The benchmark index Sensex fell over 600 points in intraday trade while Nifty touched 14,969 on the downside. Bank and financial stocks such as ICICI Bank, Kotak Mahindra Bank and SBI were among the top laggards in the 30-share pack Sensex.
At close, the Sensex was down 0.95% at 50,792.08, while Nifty was down 0.95% at 15,031. Nifty PSU Bank Index fell 1 percent dragged by the Bank of Baroda, Canara Bank, Indian Bank. BSE Bankex also ended lower at 39,995 losing 1.28%.
Nifty Bank Index ended at 34,496 down -1.23%. Amongst the top Losers were- ICICI Bank at Rs 612 ending below -2.04% followed by SBI at Rs 381 with -1.70%, Induslnd Bank at Rs 1,022 (-1.65%), Kotak Mahindra Bank at Rs 1,935 (-1.47%), Axis Bank at Rs 750 (-1.33%). While all the major indices traded in red, RBL Bank and IDFC First Bank managed to stay in the green.
Nifty Financial Services ended at 16,506 Lower by -1.10%. Amongst the biggest losers were Indiabulls Hsg Rs 224 by -2.67% followed by Cholamandalam at Rs 531 (-1.41%), HDFC at Rs 2,568 (-1.22%), Bajaj Finserv at Rs 9,934 (-0.57%).
Other key takeaways
RBI to conduct OMO for sale and purchase of govt securities The Reserve Bank of India (RBI) on March 10 announced it will purchase and sell Government of India dated securities for Rs 10,000 crore each via an open market operation (OMO) on March 18.
“The Reserve Bank has decided to conduct simultaneous purchase and sale of Government securities under open market operations (OMO) for an aggregate amount of Rs 10,000 crore each on March 18, 2021,” the central bank said.
Suryoday Small Finance Bank to launch IPO on March 17 Suryoday Small Finance Bank will open its initial public offering of 1,90,93,070 equity shares on March 17 with a price band of Rs 303-305 per share. The issue will close on March 19.
The anchor book subscription (if any) will open for a day on March 16. The offer consists of a fresh issue of 81.50 lakh equity shares and an offer for sale of 1,09,43,070 equity shares by existing shareholders.
Rupee Updates Indian rupee erased some of the intraday gains but ended higher by 13 paise at 72.81 per dollar, amid selling saw in the domestic equity market. It opened 25 paise higher at 72.66 per dollar against Wednesday’s close of 72.91 and traded in the range of 72.62-72.85.
On March 10, the domestic unit ended flat at 72.91 per dollar versus the previous close of 72.93. On Thursday the currency market was shut on account of Mahashivratri.
Wall Street closes on higher mark The S&P 500 and the Dow closed at all-time highs on Thursday as worries about rising inflation subsided, while a bigger-than-expected fall in weekly jobless claims and the signing of a massive stimulus bill reinforced expectations of a strong economic recovery.
The Dow Jones Industrial Average rose 188.57 points, or 0.58%, to 32,485.59, the S&P 500 gained 40.53 points, or 1.04%, to 3,939.34 and the Nasdaq Composite added 329.84 points, or 2.52%, to 13,398.67
Five of the top 10 Indian entities to have listed on the bourses are from the BFSI sector, according to a report by Praxis Global Alliance titled “India Investments Pulse 2020”. Contextually, 43 Indian companies raised $3.6B in the public markets in 2020, as compared to $1.8B in the previous year. Of these, five BFSI entities including SBI Card, CAMS, UTI Mutual Fund, Angel Broking and Equitas Small Finance Bank ranked amongst the top 10 Indian IPOs of the year.
SBI Card and Payment Services, which was amongst the first IPOs to be listed days before India went into a stringent lockdown to curb the spread of the COVID-19 pandemic, raised $1381M from its offer. Registrar and transfer agent entity Computer Age Management Services (CAMS), which listed in October 2020, raised $299M through its offer.
During October 2020, two more BFSI entities, namely UTI Mutual Fund and Angel Broking raised $288M and $80M, respectively. Small Finance Bank Equitas, on the other hand, having listed in November, raised $69M from its public issue.
BFSI exits
Two BFSI entities, namely SBI Card and AU Small Finance Bank, also featured amongst the Top 10 exits of 2020. The Carlyle Fund through a public market sale worth $951M, partially exited its investment in SBI Card. AU Small Finance Bank also saw complete exits from Warburg Pincus, worth $173M through a public market sale, and in a separate transaction, between IFC and ChrysCapital, which exited wholly from the lender at $124M.
Private Equity entries
The BFSI sector as a whole raised approximately $3209M in terms of funds from Venture Capital and Private Entity funds, ranking fifth after the Telecom, Retail, Consumer apps and Ecommerce platforms. Amongst the Top 10 deals featured for the BFSI sector include NBFC Edelweiss which through a Late stage fund by SSG Capital and Farallon Capital raised $401M.
NBFC PNB Housing Finance also raised $234M through funding from The Carlyle Group, whilst lender RBL Bank attracted $209M through funding from Baring Private Equity Asia, ICICI Prudential Life Insurance, Gaja Capital and CDC Group. NBFC’s Indostar, DMI Finance and Homefirst Finance also raised $362M, $123M and $95M, respectively.
