Author: Nazim Khan

Coronavirus impact: Zerodha mandates work-from-home for all employees

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

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Discount broker has asked all its 1,200 employees to start working from home in light of the coronavirus outbreak.

“For smooth business continuity, the safety of our employees, and to reduce the chance of any virus spreading due to working in large groups at our offices, we’re executing a mandatory work from home for our entire team of ~1200. Will share details soon,” tweeted Nithin Kamath, Co-Founder of Zerodha.

Zerodha may be the first large Indian company to announce a company-wide work-from-home policy, though several others have selectively rolled out the option for employees.

Recently, Google’s parent Alphabet announced that it had asked all employees working in north America, a majority of its over 1,00,000 staff, to work from home.

The coronavirus outbreak, which was yesterday dubbed a pandemic by the WHO, has created large-scale caution among the general public, and authorities have imposed several restrictions to limit gathering of crowds.

Yesterday, India suspended all visas for foreign visitors, except critical ones.

The economic impact of the coronavirus outbreak has roiled financial markets worldwide. The Sensex today fell about 3,000 points, the worst single-day fall in absolute terms.

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

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

Coronavirus: Delhi shuts all theatres, and schools & colleges where no exams are being held, till March 31

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

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Delhi Chief Minister Arvind Kejriwal today announced that all cinema halls, and all schools and colleges with the exception of those that are conducting exams, will remain closed till March 31.

Kejriwal added that more than 500 beds have been readied in hospitals to deal with the coronavirus outbreak, which has been declared a global pandemic by the WHO.

All public places such as malls etc will have to be disinfected compulsorily, the Delhi CM said.

“We held a meeting with the [Delhi] Lieutenent-General. The Delhi government is ready to deal with this situation,” Kejriwal said.

The move is aimed at limiting large public gatherings to avoid the spread of the novel coronavirus (Covid-19).

The outbreak has resulted in large scale upheaval, with more than 1,20,000 people infected and more than 4,200 dead, majorly in China where it originated.

But it has been spreading in several countries, with more than 70 confirmed cases in India.

Besides, the economic impact of coronavirus has taken a toll on several sectors that typically depend on large gatherings, such as theatres, aviation industry and restaurants among others.

It has also caused jitters in financial markets globally. The Sensex today fell nearly 3,000 points, the worst single-day fall ever.

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

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

IndusInd Bank chief Romesh Sobti writes to customers: Rumours about bank’s health unfounded

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

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Amid a heavy sell-off in shares of IndusInd Bank, CEO Romesh Sobti wrote to customers saying that rumours about the health of bank were unfounded and that IndusInd “remains focussed on building scale with profitability, on a platform of strong capitalisation/liquidity and high credit ratings.”

IndusInd Bank shares have fallen about 55 percent from a 52-week high of Rs 1,834 per share. In today’s trading, they are down nearly 5 percent to Rs 810.

The state of some private banks in India has caused jitters among customers and investors after the Yes Bank episode, which operations had to curtailed by authorities to prevent a collapse.

But in his letter to customers, Sobti, remarked that IndusInd remains healthy. He also denied rumours that IndusInd was considering investing in Yes Bank.

Below is the full text of the letter written by Romesh Sobti to customers, as disclosed by IndusInd Bank to exchanges.

“As you are aware, there are some financial market issues affecting a private sector bank that has been highlighted in the press; these are issues specific to that entity and are being dealt with by the RBI/Government so as not to pose a systemic risk. Similarly, there are challenges in terms of environmental issues caused by the spread of Coronavirus to address which, various initiatives have been, and are being, taken so as to ensure that employees and customers remain safe. We hope these issues pass soon.

Meanwhile, despite these pockets of external turbulence, Induslnd remains focussed on building scale with profitability, on a platform of strong capitalisation/liquidity and high credit ratings. In this regard, please find enclosed a synopsis of the Bank’s profile and latest quarterly financial results as at December 31, 2019 by way of further amplification.

