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India defies global slump with a record dealmaking spree in Q2

India defies global slump with a record dealmaking spree in Q2

Tuesday, June 28, 2022

While dealmaking elsewhere in the world slows to a crawl bankers in India recorded their best-ever quarter for mergers and acquisitions. India saw $82.3 billion pending and completed M&A deals in the second quarter, the highest amount on record, according to data compiled by Bloomberg. That’s more than twice as much as the previous record of $38.1 billion in the third quarter of 2019. Globally, M&A volume in the quarter reached $827.6 billion, down 8.7% from the same period in 2021. The surge in India was dominated by HDFC Bank Ltd.’s $60 billion all-stock purchase of Housing Development Finance Corp. in April, combining India’s most valuable bank and largest mortgage lender in the country’s biggest-ever M&A transaction. The move illustrated how India’s flagship companies, facing disruptive trends such as the rise of fintech and climate change, are turning to dealmaking as a tactic to dramatically reshape themselves. Read more

Indian exporters fear $400 mn stuck in Russia due to SWIFT ban

Indian exporters fear $400 mn stuck in Russia due to SWIFT ban

Wednesday, March 2, 2022

With western nations blocking many Russian banks from accessing the SWIFT international payment banking system, following Russia’s invasion of Ukraine, roughly $400 million of Indian exporters may get stuck indefinitely. While exporters will get more clarity on the impact when the finer details of the SWIFT ban are spelled out, they have had discussions with the government to deal with payment-related challenges. One of the options could be to restore the rupee-rouble payment mechanism with Russia, an industry official said, adding that the department of commerce is looking into the concerns of the exporters and is likely to come up with some measures soon. Exporters are also hoping for a wind-down period will be available in the sanctions, which will take care of trade transactions in the pipeline. Read more

MARKET UPDATE:BSE Sensex 115 points higher at 61,265, while the NSE Nifty 37 points up at 18,250

MARKET UPDATE:BSE Sensex 115 points higher at 61,265, while the NSE Nifty 37 points up at 18,250

Thursday, January 13, 2022

In the Indian markets, benchmark indices today (13th January 2021)steadily held opening gains in early morning trade. The BSE Sensex was 115 points higher at 61,265, while the NSE Nifty was 37 points up at 18,250. On the Sensex, Tata Steel and PowerGrid were the leading gainers, up 3 percent each, followed by Sun Pharma, NTPC, ITC, L&T, and RIL. On the flip side, Wipro was the biggest loser, down 5 percent, after the company fell short of market expectation, as it’s net profit was up 1.3 percent on a quarter on quarter (QoQ) basis at Rs 2,969 crore for the third quarter ended December 2021 (Q3FY22). READ HERE. HDFC Bank, HCL Tech, M&M, Titan, Asian Paints, Axis Bank, and IndusInd Bank were the other notable losers. Read more

Banks see uptick in credit growth and asset quality likely to improve

Banks see uptick in credit growth and asset quality likely to improve

Monday, January 10, 2022

According to some analysts, banks saw some uptick in credit growth during the October – December period of 2021, which could help them report better profitability. The credit growth remained sluggish since the start of the coronavirus (Covid-19) pandemic in March 2020. Q3FY22 saw loan growth improving due to festive season demand along with pent-up demand as there were minimum economic disruptions due to lockdowns. According to Reserve Bank of India’s (RBI) data, year-on-year loan growth of banks inched up to 7.3 percent by the end of September, from about 6.1 percent in June end. "Q3FY22 is expected to be sequentially better on the growth and operational front for lenders, in general, barring a few exceptions,” ICICI Securities said in a note. Read more

No relaxation in asset classification, provisioning norms for NBFCs : RBI

No relaxation in asset classification, provisioning norms for NBFCs : RBI

Friday, December 17, 2021

The Reserve Bank of India (RBI) has turned down the request of non-banking financial companies (NBFC) to relax asset classification and provisioning norms. This will give rise to bad debt numbers of such para banks on technical grounds while making asset quality norms standardised across banks and NBFCs. The para banks are now rapidly filling in the positions left vacant by the risk-averse banks, and their asset book is close to 20 percent of banks’ total credit. The NBFC lobby group Finance Industry Development Council (FIDC) had approached the RBI to offer relaxation in the NPA norms, but the RBI has declined to do so, according to the sources. Read more

MARKET UPDATE:Sensex opened at 57,853.5 level,down 47.5 points while the Nifty at 17,221 levels, down 27 points

MARKET UPDATE:Sensex opened at 57,853.5 level,down 47.5 points while the Nifty at 17,221 levels, down 27 points

