Tag: HDFC

Sensex skyrockets 958 pts; Nifty tops 17,800, BFSI News, ET BFSI

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Equity benchmark Sensex zoomed 958 points to end at a fresh lifetime high on Thursday, tracking gains in index majors Reliance Industries, HDFC twins and ICICI Bank amid a positive trend in global markets. Similarly, the broader NSE Nifty soared 276.30 points or 1.57 per cent to its new closing peak of 17,822.95. It touched an intra-day record of 17,843.90.

After scaling a new peak of 59,957.25 during the day, the 30-share Sensex settled 958.03 points or 1.63 per cent up at an all-time high of 59,885.36.

Bajaj Finserv was the top gainer in the Sensex pack, rising over 4 per cent, followed by L&T, HDFC, Axis Bank, SBI, Reliance Industries and IndusInd Bank.

On the other hand, Dr Reddy’s, ITC, Nestle and HUL were the laggards.

Domestic equities witnessed sharp recovery with benchmarks Nifty and Sensex both recording fresh all-time highs, said Binod Modi, Head-Strategy at Reliance Securities.

Favourable FOMC meeting outcome and ease of concerns from possible default of Evergrande aided market rally. Financials and Reliance Industries have dominated market rally, followed by metals, IT and auto, he added.

US Federal Reserve Chair Jerome Powell said the Fed plans to announce as early as November that it will start to taper its monthly bond purchases, should the job market maintain its steady improvement.

Elsewhere in Asia, bourses in Shanghai and Hong Kong ended with gains, while Seoul was in the red. Japanese market was closed for holidays.

Stock exchanges in Europe were also trading on a positive note in mid-session deals.

Meanwhile, international oil benchmark Brent crude slipped 0.12 per cent to USD 76.10 per barrel.



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HDFC Bank, plots path to double retail loans, BFSI News, ET BFSI

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HDFC Bank, India’s largest private lender, plans to double the amount of loans it makes to retail borrowers over the next couple years as consumer demand ramps up from a pandemic-induced slowdown.

Uncertainty is declining and demand is improving as businesses seek to bolster growth after Covid-19, Arvind Kapil, the bank’s country head for retail assets, said in an interview. It’s an opportunity to reverse the declining share of loans to this segment of the market that was needed to preserve asset quality, he said.

“We are planning to double our retail assets book in a focused manner,” Kapil said. “I can sense a robust demand at ground level. I run businesses and I am giving you a feel of what I see.”

Of the bank’s total Rs 11.5 trillion ($156 billion) loan book, Kapil is in charge of retail borrowing worth 3.7 trillion rupees, which is expected to reach almost 8 trillion rupees within the next two years.

If successful, that would mark a sharp turnaround from its strategy a year ago when the bank slowed down its retail lending to protect its asset quality as the pandemic led to millions of job losses and businesses closures.

HDFC Bank’s retail lending share as portion of its total fell to 47 per cent in March, the lowest in at least five years from an average of 54 per cent to 55 per cent previously. The bank, which is also the nation’s most valuable, has the lowest bad-loan ratio among peers, and now wants to focus on unsecured loans for salaried workers, vehicle loans and government business.

“We are taking a pretty aggressive positioning to grow our retail loan book,” Kapil said. “We want to accelerate on segments where we can maintain the asset quality and offer the best return on assets.”

HDFC Bank, plots path to double retail loans
The Mumbai-based lender’s retail loans grew around 9.3 per cent slower than its overall book’s 14.4 per cent in the June quarter. That’s sharply lower than its peers like State Bank of India’s 16.5 per cent and ICICI Bank’s 20 per cent growth in that portfolio. Still, the lenders also saw a spike in bad loans in retail lending in the June quarter after an unexpected and more deadly new wave of the virus ripped through India. Since then, loan collections have improved and, for HDFC Bank, are back to pre-pandemic levels, Kapil said.

“The results of doubling our business will be more visible early next financial year,” he said. “We will balance our top-line growth with our return on assets objective.”



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HDFC Bank, Paytm set to launch co-branded credit cards

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HDFC Bank and Paytm on Monday announced plans for launching a comprehensive range of credit cards powered by Visa.

“The partnership aims to provide one of the widest range of offerings across customer segments, with a special focus on millennials, business owners and merchants,” said a statement.

Customised cards

The credit cards will be customised to meet distinct needs of retail customers, from new-to-credit users to affluent users, and will offer one of the best-in-class rewards and cashback for users, it further said, adding that the new cards offering will also facilitate small business owners.

Also see: Banks geared for card tokenisation

The launch is planned in October 2021 to coincide with the festive season to tap into potentially higher consumer demand for credit card offers, EMIs and Buy Now Pay Later options, with the full suite of products to be on offer by the end of December 2021.

