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☕ 12.05.2020: Today's Banking / Financial News at a Glance
🍒 Finance Minster's meeting with public sector ban chiefs deferred : The Finance Minister Nirmala Sitharaman’s meeting with chief executives (CEOs) of State-owned banks slated for this afternoon has been deferred. This meeting was to discuss the flow of credit from the banking system to the economy post the breakout of Covid-19. The reasons for the deferment of the meeting was not known, official sources said. PTI says According to sources, the meeting has been deferred and the new date will be informed shortly. The meeting, to be held via video-conferencing, was to discuss various issues, including credit offtake, as part of efforts to prop up the economy hit by the Covid-19 crisis. The agenda also included taking stock of interest rate transmission to borrowers by banks and progress on moratorium on loan repayments. Earlier this month, RBI Governor Shaktikanta Das held a meeting with heads of both public and private sector banks to take stock of the economic situation and review implementation of various measures announced by the central bank. - Business Line
🍒 IBA wants to house Rs 75,000 crore bad loans via 'Bad Bank' : The Indian Banks Association (IBA) has firmed up a proposal to house approximately Rs 70,000-75,000 crore of bad loans at book value in its proposed ‘bad bank’, two people aware of the development told CNBC-TV18. IBA received comments from member banks over the weekend and has now given final shape to a proposal to set up this Bad Bank which will be submitted for approvals to the government and the Reserve Bank of India this week itself, said a senior banking executive in the know.As per IBA’s estimates, the Bad Bank would require approximately Rs 10,000 crore of capital initially, which it proposes be fully provided by the Government of India, added another senior banking executive. “We are proposing three stages of resolution, including an Asset Reconstruction Company (ARC), Asset Management Company (AMC), and finally the Alternate Investment Fund (AIF). The ARC will be owned by the Government of India- that is what we are planning, AMC will be a professional body with participation from public and private sector, and the AIF where we want to create a secondary market for Security Receipts,” said an official directly in the know of the proposal. - Moneycontrol.com
🍒 IBA considering proposal to set up AMC and AIF, takeover NPAs from PSBs : Indian Bank’s Association is considering a proposal from Sashakt panel for setting up an asset management company and Alternate Investment Fund (AIF) to acquire bad loans from banks with aim to turnaround those assets to protect and enhance value. Public sector bank executive said the structure advised by Sashakt panel is being considered for an establishing vehicle, dubbed as bad bank, to park toxic assets in back in focus.The coronavirus pandemic, which is expected to result in a rise in non-performing assets (NPAs) despite relief measures such as allowing a 90-day moratorium on retail loans and relaxing working capital financing norms. In July 2018 committee report on Resolution of Stressed Assets, also called as Sashakt panel, headed by Sunil Mehta, had recommended formation of an independent AMC to acquire bad loans predominantly from public sector banks. The large assets with exposure above Rs 500 crore with potential for turnaround were to be dealt by AMC and AIF. The groundwork for forming such a vehicle has been done, keeping in mind Indian regulatory environment and conditions in financial se ctor, Mehta told Business Standard. While details are still being fleshed out for arrangements, the bankers want focus on “turning around” assets than just transfer asset to another legal entity, bankers said. Care Rating analysis for Q3FY20 showed the gross NPAs (GNPA) of commercial banks had declined to Rs 9 trillion in December 2019 (Q3FY20) from Rs 9.7 trillion in December 2018 (Q3FY19), whereas the public sector banks continued to have lion’s share (Rs 7.2 trillion at end of of December 2019) in the total pool of NPAs. The GNPA ratio for the PSBs stood at 11.3 per cent for the quarter under review as against 12.8 per cent in Q3FY19, reflecting an increase in provisioning. State Bank of India chairman Rajnish Kumar last week had said this is the right time for a structure along the lines of a bad bank as the provisions on the existing NPAs - most of the banks are holding a very high level of provisions. - Business Stanard
🍒 Some MSMEs may need deep restructuring, not just liquidity: Union Bank : Liquidity support might not be the only solution to the problems faced by Micro small and medium enterprises (MSMEs) in the face of Covid-19, as many firms might need ‘deep restructuring,’ according to Rajkiran Rai, Managing Director and Chief Executive Officer, Union Bank of India. Speaking at a webinar with members of Bharat Chamber of Commerce and Industry, Rai said Indian Banks’ Association (IBA) has taken up the issue of restructuring with the Reserve Bank of India (RBI). Last year, RBI introduced a one-time restructuring scheme for micro, small and medium enterprises (MSMEs) with a maximum exposure of Rs 25 crore. There have been demands to further increase this limit to encompass more enterprises in the fold of restructuring . “Quickest response in this crisis is temporary liquidity support to MSMEs. As we go forward, lot of policy interventions will be needed…….we need to see what kind of cash flows is available with the MSMEs. Based on that, some kind of deep restructuring needs to be done, but this has to come from the regulator. Viability of units will depend upon much bigger issues than just credit alone,” said Rai. Also, interest subvention schemes can help bring interest rates down. “Our hands are tied with regards to reducing interest rates. Our source of funds is deposits and as long as that remains high, lending rates will continue to be high. Moreover, the credit cost in lending to MSMEs is higher due to the high NPAs so it is difficult to bring down interest rates. One way of bringing it down could be interest subvention but banks cannot do this alone they need support from government and regulator,” he said. - Business Standard
