SEBI lens on alternate investment funds — experts discuss pros and cons

SEBI

[wealthdesk shortname=”Shriram Trans” isinid=”INE721A01013″ bseid=”511218″ nseid=”SRTRANSFIN” sector=”Finance – Leasing & Hire Purchase” exchange=”nse”]

Capital markets regulator SEBI has raised questions over a popular trend in the debt markets, whereby loans are restructured by alternate investment funds (AIFs), set up by private equity firms along with non-banking financial companies (NBFCs).

In an interview to CNBC-TV18, Srini Sriniwasan, MD of Kotak Investment Advisors; Umesh Revankar, VC and MD of Shriram Transport Finance; and Ananth Narayan, Professor, SPJIMR, spoke at length about the consequences.

First up, Sriniwasan said, “This is an elegant solution and it is important to understand that subscribers to an AIF — be that an NBFC or other investor — are sophisticated investors.”

Also Read: Bourses and people dealing in securities to pay 18% GST on all Sebi charges

Meanwhile, Revankar said, “We are into retail lending and in retail lending, we do not see any kind of scope and opportunity for such kind of a deal.”

Also Read: Sebi allows AIFs and VCFs to invest in overseas investee companies but with riders

However, Narayan said no one can have a problem with any kind of restructuring, “The broader problem is, when the restructuring happens or when a fresh refinancing happens, is there a proper valuation of original exposure and is there a proper disclosure around what this means to the original exposures?” he said.

For the entire discussion, watch the accompanying video

Experts weigh in on surveillance measures post SEBI action on Franklin Templeton AMC

mutual fund

Market regulator SEBI has come down heavily on Franklin Templeton Asset Management Company (FT-AMC), by transferring the fund management and advisory fee of the last two years to aggrieved investors. A move, which is certain to provide some solace to unitholders of the six shuttered schemes.

In an interview with CNBC-TV18, Ananth Narayan, Professor at SPJIMR, and Mahendra Jajoo, CIO-fixed income at Mirae Asset Investment Managers, discussed at length the move.

First up, Narayan said, “I am encouraged by the surveillance measures taken up by SEBI (with regard to the FT India case) and a lot of other steps that have been taken. Therefore, I am sure we will end up with an industry, which is in a stronger place than it was 18 months ago.”

Meanwhile, Jajoo said, “Categorising debt mutual funds (MFs) further as a step in the right direction. This is as clear as it can be in terms of classifying and offering a simple understanding of the features of the fund, including risk-return profile.”

For the entire discussion, watch the video.

RBI’s first policy decision of FY22; experts discuss inflation, bond market, deposit rates

rbi building

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) kept the repo rate unchanged in the first bi-monthly monetary policy meet for the financial year 2021-22. With no change this time as well, the repo rate currently stands at 4 percent. The reverse repo rate has been maintained at 3.35 percent.

In an interview to CNBC-TV18, Ananth Narayan, professor at SP Jain Institute of Management and Research (SPJIMR); Neeraj Gambhir, president, head-treasury & markets at Axis Bank; Rahul Bajoria, chief India economist at Barclays; Pronab Sen, former chief statistician; and Ashwini Kumar Tewari, MD of State Bank of India (SBI); discussed at length the RBI’s expected interventions in the bond market.

Gambhir said, “It is as dovish a policy as it can get in the current circumstances and the RBI has gone the extra mile as far as reassuring the market is concerned, the fact that they will be there to support both the bond market as well as the foreign exchange (FX) market.”

Meanwhile, Bajoria said, “The RBI has tried to balance the short-term interest of the heightened uncertainty around growth with giving assurance on the liquidity front.”

Narayan said that the RBI is trying to manage the conflicting environment. “The governor repeatedly said during the press conference that RBI is trying to manage conflicting targets and requirements and that’s the real dilemma in the medium-term for the RBI.”

According to Tewari, there is not going to be any reduction in deposit rates. “I do not think we are going to see any reduction in deposit rates; they have already bottomed out in my view. Inflation expectations or inflation – where it stands and the projections as have been given; I think there is no case for a reduction in deposit rates,” he said.

For entire discussion, watch the video

 5 Minutes Read

Is current account surplus good or bad? Experts discuss

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Summary

India posted a current account surplus in the April, May and June quarter. This is for the first time in seventeen years that India has posted a current account surplus. Sajjid Chinoy, Chief India Economist at JPMorgan, Samiran Chakraborty, Chief Economist – India at Citi and Ananth Narayan, professor of Finance at SP Jain Institute of Management and Research (SPJIMR) discussed in detail.

