2 Stocks To Buy From Sharekhan For Gains Up To 20%

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Tata Motors: Solid push on electric vehicles

Sharekhan sees a nearly 20% upside on the stock of Tata Motors from the current market price of Rs 507. The firm has set a target price of Rs 610 on the stock.

Private Equity Investors, TPG and ADQ, are investing USD 1 billion (Rs 7,500 crores) in the EV subsidiary of TAMO for a stake of 11-15%, depending upon the revenue thresholds, which is not disclosed.

“The valuation of the Electric Vehicles business is thus pegged at USD 6.7-9.1 billion depending upon the stake. Tata Motors, through its Electric Vehicles subsidiary, plans to launch a total of 10 Electric Vehicles by FY20216 across price points with different body styles and driving ranges, including born-Electric Vehicles platforms in the future. Tata Motors has already launched three Electric Vehicles models,” the brokerage has said.

Buy Tata Motors stock for 20% upside

Buy Tata Motors stock for 20% upside

Sharekhan has increased its SOTP based target price to Rs 610 (Rs 430 earlier), driven largely by value unlocking of the EV subsidiary business.

“We believe Tata Motors is taking the right steps towards increasing its focus on the electric vehicles business in India. The funding from external investors would help the company to aggressively develop and launch electric vehicle models. Also, Tata Motors is likely to benefit from the re-rating of valuation multiples driven by improved ESG ratings and its focus on EV technology. Besides the EV business, we expect TAMO to benefit from all its business verticals – JLR, CVs and PVs, except in H1FY22 that would be marred by near-term challenges of supply constraints. H2FY21 saw strong volume growth and better operational efficiencies aided by aggressive product launches, market positioning, product differentiation, cost savings and investments in R&D,” the brokerage has said.

Wipro

Wipro

Sharekhan has a hold on the stock of Wipro with a price target of Rs 750 on the stock, as against a current market price of Rs 707.

“In Q2FY22, Wipro beat our estimates on all fronts, led by higher-than-expected contribution from the acquisitions (CAPCO and Ampion) and continued strong organic revenue growth. Wipro reported a constant currency (CC) revenue growth of 8.1% q-o-q and 17.8% y-o-y, well ahead of its top-end guidance of 5-7%. EBIT margin too stayed ahead of our expectations despite wage revision, impact from full quarter consolidation of Capco and Ampion, and investments in capability-building. Revenue growth guidance of 2-4% q-o-q for Q3FY2022 was on the expected lines. The management highlighted that the new business strategy, a simplified operating model and broad approach started showing results in terms of continued improvement in revenue growth trajectory and healthy deal wins,” the brokerage has said.

Disclaimer

Disclaimer

The above stocks are picked from the brokerage report of Sharekhan. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article



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Reserve Bank of India – Press Releases