🍒 Millions of MSMEs may shut shop if govt delays support, warns CARE : Majority of micro, small and medium enterprises (MSMEs) in India, a major employer to millions of workers, may have to shut shop unless immediate government support reaches them, warned rating agency CARE in a report on Monday. “Besides the lockdown the sector is likely to witness tepid demand going forward due to the overall slowdown in the economy. Most small scale business may not be in a position to survive long without timely support from the government,” said CARE. There are more than 6.3 crore unincorporated non-agriculture MSMEs (excluding construction) in the country engaged in different economic activities and the sector provides employment to more than 11.1 crore people. As for employment, the manufacturing segment would be affected more with around 75 percent employment being under pressure, CARE said. The micro sector with 6.3 crore estimated enterprises accounts for more than 99 percent of the total estimated number of MSMEs. The small sector with 3.31 lakh and medium sector with 0.05 lakh estimated MSMEs account for 0.52 percent and 0.01 percent of total estimated MSMEs, respectively. “The MSME sector comprises manufacturing, trade and service providers. A large number of MSMEs are ancillary units catering to the needs of large industries,” said CARE report. - Moneycontrol.com
🍒 Pandemic to push credit card transactions further: SBI Card CEO : The challenging situation due to coronavirus pandemic will further push credit card transactions, a senior SBI Card official has said. He also said that now people will spend more to upgrade their homes as staying indoors is becoming inevitable. "It is little early to say how the credit card industry is going to pan out. I have always been a big votary of digital payments. I think that opportunities will come back. Given whatever is the economic condition, I think transaction through credit cards will continue to see a rise," SBI Card MD and CEO Hardayal Prasad told in an interview.Assuming that the lockdown is removed in some places on May 17, the businesses will come back to normal to say about in 2-3 months, he added."After demonetisation, there was a big push towards the credit card industry, I think this (pandemic) is going to be even bigger than demonetisation."After demonetisation, cash was converted into digital (money/ transactions)...even if I get 5 per cent of that, that will be phenomenal. So, we are concentrating on what we can convert. Your cash spend can actually be your card spend. Now, if you are going to stay more time at home and you are not going out, you probably will look at more avenues also to make your house a better place," Prasad said.As people will stay more at home, they will vie for better products, may be a bigger televison set, a bigger fridge as they are not eating out and cooking at home, he added. "So, we are looking at that kind of trend also to be emerging. People will feel that let's make home a better place, this is now my workplace and office as also this is the place where I live, so they will upgrade their homes if they are working (more) from homes," he said. - economic times
🍒 IMPS transfers in April plunge to 2-year low : The economic impact of the lockdown is reflected in the sharp drop in retail interbank transfers under the Immediate Payment System (IMPS). Transactions using this platform in April at 12.2 crore were half of the 24.7 crore transactions in February 2020. This platform is used in a big way by migrant labour and small businesses. In the case of Unified Payment Interface(UPI) — an app-based payment platform — there has been a significant drop as well from 132 crore in February to less than 100 crore in April. “IMPS processes the migrant workers’ remittances which is almost zero during the lockdown period,” said Dilip Abse, CEO, NPCI. “People are aware of international remittances; NRIs in Gulf, US sending money back home. They forget that there’s a large migrant force in cities sending money back home to Bihar, Jharkhand and UP, that’s been largely hit,” said Abhijit Mazumdar, CGM, State Bank of India. April IMPS numbers are a two-year low, according to data from the National Payments Corporation of India (NPCI).SMEs and MSMEs in garments, textiles, chemicals and contractors for construction companies, city corporations largely use IMPS for vendor payments, say banks. With most Indians now having a bank account, IMPS transactions are replacing money order as a prime mode of transfer for the domestic remittance market.Bankers say that given the Rs 2 lakh limit under IMPS, it is largely small businesses that use the IMPS platform.“For anything above that, you’d need to use RTGS. So, larger corporates and mid-cap companies prefer RTGS for bulk payments such as salary credits to employees and vendor payments,” said Deepak Sharma, chief digital officer, Kotak Mahindra Bank. -economic times
🍒 IRDAI extends grace period for paying life insurance policy premiums till May 31 : The Insurance regulator Insurance Regulatory and Development Authority of India (IRDAI) has extended the grace period for payment of premium for life insurance policies till May 31, 2020. As a result, a policy premium which was due to be paid in March 2020, can now be paid on or before May 31, 2020.It may be noted that the IRDA had earlier provide grace period for payment life insurance premium by an additional 30 days in view of the Covid-19 pandemic. However, as the lockdown has been extended till May 17, the regulator has extended the grace period keeping in mind the difficulty faced by some policyholders. “The policyholders are requested to note that the objective of the grace period allowed is to pay all premiums due within that period so as to keep the policy coverage in force,” IRDAI said in a release. - Business Line