Friday, December 17, 2021

Indian equities started off on a cautious note today(17th Dec.2021) amid the acceleration of bond-buying programmes by various central banks to fight off inflation and suck excess liquidity out of the system. After the US Fed, the European Central Bank, and the Bank of Japan have decided to hasten the asset purchase programmes. That apart, the Bank of England became the first global central bank on Thursday to raise the interest rate by 25 basis points. Against this backdrop, the S&P BSE or 0.08 percent. It's NSE counterpart Nifty50, too, quoted at 17,221 levels, down 27 points in early deals. In the broader markets, the BSE MidCap and SmallCap indices dipped 0.33 percent and 0.1 percent, respectively. Read more

Centre initiates talks with RBI to kick-off bank privatisation process

Centre initiates talks with RBI to kick-off bank privatisation process

Tuesday, September 28, 2021

The government has initiated consultations with the Reserve Bank of India (RBI) to devise a new security clearance framework for screening potential bidders of public sector banks (PSBs) as it kick-starts the privatisation process, beginning with the strategic divestment of IDBI Bank. As the government is moving ahead with strategic divestment of IDBI Bank and is looking to privatise two PSBs, the Department of Investment and Public Asset Management (DIPAM) is looking to put in place an appropriate framework as the potential buyers will have to meet the RBI’s fit and proper criteria, according to an official. Read more

Sale of two state-run banks differed to next year?

Sale of two state-run banks differed to next year?

Monday, August 2, 2021

India’s plan to sell two state-controlled banks may get deferred to the next financial year as the government is yet to seek parliament’s nod for changes in laws required to start the transaction, according to reliable sources. The Finance Ministry hasn’t finalised modalities to seek approval from lawmakers for the sale, which leaves little time for the process to be completed this year, it is said. The government will seek buyers for two state-run banks by March 2022, Finance Minister Nirmala Sitharaman had said in February, in the nation’s budget for the current financial year that began on 1st April.

Banks, financials lift Sensex nearly 400 points

Banks, financials lift Sensex nearly 400 points

Tuesday, July 13, 2021

Bulls were in control today and market breadth was buoyant. Expectations of a good quarter for Textile exporters aided by a weak rupee kept several companies in this space buzzing through the day. Profit booking in several Largecaps & High-Quality Midcaps was witnessed. The 30-share pack Sensex climbed 397.04 points or 0.76 percent to close at 52,769.73. Its broader peer NSE Nifty rose 119.75 points or 0.76 percent to 15,812.35. Read more

Can PSU banks offer good returns even after a stellar rally?

Can PSU banks offer good returns even after a stellar rally?

Saturday, June 26, 2021

Stocks of the public banks have been on a gradual upward trend during the month of June. Privatisation buzz, strong earnings, and fund-raising plans have lent confidence to investors which resulted in buying in these names. The stocks did see some weakness recently but the positive sentiment remains intact. Union Bank shares have gained over 12 percent so far in June while UCO Bank has surged 5 percent. Notably, Union Bank said on Thursday (24th June 2021), it has raised Rs 850 crore while UCO Bank has received Board's nod to raise up to Rs 500 crore. Meanwhile, other stocks in the PSU bank basket-like Central Bank of India and Indian Overseas Bank have seen a sharp rise on the news of divestment plans. Read more

Indian banks proved the doomsday predictions wrong in a pandemic year

Indian banks proved the doomsday predictions wrong in a pandemic year

Monday, June 14, 2021

When the Covid-19 pandemic broke out in March last year and a nationwide lockdown was imposed to restrict its spread, there were concerns all around over its impact on the banking sector. Bad loans were stabilising after a relentless rise for several years and there was a ray of hope for the banking sector after a long time with non-performing assets have crossed the hump. Then the Covid-19 pandemic broke out crippling economic activity due to the lockdown and fears of asset quality problems resurfaced. The Reserve Bank of India (RBI) too, raised a red flag about the possible ballooning of bad loans. Stress tests by RBI projected gross non-performing assets of the Indian banks to shoot up to 13.5% by September 2021 as compared to 7.5% in September 2020 – under a baseline scenario. The situation was predicted to worsen under a severe stress scenario. Read more

Banks and NBFCs with more than Rs 1,000-crore asset base must bring in new auditors:RBI

Banks and NBFCs with more than Rs 1,000-crore asset base must bring in new auditors:RBI