Press Releases

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(Amount in ₹ crore, Rate in Per cent)
  Volume
(One Leg)		 Weighted
Average Rate 		Range
A. Overnight Segment (I+II+III+IV) 445,222.75 3.05 0.01-5.15
     I. Call Money 6,937.60 3.27 1.95-3.45
     II. Triparty Repo 332,992.80 3.05 3.02-3.60
     III. Market Repo 105,257.35 3.05 0.01-3.25
     IV. Repo in Corporate Bond 35.00 5.15 5.15-5.15
B. Term Segment      
     I. Notice Money** 1,066.94 3.14 2.40-3.40
     II. Term Money@@ 108.00 – 3.10-3.45
     III. Triparty Repo 2,833.40 3.08 3.08-3.10
     IV. Market Repo 25.00 3.00 3.00-3.00
     V. Repo in Corporate Bond 0.00 – –
  Auction Date Tenor (Days) Maturity Date Amount Current Rate /
Cut off Rate
C. Liquidity Adjustment Facility (LAF) & Marginal Standing Facility (MSF)
I. Today’s Operations
1. Fixed Rate          
     (i) Repo          
    (ii) Reverse Repo Wed, 13/10/2021 1 Thu, 14/10/2021 262,968.00 3.35
    (iii) Special Reverse Repo~          
    (iv) Special Reverse Repoψ          
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo          
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo          
3. MSF Wed, 13/10/2021 1 Thu, 14/10/2021 540.00 4.25
4. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs)£          
5. Net liquidity injected from today’s operations
[injection (+)/absorption (-)]*		       -262,428.00  
II. Outstanding Operations
1. Fixed Rate          
    (i) Repo          
    (ii) Reverse Repo          
    (iii) Special Reverse Repo~ Fri, 08/10/2021 14 Fri, 22/10/2021 6,402.00 3.75
    (iv) Special Reverse Repoψ Fri, 08/10/2021 14 Fri, 22/10/2021 2,894.00 3.75
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo Fri, 08/10/2021 14 Fri, 22/10/2021 400,002.00 3.99
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo Tue, 12/10/2021 8 Wed, 20/10/2021 200,013.00 3.90
3. MSF          
4. Long-Term Repo Operations# Mon, 17/02/2020 1095 Thu, 16/02/2023 499.00 5.15
  Mon, 02/03/2020 1094 Wed, 01/03/2023 253.00 5.15
  Mon, 09/03/2020 1093 Tue, 07/03/2023 484.00 5.15
  Wed, 18/03/2020 1094 Fri, 17/03/2023 294.00 5.15
5. Targeted Long Term Repo Operations^ Fri, 27/03/2020 1092 Fri, 24/03/2023 12,236.00 4.40
  Fri, 03/04/2020 1095 Mon, 03/04/2023 16,925.00 4.40
  Thu, 09/04/2020 1093 Fri, 07/04/2023 18,042.00 4.40
  Fri, 17/04/2020 1091 Thu, 13/04/2023 20,399.00 4.40
6. Targeted Long Term Repo Operations 2.0^ Thu, 23/04/2020 1093 Fri, 21/04/2023 7,950.00 4.40
7. On Tap Targeted Long Term Repo Operations€ Mon, 22/03/2021 1095 Thu, 21/03/2024 5,000.00 4.00
  Mon, 14/06/2021 1096 Fri, 14/06/2024 320.00 4.00
  Mon, 30/08/2021 1095 Thu, 29/08/2024 50.00 4.00
  Mon, 13/09/2021 1095 Thu, 12/09/2024 200.00 4.00
  Mon, 27/09/2021 1095 Thu, 26/09/2024 600.00 4.00
  Mon, 04/10/2021 1095 Thu, 03/10/2024 350.00 4.00
8. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs)£ Mon, 17/05/2021 1095 Thu, 16/05/2024 400.00 4.00
Tue, 15/06/2021 1095 Fri, 14/06/2024 490.00 4.00
Thu, 15/07/2021 1093 Fri, 12/07/2024 750.00 4.00
Tue, 17/08/2021 1095 Fri, 16/08/2024 250.00 4.00
Wed, 15/09/2021 1094 Fri, 13/09/2024 150.00 4.00
D. Standing Liquidity Facility (SLF) Availed from RBI$       21,695.80  
E. Net liquidity injected from outstanding operations [injection (+)/absorption (-)]*     -501,973.20  
F. Net liquidity injected (outstanding including today’s operations) [injection (+)/absorption (-)]*     -764,401.20  
G. Cash Reserves Position of Scheduled Commercial Banks
     (i) Cash balances with RBI as on 13/10/2021 609,446.75  
     (ii) Average daily cash reserve requirement for the fortnight ending 22/10/2021 630,289.00  
H. Government of India Surplus Cash Balance Reckoned for Auction as on¥ 13/10/2021 0.00  
I. Net durable liquidity [surplus (+)/deficit (-)] as on 24/09/2021 1,205,314.00  
@ Based on Reserve Bank of India (RBI) / Clearing Corporation of India Limited (CCIL).
– Not Applicable / No Transaction.
** Relates to uncollateralized transactions of 2 to 14 days tenor.
@@ Relates to uncollateralized transactions of 15 days to one year tenor.
$ Includes refinance facilities extended by RBI.
& As per the Press Release No. 2019-2020/1900 dated February 06, 2020.
* Net liquidity is calculated as Repo+MSF+SLF-Reverse Repo.
# As per the Press Release No. 2020-2021/287 dated September 04, 2020.
^ As per the Press Release No. 2020-2021/605 dated November 06, 2020.
€ As per the Press Release No. 2020-2021/520 dated October 21, 2020, Press Release No. 2020-2021/763 dated December 11, 2020, Press Release No. 2020-2021/1057 dated February 05, 2021 and Press Release No. 2021-2022/695 dated August 13, 2021.
¥ As per the Press Release No. 2014-2015/1971 dated March 19, 2015.
£ As per the Press Release No. 2021-2022/181 dated May 07, 2021 and Press Release No. 2021-2022/1023 dated October 11, 2021.
~ As per the Press Release No. 2021-2022/177 dated May 07, 2021.
ψ As per the Press Release No. 2021-2022/323 dated June 04, 2021.
Ajit Prasad
Director   
Press Release: 2021-2022/1042