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Banks rush to implement ‘standing instructions’ system, but may still miss deadline, BFSI News, ET BFSI

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Banks and payment aggregators are rushing to meet the October 1 deadline for implementing a new system for standing instructions for recurring online transactions as the Reserve Bank of India is not likely to extend it. Banks are sending communications to customers saying that they will not process recurring payments, and customers will have to make payments directly to merchants.

“In compliance with the regulatory requirements, we are currently building a solution to seamlessly manage all your domestic standing instructions for recurring payments. This solution will be available soon for you. Starting October 1, any existing standing instruction for domestic and international recurring transactions on your card account will not be processed. We request you to make these payments directly to the service providers to avoid any interruptions,” American Express said in a recent message to customers.

How does the new system work?

Under the proposed system, as a risk mitigating and customer facilitation measure, the card-issuing bank will have to send a pre-transaction notification to the cardholder, at least 24 hours before the actual charge or debit to the card. While registering e-mandate on the card, the cardholder shall be given the facility to choose a mode among available options (SMS, email, etc.) for receiving the pre-transaction notification from the issuer. On receipt of the pre-transaction notification, the cardholder shall have the facility to opt-out of the particular transaction or the e-mandate. For transactions above Rs 5000, banks will also be required to send one time passwords to customers.

What is a standing instruction?

A standing instruction is a service offered to customers of a bank, wherein regular transactions that the customer wants to make are processed as a matter of course instead of initiating specific transactions each time.

This service relates to transactions like renewing subscription to over-the-top (OTT) platforms, newspapers and magazines, and utility bill payments.

The issue

Large lenders and payment entities including State Bank of India, Citi, HDFC, Axis, HSBC, Visa and Mastercard had asked the RBI to postpone the deadline for putting in place a new system to alert customers on ‘standing instruction’ transactions.

The banks were asked to set up the system by March 31, 2021.

The lenders also wanted RBI to exclude transactions against pre-existing standing instructions and those with international merchants from the new conditions for e-mandates on cards for recurring transactions.

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Assets under management likely to grow 15% in 3-5 years, BFSI News, ET BFSI

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Even as lenders jostle for home loan pie, the assets under management of the segment across banks and non-banks are likely to grow by 15% over the next three to five years, according to ICICI Securities.

This would be on the back of the rise in disbursements and improved affordability.

“Factors such as low interest rates, stamp duty cut, benign real estate prices, etc. have improved affordability to own a house. ‘Work from home’ has kindled incremental housing demand. Construction too was not adversely impacted during the second wave,” the brokerage said.

Home loan growth fell to 8% over the previous three financial years as compared to 17-18% earlier while disbursements fell to Rs 5.3-5.5 lakh crore due to the pandemic. However, now risen to a run-rate of Rs 7-8 lakh crore.

Segment-wise

The Rs 2.5-7.5 lakh ticket size, or prime segment, has grown in the mid-teens, while the affordable housing segment has grown in mid-single digits over the past two to three years.

The extent of loans disbursed in the prime segment has also been significant, as per the brokerage.

Among housing financiers, the likes of Housing Development Finance Corp and LIC Housing Finance are returning to double digits for retail loans. In the case of banks, the home loan portfolio has stayed put since March. “Neither did they decline in the initial two months of this fiscal, nor was the momentum build-up witnessed in June-July. Year-on-year growth, thereby, sustained at around 9%. Now banks are fiercely competing with cut-throat pricing,” ICICI Securities said.

The Kotak offer

The competition among banks in home loan space is growing.

Kotak Mahindra Bank is offering home loans at a lower rate of 6.50 per cent is a festive period offer available only for two months till November 8, and the lowest offering is for those having highest credit scores coming from the salaried segment.

In the past, its rivals which include HDFC and SBI, have responded to rate cuts by slashing their own offering. The rate cut comes at a time when demand for home loans is falling in the country and may spark similar offers from rivals.

Large banks like the State Bank of India already offer home loans at as low as 6.65 per cent and 6.75 per cent, respectively, while the interest rates for HFCs is between 7.45 per cent and 10 per cent.

Nirmal Bang Institutional Equities said in a note, “The demand momentum seen in housing loans last year has tapered off and organic growth for the housing finance industry has been softening,” the brokerage house said. The organic growth in the home loan segment for large banks has been slowing over the last 45-50 days.



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Know how Banks and Financials performed throughout the week, BFSI News, ET BFSI

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Domestic benchmark indices witnessed some exhaustion this week, after a healthy rally seen in the past weeks, with the BSE Sensex gaining around 9% last month.

