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☕ 05.03.2020: Today's Banking / Financial News at a Glance
ЁЯНТ Cabinet approves merger of 10 public sector banks into 4 entities : The Union Cabinet on Wednesday approved the merger of 10 public sector banks (PSBs) into four entities, aimed at having fewer but stronger lenders in India. “Banks have submitted the scheme of amalgamation, which the Cabinet has approved today," finance minister Nirmala Sitharaman told reporters, adding that every bank service will remain intact after the merger.The date of implementation of the merger is 1 April.Currently, there are 18 PSBs compared with 27 in 2017. There will be only 12 public sector lenders post the merger.In August, the finance ministry had announced the consolidation of 10 public sector lenders. Punjab National Bank (PNB), Oriental Bank of Commerce (OBC) and United Bank will be brought together to form the second largest public sector bank in the country, after State Bank of India (SBI). The other merger will be between Canara Bank and Syndicate Bank, which will make it the fourth-largest public sector lender, while Union Bank of India will be merged with Andhra Bank and Corporation Bank to build India’s fifth-largest lender. In addition, Indian Bank will be merged with Allahabad Bank to make India’s seventh-largest PSB. - Live Mint
ЁЯНТ RBI chief Shaktikanta Das sees rate cut as option as coronavirus threat grows ; Reserve Bank of India governor said he’s ready to act to shield the economy from the coronavirus and reiterated there’s room to cut interest rates if needed. Speaking in an interview with Bloomberg News in Mumbai hours before the Federal Reserve slashed interest rates by half a percentage point in an emergency move, Shaktikanta Das said “there is a strong reason for coordinated policy action." For India, options include a rate cut and supporting the market through liquidity measures, he said. -Live Mint
ЁЯНТ Banks can save Rs 7,400 crore from lending against CRR, earn Rs 480 crore in additional profits: Report : Banks can save up to Rs 7,400 crore in CRR benefits under the new dispensation of targeted lending using their cash reserve ratios, and the incremental credit flow through this can be Rs 1.85 lakh crore, helping them earn Rs 480 crore in additional profits in FY21, SBI Research said. The RBI, at the previous monetary policy review on February 6, adopted a policy tool that the European Central Bank had deployed during the last sovereign credit crisis, by allowing banks to lend against their CRR to three targeted segments — retail loans to the auto, housing and MSME sectors. The monetary authority had also announced long-term repo operations (LTROs) to the tune of Rs 1 lakh crore to ensure long-term durable liquidity, despite the system being awash with Rs 3 lakh crore of surplus liquidity. Accordingly, the RBI has already carried out three LTROs of Rs 25,000 crore each beginning with the third Monday of February with huge success. “Using January 2020 sectoral data, we estimate that banks till July 31 can lend up to Rs 1.85 lakh crore to these specified sectors and can save around Rs 7,400 crore if credit grows at 9 percent for housing, and 5 percent for vehicle and MSME loans, as CRR benefits,” SBI Research said in a note. - Financial Express
ЁЯНТ SBI Card IPO overcomes virus scare, subscribed 15.49 times on Day 3 : The mega IPO by SBI Cards and Payment Services (SBI) got fully subscribed on Day 3 of the bidding process. The issue has been subscribed 15.49 times so far despite a weak environment in the secondary market. The issue received bids for 1,55,35,33,765 shares compared with the issue size of 10,02,79,411 shares. The qualified institutional investors (QIB) quota was subscribed a whopping 57.18 times. Non-institutional investors (NII) quota 2.18 times, retail 1.77 times, employee 3.29 times and SBI shareholder quota was bid 3.29 times. The issue closed for QIBs today and will close for retail investors and HNIs on Thursday. The price band for the issue was fixed at Rs 750-755 and the minimum amount a small investor can invest by subscribing a lot of 19 shares is Rs 14,345. Geojit Financial Services, Angel Broking, Nirmal Bang Securities and Hem Securities, among others, have ‘subscribe’ ratings on the issue.The IPO demands a PE of 45.5 times and P/B of 14.5 times, which analysts said are on the higher side. But the company has no listed peers in India. “A look at more mature markets such as the US reveals that American Express, which derives over half of the revenue from consumer services including credit cards, trades at a trailing P/E of around 17 with ROE of nearly 30 per cent,” said Progressive Share Brokers. - economic times