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Banks, NBFCs, FinTechs hire as economic revival strengthens, BFSI News, ET BFSI

Banking & Finance

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Banks and non-banking finance companies are stepping up on hiring plans in anticipation of growth in the economy and improve their digital footprint. Some banks intend to step up hiring by 30-35% over the last year.

HDFC Bank ramp-up

Private lender HDFC Bank, which aims to reach 200,000 villages in the next 24 months, has plans to hire more than 2,500 people in the next six months,

The bank aims to double its presence in the next 18-24 months through a combination of branch network , business correspondents, business facilitators, CSC (common service centres) partners, virtual relationship management and digital outreach platforms.

HDFC Bank will hire 500 relationship managers to expand the coverage of its Micro, Small and Medium Enterprises (MSME) vertical to 575 districts or more by the end of this fiscal. Out of these 500 recruits, half will be for the small and medium sub-vertical, which already has a headcount of 975. This hiring will take the private bank’s MSME vertical headcount to 2,500. India’s largest private sector lender has an employee strength of around 1.23 lakh as of June end.

NBFCs hiring

Shriram Group is hiring 5,000 across its many companies. ICICI Home Finance is looking to onboard 600 employees by December while Kotak Mahindra Bank, too, has resumed hiring closer to pre-Covid levels.

The Shriram Group is recruiting mainly in the south and north India, across tier 3-4 cities. Shriram City Union Finance is expanding its gold loan business,

while Shriram Housing Finance is expanding primarily in Andhra Pradesh and Telangana.

Credit Suisse has plans to hire over 1,000 staff in India this year for a technology innovation office. Deutsche Bank is hiring 1,000 people in India, including 300 graduates and 700 lateral hires.

FinTech hiring

From banking to FinTech, companies are looking to hire with the biggest demand for data analysts, who can handle data using technology and glean relevant information from it.

The FinTech firms are also beefing up marketing and sales teams and are looking beyond commerce and engineering backgrounds with a background in data analysis, artificial intelligence and exceptional soft skills. They are looking to pay higher salaries who have Big Data, advanced analytics and financial skills.



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Banks, NBFCs, FinTechs hire as economic revival strengthens, BFSI News, ET BFSI

Banking & Finance

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Banks, NBFCs, FinTechs hire as economic revival strengthens
Banks and non-banking finance companies are stepping up on hiring plans in anticipation of growth in the economy and improve their digital footprint. Some banks intend to step up hiring by 30-35% over the last year.

HDFC Bank ramp-up

Private lender HDFC Bank, which aims to reach 200,000 villages in the next 24 months, has plans to hire more than 2,500 people in the next six months,

The bank aims to double its presence in the next 18-24 months through a combination of branch network , business correspondents, business facilitators, CSC (common service centres) partners, virtual relationship management and digital outreach platforms.

HDFC Bank will hire 500 relationship managers to expand the coverage of its Micro, Small and Medium Enterprises (MSME) vertical to 575 districts or more by the end of this fiscal. Out of these 500 recruits, half will be for the small and medium sub-vertical, which already has a headcount of 975. This hiring will take the private bank’s MSME vertical headcount to 2,500. India’s largest private sector lender has an employee strength of around 1.23 lakh as of June end.