🍒 SBI General Insurance net profit up 23.4 per cent at Rs 412 crore in FY20 : Private sector SBI General Insurance reported a net profit of Rs 412 crore in 2019-20, which was a 23.4 per cent increase year on year. The insurer had a net profit of Rs 333.99 crore in 2018-19. “SBI General Insurance booked an underwriting profit of ?61 crore in 2019-20,” it said in a statement. Its gross written premium increased 45 per cent to ?6,840 crore last fiscal, compared to ?4,717 crore in FY19. Its solvency ratio stood at 2.27 in FY20, down from 2.34 in the previous fiscal. “SBI General has maintained a steady growth in 2019- 20. We’ve managed a growth of 45 per cent as compared to an industry growth of around 12 per cent,” said Pushan Mahapatra, MD and CEO. “New tie-ups and improved business from existing tie-ups in motor, higher branch activations/better penetrations across banca network, robust growth in corporate, SME and crop business have also contributed to the growth.” The company is also scaling up its product bouquet, he added. - Business Line
🍒 PSU banks dictum: Pepper farmers sell stock to settle gold loans : A section of pepper farmers are seen liquidating their stock to ensure a cash flow following the directive from PSU banks to settle gold loans. According to Kishore Shamji of Kishor Spices, banks are forcing farmers who availed gold loans at a concessional interest rate of 4 per cent to clear outstanding dues. Earlier, the closing date of these loans was in March, which was later extended to April 30 and then to May 31 in the wake of Covid-19 situation. The farmers are now waiting for the outcome of the meeting between the Finance Minister and heads of nationalised banks for a favourable decision, he said. Meanwhile, the pepper market in Kochi continues to remain steady in the last few days at ?310 for ungarbled, as buyers are hesitant to purchase at higher rates, while sellers are not ready to liquidate at discount prices. The off-take on Monday was 15 tonnes and the complete lockdown imposed in Kerala on Sunday's hit pepper arrivals. Those who managed to load the stock on Monday morning could able to bring the commodity to the terminal market, Shamji said. - Business Line
🍒 BFIL facilitates ?100 cr of transactions through rural distribution service points : Bharat Financial Inclusion Ltd (BFIL), an arm of IndusInd Bank, has facilitated financial transactions worth over ?100 crore through its wide network of rural distribution service points (RDSP) in Karnataka, Odisha, Maharashtra and Bihar. These RDSPs, also known as ‘Bharat Money Store’, is a business innovation by BFIL that offers the convenience of facilitating deposits and withdrawals for the rural population based in remote locations of the country.With the help of a Bharat Money Store, rural villagers can now walk into their nearest kirana/merchant store to make basic financial transactions like repaying loans, depositing money, withdrawing cash, and making utility and other kinds of bill payments. Bharat Money Stores are supporting the government’s efforts at encouraging the usage of the Direct Benefit Transfer (DBT) model by enabling withdrawal at their neighbourhood shop for over four lakh beneficiaries in Karnataka, Odisha, Maharashtra and Bihar. - Business Line
🍒 IDBI Federal Life Insurance net rises 22 per cent to ?162 crore in FY20 : IDBI Federal Life Insurance reported a 22 per cent increase in its net profit to ?162 crore in 2019-20. “This is the eight consecutive year of profit for the organisation since it first declared profit in 2012-13,” the private sector life insurer said in a statement on Monday.However, its total premium declined 4.65 per cent to ?1,843 crore in 2019-20 from ?1,933 crore in 2018-19.Renewal premium grew 14 per cent year-on-year to ?1,282 crore last fiscal.“While 2019-20 has been a challenging year for the organisation, we have taken a number of steps to steady the course. We focussed on growing distribution footprint primarily through our proprietary channels, while continuing to strengthen bottomline parameters such as costs, surrenders, claims, profit after tax and solvency margin,” said Vighnesh Shahane, Managing Director and CEO, IDBI Federal Life Insurance.- Business Line
🍒 80% of older consumers to adopt digital payment in next 6 months: study : Capgemini Research Institute has come up with a study on Covid-19 and the financial services consumer analysing on how the global pandemic will change consumer behaviour in the financial sector. The institute stated that it has spoken to more than 11,200 consumers in early April 2020 from 11 countries including India, the USA, UK, and China. The study found that pandemic has hastened the shift towards digital payments, increased digital channel adoption, spurred consumer interest in savings, and safer investments. The key India findings from the report “Covid-19 and the financial services consumer: Supporting customers and driving engagement through the pandemic and beyond” including comparison with global counterparts are below: The shift towards digital payments in India is particularly striking when the evolvement of consumer behaviourcan be seen among different segments, including older consumers who have traditionally preferred cash for transactions.- Business Line
