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Dvara Kshetriya Gramin Financial Services Pvt Ltd (Dvara KGFS), a leading NBFC operating in the remote rural parts of India, on Wednesday announced the appointment of LVLN Murty as the CEO, effective September 1, 2021.
He will take over from CO Joby.
Murthy joined Dvara KGFS as Chief Business Officer in 2016 and got promoted as Deputy CEO in the year 2019, says a press release.
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Most of the bank credit is driven by the retail and agri segments as sanctioned limits of corporates remain unutilised to the extent of 25%.
The credit to large industries shrank 2.9% in July.
The credit growth in the last two months is being led by is led by MSMEs, agriculture and retail as corporate lending stays tepid.
Lending to MSMEs, agriculture and retail picked up sharply in July this year over previous year’s levels, data on sectoral deployment of bank credit released by the Reserve Bank of India showed.
Credit to agriculture and allied activities expanded 12.4% in July 2021 as compared with 5.4% in last July.
Deleveraging on
Corporates that are flush with cash on account of booking bumper profits are looking to deleverage their bank loans and prepaying them.
HDFC Bank received Rs 30,000 crore in prepayments through the Jue quarter, mainly from companies in the commodities and infrastructure sectors.
In the April-June quarter, AAA or AA-rated companies sought to deleverage as they recorded solid cash balances. Cash flows were robust at commodity companies because of record iron ore or aluminium prices, boosting net profits. Infrastructure companies, too, reported fatter bottom lines due to the government’s extensive highway-building programme.
With demand collapsing during pandemic and uncertainty rising, companies had put a pause on expansion and have focused on becoming debt-free.
PSU loan books shrink
The deleveraging has led to a drop in corporate loan demand for banks, especially PSU ones.
The domestic corporate loans by the State Bank of India fell 2.23 per cent to Rs 7,90,494 crore in the quarter ended June 30, 2021, compared to Rs 8,09,322 crore in the same quarter last year. In the first quarter of FY21, SBI reported 3.41 per cent growth in corporate advances.
Union Bank of India‘s share of industry exposure in domestic advances dropped to 38.12 per cent at Rs 2,40,237 crore from 39.4 per cent at Rs 2,47,986 crore in the same quarter a year ago. Corporate loans dropped 3% at Indian Bank during the last quarter. At PNB, corporate loans fell 0.57 per cent at Rs 3,264,66 crore in June quarter 2021 compared to Rs 3,28,350 crore a year ago.
Up to May, the gross loans to large industries declined by 1.7 per cent year-onyear, according to RBI data.
However, HDFC Bank expanded its corporate loans by over 10% in the April-June quarter to about Rs 3.15 lakh crore.
Shift to bonds
The corporate world focused on deleveraging high-cost loans through fundraising via bond issuances despite interest rates at an all-time low. This has led to muted credit growth for banks.
Corporates raised Rs 2.1 lakh crore in the December quarter and Rs 3.1 lakh crore in the fourth quarter from the corporate bond markets. In contrast, the corresponding year-ago figures were Rs 1.5 lakh crore and Rs 1.9 lakh crore, respectively.
Bonds were mostly raised by top-rated companies at 150-200 basis points below bank loans. Most of the debt was raised by government companies as they have top-rated status.
For AAA-rated corporate bonds, the yield was 6.85 per cent in May 2020, which fell to 5.38 per cent in April 2021 and to 5.16 per cent in May 2021.
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After ordering the freezing of assets of Videocon promoter Venugopal Dhoot and other officials, the National Company Law Tribunal (NCLT) has admitted a personal insolvency petition against Dhoot.
Earlier the Ministry of Corporate Affairs (MCA) received permission to freeze Dhoot’s assets.
Asish Narayan has been appointed as the resolution professional (RP) in the case by a division bench led by judicial member Suchitra Kanuparthi and a technical member Chandra Bhan Singh. The next date of hearing is 20 September.
Lenders to Videocon had filed the personal insolvency petition to attach Dhoot’s assets a year ago and its admission now means the recovery process will go on full steam. But it is unclear how the admission of personal insolvency proceedings will impact the NCLT’s order freezing Dhoot’s assets on the MCA plea.
State Bank of India (SBI) the lead lender in the consortium of bank creditors to has also taken Venugopal’s brothers and Videocon co-promoters Rajkumar Dhoot and Pradipkumar Dhoot under the personal bankruptcy law.
Rs 18,000 crore debt
Banks led by SBI are seeking to recover close to Rs 18,000 crore by initiating guarantees given by the Dhoot brothers at different points in time to access loans from banks. Claims from Venugopal Dhoot come to about Rs 6100 crore while two separate petitions have also been filed by SBI has to invoke Rs 6,158 crore of personal guarantee given by Pradipkumar Dhoot and Rs 5353 crore to be recovered from Rajkumar Dhoot which are yet to receive the NCLT go ahead.
These guarantees were given by them for a mix of term and working capital loans granted to the company over the years.
Cyril Amarchand Mangaldas is representing SBI in the case.
The way ahead
Now that NCLT has okayed the recovery process the RP will examine the application and submit his report stating the reasons for approval or rejection of the application within 10 days.
This process is different from the corporate insolvency process and the NCLT will determine going ahead with the personal insolvency based on the report of the RP.
In December over 94% of the creditors by value voted for Vendanta arm Twin Star Technologies as the preferred bidder to take over Videocon. Vedanta’s offer of a little over Rs 3,000 crore was a haircut of more than 95% on admitted claims of Rs 61,770 crore.