NBFCs hiring

Shriram Group is hiring 5,000 across its many companies. ICICI Home Finance is looking to onboard 600 employees by December while Kotak Mahindra Bank, too, has resumed hiring closer to pre-Covid levels.

The Shriram Group is recruiting mainly in the south and north India, across tier 3-4 cities. Shriram City Union Finance is expanding its gold loan business,

while Shriram Housing Finance is expanding primarily in Andhra Pradesh and Telangana.

Credit Suisse has plans to hire over 1,000 staff in India this year for a technology innovation office. Deutsche Bank is hiring 1,000 people in India, including 300 graduates and 700 lateral hires.

FinTech hiring

From banking to FinTech, companies are looking to hire with the biggest demand for data analysts, who can handle data using technology and glean relevant information from it.

The FinTech firms are also beefing up marketing and sales teams and are looking beyond commerce and engineering backgrounds with a background in data analysis, artificial intelligence and exceptional soft skills. They are looking to pay higher salaries who have Big Data, advanced analytics and financial skills.



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Four Indian banks rise in Asian rankings on stock market boom, BFSI News, ET BFSI

Banking & Finance

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Four Indian banks have featured among the 20 largest banks in the Asia-Pacific region in terms of market capitalisation in the third quarter of 2021, according to S&P Global Market Intelligence.

HDFC Bank was ranked seventh with a market cap of $119 billion, a quarter on quarter increase of 6.7 per cent while the next was ICICI Bank at 12th spot, with its market cap rising 11.2 per cent quarter on quarter to $65.5 billion.

The State Bank of India rose two spots to 17th on the list as its market cap rose 8.1 per cent to $54.5 billion. Kotak Mahindra Bank‘s market capitalisation rose 17.5%, the highest on the list.

S&P Global’s banking outlook

The global banking sector will continue to slowly stabilize as the economic rebound gains momentum and as support is gradually withdrawn. Should a re-intensification of risks occur, more support from authorities for the real economy would be required. This in turn would help banks maintain a stabilizing trajectory. Strategies and tactics to combat Covid vary enormously across banking jurisdictions. This includes the progress with vaccination campaigns that affects a range of factors, particularly trade and travel.

Corporate default rates will fall from their COVID-19 peak. However, problematic corporate lending and other exposure will likely continue to strain banks’ asset quality metrics, it said.

Some corporate sectors have experienced no credit deterioration, such as grocery and essential retail, and technology software, while other corporate sectors are recovering sooner than previously expected. Still other sectors, however, such as autos, hotels and airlines won’t likely recover until 2023 or beyond, S&P Global said.

With debt levels at or near record highs, some corporates and governments remain vulnerable to credit deterioration and defaults if income recovers more slowly than expected. This is especially if interest rates rise, S&P Global added.

Indian banks’ outlook

Banks are likely to post over 20 per cent jump in profit in the second quarter with analysts expecting a decent sequential improvement in almost all indicators from loan growth to gross bad loan ratios.

According to Bloomberg estimates, for the 19 lenders — five public sector and 14 private banks – profit would grow 21.7 per cent to Rs 32,075 crore in Q2 year on year.

Private banks are likely to report PPoP growth of 9% YoY (3.8% QoQ) and net profit growth of 14% YoY (17.3% QoQ). Earnings are likely to pick up, led by a recovery in business growth / fee income and a gradual reduction in credit costs.

“Loan growth would pick up, led by revival in economic activity and the opening up of the economy. Demand going into the festive season and commentary around the FY22 outlook would be key monitorables. Retail and SME segment is likely to show strong recovery; though growth in the Corporate segment is likely to remain soft and recovery within this segment would be another monitorable,” according to Motilal Oswal Securities.



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Lenders get set for festive season; offer home, vehicle, gold loans at attractive rates, BFSI News, ET BFSI

Banking & Finance

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Lenders in the BFSI space are gearing up for the festive season, offering reduced interest rates on home and vehicle loans, and other discounts to customers.

Punjab National Bank, State Bank of India and Kotak Mahindra Bank are among the banks providing festive offers, while Mahindra Finance is among the non-bank lenders offering discounts on its loan products.

