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The Reserve Bank of India today released the data showing daily merchant and inter-bank transactions in foreign exchange for the period July 26 – July 30, 2021.
Ajit Prasad Press Release: 2021-2022/777 |
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The Reserve Bank of India today released the data showing daily merchant and inter-bank transactions in foreign exchange for the period July 19 – July 23, 2021.
Ajit Prasad Press Release: 2021-2022/776 |
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The Reserve Bank of India today released the data showing daily merchant and inter-bank transactions in foreign exchange for the period July 12 – July 16, 2021.
Ajit Prasad Press Release: 2021-2022/775 |
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RBI/2021-22/95 August 30, 2021 All Private Sector Banks (including Local Area Banks, Small Finance Dear Sir/Madam, Guidelines on Compensation of Whole Time Directors/ Chief Executive Officers/ Material Risk Takers and Control Function staff – Clarification Please refer to para 2.1.2 (f) of our circular DOR.Appt.BC.No.23/29.67.001/2019-20 dated November 04, 2019 on the captioned subject. In terms of the extant guidelines, share-linked instruments are required to be fair valued on the date of grant using Black-Scholes model. However, it has been observed that banks do not recognise grant of the share-linked compensation as an expense in their books of account concurrently. Therefore, in the interest of better clarity, the following sentence is being added to the extant instructions contained in the said paragraph:
2. Banks should ensure compliance to above instructions for all share-linked instruments granted after the accounting period ending March 31, 2021. Yours faithfully, (Shrimohan Yadav) |
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As per the finance ministry notification issued on August 27, “In exercise of the powers conferred by sub-section (2) of section 1 of the Deposit Insurance and Credit Guarantee Corporation (Amendment) Act, 2021 (30 of 2021), the Central Government hereby appoints the 1st day of September 2021, as the date on which the provisions of the said Act shall come into force.”
Even depositors of banks that are already under moratorium by the RBI before the amendments were made will be eligible to get their money back within 90 days from September 1, 2021 i.e., by November 30, 2021.
Nishant Singh, Partner, Induslaw says, “Where RBI is working on a scheme of merger, arrangement or restructuring of the stressed bank, it can ask the DICGC to further extend the time taken by it to pay out deposit claims by another 90 days. In such cases, depositors may need to wait for 180 days instead of 90 days to get their insurance money. The main objective is to get more time for stitching a merger deal with a stronger bank and it will help the depositors to get their money back eventually.”
As per the RBI website, some of the banks that are currently under moratorium are Garha Co-operative Bank Ltd., Guna, Madhya Pradesh, Deccan Urban Co-operative Bank Limited, Vijayapura, Karnataka, Independence Co-operative Bank Ltd, Nashik, Maharashtra etc.
Recently, the government announced that depositors of failed or stressed banks that are placed under a moratorium by the central bank will be able to get their deposits back (up to Rs 5 lakh) back within 90 days from the start of the moratorium. The amendments in the DICGC Act was passed by the parliament in its Monsoon Session in August 2021.
How will depositors get their money back?
As explained by Finance Minister Nirmala Sitharaman, the 90-day period will be divided into two periods of 45 days. “The stressed bank on whom restriction is placed is expected to collate all information regarding the number of claimants and claim amount and inform DICGC about it within the first 45 days. Within the next 45 days, DICGC is mandated to process the claim and make payment to each eligible depositor,” finance minister Nirmala Sitharaman said during the press briefing on July 28, 2021.
“Normally, it takes 8 – 10 years after complete liquidation to get money under insurance; but now, even if there is a moratorium, within 90 days, the process will definitely be completed, giving relief to depositors,” the FM said in the press briefing on July 28, 2021.
The overall insurance amount of Rs 5 lakh includes both principal and interest held with the bank in the same right and capacity. This move is expected to cover around 98.3% of the total number of accounts and 50.9% of the value of total deposits held with the banks, the FM stated in the press briefing.
During a debate regarding the DICGC bill in the upper house of the parliament, it was clarified by the finance minister that PMC Bank depositors will also get the benefit of this amendment.
Deposits with all banks are covered under DICGC insurance cover of Rs 5 lakh; earlier many cooperative banks were not included in this coverage. However, in 2020 the government introduced an amendment in Banking Regulation Act where RBI was given complete regulatory control over cooperative banks and all banks were put under deposit insurance coverage.