Developments around the US economy, revival of activity in Europe amid rising Covid-19 infections, improving economic data, positive earnings expectations and healthy pick up in daily inoculations were considered to be key market driving factors this week.

Last Friday, the BSE Sensex vaulted above the 58,000-mark, while the Nifty50 touched 17,300 points as investors cheered recovery in the economy.

Monday Closing bell: Market continues winning streak; banks and financials underperform

The Nifty50 had a gap up opening, but couldn’t build upon the early gains. The index traded in a narrow range throughout the day and consolidated its gains. During the second half, markets continued to trade on a positive note on the back of strong global cues and domestic economic activity. The Sensex was up 0.29% at 58,296.91, and the Nifty was up 0.31% at 17,377.80.

Bank Nifty closed with losses, ending 0.5% lower at 36,592 points, while Nifty Financial Services closed 0.3% lower at 18,077 points. Shares of IndusInd Bank fell 1.13% as the top laggard, followed by Kotak Mahindra Bank, and HDFC Bank.

Tuesday Closing bell: Market ends in red, banks, financials continue to lose

The Nifty50 had a cautious start on Tuesday, around levels of 17,400. All sectoral indices opened in the green, except for Nifty Bank. Domestic indices reached fresh all-time highs but failed to hold gains and ended the day with marginal losses. The Sensex closed at 58279.48 points, down 0.03%, while Nifty closed at 17362.10, down 0.09%.

Bank Nifty ended the 0.34% lower at 36,468 while Nifty Financial Services closed at 18,102 gaining 0.15%. Axis bank was among the top Nifty Losers while HDFC and IndusInd Bank were among the top gainers.

Wednesday Closing bell : Indices tad down; banks, financials among top gainers

Domestic equity indices rebounded from lows in the dying hour of trade to end flat with a negative bias, with mid and smallcaps outperforming the benchmarks. The Sensex and Nifty both ended flat, down 0.05% each at 58,250.26 points and 17,353.50 points, respectively.

Among sectors, Nifty Bank, private bank, PSU bank and financial services rose about a percent each. Bank Nifty gained 0.82% to end at 36,768, while Nifty Financial Services gained 0.57% closing at 18,207. Kotak Mahindra Bank jumped 3.5% to be the top index gainer.

Thursday Closing bell: Market closes on positive note; banks, financials underperform

Domestic indices started Thursday’s session on a flat note amid selling pressure seen in financial stocks. Sensex and Nifty both closed with a gain of 0.09%, higher at 58,305.07 and 17,369.25 respectively.

Nifty Bank ended in red at 36,683 down 0.23%, while Nifty Financial services closed at 18,160, down -0.26%. Kotak Bank and Bajaj Finserv were among top blue-chip performers. HDFC Bank, IndusInd Bank and SBI were among the volume toppers. Meanwhile, SBI Life, Axis Bank, Federal bank and Chola Invest were among the top losers.

Industry Key Takeaways

Tamilnad Mercantile Bank files IPO papers with SEBI
Private-sector lender Tamilnad Mercantile Bank has filed preliminary papers with Securities and Exchange Board of India to mop-up funds through an initial share-sale. The initial public offering (IPO) comprises fresh issue of 15,827,495 equity shares and an offer-for-sale of up to 12,505 equity shares by selling shareholders, according to the draft red herring prospectus (DRHP).

LIC Housing Finance partners with India Post Payments Bank
India Post Payments Bank (IPPB) and LIC Housing Finance on Tuesday announced a strategic partnership for providing home loan products to over 4.5 crore customers of IPPB. LIC Housing Finance was quoting at Rs 416.10, up Rs 11.35, or 2.80% on the BSE.

India’s fintech market to triple to ₹6.2 lakh cr by 2025: MoS Finance Karad
The government’s various initiatives have led to fast growth in the fintech sector, which is likely to triple to ₹6,20,700 crore in value terms by 2025, minister of state for Finance Bhagwat K Karad said on Wednesday.

Highlighting that India is a leader in adopting financial technology among emerging markets, he said, the country had an adoption rate of 87% in March 2020, as compared to the global average of 64%.

Paytm Money launches investment advisory marketplace on platform
Paytm Money, the wealth management division of digital payments major Paytm, on Tuesday said it is creating a wealth and investment advisory marketplace on its platform to offer curated advisory services and products to retail investors.

Paytm Money has partnered with investment startup WealthDesk to offer investment portfolios called ‘WealthBaskets’. A ‘WealthBasket’ is a custom portfolio of stocks and exchange traded funds (ETFs) created by SEBI-registered investment professionals.