A few highlights about Induslnd Bank, which is a NIFTY 50 company:

• Amongst the large peer private sector banks:
  – We rank in the top 3 in terms of the metrics for revenue growth, deposit growth, net interest margin, pre-provision profitability,
  – Stable loan book quality with second-lowest Gross NPA percentage
• In several product categories such as Commercial Vehicles, Microfinance, Gems & Jewellery’, we are a top 3 market player to name a few’ areas. The quality of these portfolios is stable and better than industry.
• Over 40% of the Bank’s Loan Book is devoted to small ticket “livelihood loans” helping customers mostly in rural and semi-urban areas earn a livelihood through micro & small business finance.
• Induslnd has grown to almost 5,000 distribution points serving 25 million customers through 30,000 employees; earning recognition as “Dream Employer of the Year” and various awards for banking innovation, including India’s first interactive credit card.

We are shortly unveiling our next 3-year plan which will include a deep focus on Rural India, capitalising on our areas of domain expertise such as Vehicle Financing, harnessing the power of our large and growing network, building scale in some subscale retail products like credit cards, increasing participation in deposit segments such as NRI/Wealth Management and making our assets/liabilities more granular in their make-up. All of this will be underpinned by a digital DNA to drive revenues, efficiencies and customer experience. We believe this strategy will continue to drive value for our shareholders, customers and employees.

Once again, we would like to take this opportunity to emphasise that the Bank is well capitalised with a CRAR of 15.43% (incl. 9MFY20 profits), maintains a liquidity coverage ratio between 100% to 120% on a daily basis and the entire top management remains solidly committed, under the new leadership, to drive sustainable growth and maintain a fundamentally strong institution.

Rumours abounding in the social media are highly misplaced and speculative/motivated and not grounded on factual information. Amongst these unfounded rumours is speculation on our investment in Yes Bank. We have neither contemplated nor evaluating any such investment.

Yours truly,
Romesh Sobti

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

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

Coronavirus symptoms: 52 labs in India where you can get tested

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

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The Indian Council of Medical Research (ICMR) has an approved list of 52 labs where individuals suspected of having novel coronavirus (Covid-19) symptoms can be tested.

The outbreak, which was classified as a pandemic by the World Health Organisation (WHO) yesterday, has seen at least 60 confirmed cases in India, with the latest coronavirus case cropping up in Mumbai yesterday.

ICMR has on its website put up a map and a list of all the sites where individuals can get tested for the virus.

Below is the full list of

Andhra Pradesh:
1. Sri Venkateswara Institute of Medical Sciences, Tirupati
2. Andhra Medical College, Visakhapatnam, Andhra Pradesh
3. GMC, Anantapur, AP

Andaman & Nicobar islands
4. Regional Medical Research Centre, Port Blair, Andaman and Nicobar

Assam
5. Gauhati Medical College, Guwahati
6. Regional Medical Research Center, Dibrugarh

Bihar
7. Rajendra Memorial Research Institute of Medical Sciences, Patna

Chandigarh
8. Post Graduate Institute of Medical Education & Research, Chandigarh

Chhattisgarh
9. All India Institute Medical Sciences, Raipur

Delhi-NCT
10. All India Institute Medical Sciences, Delhi
11. National Centre for Disease Control, Delhi

Gujarat
12. BJ Medical College, Ahmedabad
13. M.P.Shah Government Medical College, Jamnagar

Haryana
14. Pt. B.D. Sharma Post Graduate Inst. of Med. Sciences, Rohtak
15. BPS Govt Medical College, Sonipat

Himachal Pradesh
16. Indira Gandhi Medical College, Shimla, Himachal Pradesh
17. Dr.Rajendra Prasad Govt. Med. College, Kangra, Tanda, HP

Jammu and Kashmir
18. Sher‐e‐ Kashmir Institute of Medical Sciences, Srinagar
19. Government Medical College, Jammu

Jharkhand

20. MGM Medical College, Jamshedpur

Karnataka
21. Bangalore Medical College & Research Institute, Bangalore
22. National Institute of Virology Field Unit Bangalore
23. Mysore Medical College & Research Institute, Mysore
24. Hassan Inst. of Med. Sciences, Hassan, Karnataka
25. Shimoga Inst. of Med. Sciences, Shivamogga, Karnataka

Kerala
26. National Institute of Virology Field Unit, Kerala
27. Govt. Medical College, Thriuvananthapuram, Kerala
28. Govt. Medical College, Kozhikhode, Kerala