Singh says, “In the last five years, almost 50 Urban Co-operative Banks (UCBs) have come under RBI’s All-Inclusive Directions and have posed a systemic risk in the banking sector. The amendment will pave the way for the stressed UCBs to merge with the stronger banks.”
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Benchmark indices gained over 1% and closed at fresh record highs amid positive global cues. At close, the Sensex was up 1.36% at 56,889 and the Nifty was up 1.35% at 16,931.
The Nifty Bank Index ended 2.02% at 36,347. Amongst the top gainers were Axis Bank at Rs 784 adding 4.21% followed by RBL Bank at Rs 169 (4.02%), Bandhan Bank at Rs 285 (3.55%), SBI at Rs 422 (2.49%), ICICI Bank at Rs 713 (1.99%), PNB at Rs 36 (1.66%). All major indices ended in the green.
Nifty Financial Services ended higher at 17,843 adding over 1.85%. Amongst the biggest gainers were Chola Invest. at Rs 548 adding 4.46% followed by Indiabulls Hsg at Rs 227 (3.61%), Bajaj Finance at Rs 7,165 (2.86%), Power Finance at Rs 129 (2.77%), Bajaj Finserv at Rs 16,560 (2.25%).
Buzzing stocks
Axis Bank share price gained over 2% as the private lender began issuing debt securities under a Rs 35,000-crore debt raise plan.
The bank said on August 30 it started issuing securities under the debt-raise plan announced earlier this year. The private sector lender’s board had in April approved a capital-raise proposal of up to Rs 35,000 crore by issuing various debt instruments in Indian or foreign currency in domestic/overseas markets in one or more tranches.
Other key takeaways
Q1FY22 GDP prints likely to be released on August 31
India’s April-June quarter (Q1) GDP numbers are likely to show a significant surge owing to the lower base of last year’s first quarter and a rebound in consumer spending post the second wave of COVID-19.
Experts believe that even though May had seen a slowdown due to the lockdowns, there was a sharp recovery in June and that the economic impact of the second wave has been much more muted than the first wave . According to a Reuters poll, the country’s Q1FY22 GDP growth might have touched a new record.
SBI research report Ecowrap suggests that the country’s Q1FY22 GDP is expected to grow at around 18.5 per cent. However, it is lower than the Reserve Bank of India’s GDP growth projection of 21.4 per cent for the June quarter.
Bank of India extends term of P R Rajaqopal as executive director
The company has extended the term of office P R Rajagopal, Execurive Director of Bank for a period of two years beyond his currently notified term which expires on 28.02.2022, or until further orders, whichever is earlier. Bank of India shares rose 0.97% to Rs 68.00.
FPIs net buyers invest Rs 986 cr in equities in August
Foreign portfolio investors (FPIs) pumped in a net of just Rs 986 crore in Indian equities during August, as cautiousness continued to persist among overseas investors.
According to data from depositories, FPIs bought equities worth Rs 986 crore and invested Rs 13,494 crore in the debt segment during August 2-27. This translated into a total net investment of Rs 14,480 crore.
Gold prices continue to shine
Gold prices rose from a low of USD 1,785.20 on Friday and continued their upward trend on Monday, reaching a high of USD 1826.3 in the early morning session. Gold prices are expected to rise due to a drop in the dollar index and Fed Chair Powell’s dovish tone.
Gold prices are likely to continue solid when trading above the 20-day EMA’s important support level of USD 1797.56, but they may confront significant resistance between USD 1834- USD 1850.
Dollar hit a fresh two-week low
In overnight trade on Wall Street, US stocks surged as US Treasury yields fell on Friday after Federal Reserve Chair Jerome Powell indicated the US central bank could begin scaling back its bond buying programme by year-end but did not give a firm timeline. The Dow Jones Industrial Average rose 0.69%, the S&P500 index gained 0.88% and the Nasdaq Composite added 1.23%.
Held back by the message from the US Federal Reserve chief that there is no hurry to dial back massive stimulus, the dollar hit a fresh two-week low at 92.595 before steadying around 92.66, still a touch lower on Monday.
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The Reserve Bank of India today released the data showing daily merchant and inter-bank transactions in foreign exchange for the period July 05 – July 09, 2021.
Ajit Prasad Press Release: 2021-2022/774 |
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The Indian operation is a branch of this Asian entity. HSBC is also listed in the UK as a separate entity called HSBC Plc. Rajnish Kumar retired in October 2020 after a 40-year career at the SBI. His international tenure included stints at SBI’s UK and Canada operations.
