Reserve Bank of India – Press Releases
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The Result of the auction of State Development Loans for 06 State Governments held on November 16, 2021.
Ajit Prasad Press Release: 2021-2022/1203 |
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Reserve Bank of India – Press Releases
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The Reserve Bank of India has set up a Regulations Review Authority (RRA 2.0) vide press release dated April 15, 2021. The objective of RRA 2.0 is to review the regulatory instructions, removing redundant and duplicate instructions, reduce the compliance burden on Regulated Entities (REs) by streamlining reporting structure, revoking obsolete instructions and wherever possible obviating paper-based submission of returns. It was also envisaged that the RRA will engage internally as well as externally with all regulated entities and other stakeholders to facilitate this process. The RRA has also constituted an Advisory Group representing the REs under the chairmanship of Shri Swaminathan J., Managing Director, State Bank of India. 2. RRA has been engaging in extensive consultations with both – internal as well as external stakeholders, on review of the regulatory and supervisory instructions for their simplification and ease of implementation. Based on these consultations and the suggestions of the Advisory Group, the RRA has recommended withdrawal of 150 circulars in the first tranche of recommendations. 3. The notifications containing the list of specific instructions recommended for withdrawal is being issued separately. (Yogesh Dayal) Press Release: 2021-2022/1202 |
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PMC Bank: Proposed scheme of amalgamation could be a test case for RBI
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The proposed amalgamation of the scam-hit Punjab and Maharashtra Co-operative (PMC) Bank with the newly floated Unity Small Finance Bank could be a test case for the Reserve Bank of India (RBI) regarding its approach towards how individual depositors with deposits up to ₹2 crore and those with deposits of ₹2 crore and above can be dealt with when it comes to withdrawal of money.
The Scheme being put together by the central bank is expected to be placed in public domain in a week or so for suggestions and objections from members, depositors and other creditors of transferor bank (PMC Bank) and transferee bank (Unity SFB).
As per Reserve Bank of India (Interest Rate on Deposits) Directions, 2016, a “Bulk Deposit” means a single Rupee term deposit of ₹2 crore and above for Scheduled Commercial Banks (excluding Regional Rural banks) and Small Finance Banks.
So, a deposit of up to ₹2 crore is considered as a “Retail Deposit”.
The question uppermost on individual depositors’ (under the bulk deposit category) mind is whether the central bank will treat retail deposit and individual bulk deposit on an equal footing vis-a-vis withdrawal.
Phased withdrawal
Chander Purswani, President, PMC Depositors’ Forum, said the Scheme should clearly specify the threshold up to which individual deposits can be freely withdrawn and how deposits beyond this threshold can be withdrawn in a phased manner over, say, 3-5 years.
City Co-op Bank wants to emulate PMC Bank for reconstruction
Further, interest accrued on individual depositors’ deposits, be it retail or bulk, should be allowed to be withdrawn in toto.
He underscored that PMC Bank depositors have suffered over the last 26 months amid the Covid-19 pandemic as deposit withdrawal has been capped at ₹1 lakh of the total balance in their account(s) during the entire period that their Bank is under RBI’s Directions.
What this means is that depositors, especially senior citizens (who usually depend on interest earnings to meet monthly expenses), had to make do with only ₹3,846 a month over the last 26 months.
PMC Bank’s resolution could become a template for rescuing other weak UCBs
Purswani assessed that after taking into account deposit withdrawals of up to ₹1 lakh, PMC Bank has about 1.42 lakh depositors with deposits of over ₹1 lakh. Of this, there are about 43,000 depositors, including individuals, trusts, cooperative societies, etc, with deposits of over ₹5 lakh.
DICGC, a wholly-owned subsidiary of RBI, had upped the limit of insurance cover for depositors in the insured banks fivefold to ₹5 lakh per depositor with effect from February 4, 2020.
Individual depositors, including those with large deposits, need an assurance that they can systematically withdraw their money from Unity SFB, the Forum’s chief said.
Limited period incentive
He opined that the Scheme could also incorporate a limited period incentive, whereby PMC Bank depositors can earn higher interest rate over the card rate so that they are encouraged to keep the deposits with Unity SFB.
PMC Bank came to grief as its high exposure to real estate company HDIL turned non-performing.
The central bank red-flagged the fraud/financial irregularities in the bank and manipulation of its books of accounts.