🍒 ICICI Bank cuts fixed deposit rates by 25-50 bps effective May 11 : ICICI Bank has cut fixed deposit rates by up to 50 basis points effective May 11. Deposits up to one year will now yield 5.25 percent while those above one year will earn 5.7-5.75 percent, according to the interest rate card on the bank's website. Earlier, the bank used to offer 25-50 bps more on these maturities. There is no real surprise in this rate cut. With no demand for credit in a locked down economy, banks are flush with liquidity and do not want further inflow of deposits. In other words, banks want to disincentivise the inflow of deposits by making the returns less attractive. It is not just about lacklustre credit growth. There is a general risk aversion among investors towards equities and mutual funds in a highly uncertain economic environment. Following the Franklin Templeton fiasco, there were heavy redemption pressures in mutual funds. In an uncertain environment, customers typically prefer safer avenues such as bank fixed deposits. - Moneycontrol.com
🍒 Sindhuja Microcredit raises $8.7 million in Series B round : Sindhuja Microcredit, a rural-focussed micro finance institution, has raised $8.7 million from Norway-based Nordic Microfinance Initiative (NMI) and Carpediem Capital in Series B round. The company, in its two years of operations, has provided microloans to over 84,000 self-employed women micro-entrepreneurs across five states in northern part of the country. It currently operates 56 branches with over ₹170 crore of assets under uanagement, the company said in a statement. - Business Line
🍒 Rural customers will bounce back faster: MFIs : Rural borrowers will recover faster from the national lockdown while those in urban areas could take more time to bounce back, believe microfinance institutions. At a webinar organised by Sa-Dhan on Monday, MFIs were also of the view that the three-month moratorium on loan repayments should be extended as borrowers could take some time to resume their livelihood, given that the lockdown has been extended till May 17.“The condition is serious at ground level more, so in the case of urban areas where there have been job losses….the situation in rural areas is better,” said Mukul Jaiswal, Managing Director, Cashpor Micro Credit.Venkatesh N, Managing Director, Samasta Microfinance, also said the situation is “murkier” in urbanised parts of States, while it is more favourable in rural areas. “Extension of the moratorium till June 30 will be more helpful as the lockdown will be lifted by May 17 and it will take time for people to get back to their livelihood,” Venkatesh noted.- Business Line
🍒 Atal Pension Yojana turns 5; e-APY to become reality this year, says PFRDA chief : You as a subscriber of Atal Pension Yojana (APY) — a government-backed pension scheme targeted at the unorganised sector — can soon make adjustments throughout the year to the defined monthly pension amount that you would want to receive on turning 60 years of age, a top official said. This will be a big benefit for APY subscribers as the option to increase or reduce the pension amount was hitherto available only in the first month (April) of the fiscal, Supratim Bandyopadhyay, Chairman, Pension Fund Regulatory & Development Authority (PFRDA) told BusinessLine. “We have now decided that an APY subscriber can upgrade or lower the pension amount that he is aiming for throughout the year. Initially, it was allowed in April. Anybody who misses April, they had to wait for the entire year before they could change it,” he said. - Business Line
🍒 Sensex ends 81 points lower; financial stocks drag : Benchmark Sensex gave up all its early gains to end 81 points lower on Monday, dragged by losses in financial stocks as lenders beefing up provisions against Covid-19 risks stoked slippages worry. Besides, spiking Covid-19 cases in the country and tepid cues from global markets weighed on investor sentiment. After gyrating over 800 points during the day, the 30-share index settled 81.48 points or 0.26 per cent lower at 31,561.22. Similarly, NSE Nifty fell 12.30 points, or 0.13 per cent, to 9,239.20. ICICI Bank was the top laggard in the Sensex pack, cracking over 5 per cent, followed by Kotak Bank, HUL, HDFC, IndusInd Bank, HDFC Bank and Nestle India.On the other hand, Hero MotoCorp, Bajaj Auto, Maruti, TCS and HCL Tech were among the gainers.
🍒 Indian rupee settles 19 paise lower at 75.73 against US dollar : The rupee slipped 19 paise to close at 75.73 against the US dollar on Monday as strengthening American currency overseas and rising coronavirus cases in the country weighed on investor sentiment. Forex traders said while positive domestic equities supported the local unit, market participants were concerned about the impact of spiking coronavirus cases on the economy. The local unit opened at 75.55, then lost further ground and finally settled at 75.73 against the greenback, down 19 paise over its previous close. It had settled at 75.54 against the US dollar on Friday.
🍒 Gold slips Rs 507 to close at Rs 45,785 per 10 gram, jewellers reopen some stores : Gold prices slipped Rs 507 to Rs 45,785 per 10 gram in the Mumbai bullion market on a stronger dollar. However, the precious metal was getting support on the downside from the reemergence of a new wave of coronavirus infection being reported in some countries. The US dollar index, measured against a basket of six currencies gained 0.37 percent to 100.14. The rate of 10 gram 22-carat gold in Mumbai was Rs 41,939 plus 3 percent GST, while 24-carat 10 gram was Rs 45,785 plus GST. The 18-carat gold quoted at Rs 34,339 plus GST in the retail market. Silver prices rose Rs 600 to Rs 43,200 per kg from its closing on May 8.
🍒 Shares of Central Bank of India in Stock Market : 75% of moneycontrol users recommend buying Central Bank of India in stock market. In BSE, shares closed at Rs.14.80 against Prev Close Rs.14.75. In NSE, shares closed at Rs.14.70 against Prev Close Rs.14.80..