Also read: Ahead of festive season, banks slash interest rate on home loans. Get the details here

Here are the latest updates, so far, this week:

Mahindra Finance
Mahindra Finance on Wednesday launched festive offers on its vehicle loans for two months, providing offers and discounts to customers at competitive rates.

‘Shubh Utsav’ has been launched with immediate effect, and will continue till the end of November. It has special finance schemes, specifically for customers who plan to avail vehicle loans during these two months.

The offers can be availed across India. Below are the offers:
>SUV Loans (Mahindra brand) at interest rates starting 7.35%

>Up to 100% funding

>Loan tenure up to 7 years

>Buy now and pay after 60 days

>50% waiver on processing fees

>Pre-owned car loans at interest rates starting 12%

>Loan on tractor Implements at zero processing fee

>Quarterly and half yearly EMI for select customers for Car and Tractor loans

Punjab National Bank

PNB on Wednesday cut its gold loan rates by 145 basis points, and is now offering loans against sovereign gold bond at 7.20% and against gold jewellery at 7.30%.

The bank is also offering a full waiver of service charges and processing fee on the loans against gold jewellery and sovereign gold bond.

Earlier, the bank, as part of its festive offers, had announced a cut in home loan rate, which now starts from 6.60%, car loan rate, starting from 7.15%, and personal loan rate, from 8.95%.

ICICI Bank

ICICI Bank on Tuesday announced the launch of ‘Home Utsav’, a virtual property exhibition that digitally showcases real estate projects across cities. The exhibition will offer convenience to prospective home buyers as they can select their home by browsing through projects, approved by the bank, and avail benefits.

The offer is from October 7,2021, to December 31, 2021.

Attractive interest rate on home loans, special processing fees and digital sanction of loans and exclusive offers from developers are among the benefits that are being offered to the customers.

Furthermore, anyone, including those who are not customers of ICICI Bank, can avail of these benefits on buying a property through the exhibition, the bank said. Customers of ICICI Bank can further avail for the bank’s pre-approved home loan offers.



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What is tokenisation, and how can it ensure safe transactions?, BFSI News, ET BFSI

Banking & Finance

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When buying a product online, we are often forced to store our credit or debit card details on the e-commerce platform. To ensure safety of this, the Reserve Bank of India issued guidelines last month, allowing card-on-file tokenisation.

Recently, Visa, a digital payments platform, launched its card-on-file tokenisation service in India.

Here’s what you need to know about the upcoming advancement in India’s digital payments system:

What is tokenisation?

As per guidelines, tokenisation is when credit or debit card details can be replaced with an alternate code, called “token”, which can be generated by the holder to make payments without entering their account details.

This devaluation of card details reduces risk and vulnerability of sensitive data, thereby reducing the chances of fraud arising from sharing card details.

Furthermore, if the customer wants to convert its token back to their actual card details, they can do so. This process is known as de-tokenisation.

What is a token, and how can it be used?

The 16-character “token” generated is free-of-cost, and can be used to perform contactless card transactions at point-of-sale (PoS) terminals, QR code payments, and now for card-on-file (CoF) transactions.

A customer can make a CoF transaction, after authorising a token to their merchant. The merchant can store the token, and use that to bill the customer’s products. Merchants here can be refered to e-commerce companies, airlines and supermarket chains.

The RBI has directed merchants not to store customers’ card details in their systems from January 1, 2022.

How do you generate a token?

The cardholder can generate a token by first requesting for a token on the app provided by the token requestor – the entity that accepts request from the customer for tokenisation of a card. Then, the company will pass the request on to the card network to issue a token. The card network, after seeking consent of the card issuer, will issue a token, which will have a combination of the card, the token requestor, and the device.

This process can be done through mobile phones or tablets for all use cases and channels like contactless card transactions, payments through QR codes and apps.

Tokens are generated by payment companies, which act like Token Service Providers (TSPs). They will provide tokens to mobile payment or e-commerce platforms so that the token can be used during transactions.

If a customer enters their card details in a virtual wallet like Google Pay, these platforms ask one of these TSPs for a token. Only after the TSPs get the go-ahead from the customer’s bank, a code is generated and sent to the user’s device. Once the token has been generated, it remains linked to the device and cannot be replaced.
Consequently, each time a customer uses their device to make a payment, the payments platform can authorise the transaction by simply sharing the token.

