Tag: trade

Trade credit insurance norms to kick in from Nov 1

Banking & Finance

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Companies are gearing up for trade credit insurance covers, for which the guidelines come into effect from November 1. This is expected to improve liquidity for micro, small and medium enterprises (MSMEs).

A number of insurance companies are said to be working on the draft agreements and products.

“The new trade credit insurance (TCI) guidelines have come at the right time. The Factoring Regulation (Amendment) Act, 2021 allows NBFCs [non-banking financial companies] as factors. Once the RBI [Reserve Bank of India] amends the TReDS [trade receivables discounting system] guidelines to allow an NBFC as a financier on the platform, it will increase liquidity and financiers will have a risk-sharing partner,” said Ketan Gaikwad, Managing Director and CEO, Receivables Exchange Of India Limited (RXIL).

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RXIL had earlier initiated a TCI-backed transaction with Tata AIG General Insurance Company as the insurer and ICICI Bank and Yes Bank as financiers in a sandbox environment.

Gaikwad said RXIL has applied to the RBI for approval and will also seek board approval soon.

The Insurance Regulatory and Development Authority of India had in September announced guidelines for TCI cover to enable general insurance companies to offer it to suppliers as well as licensed banks and other financial institutions to help businesses manage country risk, access new markets and manage the non-payment risk associated with the trade financing portfolio.

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General insurers can also offer TCI with customised covers for small and medium-sized enterprises (SMEs) and MSMEs.

Arun Poojari, CEO, Cashinvoice, a digital supply chain finance marketplace, noted that several pilots were on for these covers.

“There is a testing with an insurance company on the Cashinvoice platform. By nature, this is a very powerful proposition and bound to be accepted in a big way,” he said.

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Rupee inches 4 paise higher to 73.25 against dollar in early trade

Banking & Finance

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The Indian rupee appreciated 4 paise to 73.25 against the US dollar in opening trade on Tuesday, tracking a positive trend in domestic equities.

At the interbank foreign exchange, the rupee opened at 73.26 against the dollar, then inched higher to 73.25, up 4 paise over its previous close.

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On Monday, the rupee had settled at 73.29 against the US dollar.

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Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was down 0.12 per cent at 92.54.

A strong rally in the domestic equity markets and a weak American currency in the overseas markets also supported the rupee sentiment.

According to Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors, the rupee, which has appreciated nearly 100 paise since Friday, has been gaining on bountiful corporate inflows.

“RBI has been present intermittently and equity inflows have also been aiding the rupee after Fed rhetoric on Friday,” he added.

The US Fed chief Jerome Powell’s speech at Jackson Hole Symposium was ‘dovish’ and expressed hope that the Fed will keep supporting the market with low interest rates, traders said.

Global oil benchmark Brent crude futures fell 0.48 per cent to $73.06 per barrel.

On the domestic equity market front, BSE Sensex was trading 87.09 points, or 0.15 per cent higher at 56,976.85, while the broader NSE Nifty advanced 21.55 points, or 0.13 per cent, to 16,952.60.

Foreign institutional investors were net buyers in the capital market on Monday as they purchased shares worth ₹1,202.81 crore, as per exchange data.

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Rupee rises 9 paise against US dollar in early trade, BFSI News, ET BFSI

Personal Finance

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The rupee appreciated 9 paise to 74.13 against the US dollar in opening trade on Tuesday, following a positive trend in domestic equities. However, flight of foreign capital, a strong dollar overseas and higher crude prices restrained the rupee to gain momentum, forex dealers said.

At the interbank foreign exchange, the rupee opened strong at 74.12 against the dollar, then it weakened slightly to quote 74.13, a rise of 9 paise over its previous close.

On Monday, the rupee had settled at 74.22 against the US dollar.

On the domestic equity market front, BSE Sensex was trading 45.14 points or 0.08 per cent higher at 55,600.93, while the broader NSE Nifty rose 19.65 points or 0.12 per cent to 16,516.10.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.08 per cent to 93.04.

Global oil benchmark Brent crude futures surged 0.33 per cent to USD 68.98 per barrel.

Foreign institutional investors remained net sellers in the capital market on Friday as they offloaded shares worth Rs 1,363.36 crore, as per exchange data.

Meanwhile, Finance Minister Nirmala Sitharaman on Monday unveiled an ambitious Rs 6 lakh crore National Monetisation Pipeline (NMP) that included unlocking value by involving private companies across infrastructure sectors — from passenger trains and railway stations to airports, roads and stadiums.

“A four-year National Monetization Pipeline (NMP) to monetize Rs 6 trillion of brownfield infrastructure assets across sectors will definitely boost investors’ confidence by providing sufficient clarity on the number, size and type of assets that would be made available in the market,” Abhaya Agarwal, Partner, Infrastructure Practice, EY India, said.



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Fed’s Rosengren says important to understand trade-offs of digital currencies, BFSI News, ET BFSI

Banking & Finance

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The Federal Reserve is exploring the technology that would be required to establish a central bank digital currency, but more research needs to be done before it would move forward with a currency, Boston Fed Bank President Eric Rosengren said on Wednesday.

“It is important to highlight that this is exploratory work, and any decision to move forward with such a currency would depend on a variety of factors beyond the technological feasibility and implementation,” Rosengren said in remarks prepared for a virtual event organized by Harvard Law School.

A central bank digital currency could improve financial inclusion, reduce the cost of cross-border financial transactions and provide more flexibility for implementing monetary policy, he said.

But Fed officials would need to fully consider the policy implications and trade-offs that come with using a digital currency, including possible threats to financial stability, Rosengren said.

“It is important to highlight that this is exploratory work, and any decision to move forward with such a currency would depend on a variety of factors beyond the technological feasibility and implementation,” Rosengren said

They plan to release a white paper and open source code early in the third quarter of this year, and later phases of the research project will focus on privacy, anti-money laundering and other issues.

“It is important to understand what problems a central bank digital currency is being designed to solve, and whether other technologies could more cheaply or efficiently address those problems,” Rosengren said.



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Axis Bank shares decline over 2% in early trade; bounces back later

Banking & Finance

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Shares of Axis Bank on Thursday declined over 2 per cent in early trade after the company reported a 29 per cent decline in December quarter consolidated net.

The stock opened on a weak note and further dipped 2.35 per cent to ₹617 on the BSE. But it soon bounced back wiping out the early losses and was trading in the green at ₹643.05, registering a gain of 1.76 per cent.

At the NSE also, it opened lower and declined 2.54 per cent to ₹616. In a similar trend, it bounced back as the trade progressed to quote at ₹641.20, up 1.44 per cent.

The country’s third largest private sector lender Axis Bank on Wednesday reported a 29 per cent decline in December quarter consolidated net at ₹1,334 crore, and reported a spike in non-performing assets from the retail assets side. In the 2019 December quarter, consolidated net profit was at ₹1,884 crore.

On a standalone basis, the city-based bank’s net profit for the October-December period declined 36 per cent to ₹1,116 crore from ₹1,757 crore in the same period a year ago. It reported fresh slippages of ₹6,736 crore under the IRAC norms, as against ₹6,214 crore in the year-ago period.

The same had come down to ₹1,572 crore in the preceding September quarter.

A bulk 83 per cent of the fresh slippages came from retail assets, which had become a focus area for lenders across the system in the last few years because of its perceived resilience in face of stress being reported by the corporate segment.

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