Wednesday, May 26, 2021

RBI in its April 27th norms on auditors had said banks and NBFCs, excluding those that don’t take deposits and have a sub-Rs 1,000-crore asset base, must immediately bring in new auditors. The para banks, however, were allowed to do the change from the second half of the fiscal year. Banks and NBFCs, having an asset size of Rs 15,000 crore or more, were asked to appoint joint auditors. Crucially, there was retrospective applicability of the extended eligibility criteria for auditors, including those relating to the provision of audit and non-audit services. Both the NBFC lobby group Finance Industry Development Council and the Confederation of Indian Industry protested the rules. However, the RBI argued that the guidelines are compulsorily applicable to only 300 NBFCs, of the 9,600 operational in India. The other NBFCs, with asset sizes below Rs 1,000 crore, have the option to continue with their existing auditors. Read more

RIL, pvt banks take Sensex 558 pts up and Nifty tops 14,650

RIL, pvt banks take Sensex 558 pts up and Nifty tops 14,650

Tuesday, April 27, 2021

Hefty buying in industry heavyweights such as Reliance Industries, HDFC Bank, ICICI Bank, L&T, SBI, and TCS, coupled with a decline in fresh Covid-19 cases in the country, enthralled investors on Dalal Street today(27th April 2021). Helped by the across-the-board buying visible at the bourses as bargain hunters returned to Dalal Street, the benchmark indices climb over 1 percent on Tuesday. On the BSE, the 30-share Sensex settled at 48,944 levels, up 558 points while the broader Nifty50 closed at 14,653 levels, up 168 points on the NSE. Hindalco, L&T, Tata Steel, Divis Labs, Reliance Industries, Bajaj Finance, and SBI were the top gainers on the 50-share pack, up between 3.7 percent and 5 percent. HDFC Life, SBI Life, Kotak Mahindra Bank, Maruti Suzuki, and Nestle India declined up to 3.6 percent to end as top laggards. All the key sectoral indices settled the session in the green with the Nifty Metal index ruling 2.7 percent up. This was followed by the Nifty PSU Bank inde Read more

RBI’s list of “systemically important banks” may widen

RBI’s list of “systemically important banks” may widen

Thursday, March 18, 2021

After the changes in the pecking order consequent to the merger of state-run players the RBI’s list of “systemically important banks” may wi en. As of date, only the State Bank of India (SBI), ICICI Bank, and HDFC Bank figure in the central bank’s classification of domestic systemically important banks (D-SIBs). The matter has figured in internal meetings of the central bank’s supervisory department, but a formal agenda note is yet to be put up. While SBI and HDFC Bank continue to occupy the top two slots in terms of asset size, Bank of Baroda (BoB), Punjab National Bank (PNB), and Canara Bank have pushed ICICI Bank to the sixth position. The indicator weight for size under the RBI’s ‘Framework for dealing with D-SIBs’ (released on July 22, 2014) is 40 percent. Read more

CLSA sees a lot of value in large cap banks

CLSA sees a lot of value in large cap banks

Tuesday, March 16, 2021

CLSA sees a lot of value in large-cap banks like Axis Bank, State Bank of India, and ICICI Bank, in spite of the 60-90% surge in their stocks since September 2020. "We see a dual benign credit cycle play out both for corporate and retail loans from FY22, and our top picks are key beneficiaries as 70% of their provisioning in the past five years was due to high corporate stress," said CLSA. The brokerage said the dual benign credit cycle for both corporate and retail loans continues to play out and the reversing rate cycle is positive for banks' net interest margins. CLSA said its analysis on what's priced in indicates that the current share prices imply long term return on equity of 13.5-14% for ICICI Bank and Axis bank and 10% for SBI. This is 2.5% lower for Axis Bank and ICICI Bank and 3% lower for SBI versus its long-term return on equity expectations.

India’s endless bank salvage pain

India’s endless bank salvage pain

Wednesday, January 13, 2021

India's state-dominated lending system’s aggregate balance sheet had a gaping hole even before Covid-19. Now things could turn uglier. The regulator’s latest stress test projects nonperforming assets to jump to 13.5% of loans and advances by September in its baseline scenario, and 14.8% in the worst-case situation, almost doubling from 7.5% a year earlier. After many tough years, making India’s broken banks whole is still very much like pulling teeth. The twists and turns in the $12 billion bankruptcy of a housing finance company show how challenging it may be for the country to nurse its post-pandemic financial system to health.