Last month, RBI granted banking licence to Unity SFB, which has been established jointly by the Centrum Financial Services Ltd (CFSL) and Resilient Innovations Private Limited (BharatPe), to carry on SFB business in India.
RBI had accorded “in-principle” approval to CFSL, which is a wholly-owned subsidiary of Centrum Capital Ltd, on June 18, 2021, to set up an SFB.
The “in-principle” approval was in specific pursuance to CFSL’s February 2021 offer in response to PMC Bank’s November 2020 Expression of Interest (EoI) notification.
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Motilal Oswal Suggests To Buy This Infrastructure Stock For +70% Upside
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2QFY22 results of Ashoka Buildcon Limited
According to the brokerage “Ashoka Buildcon (ASBL)’stopline grew 5% YoY to INR9.2b in 2QFY22 and was 8% below our estimate. It de-grew 9% on a QoQ basis. The EBITDA margin was down 341 bps YoY and came in at 11.5% in 2QFY22 (in line with our estimate). EBITDA/PAT fell 19%/9% YoY to INR1.1b/INR0.96b (v/s our estimate of INR1.2b/0.8b). Other income grew 19% YoY to reach INR590m in 2QFY22.”
Motilal Oswal has stated that the company’s “OB stood at ~INR119b, with an OB/revenue ratio of ~2.8x, providing comfort on revenue growth. The management’s major focus in the future would be on Roads/Railways, which has 70% share of the order book. The Building, Power T&D, and other segments account for a 30% share. The pending exit of the private equity investor in its asset portfolio would be a key monitorable. A strong order book – coupled with a healthy ordering outlook and continuous improvement in the balance sheet – augurs well for ASBL”
Key highlights from management commentary according to Motilal Oswal
- The management has revised the revenue growth guidance for FY22 to 20%, from 25% provided earlier, due to delays witnessed in commencing various projects.
- The total equity requirement for the 10 HAM projects is INR13.4b, of which INR9.4b has already been invested.
- For FY22/FY23, the incremental equity requirement is INR1.6b/INR1.4b.
- In 2QFY22, the BOT division recorded toll collections of INR2.4b (against INR2.2b in 2QFY21).
- The management has renegotiated the terms of the shareholder agreement with SBI Macquarie; the commitment to the investors has been revised from INR15.3b to INR11b, with a cap of INR12b.
Buy Ashoka Buildcon Limited with a target price of Rs 175
Motilal Oswal has said the company’s “current OB remains strong (~INR119b). The book-to-bill ratio stands strong (~2.8x), which provides comfort and revenue visibility for more than two years. Net debt-to-equity at the standalone level stood at 0.1x in FY21. ASBL is well placed to fund its equity commitment. We expect net debt-to-equity to remain at 0.1x/0.01x for FY22E/FY23E, making it one of the strongest Road players in the sector.”
In its research report, the brokerage has claimed that “A strong order book and continuous improvement in the Balance Sheet augurs well for ASBL. Our TP of INR175/share is based on the SoTP methodology. We value the: a) EPC business at 5x Mar’23E EPS, and b) BOT business on an NPV basis. We maintain our Buy rating.”
Disclaimer
The 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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Reserve Bank of India – Press Releases
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Ajit Prasad Press Release: 2021-2022/1201 |
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Buy Godrej Consumer Products With A Target Price of Rs 1,252 Suggests IDBI Capital
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Q2FY22 results of Godrej Consumer Products
According to the brokerage, the company’s “Consolidated revenue grew 9%YoY driven by 10%YoY growth in India business (on a base of 10%YoY) while the international business grew 7% (on a base of 11%YoY). Revenue from home care grew 5%YoY (India business +7%YoY) while from Personal Care grew 10%YoY (India business 12%YoY). GCPL gained market share in soaps. In international market revenue from; Africa, USA & Middle East grew 15% YoY (16% CC), Latin America & SAARC decline 3% YoY (+11% CC), Indonesia remained flat YoY (-2% CC).”
The brokerage has claimed that the company’s “Gross margin contracted sharply by 616bp YoY to 50% largely due to inflation in palm oil price. However, EBITDA margin contracted only 223bp YoY to 21% due to cost savings (lower ad-spends, employee cost, other expenses). Adjusted PAT grew 5%YoY to Rs 5bn.”