India posted a current account surplus in the April, May and June quarter. This is for the first time in seventeen years that India has posted a current account surplus. The negative from this is that it has come from a very sharp drop in imports because of economy’s inability to consume. However, the positive, some economists say, is that it makes it easy for government to run up a larger fiscal deficit. How was the fiscal deficit connected to current account surplus and more importantly will the current account surplus situation continue?

Sajjid Chinoy, Chief India Economist at JPMorgan, Samiran Chakraborty, Chief Economist – India at Citi and Ananth Narayan, professor of Finance at SP Jain Institute of Management and Research (SPJIMR) discussed in detail.

“We think the current account surplus will sustain at least for this fiscal year. This year we are quite certain that we will get a surplus of 1.5 percent of gross domestic product (GDP), next year if the economy recovers faster and households have more confidence about the future then you would expect them to mark savings rates down,” said Chinoy.

“The longer the shock perseveres and the more uncertainty there is about the future, the higher will savings rate be for the private sector and that should all else equal result in a lower current account balance,” Chinoy added.

“Our number is 1.2 percent of GDP but next year I think it will depend a lot on these nominal variables, gold prices, oil prices etc,” said Chakraborty.

“What we are seeing this year is a forced austerity shock because of the COVID situation. This year will be a current account surplus, I think it will be closer to 2 percent of the GDP,” said Narayan.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
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New SEBI risk-o-meter significant for debt mutual funds: Experts

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Summary

The new risk-o-meter introduced by SEBI will drive home the point to investors that higher returns come with higher risks, Ananth Narayan, Associate Professor, Finance SPJIMR said in a panel discussion on CNBC-TV18. “One of the issues that AMCs had in the past that you have investors asking for higher returns without recognizing that that …

The new risk-o-meter introduced by SEBI will drive home the point to investors that higher returns come with higher risks, Ananth Narayan, Associate Professor, Finance SPJIMR said in a panel discussion on CNBC-TV18.

“One of the issues that AMCs had in the past that you have investors asking for higher returns without recognizing that that will only come if you have a higher risk. So hopefully, when you have a scurry for returns, the fact that the risk is also going up either through credit risk or liquidity risk will show up prominently and therefore, investors will be better informed and will be able to take a better decision,” Narayan said.

He said the new mechanism would be greatly help investors in debt funds.

“Take debt fund for instance, much of the issues around credit risk and for that matter liquidity risk is dependent upon the rating of the paper as well as nature of the paper whether it has any bespoke structure embedded etc,” he said.

“If I have to think like a crook on how I make credit fund look safer than it is; it is probably by cutting down on duration, but remember duration has lesser weightage as far as the risk-o-meter is concerned. Liquidity is given the primary importance which means if there are issues that come up there, it will straight away show up in my risk and will overwhelm any duration risk.”

Sandeep Parekh, Managing Partner, Finsec Law Advisors agreed with the points made by Narayan.

“It’s something which is going to be true to label,” Parekh said, “..so whether you are looking at duration or the risk-o-meter; essentially the fact is that the investors will get a better sense of what they are buying.”

Swarup Mohanty CEO, Mirae Asset Global Investments said that funds will now have a risk history since the risk report will be made public monthly. Mohanty did not see any operational problems in implementing the new risk-o-meter and said the regulation will be quite significant for debt mutual funds.

Watch video for more

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
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Franklin Templeton closure: Expect RBI, govt to step in, says Ananth Narayan

Franklin Templeton mutual funds

Franklin Templeton closing six of its schemes was not about bad credit but heavy redemptions had made the situation challenging amid the coronavirus crisis, said Ananth Narayan, professor, SPJIMR, adding that he expects the RBI and government to step in to ensure liquidity.

Franklin Templeton Mutual Fund on Thursday announced the closure of its six credit funds due to liquidity issues amid the coronavirus crisis.

The funds that will be shut are Franklin India Low Duration Fund, Ultra Short Bond Fund, Short Term Income Plan, Credit Risk Fund, Dynamic Accrual Fund, Income Opportunities Fund, the company said in a statement.

“I do expect the RBI and maybe the government to step in right now. Fundamentally, the problem is that the liquidity in the secondary market for corporate debt stays limited. Last month in March, the redemptions from the non-liquid, non-overnight funds which is about Rs 7 lakh crore of AUM of mutual funds itself was over Rs 1 lakh crore. In addition, because of the global risk-off, you saw FPI selling bonds as well. So the system is simply not geared towards handling these kind of redemptions at one shot. This is not about insolvency or about bad credit,” Narayan said.