ЁЯНТ SBI Life re-appoints Sanjeev Nautiyal as MD & CEO : SBI Life Insurance on March 4 said it has re-appointed Sanjeev Nautiyal as managing director and chief executive officer of the company. The Board of Directors of SBI Life Insurance Company Limited at their meeting held on March 4, 2020 has approved the re-appointment of Sanjeev Nautiyal as Managing Director & Chief Executive Officer (MD & CEO) of the company with effect from March 10, 2020, it said in a regulatory filing. - Moneycontrol.com
ЁЯНТ RBI’s new measures will see banks’ dependence on CDs, TDs coming down : The requirement of certificates of deposits (CDs) and term deposits (TDs) for banks will come down while their rates could see downward pressure in the wake of the Reserve Bank of Indiaproviding long-term funding at a fixed rate (current average rate 5.15 per cent) along with the relaxation in cash reserve ratio (CRR) for incremental loan book growth in certain segments, according to India Ratings (Ind-Ra). The recent measures announced by the RBI – provision of long-term funding via the long-term repo operation (LTRO) facility and limited CRR relaxation to encourage credit flow to the MSME (micro, small and medium enterprises) and consumer segments (auto and housing) – will encourage banks to extend credit to the retail and MSME segments, the credit rating agency said. - Business Line
ЁЯНТ PMJDY helps raise women’s ownership of bank accounts to 77% in 2017: MSC : The Modi government’s flagship scheme, Pradhan Mantri Jan Dhan Yojana (PMJDY), has helped raise women’s ownership of bank accounts from 43 per cent in 2014 to 77 per cent in 2017, according to a report. In a report titled ‘The Real Story of Women’s Financial Inclusion in India’, consulting firm MicroSave Consulting (MSC) said the country has succeeded in reducing the gender gap in financial inclusion by 14 percentage points in three years (2014 to 2017). “The Pradhan Mantri Jan Dhan Yojana (PMJDY) raised women’s ownership of bank accounts from 43 per cent in 2014 to an extraordinary 77 per cent in 2017,” it said. - Business Line
ЁЯНТ HDFC to reduce home-loan rates by 5 basis points : Housing Development Finance Corporation (HDFC) has decided to cut its retail prime lending rate (RPLR) on housing loans, on which its adjustable rate home loans are benchmarked, by 5 basis points (bps) across the board with effect from March 9. The company said the change will also benefit the existing retail home loan customers. In the case of salaried women borrowers, the interest rate has been reduced to 8 per cent (from 8.05 per cent now) for loans up to ₹30 lakh; 8.25 per cent (8.30 per cent) for loans loans in the ₹30.01 lakh to ₹75 lakh bracket; and 8.35 per cent (8.40 per cent) for loans loans in the ₹75.01 lakh and above bracket. In the case of other salaried borrowers, HDFC has reduced the interest rate to 8.05 per cent (from 8.10 per cent now) for loans up to ₹30 lakh; 8.30 per cent (8.35 per cent) for loans loans in the ₹30.01 lakh to ₹75 lakh bracket; and 8.40 per cent (8.35 per cent) for loans loans in the ₹75.01 lakh and above bracket. - Business Line
ЁЯНТ Moody’s downgrades Bank of Baroda’s baseline credit assessment : Moody’s Investors Service on Wednesday downgraded the baseline credit assessment of Bank of Baroda to reflect weakening in asset quality and risk from deteriorating operating environment in India. Moody’s affirmed Bank of Baroda’s domestic and foreign bank long-term and short-term deposit ratings of Baa3, stable/P-3. Moody’s has downgraded BoB’s Baseline Credit Assessment (BCA) to ‘ba3’ to reflect the weakening in asset quality and further downside risk from the deteriorating operating environment in India. BCAs are essentially an opinion on the likelihood of an issuer requiring extraordinary support to avoid a default on its debt obligations. “Further deterioration in asset quality poses risks to BoB’s profitability and capital,” Moody’s said, adding the asset quality in micro, small and medium enterprises and agriculture portfolio, which has deteriorated, will continue to weaken further. - Business Line