“Rajnish‘s depth and breadth of experience across India‘s financial industry will be an invaluable addition to the Board of the Group‘s flagship Asian entity as HSBC directs its focus towards the region. The opportunities presented by its 1.4 billion population, 18 million non-resident Indians and 40,000 MNCs make India a key component of HSBC‘s growth strategy” said Peter Wong, Chairman of the Board, HSBC.
Rajnish Kumar was formerly Chairman of the State Bank of India (SBI), until he retired in October 2020 following a distinguished 40-year career with the SBI. In addition to his extensive background with regulatory authorities, investors and businesses in India, Kumar has strong experience of global business and financial markets from his work with the SBI in the UK and Canada. During his tenure as Chairman of the SBI, he also led the strengthening of the bank‘s digital banking platform.
He is also currently a director of India’s Lighthouse Communities Foundation, an independent director of Larsen & Toubro Infotech, a senior advisor of Baring Private Equity Asia Pte Ltd in Singapore and an advisor of Kotak Investment Advisors Ltd in Mumbai.
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The company, backed by SoftBank Group Corp. and Tiger Global Management, has also picked Morgan Stanley for the listing, said the people, who asked not to be named as the information is private. The Bangalore-based startup could seek a valuation of more than $8 billion in the IPO and could lodge a filing as soon as October, one of the people said.
The 11-year-old Ola would be joining a strong pipeline of Indian startups that are ready to tap the IPO market in the coming months. Paytm, the country’s leader in digital payments, Flipkart, the Indian e-commerce giant controlled by Walmart Inc., and digital education startup Byju’s are also preparing for their first-time share sales, Bloomberg News has reported.
Details of Ola’s IPO including size and timeline could still change as deliberations are ongoing, the people said. More banks could be added later, they said. A representative for Citi declined to comment, while representatives for Kotak Mahindra, Morgan Stanley and Ola didn’t immediately respond to requests for comment.
Ola currently partners with about 1.5 million drivers across 250 cities in India, Australia, New Zealand and the U.K. The Uber Technologies Inc.’s rival in July raised $500 million from investors including Temasek Holdings Pte and an affiliate of Warburg Pincus.
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After HDFC Bank and Axis Bank successfully raised Additional Tier 1 (AT1) bonds from overseas investors, the State Bank of India is set to test the local market this week with such bonds.
State Bank of India plans to raise up to Rs 4,000 crore selling AT-1 in the local market, first by a lender in this fiscal.
The At-1 market was almost dead after the Securities and Exchange Board of India earlier this year changed the valuation rules, which were partially rolled back later.
If the issue is successful, other lenders may tap the local market rather than the overseas market.
HDFC Bank and Axis Bank have eschewed the local market this year raising funds via the AT1 route in the overseas market.
SBI bonds are expected to be up for bidding on Wednesday on the electronic debt bidding platform of stock exchanges. The bonds may offer between 7.90% and 8.10% with a five-year call option, which allows investors an exit route.
AT1, or perpetual bonds, do not have any fixed maturity.
The bonds are compliant with Basel-III, an international capital standard.
SBI Capital Markets is helping the bank raise the money. It has reached out to several local investors including private banks, corporate treasuries, bond houses, retirement bodies, wealth managers and insurers.
AT1 bonds are billed as quasi-equity securities that bear a higher risk of capital losses. These are generally rated three-to-four notches lower than an issuer’s corporate credit rating.
Local rating firms Crisil and India Ratings have graded the SBI’s paper AAplus with a stable outlook.
The mutual fund position
Mutual funds, which once used to buy heavily in AT1 bonds, are lukewarm about this asset class after the banking regulator last year ordered that these instruments be written off in Yes Bank’s state-sponsored bailout. Also, on March 10, Sebi had ordered mutual funds to cap ownership of bonds with special features at 10% of the assets of a scheme and value them as 100-year instruments from next month, potentially triggering a redemption wave. Later, the capital markets regulator eased valuation rules but with some riders after the finance ministry asked it to withdraw the directive to mutual funds.
The muted response by MFs had prompted the lenders to tap the overseas market
Perpetual bond sales by banks have nearly halved to Rs 18,772 crore in FY21 from Rs 34,860 crore three years earlier.
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