In the last few weeks, two headlines became very famous and all the verticals of the media around the world carried it. First was Kamala Harris who took over as a vice president of the United States of America. And the second is Jane Fraser, who took over as CEO of CitiBank. The common factor in both the stories is not just that they belong to America… but both of them are the first women candidates in the role.
What surprises me is the largest economy, and the most developed country in the world never ever had any woman in these roles in the past. Forget politics, not even in banking. Despite being a global bank operating in almost 50 countries, it’s hard to believe that CITI took more than 200 years to find a women leader.
Dr B R Ambedkar said, “I measure the progress of a community by the degree of progress which women have achieved,”
Ambedkar’s statement is quite laudable in India‘s financial world. Because India had and also has a number of women leaders in the sector. Look at the accompanying chart. This is not a complete list.
Present Women Leaders
Nirmala Sitharaman
Fianance Minister
Government of India
Padmaja Chunduru
MD & CEO
Indian Bank
Zarin Daruwala
CEO
Standard Chartered Bank (India)
Kalpana Morparia
CEO
JP Morgan India
Radhika Gupta
CEO
Edelweiss Asset Management
Vibha Padalkar
MD & CEO
HDFC Life
Anamika Roy Rashtrawar
MD & CEO
Iffco Tokio General Insurance
RM Vishakha
MD & CEO
IndiaFirst Life Insurance
Neera Saxena
MD & CEO
GIC Housing Finance
Shanti Ekambaram
President (Consumer Banking)
Kotak Mahindra Bank
Meghana Baji
CEO
ICICI Prudential Pension Funds
Ashu Suyash
CEO
CRISIL
Renu Sud Karnad
MD
HDFC
Sonia Dasgupta
MD
JM Financial
Vani Kola
Co-Founder & MD
Kalari Capital
Suniti Rani Nanda
Chief FinTech Officer
Government of Maharashtra
Rashmi Mohanti
CFO & Interim CEO
Clix Capital
Deena Mehta
Managing Director
Asit C. Mehta Investment Interrmediates
Women leaders in past
State Bank of India
Arundhati Bhattacharya
Chairman
ICICI Bank
Chanda Kochar
MD & CEO
Axis Bank
Shikha Sharma
MD & CEO
NSE
Chitra Ramakrishnan
MD & CEO
Alice Vaidyan
GIC Re
CMD
Naina Lal Kidwai
HSBC India
Country Head
Usha Ananthasubramanian
CMD
Bhartiya Mahila Bank
Meera Sanyal
CEO
RBS
Due to space crunch I have only added a few names but women leaders are an integral part of the India’s finance sector. From Deputy Governors at RBI and Whole Time Members at SEBI and even emerging areas like FinTechs, and technology also have many women CEOs.It requires a refined mind and a dedication to follow a great schedule to maintain a work life balance. For women it’s far trickier… In my recent conversation with Padmaja Chunduru, MD & CEO of Indian Bank, she said that she travelled to a village with a three- month-old infant. I am sure every lady has a breathtaking journey.
In the BFSI sector women have raised their flag high…let it wave there always. In the words of the poetess, Sylvia Path,
‘I took a deep breath and listened to the old brag of my heart… I am, I am, I am… Editors View is a weekly column written by Amol Dethe, Editor, ETBFSI. Click here to read his previous columns.
Four industrial sectors, including healthcare, banking, financial services and insurance (BFSI), media-telecom and IT-ITES, show superior risk handling, according to the Corporate India Risk Index 2020 launched by ICICI Lombard General Insurance.
The index also revealed that sectors that deal with high-transaction volumes and customer touchpoints, including BFSI, FMCG, automotive and transportation, are observed to have high-risk exposure.
“BFSI has very high risk exposure, but excels in risk management too,” it found, adding that real economy sectors such as metals, automotive, manufacturing and infrastructure and realty are currently handling risks optimally.
Further, new-age, hospitality and logistics sectors have high intrinsic risk exposure, which are being handled sub-optimally.
“Most new-age companies adopt operational best practices from established players for operational risk management,” it revealed.
According to a statement by ICICI Lombard General Insurance, the Corporate India Risk Index is a quantifiable measure to gauge the level of a company’s risk exposure and preparedness. The framework comprises 32 risk elements across six broad dimensions and covers large, medium, and small corporates across 15 key sectors in India.
The insurer has worked with Frost and Sullivan to develop the risk index.
As the year draws to an end here’s a look at what shaped the BFSI sector in the year gone by:
RBI vs. Covid-19: The Reserve Bank of India came out with a slew of measures to safeguard the financial services sector and the overall economy against the virus triggered pandemic and the lockdowns.
Shaktikanta Das, RBI Governor, during one of his monetary policy announcements.
Since March, the RBI cut the repo rate by 115 basis points to 4%. It also purchased Rs 1.9 lakh crore of G-secs until September. These measures helped in reducing the interest rates in money and debt markets, and even got transmitted to bank lending rates. RBI also maintained an accommodative monetary policy stance, suggesting it could cut rates to inject money into the financial system whenever needed.
