Category: Personal Finance

Loan portfolio still vulnerable

ICICI Securities said in a recent note that Yes Bank’s December-quarter earnings have aggravated fears of its asset quality issues.

“The portfolio vulnerability becomes visible from, a spike in standstill non-performing loans or NPLs (from 1.5% to 5%), SMA-2 pool (from 2.4% to 4%), SMA-1 (from 1.6% to 7.3), and additional restructuring outside of this pool at 3.2% over and above the labelled non-performing assets at 22%,” it said.

The brokerage further gave a “hold” rating on the stock with a revised price target of Rs 16 adding that “asset quality fears outweigh the turn around in operating metrics and we expect the recently proposed equity raise to depress RoE.”

Asset quality concerns merely being deferred and seem far from over, Yes Bank’s stress pool aggravate fears around its asset quality, ICICI Securities said.

Emkay Research has a “sell” call on Yes Bank

Emkay Research has given a ‘sell’ rating to Yes Bank given the sub-par return ratios and unfavourable risk-reward with higher valuations.

The brokerage has set a target price of Rs 11 for the stock.

“We believe that the transfer of NPAs to a separate ARC (somewhat similar to IDBI in 2003) probably means window dressing standalone bank B/sheet, but we need to see the extent of hair-cuts, structure of ARC and recovery record in the ARC, which is not inspiring in case of IDBI SASF,” said Emkay Research in its report.

The brokerage adds that though current top management with the help of regulatory/investor support has been able to arrest bank failure, re-orienting into a sustainable retail bank will require differentiated private management.

However, the brokerage believes a faster and sustainable business growth, lower-than-expected NPA formation and higher-than-expected recoveries from stress pool can be a key risk to their call.

Elara Capital lowers price target to Rs 6

Elara Capital said that Yes Bank’s new stress loans stood at 17% while outstanding stress stood at 39%. Standstill corporate NPLs of Rs 51 bn were spread over 3000 accounts indicating that the average ticket size of corporate NPLs was low and there were no lumpy accounts. New corporate stress was mainly from hospitality and real estate, the brokerage said.

Elara Capital recommends “Sell” on Yes Bank with a target price of Rs 6 due to an uncomfortably high level of incremental stress. The brokerage said that its assessment is that Yes Bank’s stress loans will likely rise sharply in H2FY21 / FY22E is turning out to be correct.

Opening of an FD account

Having a regular savings account with the bank, senior citizens generally open an FD account with the same bank. In case they do not have a savings account with the bank, he or she will be mandated to go through complete KYC procedure. You will be asked to submit, along with the properly completed KYC form, a self-attested copy of identity (ID) proof, address proof, and passport size color photographs. As the bank official will ask for them for authentication purposes, you will have to carry original documents too with you. Bank officials can check your age from the documents submitted by you in order to be able to invest in FDs as a senior citizen. Typically, as stated in the Income Tax Act, the bank meets the classification of a senior citizen.

Minimum and maximum deposit limit

The minimum deposit amount in an FD account varies between banks. But there is no upper limit for the general public as well as senior citizens to deposit.

Tenure

In order to open an FD account with them banks generally have specified the minimum and maximum tenure. Currently, for a minimum of 7 days and up to a limit of 10 years, one can invest in an FD. The tenure can be preferred according to your requirements within this set.

Tax deductions

As per the recently added section 80TTB of the Income Tax Act, interest on deposits maintained with banks, or post offices earned up to Rs 50,000 is exempted from tax. This tax deduction operates as follows: a senior citizen can seek an exemption of interest income received by these institutions of up to Rs 50,000 as a post-tax deduction from gross total income. In addition, no TDS will be withheld from interest payments made in a single financial year of up to Rs 50,000. A senior citizen can submit Form-15H to the bank to avoid TDS.

Premature withdrawal facility

FDs typically have a premature withdrawal facility that can support you fulfill emergency needs. That being said, the bank can levy a penalty on the premature withdrawal of the FD and thus the penalty amount varies through banks. Some banks do not impose a penalty on early withdrawals presently. In addition, without a premature withdrawal facility, some banks often offer FDs. It is also prudent to review the laws surrounding the same matter.

Nomination facility

FDs also support senior citizens with a nomination facility. It is vital that you identify the nominee in a straightforward and correct way while opening an FD account. A separate form, known as Form DA1, has to be fulfilled correctly during nomination so that your legitimate successors do not have to go through challenges to receive the fund.

Interest rates

In contrast to the general public, senior citizens are usually granted higher interest rates. Banks usually pay a higher interest rate of 0.50 percent. Elderly people can opt whether to earn monthly interest payments (non-cumulative option) to cover their expenditures or, including the principal amount, at the time of maturity (cumulative).

1 Year FD Rates For Senior Citizens

2 Year FD Rates For Senior Citizens

3 Year FD Rates For Senior Citizens

5 Year FD Rates For Senior Citizens

Ahead of the Union Budget 2021, the stock market has been very volatile. The India VIX index was up nearly 4% to 23.25 on Monday. Benchmark equity indices plunged with BSE’s Sensex falling over 500 points dragged by losses in IT and FMCG stocks.

NSE’s Nifty settled 133 points or 0.93% lower at 14,239.

Among major losers for the day was Reliance Industries. The stock traded 4.96% lower at Rs 1,948.00 apiece on BSE, having slumped as much as 5.34% to Rs 1,940.15 earlier on Monday after the conglomerate posted a sharp drop in quarterly revenue from its dominant oil-to-chemicals business.