Public Sector Banks face fresh capital shortages as coronavirus aftermath: Moody's

Public Sector Banks face fresh capital shortages as coronavirus aftermath: Moody's

Friday, August 21, 2020

Public sector banks in India will need external capital injection of Rs 1.9-2.1 trillion over the next two years to restore loss absorption capacity, according to Moody’s. The most likely source of capital to plug these capital shortfalls is the government, despite its completion of a large recapitalisation just a few months ago. Uncertainty surrounding India's economic recovery and the ongoing clean-up of balance sheets are making it difficult for banks to raise equity capital from markets, the rating agency said in a statement. "PSBs dominate India's banking system, meaning any failure could jeopardise financial stability Moody’s, said. The sharp slowdown in India's economic growth, exacerbated by the coronavirus outbreak, will hurt public sector banks' (PSBs) asset quality and drive up credit costs. The Non-Performing Loans (NPLs) ratio will rise to 14.5 percent by March 2022 from 11 percent as of March 2020.

Lockdown Aftermath: Govt may need to pump Rs 1.5 trn into state banks

Lockdown Aftermath: Govt may need to pump Rs 1.5 trn into state banks

Thursday, May 28, 2020

India may need to inject up to Rs 1.5 trillion ($19.81 billion) into its state-owned lenders as their pile of soured assets is expected to double during the coronavirus pandemic, three government and banking sources told Reuters. The government initially considered a budget of around Rs 250 billion for bank recapitalisations but that has risen significantly with loan defaults likely to rise as businesses take a severe hit from nationwide lockdowns to tackle the coronavirus. "The situation is very grim," sources said, adding that banks would require fresh funds soon. Indian banks were already saddled with Rs 9.35 trillion of non-performing assets at the end of September 2019 or roughly 9.1% of their total assets at the time. One source said it was unlikely the central government would be able to fund the entire capital injection itself and may rely on indirect measures such as issuing bonds as a means of recapitalisation, a method which it has used previously.

Axis Bank shares declined 6.1 per cent as Rs 3,000 crore provisions in Q4 due to Covid-19

Axis Bank shares declined 6.1 per cent as Rs 3,000 crore provisions in Q4 due to Covid-19

Wednesday, April 29, 2020

Axis Bank shares declined 6.1 percent to Rs 427.5 on the BSE today, 29th April 2020 after the bank made massive Rs 7,730 crore provisions in the March quarter of FY20 (Q4FY20), of which Rs 3,000 crore worth provisions were due to coronavirus (Covid-19)-induced uncertainty. This pushed the bank in the red zone, with the lender posting a surprise Rs 1,388-crore net loss in the recently concluded quarter. At 10:10 am, the stock was trading 5 percent lower at Rs 432.35 apiece on the BSE, as against a 0.84 percent rise in the benchmark S&P BSE Sensex. Nearly 19.68 million shares have changed hands on the counter on the NSE and BSE at 10:20 am. Historically, Q4 is the first time since March 2018 that the bank has dipped into losses of this magnitude because of the provisioning cost. The September 2019 quarter’s loss was due to the adjustment of deferred tax assets. Read more

Merger of 10 banks into 4 from April1

Merger of 10 banks into 4 from April1

Thursday, March 5, 2020

The government on 4th March approved the amalgamation of 10 state-owned banks into four, putting to rest any doubts about a possible delay in the process from 1st April 2020, the balance sheets as well as stocks of these banks will be integrated, according to the scheme of amalgamation approved by the Union Cabinet. Punjab National Bank (PNB), Oriental Bank of Commerce, and United Bank of India will combine to form the nation’s second-largest lender. Canara Bank will take over Syndicate Bank; Union Bank of India is planned to be amalgamated with Andhra Bank and Corporation Bank, and Indian Bank will subsume Allahabad Bank. “Businesses and industry will benefit through an increased lending capacity, with the regulatory ceiling for lending to individual borrowers increasing by over Rs 1,500 crore to Rs 3,000 crore,” according to finance ministry and with this, the banks would be able to support specialised loan products, such as supply chain financing and cash management services.

A Bill to provide more powers to RBI for regulating co-operative banks introduced in the Lok Sabha

A Bill to provide more powers to RBI for regulating co-operative banks introduced in the Lok Sabha

Wednesday, March 4, 2020

A Bill to provide more powers to RBIfor regulating co-operative banks was introduced by Finance Minister Nirmala Sitharaman in the Lok Sabha on Tuesday. The Banking Regulation (Amendment) Bill, 2020, which comes in the backdrop of Punjab and Maharashtra Co-operative Bank scam, seeks to strengthen co-operative banks by increasing professionalism, enabling access to capital, improving governance and ensuring sound banking through the RBI. The Bill was introduced in the Lok Sabha amid the din, with Sitharaman saying if the opposition wants to deny the small depositors their rights then “it is a shame”. The proposed law seeks to enforce banking regulation guidelines of the RBI in cooperative banks, while administrative issues will still be guided by the Registrar of Cooperative.

Tag: banks

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