ЁЯНТ SBI Cards IPO attracts highest QIB subscription at ₹1.04 lakh cr : IPO market has come alive with the issue of SBI Cards. The IPO has achieved highest subscription from qualified institutional buyers (QIB) category. On the last day on Wednesday, the QIB portion was subscribed by ₹1.04 lakh crore. Overall, the issue saw bids for 155 crore shares as against 10.02 crore shares on offer. Overall, the issue was oversubscribed by 57.18 times. QIB portion of HDFC AMC had received bids worth ₹93,000 crore. QIBs had bid more than ₹55,000 crore for shares of Avenue Supermart, the promoter of retail chain D-Mart. Bandan Bank QBI portion was subscribed by ₹35,000 crore and IRCTC got ₹34,500 crore in the QIB category. - Business Line
ЁЯНТ Apex Court permits banks to provide services to cryptocurrencies : The Supreme Court on Wednesday allowed banks to provide services for virtual currencies (VC), better known as ‘Cryptocurrency’ or popularly referred as ‘Bitcoins.’ This order is expected to enable trading of such currencies. Finance Minister Nirmala Sitharaman said that she is yet to read the order and that the government will decide on further course of action after studying the order. Virtual Currencies are like codes, numbers or tokens. They are not a legal tender like the rupee, which is ‘fiat currency’ (issued under a government order by the monetary system, enjoying full sovereign support though not backed by any precious metal such as gold or silver). - Business Line
ЁЯНТ Insurers stop issuing policies for travel to coronavirus-affected countries : General insurance companies are no longer issuing travel insurance for countries against which India has issued a travel advisory with regard to coronavirus. While there has been no formal instruction from the Insurance Regulatory and Development Authority of India (IRDAI) on the issue, a number of insurers that BusinessLine spoke to said it is common practice not to issue travel insurance for countries against which there is a travel advisory. “We are following the advisory as listed by the Government of India on their website,” said Gurdeep Singh Batra, Head - Retail Underwriting, Bajaj Allianz General Insurance. - Business Line
ЁЯНТ With a ₹1.1-lakh-crore bill to settle,NBFCs to face biggest funding test : India’s troubled non-banking finance companies face their biggest test yet in the months ahead: a record bill to settle in the local debt market. The lenders will need to repay ₹1.1-lakh crore ($15.1 billion) of local-currency bonds in the three months starting April 1, the most ever for a quarter. That will prove challenging for the lower-rated ones among them, given they have been largely shut out of the domestic funding market. While India’s credit crisis is showing some signs of easing with borrowing costs dropping for top-rated NBFCs, defaults remain a risk for weaker firms. - Business Line
ЁЯНТ Rupee closes flat at 73.19 as coronavirus scare keeps rate cut optimism in check: The rupee swung wildly before closing flat at 73.19 against the US currency on Wednesday as increasing number of coronavirus cases in India kept investors on edge despite a rate cut by the US Federal Reserve. The rupee had opened strong and raced to a high of 72.90 to the US dollar in early trade following weakness in the US currency after the rate cut by the US Fed.
ЁЯНТ Gold rises Rs 870 to Rs 43,303 per 10 gram, silver up Rs 1,225 per kg : Gold prices on Wednesday rose by Rs 870 to touch Rs 43,303 per 10 gram in the Mumbai bullion market on rupee depreciation and safe-haven appeal. The precious metal jumped after the US Fed Reserve cut interest rate by 50 basis points to limit the economic slowdown caused by coronavirus outbreak. Silver prices jumped Rs 1,225 to Rs 46,205 per kg from its closing on March 3.