Buy Godrej Consumer Products with a target price of Rs 1,252
IDBI Capital has reported that “Godrej Consumer Products (GCPL) result was in-line with our estimates. India business performance has been resilient (10%YoY revenue growth on a base of 10%). Home care and personal care grew at a high single digit and double digit rate led by market share gains in soap and hair color. Positively; GCPL has launched Goodknight Jumbo Fast Card nationally while Godrej Expert Easy 5 minute shampoo is scaling up well.”
In its research report, IDBI Capital has reported that “In international business; South Africa performed well while other markets remained soft. Indonesia continues to underperform for 5th consecutive quarter largely due to macroeconomic uncertainties. Gross margin contraction has been steep primarily due to inflation in palm oil. Management expects the operating margin to normalize by 4QFY22. Accordingly, we have trimmed our EPS estimate by 6% in FY22E. We have introduced FY24E. We maintain our BUY rating and positive view on GCPL. Our revised TP stands at Rs 1,252 (vs previous TP of Rs 1,171) valued at 50x FY24E EPS.”
Disclaimer
The stock is picked from the brokerage report of IDBI Capital. 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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Videocon, Reliance Naval among first lot of assets to be sold to NARCL, BFSI News, ET BFSI
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Companies that have had a shot at debt resolution under the Insolvency and Bankruptcy Code, including Videocon Oil Ventures and Reliance Naval, are among the first tranche of 22 non-performing accounts that are being sold to the National Asset Reconstruction Company (NARCL) by various lenders, according to a report.
State Bank of India (SBI) is planning to sell Videocon Oil Ventures’ bad loans of Rs 22,532 crore, while Union Bank of India plans to offload the Rs 9,000-crore Amtek Auto debt, the report said.
IDBI Bank is selling Reliance Naval and Engineering’s loans of Rs 8,934 crore while Union Bank is looking to sell the Rs 1,400 crore debt of Lavasa Corporation.
A consortium led by Mumbai-based industrialist Nikhil Merchant was leading the race to acquire the debt-laden Reliance Naval and Engineering Ltd, originally known as Pipavav Shipyard, with Rs 2,100 crore offer while another bid was of Rs 400 crore from the Naveen Jindal group.
In the case of Lavasa Corporation, the lenders are still undecided over the two offers received from Dhir Hotels and Resorts and Darwin Platform Infrastructure, with the last date of finalising a resolution being November 25. Lavasa Corporation has got bids worth Rs 700 crore for loan claims of over Rs 8,000 crore at NCLT.
Though banks have made 100% provision for the assets to be transferred to the bad bank, experts do not expect more than 20-25 per cent recovery from these legacy accounts.
The assets
Banks had identified Rs 82,496 crore worth of bad loans that could be transferred to the NARCL, which names like Videocon’s VOVL (Rs 22,532 crore total exposure), Reliance Naval and Engineering Ltd (Rs 8,934 crore), Amtek Auto (Rs 9,014 crore), Jaypee Infratech (Rs 7,950 crore, Castex Technologies (Rs 6,337 crore), GTL Ltd (Rs 4,866 crore), Visa Steel (Rs 3,394 crore), Wind World India Ltd (Rs 3,161 crore), Lavasa Corporation (Rs 1,424 crore), Consolidated Construction Consortium Ltd (Rs 1,353 crore), among others.
Several assets such as Videocon have seen realisable value close to liquidation value in NCLT proceedings. Many big-ticket resolutions at IBC have seen haircuts over 90%. With most of the NPAs proposed to be transferred to the bad bank being old legacy NPAs, there has been an erosion in value, making them more likely to head to liquidation.
The bad bank
Finance Minister Nirmala Sitharaman in Budget 2021-22 announced the setting up of a bad bank as part of the resolution of bad loans worth about Rs 2 lakh crore.
The bad bank or NARCL will pay up to 15 per cent of the agreed value for the loans in cash and the remaining 85 per cent would be government-guaranteed security receipts (SRs). The government guarantee would be invoked if there is a loss against the threshold value.
This sovereign guarantee would be for a period of five years and NARCL would have to pay a fee for this.
“The SRs are getting the backstop through government funding only in as much as to pay the gap between the realised value (resolution/liquidation) and the face value of SRs and this will hold good for five years,” Sitharaman had said.
The fee for the guarantee would be initially 0.25 per cent, which would progressively increase to 0.5 per cent in case of delay in resolution of bad loans.