🙏“All the Best… Have a Good day..
☕ 12.05.2020: Today's Banking / Financial News at a Glance
🍒 Finance Minster's meeting with public sector ban chiefs deferred : The Finance Minister Nirmala Sitharaman’s meeting with chief executives (CEOs) of State-owned banks slated for this afternoon has been deferred. This meeting was to discuss the flow of credit from the banking system to the economy post the breakout of Covid-19. The reasons for the deferment of the meeting was not known, official sources said. PTI says According to sources, the meeting has been deferred and the new date will be informed shortly. The meeting, to be held via video-conferencing, was to discuss various issues, including credit offtake, as part of efforts to prop up the economy hit by the Covid-19 crisis. The agenda also included taking stock of interest rate transmission to borrowers by banks and progress on moratorium on loan repayments. Earlier this month, RBI Governor Shaktikanta Das held a meeting with heads of both public and private sector banks to take stock of the economic situation and review implementation of various measures announced by the central bank. - Business Line
🍒 IBA wants to house Rs 75,000 crore bad loans via 'Bad Bank' : The Indian Banks Association (IBA) has firmed up a proposal to house approximately Rs 70,000-75,000 crore of bad loans at book value in its proposed ‘bad bank’, two people aware of the development told CNBC-TV18. IBA received comments from member banks over the weekend and has now given final shape to a proposal to set up this Bad Bank which will be submitted for approvals to the government and the Reserve Bank of India this week itself, said a senior banking executive in the know.As per IBA’s estimates, the Bad Bank would require approximately Rs 10,000 crore of capital initially, which it proposes be fully provided by the Government of India, added another senior banking executive. “We are proposing three stages of resolution, including an Asset Reconstruction Company (ARC), Asset Management Company (AMC), and finally the Alternate Investment Fund (AIF). The ARC will be owned by the Government of India- that is what we are planning, AMC will be a professional body with participation from public and private sector, and the AIF where we want to create a secondary market for Security Receipts,” said an official directly in the know of the proposal. - Moneycontrol.com
🍒 IBA considering proposal to set up AMC and AIF, takeover NPAs from PSBs : Indian Bank’s Association is considering a proposal from Sashakt panel for setting up an asset management company and Alternate Investment Fund (AIF) to acquire bad loans from banks with aim to turnaround those assets to protect and enhance value. Public sector bank executive said the structure advised by Sashakt panel is being considered for an establishing vehicle, dubbed as bad bank, to park toxic assets in back in focus.The coronavirus pandemic, which is expected to result in a rise in non-performing assets (NPAs) despite relief measures such as allowing a 90-day moratorium on retail loans and relaxing working capital financing norms. In July 2018 committee report on Resolution of Stressed Assets, also called as Sashakt panel, headed by Sunil Mehta, had recommended formation of an independent AMC to acquire bad loans predominantly from public sector banks. The large assets with exposure above Rs 500 crore with potential for turnaround were to be dealt by AMC and AIF. The groundwork for forming such a vehicle has been done, keeping in mind Indian regulatory environment and conditions in financial se ctor, Mehta told Business Standard. While details are still being fleshed out for arrangements, the bankers want focus on “turning around” assets than just transfer asset to another legal entity, bankers said. Care Rating analysis for Q3FY20 showed the gross NPAs (GNPA) of commercial banks had declined to Rs 9 trillion in December 2019 (Q3FY20) from Rs 9.7 trillion in December 2018 (Q3FY19), whereas the public sector banks continued to have lion’s share (Rs 7.2 trillion at end of of December 2019) in the total pool of NPAs. The GNPA ratio for the PSBs stood at 11.3 per cent for the quarter under review as against 12.8 per cent in Q3FY19, reflecting an increase in provisioning. State Bank of India chairman Rajnish Kumar last week had said this is the right time for a structure along the lines of a bad bank as the provisions on the existing NPAs - most of the banks are holding a very high level of provisions. - Business Stanard
🍒 Some MSMEs may need deep restructuring, not just liquidity: Union Bank : Liquidity support might not be the only solution to the problems faced by Micro small and medium enterprises (MSMEs) in the face of Covid-19, as many firms might need ‘deep restructuring,’ according to Rajkiran Rai, Managing Director and Chief Executive Officer, Union Bank of India. Speaking at a webinar with members of Bharat Chamber of Commerce and Industry, Rai said Indian Banks’ Association (IBA) has taken up the issue of restructuring with the Reserve Bank of India (RBI). Last year, RBI introduced a one-time restructuring scheme for micro, small and medium enterprises (MSMEs) with a maximum exposure of Rs 25 crore. There have been demands to further increase this limit to encompass more enterprises in the fold of restructuring . “Quickest response in this crisis is temporary liquidity support to MSMEs. As we go forward, lot of policy interventions will be needed…….we need to see what kind of cash flows is available with the MSMEs. Based on that, some kind of deep restructuring needs to be done, but this has to come from the regulator. Viability of units will depend upon much bigger issues than just credit alone,” said Rai. Also, interest subvention schemes can help bring interest rates down. “Our hands are tied with regards to reducing interest rates. Our source of funds is deposits and as long as that remains high, lending rates will continue to be high. Moreover, the credit cost in lending to MSMEs is higher due to the high NPAs so it is difficult to bring down interest rates. One way of bringing it down could be interest subvention but banks cannot do this alone they need support from government and regulator,” he said. - Business Standard