“I think the whole market was a non-AAA space. There has been so much fear that extended lockdown will result in some of these non-AAA companies moving from a liquidity situation to maybe an insolvency situation — that has resulted in a run on the Franklin Templeton ,” added Dhruv Mehta, chairman of Foundation of Independent Financial Advisors.

 5 Minutes Read

Rate cut needed to soothe market nerves; need more fiscal measures to ensure financial stability, say experts

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

 Listen to the Article (6 Minutes)

Summary

Rate cuts cannot revive the economy and cannot bring demand at this point in time. The point is that we are not trying to address the economy. Of course the economy requires other steps, largely fiscal to take care at this point in time, said Ananth Narayan, professor at SPJIMR.

With the markets significantly down, the already slowing economy futher getting impacted by the coronavirus scare, what is it that the country’s central bank and central government can do to help better the situation and more importantly what steps need to be taken to tackle the finance dislocation that is underway in the debt markets is the big question.

To discuss this in detail and get answers to few of the questions, CNBC-TV18 spoke with Ananth Narayan, professor at SPJIMR; market expert V Srinivasan and Neeraj Gambhir, president and head-treasury at Axis Bank.

Gambhir said the market has been asking for a rate cut for a while. The expectations have been built-up. The MPC did not deliver it the last time and there was a disappointment around this. “We do need at least a 50 basis points cut, if not more. This is just to calm the nerves in the market and say that this was expected, this is delivered and the RBI is watching and acting as required,” he added.

“The open market operation of Rs 10,000 crore is quite small. We need a commitment to do more open market operations over the period of next 5-7 weeks as this problem persists and a commitment to say that if required we will do more,” said Gambhir, adding that we don’t need liquidity from central bank because there is plenty of liquidity around.

“Therefore, this open market operations is not to take care of the liquidity aspect of the system. The open market operations is to provide a bid in the market as far as government bond market is concerned, to make sure that the rates do not fly at this point in time and give the confidence to the market,” he further added.

Srinivasan said liquidity is not reaching the pockets where it is most needed. “So you need to address pockets which need liquidity right now and try and provide direct assistance and not provide system liquidity because when you are providing liquidity to the system, the system liquidity is abundant but it is not flowing through the pipe to people who need it,” he added.

Speaking about rate cut and liquidity measures, Narayan said, “Rate cuts cannot revive the economy and cannot bring demand at this point in time. The point is that we are not trying to address the economy. Of course the economy requires other steps, largely fiscal to take care at this point in time.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

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today's market

index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
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RBI announces liquidity measures: Here’s what bankers, economists make of it

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Summary

“The message to the Yes Bank depositors is very clear that RBI is right behind it and the central bank will ensure, come what may that the money given by the depositor is not going to be lost, said Keki Mistry, VC & CEO of HDFC;.

In a press conference today, the Reserve Bank of India (RBI) governor Shaktikanta Das said the revival plan announced for Yes Bank was a credible one and will work. He also assured that depositors money was safe. With regards to COVID-19, he said they were ready to take necessary steps at the appropriate time.

The RBI announced another round of USD 2 billion dollar-rupee swap on March 23 and up to Rs 1 lakh crore of long-term repo operations as and when the market needs it.

Keki Mistry, VC & CEO of HDFC; HR Khan, former deputy governor of RBI; Ananth Narayan, professor at SPJIMR; Sanjeev Sanyal, principal economic adviser and Jayesh Mehta of Bank of America spoke at length about the announcements made by the RBI governor with regards to liquidity in an interview with CNBC-TV18.

Mistry said, “I don’t think doing a knee-jerk reaction of cutting rates at such short notice would have made that much sense. To my mind this is right. The governor has said that he is going to review this from time to time and he will do whatever it takes to ensure that the system functions properly.”

On Yes Bank he said, “The message to the Yes Bank depositors is very clear that RBI is right behind it and the central bank will ensure, come what may that the money given by the depositor is not going to be lost and the depositor can feel confident. I think this brings a lot of confidence to the depositors.”

According to Mistry, Yes Bank will come out of this situation a lot stronger.

The governor made two important points, one was reassuring Yes Bank depositors and the other was he was right in emphasizing that state governments and state government agencies should be calm and confident about the health of the banks, whether they are private and public and they should not discriminate at this point of time. If the state government official or state government agencies were to withdraw money from private sector banks it would be disastrous because it could have financial stability implications, said Khan, adding that it would not right time for them to take out the plug and create instability.