Madhya Pradesh
29. All India Institute Medical Sciences, Bhopal
30. National Institute of Research in Tribal Health (NIRTH), Jabalpur

Meghalaya
31. NEIGRI of Health and Medical Sciences, Shillong, Meghalaya

Maharashtra
32. Indira Gandhi Government Medical College, Nagpur
33. Kasturba Hospital for Infectious Diseases, Mumbai

Manipur
34. J N Inst. of Med. Sciences Hospital, Imphal‐East, Manipur

Odisha

35. Regional Medical Research Center, Bhubaneswar

Puducherry

36. Jawaharlal Institute of Postgraduate Medical Education & Research, Puducherry

Punjab

37. Government Medical College, Patiala, Punjab
38. Government Medical College, Amritsar

Rajasthan
39. Sawai Man Singh, Jaipur
40. Dr. S.N Medical College, Jodhpur
41. Jhalawar Medical College, Jhalawar, Rajasthan
42. SP Med. College, Bikaner, Rajasthan

Tamil Nadu
43. King’s Institute of Preventive Medicine & Research, Chennai
44. Government Medical College, Theni

Tripura
45. Government Medical College, Agartala

Telangana
46. Gandhi Medical College, Secunderabad

Uttar Pradesh
47. King’s George Medical University, Lucknow
48. Institute of Medical Sciences, Banaras Hindu University, Varanasi
49. Jawaharlal Nehru Medical College, Aligarh

Uttarakhand
50. Government Medical College, Haldwani

West Bengal
51. National Institute of Cholera and Enteric Diseases, Kolkata
52. IPGMER, Kolkata

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

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

Govt suspends all except key visas till April 15, asks Indians to avoid non-essential travel

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

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The Ministry of Health announced a slew of measures to contain the outbreak of novel coronavirus (Covid-19), including suspension all visas, except diplomatic, official, UN/International Organizations, employment, project visas, till April 15.

It also advised all Indians to avoid non-essential travel abroad and said inbound travellers to India from select countries, including Indian citizens, after February 15 will be quarantined.

Below is the full text of the Ministry of  Health’s announcement.

1.    All existing visas, except diplomatic, official, UN/International Organizations, employment, project visas, stand suspended till 15th April 2020. This will come into effect from 1200 GMT on 13th March 2020 at the port of departure.

2.    Visa free travel facility granted to OCI card holders is kept in abeyance till April 15th 2020. This will come into effect from 1200 GMT on 13th March 2020 at the port of departure.

3.    Any foreign national who intends to travel to India for compelling reason may contact the nearest Indian Mission.

4.    All incoming travelers, including Indians, arriving from or having visited China,Italy,Iran,Republic of Korea, France, Spain & Germany after 15th Feb, 2020 shall be quarantined for a minimum period of 14 days.

5.    The above will come into effect from 1200 GMT on 13th March 2020 at the port of departure

6.   Incoming travelers, including Indian nationals, are advised to avoid non-essential travel and are informed that they can be quarantined for a minimum of 14 days on their arrival in India.

7.    Indian nationals are strongly advised to avoid all non-essential travel abroad. On their return, they can be subjected to quarantine for a minimum of 14 days.

8.    International traffic through land borders will be restricted to Designated check posts with robust screening facilities. These will be notified separately by M/o Home Affairs.

9.    Provision for testing primarily for students/compassionate cases in #Italy Italy to be made and collection for samples to be organized accordingly. Those tested negative will be allowed to travel and will be quarantined on arrival in India for 14 days.

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

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

Coronavirus outbreak: Google’s parent asks all North American employees to work from home

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

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Tech giant Google’s parent Alphabet has asked all its north American employees to work from home till at least April 10 in a bid to reduce density at its offices and prevent the spread of the novel coronavirus (Covid-19), ZDNet reported quoting the company.

Most of Alphabet’s 100,000 plus employees work in the US.

With this announcement, the company has become the first tech firm to announce work from home for its workforce across an entire continent.

“Out of an abundance of caution, and for the protection of Alphabet and the broader community, we now recommend the you work from home if your role allows,” CNN reported Chris Rackow, Google’s vice president of global security, as saying in an email.

Alphabet’s decision comes in the wake of a spike in cases of coronavirus in the US, which has now seen 900 fasee and 30 deaths.