How can you register for tokenisation, and is it mandatory?

The ability to tokenise and de-tokenise card data will be with the same TSP, and if a customer wishes to register their card for tokenisation, they will have to first give their consent through Additional Factor of Authentication (AFA), RBI says. Tokenisation is not mandatory, and the customer will be given a choice of selecting the use case and setting-up of limits. The stakeholders involved in a tokenised card transaction are the merchant, the merchant’s acquirer, card network, token requestor, issuer and customer.



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Crypto bourses block accounts as red flags rise, BFSI News, ET BFSI

Personal Finance

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Indian cryptocurrency exchanges have started reporting and blocking trading accounts, which undertake suspicious trades after government agencies raised red flags over cryptocurrencies being used for money laundering.

The self-regulation comes at a time when India is yet to come out with any regulations around cryptocurrencies or the way to tax them. Industry trackers say investigators including cybercrime officials, the Enforcement Directorate and the income tax department, had raised red flags in the past few months.

Also, top crypto exchanges are getting requests from foreign investigators regarding certain suspicious accounts.
For instance, WazirX, one of the largest cryptocurrency exchanges in the country, recently declared the numbers in what it calls a “transparency report”.

Between April and September this year, the exchange got 377 requests from legal enforcement agencies, out of which 38 requests were from foreign law enforcement agencies. The crypto exchange locked about 1,500 accounts.

In all, the exchange locked 14,469 accounts, although most of them were after customers asked them to stop services or there were some other payment issues.

“Initiatives such as the transparency report add credibility to the ecosystem and make the crypto world look more appealing to outsiders,” Nischal Shetty, CEO and founder, WazirX. “We aim to look at the bigger goals like positive regulations and consider ourselves paving the way to it through innovative approaches.” Many regulators in India had raised red flags around certain cryptocurrency transactions.

Exchanges have said they have developed a strong internal anti-money laundering policy as well.

“In India, we are bringing our four years of robust policy with our technologies to make sure we build products and services which help in crypto adoption but at the same time minimise the risk of money laundering,” said Kumar Gaurav, founder & CEO, Cashaa.

The exchanges waking up to money laundering and other regulators also come at a time when India is planning to come out with a cryptocurrency regulation.

There has always been regulatory scepticism around cryptocurrency and whether it can be used for illegal activities from buying drugs to money laundering.

The exchanges have always claimed that if the cryptocurrency is based on a blockchain technology, all the records are permanent and, in fact, it would be easier to discover the exact nature of the transactions.

“The report and the think tank is part of our efforts to bring more clarity and build transparency for our users and policy makers in India around everything crypto,” said Aritra Sarkhel, director of public policy at WazirX. Most of the large exchanges have seen between 100% and 400% jump in their volumes and value of trade that happen on their platforms amidst the global rally and some hope on the domestic regulatory front.



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Cryptocurrency crash ‘plausible’, rules needed, Bank of England’s Cunliffe says, BFSI News, ET BFSI

Personal Finance

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By Huw Jones

LONDON -A collapse in cryptocurrencies is a “plausible scenario” and rules are needed to regulate the fast-growing sector as a “matter of urgency”, Bank of England Deputy Governor Jon Cunliffe said on Wednesday.

Risks to financial stability from the application of crypto technologies are currently limited, but there are a number of “very good reasons” to think that this might not be the case for very much longer, Cunliffe said.

“Regulators internationally and in many jurisdictions have begun the work. It needs to be pursued as a matter of urgency,” Cunliffe said in a speech to the SIBOS conference.

Largely unregulated cryptoassets have grown by 200% so far this year, from just under $800 billion to $2.3 trillion, with 95% of them, including bitcoin, unbacked by any asset or fiat currency, Cunliffe said.

“But as the financial crisis showed us, you don’t have to account for a large proportion of the financial sector to trigger financial stability problems – sub-prime was valued at around $1.2 trillion in 2008,” Cunliffe said, referring to a corner of the U.S. mortgage market whose collapse led to a global banking crisis.