Other defaulting promoters
Banks have approached the National Company Law Tribunal for invoking personal guarantees of promoters of 17 defaulting companies.
The defaulting promoters include those of Punj Lloyd, Amtek Auto, ABG Shipyard, Videocon, Varun Shipping, and Lanco, according to reports.
Armed with a Supreme Court order, banks are looking to invoke personal guarantees of tycoons from Venugopal Dhoot to Kapil Wadhawan to recover unpaid loans from their delinquent firms
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 banks led by 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.
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The Reserve Bank of India on Wednesday imposed a monetary penalty of ₹25 lakh on private sector lender Axis Bank.
The penalty has been imposed for contravention of non-compliance with certain provisions of directions issued by RBI contained in the Reserve Bank of India – (Know Your Customer (KYC)) Direction, 2016, the RBI said.
RBI conducted scrutiny during February 2020 and March 2020 in a customer account maintained with Axis Bank. It was observed that the bank had failed to comply with the KYC directions and had failed to monitor/carry out on-going due diligence in the account to ensure that the transactions were consistent with its knowledge about the customer, customer’s business and risk profile.
“In furtherance to the same, a notice was issued to the bank advising it to show cause why penalty should not be imposed on it for contravention of the said directions,” the RBI said.
After considering Axis Bank’s reply to the notice and oral submissions made during the personal hearing, RBI concluded that the charge of contravention of / non-compliance with the directions were substantiated and warranted imposition of monetary penalty, it further said.
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Shanti Lal Jain has assumed charge as Managing Director and Chief Executive Officer of Chennai-headquartered Indian Bank from today.
Prior to this, he served as Executive Director of Bank of Baroda since September 2018, according to a statement.
A Post-graduate in Commerce, and a qualified Chartered Accountant, Company Secretary and CAIIB, Jain joined Allahabad Bank in 1993 in middle management cadre. In a career spanning more than 25 years in banking, he handled critical portfolios. Previously, he had worked in a range of industries for over six years.
He has served as Chief Financial Officer, Chief Risk Officer and headed IT department of Allahabad Bank.
Later, he led team Mumbai as Field General Manager (West) and was responsible for Maharashtra, Gujarat and Goa operations having business of about ₹50,000 crore.
Earlier to this, he has served in several branches and administrative offices of the Bank, pan India. Prior to joining Allahabad Bank, he worked in various industries for about 6 years.
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Axis Bank has raised $600 million from offshore investors by selling sustainable additional tier-1 (AT1) bonds at a coupon of 4.1 per cent said.
The bank will be using the proceeds towards eligible green and social project categories, as per the term sheet. The bonds will be listed on bourses, including NSE IFSC and India INX IFSC.
The lender launched the issue of the perpetual bonds earlier in the day with the initial pricing guidance at 4.4 per cent, looking to raise up to USD 1 billion.
Axis Bank raised USD 600 million from its GIFT City branch. The issue saw the order book peaking at USD 2.3 billion, as per the sources.
The major investors in the issue included Bluebay, Blackrock, Fidelity and HSBC Asset Management Company, they said.
This was only the third environment, social and governanc-themed bond issue by any lender globally and the first one in India.
The Axis Bank bonds were rated Baa3 (negative) by Moody’s Investors Service, BB+ (stable) by Standard & Poor’s and BB+ (negative) by Fitch Ratings.
HSBC deposits
Last month UK-based Hong Kong and Shanghai Banking Corp (HSBC) has raised $400 million of green deposits in India and identified financing opportunities to use those funds. Under its strategy, the bank first finds avenues to finance before raising the resources. The loans are extended for renewable projects, biodiversity linked initiatives, clean transportation and pollution control. Once the loans are sanctioned they are matched with deposits.
HDFC issue
HDFC, India’s largest private-sector mortgage financier, too announced last month the launch of a new green deposit plan to attract environmentally conscious depositors.
The company plans to raise these deposits from individuals to lend to projects by retail borrowers.
It plans to use these funds to lend to standalone homes which use environment-friendly practices, like putting up solar panels and water recycling, or even to women borrowers or self-help groups.
AT1 bonds
The bank is the third lender in quick succession to raise money from the AT1 route after HDFC Bank raised USD 1 billion from overseas investors last month, and SBI raised Rs 4,000 crore earlier in the day from domestic investors.
The AT1 capital instrument had received a setback after Yes Bank’s investors lost over Rs 8,400 crore of bets after a write-off in the RBI-led bailout.
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Axis Bank has completed the pricing of its overseas AT-1 bonds to raise $600 million.
“We are pleased to inform that the Bank, acting through its GIFT City branch, has completed the pricing of its US dollar denominated Basel III Additional Tier 1 Notes,” it said in a stock exchange filing.
The coupon rate for the bonds have been set at 4.10 per cent per annum.
Also read: RBI imposes ₹25 lakh penalty on Axis Bank
“The proceeds of the Notes will be used towards financing or refinancing, in whole or in part, new or existing Eligible Green Project Categories and Eligible Social Project Categories under the Issuer’s Sustainable Financing Framework,” it further said.
The private sector lender had on August 30 said it has initiated the process of issuing of the debt instruments, in the form of the AT-1 1 Notes in foreign currency, subject to market conditions.
“This will be a sustainable bond under the Sustainable Financing Framework of the bank. The issuance is part of the existing Global Medium Term Notes programme of the bank,” it had said at the time.
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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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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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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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