a scrutiny was carried out during February and March 2020 in a customer account maintained with Axis Bank, and it was observed that the bank had “failed to comply” with directions contained in the Reserve Bank of India – KYC Direction, 2016.
“…the bank failed to monitor/carry out ongoing due diligence in the said account to ensure that the transactions were consistent with its knowledge about the customer, customer’s business and risk profile,” it said in a statement.
A notice was issued to the bank, advising it to show cause why the penalty should not be imposed on it for contravention of the directions.
After considering the reply to the notice and oral submissions made during the personal hearing, the RBI said it “came to the conclusion that the charge of contravention of/non-compliance with the aforesaid RBI directions was substantiated” and warranted imposition of monetary penalty.
The RBI, however, added that the penalty 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.
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