India to post strong GDP growth in coming quarters: S&P
India is expected to post strong economic growth in the coming quarters, even as inflation, led by food prices, is likely to remain elevated, S&P Global Ratings said on Wednesday.

The economy is expected to clock 9.5 percent growth in the current fiscal year, followed by 7% expansion in the next year, it said, adding high nominal GDP growth would be important for ensuring fiscal consolidation going forward

Kotak Mahindra Bank slashes home loan rates by 15bps to 6.5%
Kotak Mahindra Bank announced today that it has reduced home loan rates by 15 base points, from Friday till November 8.

The bank is offering this rate in view of the upcoming festive period. The rate of 6.5% will be prevalent for both fresh home loans and balance transfers, and will be available across all loan amounts and is linked to a borrower’s credit profile.

UCO Bank shares spike 16% after RBI lifts PCA restrictions
UCO Bank shares received strong buying demand, rising as much as 15.9 percent on September 9 after the Reserve Bank of India lifted Prompt Corrective Action (PCA) restrictions on the bank.

“The performance of the UCO Bank was reviewed by the Board for Financial Supervision under the RBI. As per published results for the year ended March 31, 2021, the bank is not in breach of the PCA parameters,” said the RBI in its press release published on September 8.



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HDFC Life to cap policies, channels’ share in sales, BFSI News, ET BFSI

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MUMBAI: As part of its strategy to grow consistently, HDFC Life Insurance has decided to keep a cap on the share of products and distribution channels. According to the CEO of the country’s most valuable life insurer, Vibha Padalkar, the Exide Life acquisition is aimed at increasing the share of agents and reducing dependence on HDFC Bank’s distribution.

Speaking to TOI, Padalkar said that HDFC Life has managed to survive volatility in macro-economic conditions and regulatory changes better because of portfolio diversification. As a result, the company does not want to increase the share of unit-linked insurance plans (ULIPs) to beyond the present level of 25% despite surging markets. Even when it comes to the company’s best-selling investment product Sanchay Plus, it has decided to cap the extent of sales.

“Bancassurance used to be around 75% of our business at one time. It’s hovering around 50% of the business. I am not saying that it will not grow. I am saying that other channels should grow faster purely from a diversification point of view,” said Padalkar.

On Friday, HDFC Life had announced that it will buy Exide Life Insurance for Rs 6,687 crore.

According to Padalkar, it is product diversity that has helped HDFC Life survive the shift in the regulation of ULIPs in 2010 that resulted in several other insurers losing market share. She added that it was this strategy that helped the company increase sales of protection policies during the pandemic.

“Our share of agency business had shrunk because we had focused on persistency of agents and reducing complaints, which we have got right. The Exide Life acquisition helps us to expand our agency force by 40%,” said Padalkar. Pointing out that the trend was for insurance to be sold through company advisers, she said that HDFC Life had all the tools in place to improve the productivity of agents.“Exide agents would be excited to have the bouquet of products that we have to offer because we are seen as a product innovator or product factory. We have the technology for our agents to quickly onboard customers or allow them to offer a pre-approved sum assured to the client,” she said. The private insurer, which has made huge investments in digital technology and artificial intelligence, has the capability of profiling the customer and their needs once his basic information is updated.

“We have a digital agent platform where they can do business without ever attending office. We have a Google-like tech solution, using which agents can get any product-related questions. This question can be asked in regional languages and forms can be filled in regional languages,” she said.



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HDFC Life buys Exide arm for ₹6,687 crore in cash, equity deal

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HDFC Life Insurance Company (HLIC) on Friday announced the acquisition of 100 per cent share capital of Exide Life Insurance Company for a total consideration of ₹6,687 crore.

This move comes about four years after the proposed merger of Max Life with HDFC Life was called off as it did not pass muster with the insurance regulator.

Of the total consideration, ₹725.97 crore will be payable in cash and the balance by way of issue of about 8.7 crore equity shares of HDFC life, with a face value of ₹10, issued at ₹ 685 a piece to Exide Industries Ltd (the holding company of Exide Life), HDFC Life said in a regulatory filing.

The issue of shares to Exide Industries will be on a preferential allotment basis for non-consideration. The completion of the proposed issue is subject to shareholder approval and subject to receipt of all regulatory approvals.

HDFC Life is acquiring Exide Life at about 2.47 times the latter’s embedded value (EV) of ₹2,711 crore (as at June-end 2021). EV is the value of business currently on an insurer’s books. Upon completion of the transaction, Exide Industries will hold 4.1 per cent in HDFC Life.

