Tag: Union Budget 2021

RBI Guv, BFSI News, ET BFSI

Banking & Finance

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The proposed asset reconstruction company (ARC) for management of non-performing assets (NPAs) announced in Budget 2021 will not ‘jeopardise’ the activities of existing players in the space, Reserve Bank Governor Shaktikanta Das said on Thursday. While presenting the Union Budget 2021, Finance Minister Nirmala Sitharaman proposed to set up an asset reconstruction company and asset management company to consolidate and take over existing stressed debts and manage them.

“(In) no way will it (proposed ARC) jeopardise the activities of the existing ARCs. I think there is scope to have one more strong ARC…,” the governor said at an event organised by the Bombay Chamber of Commerce.

There are close to 28 asset reconstruction companies operating in the country at present.

Das said the proposal for setting up an ARC was given by public sector lenders to the government, which accepted it and announced it in the Budget.

The proposed entity will take over stressed assets from the books of public sector banks, and try to resolve them like any other ARCs are doing, he noted.

Das also said strengthening of regulatory architecture for existing ARCs is very much on the central bank’s agenda.

“Refining and further upgrading the regulatory architecture in respect of ARCs to ensure that they have a skin in the game and they are very much in business, is one aspect which is receiving a lot of attention from us,” he said, adding last year he had interacted with a group of ARCs but COVID-19 slowed progress on that front.

Speaking about stressed assets, the governor said there is growing awareness and realisation among banks in dealing with NPAs.

Even during the period when the Supreme Court ordered an asset classification standstill, banks proactively provisioned for stressed assets, he said.

The governor said RBI has also sharpened and deepened its supervisory methods and is now going to deep dive into areas of banking that were unexplored earlier.

With the help of the Central Repository of Information on Large Credits (CRILC) data coming in from banks on a regular basis, RBI has an idea on the quantum of stressed assets in various default buckets, he said.

“We have a precise idea of the build up of stressed assets in banks and as soon as we see a sign of stress, we immediately enter into a discussion with banks and proactively deal with the problems,” he emphasised.

The governor said apart from RBI’s supervisory and regulatory initiatives, the key to all issues is improving the governance in both public and private sector banks.

One area which requires focus of the bank management is on improving their credit appraisal skills and taking measures to see whether evergreening of loans, which was happening at some point, is suitable or not, Das said.

He also said the country’s financial sector currently is in a much better place than it was earlier. HV ABM ABM



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Growth-focused budget helps Sensex , Nifty maintains the bull run, BFSI News, ET BFSI

Personal Finance

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-Sheersh Kapoor

Broader markets have started recovering post the announcement of Union Budget 2021. A growth and capex oriented Budget has provided ammunition to the bulls as the BSE Sensex attempts to scale mount 50K yet again. Several stocks notched up 52-week highs today in the broader market.

At close, the Sensex was up by 2.46% at 49,797.72, and the Nifty up by 2.57% at 14,647.90. Nifty Bank Index traded green at Rs 34,267 Adding 3.56%, while BSE Bankex ended at Rs 38,833 adding 3.43%. Amongst the top Gainers were- SBI at Rs 333 adding 7.21% followed by HDFC Bank at Rs 1,560 adding 5.67%, Bandhan Bank at Rs 339 (4.98%), Kotak Mahindra Bank at Rs 1,861 (3.32%), IDFC First Bank at Rs 47 (2.36%), RBl Bank at Rs 242 (2.34%), ICICI Bank at Rs 617 (2.24%).

Nifty Financial Services ended at 16,208 adding 3.23%. Amongst the top gainers were Indiabulls Hsg at Rs 213 adding 3.74% followed by HDFC at Rs 2,659 down 3.09%, Bajaj Finance at Rs 5173 (2.27%),Power Finance at Rs 118 (2.19%). while all other major indices traded in green, Bajaj Finance and Cholamadalam traded lower by 2.53% and 0.89% respectively.

Other key takeaways

Govt won’t own or fund ‘Bad Bank’
The government is preparing to bring stressed assets worth Rs 2.25 lakh crore under the proposed ‘Bad Bank’. The entity which will be entirely funded and managed by commercial banks, said two top bureaucrats in an exclusive interaction on February 2. The funding will be done by banks from both the private sector and the public sector, they said. It is not clear what is initial capital estimated for setting up the Bad Bank

“The new budget has ignited spark in all cyclical and economy driven sectors.”

Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities:-
The elevated borrowings for the next few years indicate higher spending could remain for next few years. The earnings season is throwing good earnings surprise which is also getting factored in stock prices. With clarity on growth and earnings it will be ideal to focus on economy driven sectors like capital goods, construction, engineering, cement, power utilities, oil & gas, banks, Insurance and NBFCs.”

“As valuations are rich and Nifty-50 has again gone closer to the 15,000 mark there could be some resistance setting in at these levels. Investors can now look to accumulate stocks in every decline with a 2 to 3 year view.” he added.

HDFC Q3 result:
The company has reported 65 % YoY fall in its December quarter net profit at Rs 2,925.8 crore versus Rs 8,372.5 crore and revenue was down 42.3% at Rs 11,707 crore against Rs 20,285.5 crore. The Q3FY20 net profit includes proceeds from Gruh stake sale, reported CNBC-TV18.

Gold Updates
COMEX gold trades little changed near $1865/oz after a 0.7% gain yesterday. Gold is choppy amid mixed trade in the US dollar index and as market players assess the possibility of a US stimulus deal.

Experts believe that gold may continue to witness mixed trade reflecting the mixed trend in the US dollar but general bias may be on the upside owing to global growth worries and the possibility of US stimulus. Domestic gold prices have become cheaper due to duty cut, however, general price trend will be determined by international markets.

Rupee Updates
Indian rupee is trading higher by 8 paise at 72.94 per dollar, amid buying seen in the domestic equity market. It opened flat at 73.02 per dollar against it’s previous close of 73.02. The rupee opened flat at 72.92 against the US dollar in opening trade on Tuesday morning.

USDINR pair closed positive, USDINR Feb Future is trading at 73.27. it is expected to trade with bullish momentum for the day. The USDINR Spot pair took support at 72.80 level and bounced back up to 73.15 levels and ended above 73.00 level indicating a positive momentum to continue with in the range of 72.70-73.20 levels.



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