🍒 Millions of MSMEs may shut shop if govt delays support, warns CARE : Majority of micro, small and medium enterprises (MSMEs) in India, a major employer to millions of workers, may have to shut shop unless immediate government support reaches them, warned rating agency CARE in a report on Monday. “Besides the lockdown the sector is likely to witness tepid demand going forward due to the overall slowdown in the economy. Most small scale business may not be in a position to survive long without timely support from the government,” said CARE. There are more than 6.3 crore unincorporated non-agriculture MSMEs (excluding construction) in the country engaged in different economic activities and the sector provides employment to more than 11.1 crore people. As for employment, the manufacturing segment would be affected more with around 75 percent employment being under pressure, CARE said. The micro sector with 6.3 crore estimated enterprises accounts for more than 99 percent of the total estimated number of MSMEs. The small sector with 3.31 lakh and medium sector with 0.05 lakh estimated MSMEs account for 0.52 percent and 0.01 percent of total estimated MSMEs, respectively. “The MSME sector comprises manufacturing, trade and service providers. A large number of MSMEs are ancillary units catering to the needs of large industries,” said CARE report. - Moneycontrol.com
🍒 Pandemic to push credit card transactions further: SBI Card CEO : The challenging situation due to coronavirus pandemic will further push credit card transactions, a senior SBI Card official has said. He also said that now people will spend more to upgrade their homes as staying indoors is becoming inevitable. "It is little early to say how the credit card industry is going to pan out. I have always been a big votary of digital payments. I think that opportunities will come back. Given whatever is the economic condition, I think transaction through credit cards will continue to see a rise," SBI Card MD and CEO Hardayal Prasad told in an interview.Assuming that the lockdown is removed in some places on May 17, the businesses will come back to normal to say about in 2-3 months, he added."After demonetisation, there was a big push towards the credit card industry, I think this (pandemic) is going to be even bigger than demonetisation."After demonetisation, cash was converted into digital (money/ transactions)...even if I get 5 per cent of that, that will be phenomenal. So, we are concentrating on what we can convert. Your cash spend can actually be your card spend. Now, if you are going to stay more time at home and you are not going out, you probably will look at more avenues also to make your house a better place," Prasad said.As people will stay more at home, they will vie for better products, may be a bigger televison set, a bigger fridge as they are not eating out and cooking at home, he added. "So, we are looking at that kind of trend also to be emerging. People will feel that let's make home a better place, this is now my workplace and office as also this is the place where I live, so they will upgrade their homes if they are working (more) from homes," he said. - economic times
🍒 IMPS transfers in April plunge to 2-year low : The economic impact of the lockdown is reflected in the sharp drop in retail interbank transfers under the Immediate Payment System (IMPS). Transactions using this platform in April at 12.2 crore were half of the 24.7 crore transactions in February 2020. This platform is used in a big way by migrant labour and small businesses. In the case of Unified Payment Interface(UPI) — an app-based payment platform — there has been a significant drop as well from 132 crore in February to less than 100 crore in April. “IMPS processes the migrant workers’ remittances which is almost zero during the lockdown period,” said Dilip Abse, CEO, NPCI. “People are aware of international remittances; NRIs in Gulf, US sending money back home. They forget that there’s a large migrant force in cities sending money back home to Bihar, Jharkhand and UP, that’s been largely hit,” said Abhijit Mazumdar, CGM, State Bank of India. April IMPS numbers are a two-year low, according to data from the National Payments Corporation of India (NPCI).SMEs and MSMEs in garments, textiles, chemicals and contractors for construction companies, city corporations largely use IMPS for vendor payments, say banks. With most Indians now having a bank account, IMPS transactions are replacing money order as a prime mode of transfer for the domestic remittance market.Bankers say that given the Rs 2 lakh limit under IMPS, it is largely small businesses that use the IMPS platform.“For anything above that, you’d need to use RTGS. So, larger corporates and mid-cap companies prefer RTGS for bulk payments such as salary credits to employees and vendor payments,” said Deepak Sharma, chief digital officer, Kotak Mahindra Bank. -economic times
🍒 IRDAI extends grace period for paying life insurance policy premiums till May 31 : The Insurance regulator Insurance Regulatory and Development Authority of India (IRDAI) has extended the grace period for payment of premium for life insurance policies till May 31, 2020. As a result, a policy premium which was due to be paid in March 2020, can now be paid on or before May 31, 2020.It may be noted that the IRDA had earlier provide grace period for payment life insurance premium by an additional 30 days in view of the Covid-19 pandemic. However, as the lockdown has been extended till May 17, the regulator has extended the grace period keeping in mind the difficulty faced by some policyholders. “The policyholders are requested to note that the objective of the grace period allowed is to pay all premiums due within that period so as to keep the policy coverage in force,” IRDAI said in a release. - Business Line