Principal economic adviser Sanjeev Sanyal said, “As the governor pointed out clearly that using the long-term refinancing operation (LTRO) to keep the quantitative liquidity in the system as easy as possible is what we have done for now but that doesn’t mean anything else has been ruled out and he was quite clear about that.”

According to Mehta, the extra LTRO may not have immediate impact on the yield curve. “So whether it is on April 3rd or maybe before that, if policy rates are going to change then not much impact of 3 year money at this juncture to be borrowed; we don’t even know whether it’s one or two or 5 year swap but it will help at a margin,” he added.

Speaking about rate cut, Narayan said, “I continue to believe there is a good chance we see a rate action before April 3rd but today’s press conference did bring some doubts to my mind; the fact that he (the governor) seemed a little unsure about the timing and the fact that he also mentioned growth might not be impacted in India that much. He didn’t give a straight answer to dollar-rupee linkage to monetary policy question. So, while I still think he is a dove and wants to do as much as possible for the economy, but the confidence has come down; I still think though the rate action will happen before.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

 Daily Newsletter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Previous Article

Oil Fluctuates as Traders Assess China’s Vow, Unrest in Libya

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LIVE TV

today's market

index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
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 5 Minutes Read

Yes Bank rescue plan: Depositors need not worry, RBI to protect their interests, say experts

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Summary

This is the first time they have put a moratorium only for a period of one month, which basically means that they have got some very clear plans in mind, said VG Kannan, Former CEO of IBA.

The Reserve Bank of India (RBI) has taken control of the Yes Bank board for 30 days and imposed a moratorium from March 5 to April 3. Frantic depositors thronged Yes Bank branches and ATMs to withdraw their money.

Each depositor will be able to withdraw only up to Rs 50,000 till the moratorium is in place. However, depositors can withdraw up to Rs 5 lakh, or the amount lying in the account, whichever is less, in circumstances such as a medical emergency or marriage

Usha Thorat, Former Deputy Governor of Reserve Bank of India; Ananth Narayan, Professor at SPJIMR; VG Kannan, Former CEO of IBA; Deepak Shenoy, Founder of Capitalmind and Manoj Nagpal, MD and CEO of Outlook Asia Capital discussed what investors and depositors could do.

Thorat said that the depositors should not be worried. “RBI is there to protect the interest of the depositors. That is exactly what we did in the case Global Trust Bank (GTB). There are powers under the RBI Act, RBI has the power and I am sure it will do everything it can to protect the interest of the depositors,” she said.

Concurring with Thorat’s view, Ananth Narayan said that it does not matter whether your deposit amount is Rs 1 lakh or Rs 10 lakh. “RBI has made it extremely clear that depositors’ interest will be protected and so has the government. What Mrs Thorat said is absolutely right that the depositors need not worry. Other parts of the ecosystem might have to think about things, but depositors need not worry at all,” he said.

According to Kannan, RBI has clear plans and there is certainty in place. “This is the first time they have put a moratorium only for a period of one month, which basically means that they have got some very clear plans in mind. Hopefully the entire thing will not last longer. In the case of PMC, it was ‘till further orders’, here some sort of certainty appears to be in place,” he said.

Answering a query on auto debit facility and whether credit cards payments will bounce, Deepak Shenoy said, “From a perspective of debit, the rule applies across the board no matter how that debit happens, whether it is auto debit, a cheque, NEFT transfer or a debit on case of the IPO. The limit is Rs 50,000 and anything more than that will be rejected. I do not know how the implementation will be internally, but that is what RBI has said. So, I do not think any amount more Rs 50,000 will be allowed to leave the account in whichever manner it might choose to be transacted. So, the short answer in both cases is, it is not going to go through if it is more than Rs 50,000.”

Nippon India has written down the entire exposure that they had to Yes Perpetual bonds to zero. They have restricted the subscription. Speaking whether a similar route will be taken by other AMCs as well, Nagpal said, “People who have invested in debt mutual funds, there are approximately around 30-35 mutual fund schemes that have been impacted because of that and it is spread across 6-7 mutual funds. The largest exposure is Nippon Mutual Fund and the problem with them is that the exposure in some of their schemes is as high as 25 percent.”

“The Nippon Strategic Debt Fund has an exposure of almost 25 percent in this particular bond and they have taken a call that they have written it down to zero. In fact some of the other fund houses as well like Franklin Templeton Mutual Fund have written it down to zero yesterday,” added Nagpal.