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This Small Finance Bank Revises Interest Rates On FD, RD & Savings Account
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oi-Vipul Das
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Shivalik Small Finance Bank offers competitive interest rates on fixed deposits, recurring deposits, and savings accounts. The bank, which has 4.5 lakh unique customers across Uttar Pradesh, Madhya Pradesh, Delhi, and Uttarakhand through 31 branches, 250 banking agents, and 15,000 self-help groups, recently revised its interest rates on fixed deposits, recurring deposits, and savings accounts, which investors should be aware of. The new rates are in effect from November 9th, 2021, and are discussed below in brief.
Shivalik Small Finance Bank Savings Account Interest Rates
Customers will now receive the maximum interest rate of 7% on a deposit balance of Rs 7 Crore and above, as the bank has modified its interest rates on savings accounts with effect from November 9th, 2021. The interest rates on savings accounts are determined by incremental balance slabs and are as follows.
| SAVING BANK ACCOUNT | RATE OF INTEREST (%p.a.) |
|---|---|
| Balance upto 1 Lac | 3.50% |
| Above 1 Lac to 5 Lacs | 3.50% |
| Above 5 Lacs to 10 Lacs | 3.50% |
| Above 10 Lacs to 25 Lacs | 4.00% |
| Above 25 Lacs to 50 Lacs | 4.00% |
| Above 50 Lacs to 1 Crore | 4.50% |
| Above 1 Crore to 2 Crore | 5.00% |
| Above 2 Crore to 5 Crore | 5.00% |
| Above 5 Crore to 7 Crore | 5.00% |
| 7 Crore and above | 7.00% |
| Source: Bank Website. W.e.f. November 9th, 2021 |
Shivalik Small Finance Bank FD Rates
Shivalik Small Finance Bank is currently offering interest rates of up to 6.75 percent to the general public and elderly people on deposits maturing in 548 days to 998 days for deposits of less than Rs 2 crore. The following are the bank’s new and existing fixed deposit interest rates.
| Tenure | NORMAL | SENIOR CITIZEN | ||
|---|---|---|---|---|
| Below 25 Lacs | 25 Lacs to below Rs.2 Crores | 2 Crores and above | RATE OF INTEREST (%p.a.) | |
| 7 days to 14 days | 3.50% | 3.75% | 3.75% | 4.00% |
| 15 days to 29 days | 3.75% | 4.00% | 4.00% | 4.25% |
| 30 days to 90 days | 4.25% | 4.50% | 4.50% | 4.75% |
| 91 days to 179 days | 4.75% | 5.00% | 5.00% | 5.25% |
| 180 days to 269 days | 5.50% | 5.75% | 5.75% | 6.00% |
| 270 days to 364 days | 5.50% | 5.75% | 5.75% | 6.00% |
| 365 days to 547 days | 5.75% | 6.00% | 6.00% | 6.25% |
| 548 days to 729 days | 6.25% | 6.75% | 6.75% | 6.75% |
| 730 days to 998 days | 6.25% | 6.75% | 6.75% | 6.75% |
| 999 days and above | 5.50% | 5.75% | 5.75% | 6.00% |
| Source: Bank Website. W.e.f. November 9th, 2021 |
Shivalik Small Finance Bank RD Rates
On November 9th, 2021, the bank also amended its interest rates on recurring/flexi recurring deposits, which are as follows.
| Tenure | NORMAL | SENIOR CITIZEN |
|---|---|---|
| 6 months to less than 9 months | 5.50% | 6.00% |
| 9 months to less than 12 months | 5.50% | 6.00% |
| 1 year to less than 18 months | 5.75% | 6.25% |
| 18 months to less than 2 years | 6.25% | 6.75% |
| 2 years to less than 3 years | 6.25% | 6.75% |
| 3 years to 10 years | 5.50% | 6.00% |
| Source: Bank Website. W.e.f. November 9th, 2021 |
Story first published: Tuesday, November 16, 2021, 14:58 [IST]
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UST named ‘leader’ in blockchain services for banking
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Digital transformation solutions company UST announced that the NelsonHall NEAT report for blockchain services has named it a leader in the banking capability market segment.
Leaders are vendors that exhibit a high capability, relative to peers, to deliver immediate benefit and meet future client requirements, a spokesman for UST said here.