Have a Good day.. " ЁЯМ╗ЁЯСйЁЯСйЁЯСзЁЯСж
☕ 05.03.2020: Today's Banking / Financial News at a Glance
ЁЯНТ Cabinet approves merger of 10 public sector banks into 4 entities : The Union Cabinet on Wednesday approved the merger of 10 public sector banks (PSBs) into four entities, aimed at having fewer but stronger lenders in India. “Banks have submitted the scheme of amalgamation, which the Cabinet has approved today," finance minister Nirmala Sitharaman told reporters, adding that every bank service will remain intact after the merger.The date of implementation of the merger is 1 April.Currently, there are 18 PSBs compared with 27 in 2017. There will be only 12 public sector lenders post the merger.In August, the finance ministry had announced the consolidation of 10 public sector lenders. Punjab National Bank (PNB), Oriental Bank of Commerce (OBC) and United Bank will be brought together to form the second largest public sector bank in the country, after State Bank of India (SBI). The other merger will be between Canara Bank and Syndicate Bank, which will make it the fourth-largest public sector lender, while Union Bank of India will be merged with Andhra Bank and Corporation Bank to build India’s fifth-largest lender. In addition, Indian Bank will be merged with Allahabad Bank to make India’s seventh-largest PSB. - Live Mint
ЁЯНТ RBI chief Shaktikanta Das sees rate cut as option as coronavirus threat grows ; Reserve Bank of India governor said he’s ready to act to shield the economy from the coronavirus and reiterated there’s room to cut interest rates if needed. Speaking in an interview with Bloomberg News in Mumbai hours before the Federal Reserve slashed interest rates by half a percentage point in an emergency move, Shaktikanta Das said “there is a strong reason for coordinated policy action." For India, options include a rate cut and supporting the market through liquidity measures, he said. -Live Mint
ЁЯНТ Banks can save Rs 7,400 crore from lending against CRR, earn Rs 480 crore in additional profits: Report : Banks can save up to Rs 7,400 crore in CRR benefits under the new dispensation of targeted lending using their cash reserve ratios, and the incremental credit flow through this can be Rs 1.85 lakh crore, helping them earn Rs 480 crore in additional profits in FY21, SBI Research said. The RBI, at the previous monetary policy review on February 6, adopted a policy tool that the European Central Bank had deployed during the last sovereign credit crisis, by allowing banks to lend against their CRR to three targeted segments — retail loans to the auto, housing and MSME sectors. The monetary authority had also announced long-term repo operations (LTROs) to the tune of Rs 1 lakh crore to ensure long-term durable liquidity, despite the system being awash with Rs 3 lakh crore of surplus liquidity. Accordingly, the RBI has already carried out three LTROs of Rs 25,000 crore each beginning with the third Monday of February with huge success. “Using January 2020 sectoral data, we estimate that banks till July 31 can lend up to Rs 1.85 lakh crore to these specified sectors and can save around Rs 7,400 crore if credit grows at 9 percent for housing, and 5 percent for vehicle and MSME loans, as CRR benefits,” SBI Research said in a note. - Financial Express
ЁЯНТ SBI Card IPO overcomes virus scare, subscribed 15.49 times on Day 3 : The mega IPO by SBI Cards and Payment Services (SBI) got fully subscribed on Day 3 of the bidding process. The issue has been subscribed 15.49 times so far despite a weak environment in the secondary market. The issue received bids for 1,55,35,33,765 shares compared with the issue size of 10,02,79,411 shares. The qualified institutional investors (QIB) quota was subscribed a whopping 57.18 times. Non-institutional investors (NII) quota 2.18 times, retail 1.77 times, employee 3.29 times and SBI shareholder quota was bid 3.29 times. The issue closed for QIBs today and will close for retail investors and HNIs on Thursday. The price band for the issue was fixed at Rs 750-755 and the minimum amount a small investor can invest by subscribing a lot of 19 shares is Rs 14,345. Geojit Financial Services, Angel Broking, Nirmal Bang Securities and Hem Securities, among others, have ‘subscribe’ ratings on the issue.The IPO demands a PE of 45.5 times and P/B of 14.5 times, which analysts said are on the higher side. But the company has no listed peers in India. “A look at more mature markets such as the US reveals that American Express, which derives over half of the revenue from consumer services including credit cards, trades at a trailing P/E of around 17 with ROE of nearly 30 per cent,” said Progressive Share Brokers. - economic times