Vibha Padalkar, MD & CEO, HDFC Life, said the transaction will be a two-step process, with Exide Life first becoming a subsidiary of HDFC Life by December/January. Thereafter, depending on NCLT approval, which could take up to nine months, Exide Life will be merged with HDFC Life. She emphasised the subsidiarisation of Exide Life will help HDFC Life gain control of its business, making value preservation easier.

Use of Exide brand

Padalkar said that as part of the deal, HDFC Life is allowed to use the Exide brand for two years until it is transitioned out. The Assets Under Management (AUM) of HDFC Life is expected to increase by approximately 10 per cent, taking it beyond ₹2-lakh crore, she added.

Exide Life posted a turnover (total premium for FY 2020-21) of ₹3,325 crore (₹3,220 crore for FY2019-20). Its AUM as on June 30, 2021, totalled ₹18,780 crore, per the filing.

In a joint statement, the two companies said: “Exide Life complements HDFC Life’s geographical presence and has a strong foothold in South India, especially in Tier 2 and 3 towns, thus providing access to a wider market. Further, a good quality, predominantly traditional and protection focussed business, will augment the existing embedded value of HDFC Life by approximately 10 per cent.”

‘Landmark transaction’

Deepak S Parekh, Chairman, HDFC Life, said, “This is a landmark transaction, first of its kind, in the Indian life insurance space. It would enhance insurance penetration and further our purpose of providing financial protection to a wider customer base.”

The shares of HDFC Life were down 3.21 per cent to close at ₹734 a piece on Friday on the BSE. Exide Industries shares were up 6.3 per cent at close on Friday on BSE. “One of the major sticking points with investors in relation to Exide Industries was its investment in non-related life insurance business. This issue seems to be now resolved and should lead to significant re-rating of the stock,” said analysts at Investec Securities

Exide Industries had recently announced its intention to foray into lithium-ion cell manufacturing over and above its existing battery pack manufacturing plant at Gujarat in partnership with Leclanche of Switzerland. The proceeds from the sale of Exide Life should help fund the capital requirement

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HDFC Bank divests over 2 per cent stake in CDSL for Rs 223 crore, BFSI News, ET BFSI

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HDFC Bank has divested more than 2 per cent stake in Central Depository Services (India) Ltd (CDSL) in tranches during June-August this year, garnering nearly Rs 223 crore from the sale, according to a regulatory filing. HDFC Bank sold 23,11,000 equity shares of face value of Rs 10 each fully paid up held by the bank in CDSL through the secondary market route on the NSE, the private bank said in the regulatory filing.

The divestment of 2.21 per cent stake in Central Depository Services (India) Ltd took place over a period from June 22 to August 24, 2021.

The bank sold 20,36,000 shares (1.95 per cent) of CDSL at an average price of Rs 937.46 per piece on June 22. On August 23, it sold 2,13,481 shares at Rs 1,168.94 apiece and on August 24, it sold 61,519 shares for Rs 1,119.31 apiece.

The shares were sold for a cash consideration of Rs 222.71 crore, HDFC Bank said.

CDSL provides depository services to market participants. It has three operating services: depository, data entry and record keeping of KYC documents of capital market investors, and repository.

Repository provides policyholders and warehouse receipt holders the facility to keep insurance policies and warehouse receipts in electronic form, as well as to undertake changes, modifications and revisions in it.



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Financiers line up green deposits as investors ready as ESG concerns trump yield chase, BFSI News, ET BFSI

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As investors become environmentally conscious and look to put their money in green projects, financiers are rising to the cause.

They are offering green deposits to customers which will be used to fund environmentally friendly projects.

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.

While HSBC will offer deposits and lend the money raised to companies, HDFC plans to raise these funds through retail depositors.

HSBC has opened these deposits only for corporate clients currently, but there is no differentiation in interest rates with normal deposits. The bank is currently offering a tenure ranging from 90 days to five years.

HDFC bonds

Last week, India’s largest private-sector mortgage financier announced 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.

These deposits to be raised from retail and HNI investors will carry interest rates up to 6.55 per cent, while the maturity period would vary from three to five years.

Senior citizens (60 years+) will be eligible for an additional 0.25 per cent per annum on deposits up to Rs 2 crore.

HDFC Chairman Deepak Parekh said, “Today, sustainability is no longer about doing less harm, but about doing more good.” HDFC anticipates growing demand for green solutions and has launched green and sustainable deposits offering for our customers who can grow their wealth while they contribute to serving the needs of a changing world, he said, adding that HDFC is committed to supporting India’s efforts for a sustainable and green low-carbon economy.

At present, HDFC has a total deposit base of Rs 1.54 lakh crore as of June end and even 1% of this the new fundraising will amount to over Rs 1,500 crore.



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