How blockchain can aid healthcare delivery
Building reusable components
UST has a centre of excellence in blockchain in Madrid and an R&D lab in Thiruvananthapuram. More than 100 global organisations across banking, insurance, energy and utilities, healthcare, technology-media-telecom, retail and consumer packaged goods, and transportation use its solutions, the spokesman added.
Don’t ban cryptos: Experts, stakeholders to House panel
The NEAT report cited UST’s focus on building reusable components versus customisable accelerated solutions. Working with practitioners, domain experts, and a network of innovation partners, it offers blockchain services in four categories:
Strategy and consulting services: this includes a framework that enables enterprises to seamlessly adopt blockchain-based solutions and services.
Solution design and development: UST’s lab in Madrid is dedicated to research in rapid prototyping, co-creation of use cases, and concept development on DLT (distributed ledger technology).
Architecture and integration: UST provides blockchain-based solutions that integrate with existing technology to enhance existing solutions.
Products and tools: this includes libraries and accelerators to jumpstart prototypes and manage blockchain infrastructure.
Niranjan Ramsunder, Chief Technology Officer, said the recognition proves UST’s ability to deliver innovative solutions for any bottlenecks including legacy integration challenges.
Cost and time savings
“As a global leader in leveraging blockchains, UST helps reduce cost and time-to-market for clients’ most important blockchain initiatives. We are blockchain platform-agnostic and build on a solid international ecosystem, working with the best vertical solutions on all the principal blockchain platforms,” said Ramsunder.
The NelsonHall report estimates the global market for blockchain services at $496 million in 2020, with a CAGR of 53.3 per cent through 2025. While North America and Europe have the largest blockchain markets, the Asia-Pacific region is projected to grow fastest in the next five years.
‘Exciting time for blockchain’
UST’s client-specific blockchain solutions facilitate innovative business models built on data reliability and operational agility.
Daniel Field, Head of Blockchain, UST, said the recognition acknowledges UST’s work in helping clients transform their business processes through blockchain technology.
“It is an exciting time for the field of blockchain. Long-envisaged solutions for programmable money and cheaper, faster settlement and reconciliation are rapidly becoming a commercial reality and the exploration of central bank digital currencies (CBDCs) is accelerating significantly.”
‘Top Case Study’
UST’s blockchain services were recognised by ISG with a ‘Top Case Study Award for Digital Excellence’, highlighting the company’s engagement with a leading Spanish multinational commercial bank to transform its international payments experience through blockchain-based solutions.
The bank launched its mobile-based application, which enables end-customers to complete international transactions in hours, even minutes, instead of the usual 2-3 days.
In four to five clicks, the customer can enter the amount to be transferred, select a recipient and exchange rate, and confirm the transaction. UST played a significant role in delivering this solution and integrating the platform, the spokesman said.
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Kotak Mahindra Bank, PVR Cinemas launch co-branded movie debit card, BFSI News, ET BFSI
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Kotak Mahindra Bank and PVR Cinemas on Tuesday launched India’s first co-branded movie debit card, adding to the existing product suite of two co-branded Kotak-PVR Credit Cards.
Cardholders will receive joining vouchers and earn points on every transaction on the debit card at PVR and outside PVR as well, with no upper limit on the points earned.
The points can be redeemed all year round at PVR Cinemas, app or website, to avail free movie tickets and on food and beverages. Upto 17 free movie tickets can be earned with a minimum monthly spend of Rs 20,000 from this debit card.
“The first signs of recovery in the entertainment industry are visible with movie theatres reporting higher footfalls. We believe that this is just the right time to introduce the first-ever co-branded movie debit card in India, enabling us to serve a much larger segment of our customers who are avid movie-goers,” said Puneet Kapoor, President – Products, Alternate Channels and Customer Experience Delivery, Kotak Mahindra Bank.
In a release, the bank said that 10 reward points will be given at every Rs 100 spent at PVR Cinemas while 0.50 reward points will be given for every Rs 100 spent on all the other transactions. Here, one reward point is equivalent to Rs 1.
Further, Kotak PVR debit cardholders will get automatically enrolled to the PVR Privilege Plus programme.
“The launch of the card comes at the right time when the film exhibition sector is showing strong signals of revival with states relaxing restrictions and cinema enthusiasts resuming their movie going habits with the vibrant content pipeline being showcased at the cinemas,” said Gautam Dutta, CEO, PVR.
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