ЁЯНТ SBI Life re-appoints Sanjeev Nautiyal as MD & CEO : SBI Life Insurance on March 4 said it has re-appointed Sanjeev Nautiyal as managing director and chief executive officer of the company. The Board of Directors of SBI Life Insurance Company Limited at their meeting held on March 4, 2020 has approved the re-appointment of Sanjeev Nautiyal as Managing Director & Chief Executive Officer (MD & CEO) of the company with effect from March 10, 2020, it said in a regulatory filing. - Moneycontrol.com
ЁЯНТ RBI’s new measures will see banks’ dependence on CDs, TDs coming down : The requirement of certificates of deposits (CDs) and term deposits (TDs) for banks will come down while their rates could see downward pressure in the wake of the Reserve Bank of Indiaproviding long-term funding at a fixed rate (current average rate 5.15 per cent) along with the relaxation in cash reserve ratio (CRR) for incremental loan book growth in certain segments, according to India Ratings (Ind-Ra). The recent measures announced by the RBI – provision of long-term funding via the long-term repo operation (LTRO) facility and limited CRR relaxation to encourage credit flow to the MSME (micro, small and medium enterprises) and consumer segments (auto and housing) – will encourage banks to extend credit to the retail and MSME segments, the credit rating agency said. - Business Line
ЁЯНТ PMJDY helps raise women’s ownership of bank accounts to 77% in 2017: MSC : The Modi government’s flagship scheme, Pradhan Mantri Jan Dhan Yojana (PMJDY), has helped raise women’s ownership of bank accounts from 43 per cent in 2014 to 77 per cent in 2017, according to a report. In a report titled ‘The Real Story of Women’s Financial Inclusion in India’, consulting firm MicroSave Consulting (MSC) said the country has succeeded in reducing the gender gap in financial inclusion by 14 percentage points in three years (2014 to 2017). “The Pradhan Mantri Jan Dhan Yojana (PMJDY) raised women’s ownership of bank accounts from 43 per cent in 2014 to an extraordinary 77 per cent in 2017,” it said. - Business Line
ЁЯНТ HDFC to reduce home-loan rates by 5 basis points : Housing Development Finance Corporation (HDFC) has decided to cut its retail prime lending rate (RPLR) on housing loans, on which its adjustable rate home loans are benchmarked, by 5 basis points (bps) across the board with effect from March 9. The company said the change will also benefit the existing retail home loan customers. In the case of salaried women borrowers, the interest rate has been reduced to 8 per cent (from 8.05 per cent now) for loans up to ₹30 lakh; 8.25 per cent (8.30 per cent) for loans loans in the ₹30.01 lakh to ₹75 lakh bracket; and 8.35 per cent (8.40 per cent) for loans loans in the ₹75.01 lakh and above bracket. In the case of other salaried borrowers, HDFC has reduced the interest rate to 8.05 per cent (from 8.10 per cent now) for loans up to ₹30 lakh; 8.30 per cent (8.35 per cent) for loans loans in the ₹30.01 lakh to ₹75 lakh bracket; and 8.40 per cent (8.35 per cent) for loans loans in the ₹75.01 lakh and above bracket. - Business Line
ЁЯНТ Moody’s downgrades Bank of Baroda’s baseline credit assessment : Moody’s Investors Service on Wednesday downgraded the baseline credit assessment of Bank of Baroda to reflect weakening in asset quality and risk from deteriorating operating environment in India. Moody’s affirmed Bank of Baroda’s domestic and foreign bank long-term and short-term deposit ratings of Baa3, stable/P-3. Moody’s has downgraded BoB’s Baseline Credit Assessment (BCA) to ‘ba3’ to reflect the weakening in asset quality and further downside risk from the deteriorating operating environment in India. BCAs are essentially an opinion on the likelihood of an issuer requiring extraordinary support to avoid a default on its debt obligations. “Further deterioration in asset quality poses risks to BoB’s profitability and capital,” Moody’s said, adding the asset quality in micro, small and medium enterprises and agriculture portfolio, which has deteriorated, will continue to weaken further. - Business Line