“Such a collapse is certainly a plausible scenario, given the lack of intrinsic value and consequent price volatility, the probability of contagion between cryptoassets, the cyber and operational vulnerabilities, and of course, the power of herd behaviour,” Cunliffe said.

Connections between cryptocurrencies and the traditional financial system are also growing as big investors, hedge funds and banks become more involved, Cunliffe said.

Unregulated, decentralised finance or DeFi, which delivers financial services like credit on the technology that underpins cryptocurrencies, presents “pronounced” challenges given the absence of investor protection and the BoE has begun work on how such risks can be managed, he added.

Last week, global regulators proposed that the safeguards they apply to systemic clearing houses and payment systems should also be applied to stablecoins, a type of cryptocurrency typically backed by an asset or fiat currency, but they only make up 5% of cryptoassets.

Cunliffe, who helped to lead the work on the safeguards, said it took two years to draft this measure, during which stablecoins have grown 16-fold.

“Indeed, bringing the crypto world effectively within the regulatory perimeter will help ensure that the potentially very large benefits of the application of this technology to finance can flourish in a sustainable way,” he added.

(Reporting by Huw JonesEditing by David Goodman, Gareth Jones and Nick Macfie)



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Five banks may bid for Citi’s India consumer businesses, BFSI News, ET BFSI

Banking & Finance

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Five top lenders, including HDFC Bank and Kotak Mahindra Bank, are expected to submit binding bids for the Citi India consumer businesses before the October 26 deadline, two officials aware of the development told ET.

Axis Bank, IndusInd Bank and DBS India are also in contention for the businesses Citi is exiting in India. Although the US lender is seeking a valuation in excess of $2 billion, the bids could be more circumspect after Citi lost significant market share in its retail and credit card books, one of the executives cited above said.

HDFC Bank and Kotak Mahindra Bank, two of India’s top three most valued private sector lenders, are considered front-runners to win the business that generates about $1 billion in revenue.
“While Citi’s retail franchise remains excellent, the book has shrunk. It has lost significant market share and due to the exit plans, it has not been able to focus on enhancing the existing book and adding quality customers,” said an official involved in the bidding process.

“Still, Citi has received multiple bids from domestic banks. Plus, it is also expected to receive bids from global suitors that may be looking to pick up consumer assets in several markets the bank has exited,” the official said.

Citi India said it has received strong interest from bidders.

“We are pursuing consumer franchise sales with a focus on optimising results for our people, our clients and our shareholders,” a spokesperson for Citi India said in a mailed response to ET’s queries. “Conversations with potential buyers continue in these markets, including India, with strong interest from a broad range of bidders.”

HDFC Bank, Kotak Mahindra Bank, DBS India, Axis Bank and IndusInd Bank did not respond to ET’s mailed query.

Citibank, under its first woman CEO Jane Fraser, decided to exit retail businesses in 13 markets to conserve capital and focus on higher yielding revenue streams. The Citi management has indicated that the exit process is currently on and that while it will look to complete the exits in a timely manner, the retreats wouldn’t be anything akin to so-called fire sales.

Citi’s consumer portfolio contributes about a third to the India business on profitability while the total India business contributes 1.5% in profits to the lender’s global book.

The Indian retail basket includes credit cards, deposit accounts, wealth management and a mortgage portfolio. Overall, Citibank’s India unit had a market share of advances and deposits of 0.6% and 1.1%, respectively. In India, Citibank has more than 2.5 million retail customers, 1.2 million bank accounts and nearly 2.6 million credit cards. It lost more than 100,000 customers since announcing its exit.

The Right Mix
Although Citi is India’s sixth-largest card issuer, it has lost market share on card spends – from 20% a decade ago to 4% now. However, it has consistently logged 15-25% higher expenditure per card against the industry average, an analysis by Macquarie showed. A mix of premium cards and corporate salary account cards in the portfolio makes the Citi business attractive for bidders. “We have done due diligence on the book; it’s a good franchise for banks that don’t have an existing credit card or wealth book and it only makes sense at a good valuation. We will have to see how aggressively we bid,” said a top official at a bank that is likely to submit its bid.



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