🍒 SBI General Insurance net profit up 23.4 per cent at Rs 412 crore in FY20 : Private sector SBI General Insurance reported a net profit of Rs 412 crore in 2019-20, which was a 23.4 per cent increase year on year. The insurer had a net profit of Rs 333.99 crore in 2018-19. “SBI General Insurance booked an underwriting profit of ?61 crore in 2019-20,” it said in a statement. Its gross written premium increased 45 per cent to ?6,840 crore last fiscal, compared to ?4,717 crore in FY19. Its solvency ratio stood at 2.27 in FY20, down from 2.34 in the previous fiscal. “SBI General has maintained a steady growth in 2019- 20. We’ve managed a growth of 45 per cent as compared to an industry growth of around 12 per cent,” said Pushan Mahapatra, MD and CEO. “New tie-ups and improved business from existing tie-ups in motor, higher branch activations/better penetrations across banca network, robust growth in corporate, SME and crop business have also contributed to the growth.” The company is also scaling up its product bouquet, he added. - Business Line
🍒 PSU banks dictum: Pepper farmers sell stock to settle gold loans : A section of pepper farmers are seen liquidating their stock to ensure a cash flow following the directive from PSU banks to settle gold loans. According to Kishore Shamji of Kishor Spices, banks are forcing farmers who availed gold loans at a concessional interest rate of 4 per cent to clear outstanding dues. Earlier, the closing date of these loans was in March, which was later extended to April 30 and then to May 31 in the wake of Covid-19 situation. The farmers are now waiting for the outcome of the meeting between the Finance Minister and heads of nationalised banks for a favourable decision, he said. Meanwhile, the pepper market in Kochi continues to remain steady in the last few days at ?310 for ungarbled, as buyers are hesitant to purchase at higher rates, while sellers are not ready to liquidate at discount prices. The off-take on Monday was 15 tonnes and the complete lockdown imposed in Kerala on Sunday's hit pepper arrivals. Those who managed to load the stock on Monday morning could able to bring the commodity to the terminal market, Shamji said. - Business Line
🍒 BFIL facilitates ?100 cr of transactions through rural distribution service points : Bharat Financial Inclusion Ltd (BFIL), an arm of IndusInd Bank, has facilitated financial transactions worth over ?100 crore through its wide network of rural distribution service points (RDSP) in Karnataka, Odisha, Maharashtra and Bihar. These RDSPs, also known as ‘Bharat Money Store’, is a business innovation by BFIL that offers the convenience of facilitating deposits and withdrawals for the rural population based in remote locations of the country.With the help of a Bharat Money Store, rural villagers can now walk into their nearest kirana/merchant store to make basic financial transactions like repaying loans, depositing money, withdrawing cash, and making utility and other kinds of bill payments. Bharat Money Stores are supporting the government’s efforts at encouraging the usage of the Direct Benefit Transfer (DBT) model by enabling withdrawal at their neighbourhood shop for over four lakh beneficiaries in Karnataka, Odisha, Maharashtra and Bihar. - Business Line
🍒 IDBI Federal Life Insurance net rises 22 per cent to ?162 crore in FY20 : IDBI Federal Life Insurance reported a 22 per cent increase in its net profit to ?162 crore in 2019-20. “This is the eight consecutive year of profit for the organisation since it first declared profit in 2012-13,” the private sector life insurer said in a statement on Monday.However, its total premium declined 4.65 per cent to ?1,843 crore in 2019-20 from ?1,933 crore in 2018-19.Renewal premium grew 14 per cent year-on-year to ?1,282 crore last fiscal.“While 2019-20 has been a challenging year for the organisation, we have taken a number of steps to steady the course. We focussed on growing distribution footprint primarily through our proprietary channels, while continuing to strengthen bottomline parameters such as costs, surrenders, claims, profit after tax and solvency margin,” said Vighnesh Shahane, Managing Director and CEO, IDBI Federal Life Insurance.- Business Line
🍒 80% of older consumers to adopt digital payment in next 6 months: study : Capgemini Research Institute has come up with a study on Covid-19 and the financial services consumer analysing on how the global pandemic will change consumer behaviour in the financial sector. The institute stated that it has spoken to more than 11,200 consumers in early April 2020 from 11 countries including India, the USA, UK, and China. The study found that pandemic has hastened the shift towards digital payments, increased digital channel adoption, spurred consumer interest in savings, and safer investments. The key India findings from the report “Covid-19 and the financial services consumer: Supporting customers and driving engagement through the pandemic and beyond” including comparison with global counterparts are below: The shift towards digital payments in India is particularly striking when the evolvement of consumer behaviourcan be seen among different segments, including older consumers who have traditionally preferred cash for transactions.- Business Line