However, since the exposure to the overall NAV of these bonds is 1-1.5 percent, they have not restricted any fresh inflows. Only, when it becomes a large part of your scheme – more than 10 percent of your scheme, which is the case with Nippon Mutual Fund in one of their schemes and in other schemes also it is almost touching 8-9 percent, hence they have restricted inflows to this entire thing, said Nagpal.

“My view is that out of the 30-35 schemes that will be impacted, almost 20-25 schemes have already taken a hit on this by writing it down to zero as a prudent measure, the valuation agencies have provided a cut down of another 25 percent, Nagpal said.

However,  most of the mutual funds have taken a very prudent view. These kind of bonds have exit clauses for both the existing bank and even if it is amalgamated into another bank, the other bank also has the option of not paying these bonds to the extent that it is there. Hence the risk on such bonds is fairly high of not getting the money back.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

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today's market

index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
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 5 Minutes Read

Yes Bank debacle: Rate cuts and extraordinary measures cannot be ruled out till April 3, says Ananth Narayan of SPJIMR

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

 Listen to the Article (6 Minutes)

Summary

Both rates cuts, as well as extra ordinary measures such as extension of the long-term repo operation (LTRO) can’t be ruled out between now and April 3rd, said Ananth Narayan, Professor, SPJIMR.

The government has effected moratorium on YES Bank from March 5 to April 3 on the recommendation of Reserve Bank of India (RBI). The order came into effect from 6 pm March 5. The private lender will not pay depositors more than Rs 50,000 during the moratorium period, irrespective of the number of accounts with the bank.

Discussing the impact of this on the currency market and his expectations from RBI on back of this developments, Ananth Narayan, Professor, SPJIMR said, “I do expect the RBI to be very vigilant on all markets right now. Governor Das has repeatedly told us that he is worried about financial stability, the health of the financial services ecosystem. With the Yes Bank debacle and with the possibility that there are still question marks about some banks and some other non-bank finance companies, I think RBI will be very vigilant.”

“Both rates cuts, as well as extra ordinary measures such as extension of the long-term repo operation (LTRO) can’t be ruled out between now and April 3rd,” he said in an interview with CNBC-TV18.

Let us not forget that we still have Federal Open Market Committee (FOMC) coming up on March 18th, which could see some additional cuts coming through, he said, adding that rate cuts would probably continue to try and give some ease to the system.

He further added, “On the foreign exchange (FX) markets things aren’t looking great despite oil prices coming down and globally soft commodity prices etc. There is an overhang of long rupee carry positions in India. Much of the dollars which have been accreted into RBI’s reserves are either unhedged foreign currency debt or simply speculate a long rupee positions or net exporter selling etc. that nervousness is there. I think the RBI will use its ample reserves to quieten the FX market as well.”

When asked if under current circumstances any  kind of measures would help,  he said, “I don’t think interest rates can help, it will be pushing on a string, the issues are elsewhere but at least in terms of sentiment the RBI will be careful. There are questions marks which are unresolved right now, what happens to the tier II bonds, credit spreads of other NBFCs which have been big issue will probably also go up, so given that kind of nervousness I think they will provide relief . But the solution is not rate cuts or sweet talk. At least now the need to recognise there is the bigger problem and take some severe action in terms of a onetime solution on the non-performing assets (NPAs) as well as banking reforms going ahead I hope they go down that path.”

Speaking about collateral damage of the Yes Bank debacle he said, “Unfortunately, the problem is not or the trust deficit is not limited to Yes Bank, Yes Bank was the most egregious of the lot but there are other banks, and other non-bank finance companies where there are questions marks as well. So all of them as a class could get affected as well. So, you will see the credit spreads going up, you will see question mark coming up. Overall it is not a great situation to be in but solutions do exist, hopefully Delhi will recognise them and take the adequate steps.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

 Daily Newsletter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Previous Article

Oil Fluctuates as Traders Assess China’s Vow, Unrest in Libya

Next Article

Shanghai residents turn to NFTs to record COVID lockdown, combat censorship

LIVE TV

today's market

index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
Quiz
Powered by
Are you a Crypto Head? It’s time to prove it!
10 Questions · 5 Minutes
Start Quiz Now
Win WRX (WazirX token) worth Rs. 1500.
Question 1 of 5

What coins do you think will be valuable over next 3 years?

Answer Anonymously

Should Elon Musk be able to buy Twitter?