Moreover, the regulator provided instant relief to borrowers by wavering off EMIs on term loans for six months — March to August.
Bidding farewell: State Bank of India’s chairman Rajnish Kumar hung up his boots in 2020, after serving the bank in various capacities for almost 40 years, and the last three as its chairman. Kumar is credited with launching SBI’s digital platform YONO, whose valuation he’d estimated to be around $40 billion. Kumar’s vision for the bank was to transform it into a strong bank and at the top of the digital game. And he definitely succeeded at that. In October he was replaced by Dinesh Kumar Khara, previously a Managing Director at SBI.
Rajnish Kumar, Former Chairman, State Bank of India and Aditya Puri, Former MD & CEO, HDFC Bank
Aditya Puri, who was at the helm of HDFC Bank for 26 years, also retired in October to give way to Sashidhar Jagdishan. Puri was at Citi Bank when Deepak Parekh first offered him the job to pilot the newly formed HDFC Bank. Puri, a Chartered Accountant, became the first CEO of HDFC Bank in 1994. And in the past quarter century, he transformed the bank and made it the largest private sector lender of India. Puri is now a Senior Advisor at The Carlyle Group.
Failed banks: In March, RBI placed YES Bank under moratorium and restricted withdrawals to a maximum of Rs 50,000, sending its customers to a frenzy. Shares of the bank tanked to Rs 5.65 a piece, its lowest till date.
Yes Bank customers queue up to withdraw money when the bank was put under moratorium by the regulator
The bank ran into trouble following the RBI’s asset quality reviews in 2017 and 2018, which led to a sharp increase in its NPA ratio and significant governance lapses that led to a complete change of management. The bank subsequently struggled to address its capitalisation issues and get investors. Later, the bank was rescued by State Bank of India (SBI), six private sector banks, and a mortgage lender, who invested a total of Rs 10,000 crore the bank, helping it shore up its capital buffers after they dropped below the regulatory requirements. SBI’s then CFO Prashant Kumar was chosen to head the struggling lender.
Another bank that made headlines is Lakshmi Vilas Bank. In September, in an unprecedented move, shareholders voted against the seven out of a total of 11 members from the senior management including the interim MD & CEO, S, Sundar. According to reports the shareholders were unhappy with the rise in bad loans, value erosion and the future of the bank. The RBI then appointed three members to look after the daily affairs of the bank along with the remaining four senior officials of the bank.
The capital starved LVB was looking for potential mergers and began talks with IndiaBulls Housing Finance, but couldn’t get a nod from the RBI. Later this year, LVB announced merger talks with Clix Capital. But before anything could materialise, RBI put it under moratorium and later announced its merger with DBS Bank India.
Coronavirus health insurance policies : On the basis of guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI), most insurance companies rolled out their Corona Kavach and Corona Rakshak policies. These short-term policies will cover the treatment cost of the coronavirus disease and remain valid until March 31, 2021. The Corona Kavach policy will cover both individuals and families. The Corona Rakshak policy will only cover individuals.
IRDAI had asked insurers to roll out Covid-19 specific policies Corona Rakshak & Corona Kavach. Industry experts believe many first time buyers have purchased these policies and the sale of these policies has been good.
Above all, the industry accelerated digital adoption, leaving behind the face-to-face service, a dominant mode of distribution and business acquisition. Agents and distributors now interact with customers on video calls for selling products and customer engagement.
The awareness for insurance has gone up significantly towards the concept of protection, the primary reason why insurance exist. Industry experts believe this momentum is here to stay. Further, the industry is moving towards rolling out standardised insurance products like Aarogya Sanjeevani for health insurance, the regulator has also pushed for standardised term cover and travel insurance.
NBFC vs liquidity: NBFCs continued to struggle with liquidity and credit flow. They faced a dual challenge of growth and profitability. The percentage of customers availing the moratorium was relatively lower for NBFCs, while loans outstanding under moratorium were higher than those extended by banks, indicative of incipient stress, said a latest report by RBI. Moreover, the asset quality deteriorated as slippages rose in FY20. However, efforts were made by NBFCs to clean up their balance sheets, as reflected in their written-off and recovery ratios.
Meanwhile, amidst pervasive risk aversion, bank borrowings by NBFCs continued to grow at a robust pace as compared to market borrowings. As the RBI required NBFCs to adopt a Liquidity Risk Management Framework from December 2020, NBFCs gradually swapped their short-term borrowings for long-term borrowings with the aim of maintaining adequate liquidity.
RBI’s NUE: RBI took a leap towards establishing a new umbrella entity (NUE) for retail payments. This entity will set up, manage, and operate new payment systems in the retail space. It is tasked with operating payment systems such as ATMs, white-label PoS, Aadhaar-based payments, and remittance services. All NUEs will have to be interoperable with the National Payments Corporation of India (NPCI)— the umbrella entity that currently manages retail payments in India. However, they will be allowed to set themselves up as for-profit or not-for profit entities. Some big names are already in fray for licence.