🍒 ICICI Bank cuts fixed deposit rates by 25-50 bps effective May 11 : ICICI Bank has cut fixed deposit rates by up to 50 basis points effective May 11. Deposits up to one year will now yield 5.25 percent while those above one year will earn 5.7-5.75 percent, according to the interest rate card on the bank's website. Earlier, the bank used to offer 25-50 bps more on these maturities. There is no real surprise in this rate cut. With no demand for credit in a locked down economy, banks are flush with liquidity and do not want further inflow of deposits. In other words, banks want to disincentivise the inflow of deposits by making the returns less attractive. It is not just about lacklustre credit growth. There is a general risk aversion among investors towards equities and mutual funds in a highly uncertain economic environment. Following the Franklin Templeton fiasco, there were heavy redemption pressures in mutual funds. In an uncertain environment, customers typically prefer safer avenues such as bank fixed deposits. - Moneycontrol.com
🍒 Sindhuja Microcredit raises $8.7 million in Series B round : Sindhuja Microcredit, a rural-focussed micro finance institution, has raised $8.7 million from Norway-based Nordic Microfinance Initiative (NMI) and Carpediem Capital in Series B round. The company, in its two years of operations, has provided microloans to over 84,000 self-employed women micro-entrepreneurs across five states in northern part of the country. It currently operates 56 branches with over ₹170 crore of assets under uanagement, the company said in a statement. - Business Line
🍒 Rural customers will bounce back faster: MFIs : Rural borrowers will recover faster from the national lockdown while those in urban areas could take more time to bounce back, believe microfinance institutions. At a webinar organised by Sa-Dhan on Monday, MFIs were also of the view that the three-month moratorium on loan repayments should be extended as borrowers could take some time to resume their livelihood, given that the lockdown has been extended till May 17.“The condition is serious at ground level more, so in the case of urban areas where there have been job losses….the situation in rural areas is better,” said Mukul Jaiswal, Managing Director, Cashpor Micro Credit.Venkatesh N, Managing Director, Samasta Microfinance, also said the situation is “murkier” in urbanised parts of States, while it is more favourable in rural areas. “Extension of the moratorium till June 30 will be more helpful as the lockdown will be lifted by May 17 and it will take time for people to get back to their livelihood,” Venkatesh noted.- Business Line
🍒 Atal Pension Yojana turns 5; e-APY to become reality this year, says PFRDA chief : You as a subscriber of Atal Pension Yojana (APY) — a government-backed pension scheme targeted at the unorganised sector — can soon make adjustments throughout the year to the defined monthly pension amount that you would want to receive on turning 60 years of age, a top official said. This will be a big benefit for APY subscribers as the option to increase or reduce the pension amount was hitherto available only in the first month (April) of the fiscal, Supratim Bandyopadhyay, Chairman, Pension Fund Regulatory & Development Authority (PFRDA) told BusinessLine. “We have now decided that an APY subscriber can upgrade or lower the pension amount that he is aiming for throughout the year. Initially, it was allowed in April. Anybody who misses April, they had to wait for the entire year before they could change it,” he said. - Business Line
🍒 Sensex ends 81 points lower; financial stocks drag : Benchmark Sensex gave up all its early gains to end 81 points lower on Monday, dragged by losses in financial stocks as lenders beefing up provisions against Covid-19 risks stoked slippages worry. Besides, spiking Covid-19 cases in the country and tepid cues from global markets weighed on investor sentiment. After gyrating over 800 points during the day, the 30-share index settled 81.48 points or 0.26 per cent lower at 31,561.22. Similarly, NSE Nifty fell 12.30 points, or 0.13 per cent, to 9,239.20. ICICI Bank was the top laggard in the Sensex pack, cracking over 5 per cent, followed by Kotak Bank, HUL, HDFC, IndusInd Bank, HDFC Bank and Nestle India.On the other hand, Hero MotoCorp, Bajaj Auto, Maruti, TCS and HCL Tech were among the gainers.
🍒 Indian rupee settles 19 paise lower at 75.73 against US dollar : The rupee slipped 19 paise to close at 75.73 against the US dollar on Monday as strengthening American currency overseas and rising coronavirus cases in the country weighed on investor sentiment. Forex traders said while positive domestic equities supported the local unit, market participants were concerned about the impact of spiking coronavirus cases on the economy. The local unit opened at 75.55, then lost further ground and finally settled at 75.73 against the greenback, down 19 paise over its previous close. It had settled at 75.54 against the US dollar on Friday.
🍒 Gold slips Rs 507 to close at Rs 45,785 per 10 gram, jewellers reopen some stores : Gold prices slipped Rs 507 to Rs 45,785 per 10 gram in the Mumbai bullion market on a stronger dollar. However, the precious metal was getting support on the downside from the reemergence of a new wave of coronavirus infection being reported in some countries. The US dollar index, measured against a basket of six currencies gained 0.37 percent to 100.14. The rate of 10 gram 22-carat gold in Mumbai was Rs 41,939 plus 3 percent GST, while 24-carat 10 gram was Rs 45,785 plus GST. The 18-carat gold quoted at Rs 34,339 plus GST in the retail market. Silver prices rose Rs 600 to Rs 43,200 per kg from its closing on May 8.
🍒 Shares of Central Bank of India in Stock Market : 75% of moneycontrol users recommend buying Central Bank of India in stock market. In BSE, shares closed at Rs.14.80 against Prev Close Rs.14.75. In NSE, shares closed at Rs.14.70 against Prev Close Rs.14.80..
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