ЁЯНТ SBI Cards IPO attracts highest QIB subscription at ₹1.04 lakh cr : IPO market has come alive with the issue of SBI Cards. The IPO has achieved highest subscription from qualified institutional buyers (QIB) category. On the last day on Wednesday, the QIB portion was subscribed by ₹1.04 lakh crore. Overall, the issue saw bids for 155 crore shares as against 10.02 crore shares on offer. Overall, the issue was oversubscribed by 57.18 times. QIB portion of HDFC AMC had received bids worth ₹93,000 crore. QIBs had bid more than ₹55,000 crore for shares of Avenue Supermart, the promoter of retail chain D-Mart. Bandan Bank QBI portion was subscribed by ₹35,000 crore and IRCTC got ₹34,500 crore in the QIB category. - Business Line
ЁЯНТ Apex Court permits banks to provide services to cryptocurrencies : The Supreme Court on Wednesday allowed banks to provide services for virtual currencies (VC), better known as ‘Cryptocurrency’ or popularly referred as ‘Bitcoins.’ This order is expected to enable trading of such currencies. Finance Minister Nirmala Sitharaman said that she is yet to read the order and that the government will decide on further course of action after studying the order. Virtual Currencies are like codes, numbers or tokens. They are not a legal tender like the rupee, which is ‘fiat currency’ (issued under a government order by the monetary system, enjoying full sovereign support though not backed by any precious metal such as gold or silver). - Business Line
ЁЯНТ Insurers stop issuing policies for travel to coronavirus-affected countries : General insurance companies are no longer issuing travel insurance for countries against which India has issued a travel advisory with regard to coronavirus. While there has been no formal instruction from the Insurance Regulatory and Development Authority of India (IRDAI) on the issue, a number of insurers that BusinessLine spoke to said it is common practice not to issue travel insurance for countries against which there is a travel advisory. “We are following the advisory as listed by the Government of India on their website,” said Gurdeep Singh Batra, Head - Retail Underwriting, Bajaj Allianz General Insurance. - Business Line
ЁЯНТ With a ₹1.1-lakh-crore bill to settle,NBFCs to face biggest funding test : India’s troubled non-banking finance companies face their biggest test yet in the months ahead: a record bill to settle in the local debt market. The lenders will need to repay ₹1.1-lakh crore ($15.1 billion) of local-currency bonds in the three months starting April 1, the most ever for a quarter. That will prove challenging for the lower-rated ones among them, given they have been largely shut out of the domestic funding market. While India’s credit crisis is showing some signs of easing with borrowing costs dropping for top-rated NBFCs, defaults remain a risk for weaker firms. - Business Line
ЁЯНТ Rupee closes flat at 73.19 as coronavirus scare keeps rate cut optimism in check: The rupee swung wildly before closing flat at 73.19 against the US currency on Wednesday as increasing number of coronavirus cases in India kept investors on edge despite a rate cut by the US Federal Reserve. The rupee had opened strong and raced to a high of 72.90 to the US dollar in early trade following weakness in the US currency after the rate cut by the US Fed.
ЁЯНТ Gold rises Rs 870 to Rs 43,303 per 10 gram, silver up Rs 1,225 per kg : Gold prices on Wednesday rose by Rs 870 to touch Rs 43,303 per 10 gram in the Mumbai bullion market on rupee depreciation and safe-haven appeal. The precious metal jumped after the US Fed Reserve cut interest rate by 50 basis points to limit the economic slowdown caused by coronavirus outbreak. Silver prices jumped Rs 1,225 to Rs 46,205 per kg from its closing on March 3.
Have a Good day.. " ЁЯМ╗ЁЯСйЁЯСйЁЯСзЁЯСж
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