Other tech firms such as Amazon and Microsoft too have asked their staff in select cities to work from home if their roles allow it.

The coronavirus outbreak has been picking up in most countries, except China — the worst-affected — where it appears to have levelled out.

Globally, over 119,000 cases have been reported with over 4,200 fatalities.

In India, more than 60 cases have been reported with the latest case appearing in Mumbai today.

Among tech companies, Paytm and Mindtree have said that one of their employees had tested positive.

Paytm had asked its Gurugram staff to work from home.

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

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

India’s top banks, investors line up to pump in funds in Yes Bank; SBI may pour in $1 bn

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

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As the plan to resuscitate Yes Bank gathers pace, CNBC Awaaz has learned that the lender is expected to attract investments from marquee names in the financial and investment industry.

Sources told CNBC Awaaz’s Yatin Mota that SBI is set to invest as much as Rs 5,000-7,000 crore, a sum that will be matched by a clutch of foreign institutional investors (FIIs) and private-equity (PE) funds.

The list of investors does not end there: the ICICI and HDFC Groups, which run some of India’s most successful franchises, are also set to invest Rs 700-1,000 crore each in Yes Bank.

Funds from billionaire investors Rakesh Jhunjhunwala and RK Damani, to the tune of Rs 300-500 crore each, may also find its way to Yes Bank, sources said.

The proposals have been sent to Reserve Bank of India (RBI), which will review and decide by March 12 whether to grant approvals. If approved, an announcement could come in this week, the source added.

RBI will take a call on the pricing and the quantum of investments.

The government last week imposed a moratorium on Yes Bank, capping withdrawals at Rs 50,000 for a month, while the RBI superseded its board and appointed a nominee.

The drastic measure came after mounting losses threatened to create a run on the bank.

The government and RBI also asked SBI to invest in Yes Bank, as a measure of confidence, to save the lender from what could have, absent action, potentially resulted in a catastrophic outcome.

Authorities since, including FM Nirmala Sitharaman and RBI Governor Shaktikanta Das, have said the focus of the rescue plan would be to ensure the bank remains a going concern and the interest of the depositors are protected.

Yes Bank administrator Prashant Kumar today told CNBC-TV18 that he was aiming to have the moratorium on withdrawals lifted to as early as this week, much ahead of the government-imposed April 3 deadline.

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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

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

Motor third party insurance premiums may go up by up to 15% from April 1

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

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The Insurance Regulatory and Development Authority of India (IRDAI) has proposed a hike in motor third party premium for FY20-21. Motor Third Party rates are applicable on all segments of automobiles and are revised every year.

The IRDAI, following the directions of the Supreme Court, has mandated the purchase of long-term third party motor insurance policies of 3-year duration for four-wheelers and 5 years for two-wheelers.

Through its latest consultation paper, the IRDAI proposed a motor TP premium hike across cars and two-wheelers of various engine sizes.

Insurance Regulator suggests higher Motor Third Party premium for FY21. Avg premium increase of over 10% across motor industry @CNBCTV18Live @CNBCTV18News @CNBC_Awaaz #insurance #motorinsurance #IRDAI pic.twitter.com/OOqWE68HzX

— Yash Jain (@YashJain88) March 9, 2020

For all segments of private commercial vehicles, the Motor TP premium has been proposed to be hiked by 2%.

IRDAI also proposed raising the Motor TP rate for electric cars and two-wheelers. The three-year single TP premium may also be raised to Rs 5,167 from the existing Rs 4,493 for private electric cars not exceeding 30 kilowatts (KW). In case of two-wheelers (not exceeding 3 KW), the new Motor TP premium may go up to Rs 1,040 from the current Rs 888.

The rate increase has also been proposed for taxis, buses and trucks. All stakeholders have been asked to submit their comments on the consultation paper by March 20.

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

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

Coronavirus shock, oil price plunge pummel world stocks

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

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Global stock markets plunged on Monday and crude oil prices tumbled by as much as a third after Saudi Arabia launched a price war with Russia, sending investors already spooked by the coronavirus outbreak fleeing for the safety of bonds and the Japanese yen.

European stocks suffered hefty losses and a 7% slide in the S&P 500 at the open on Wall Street triggered a circuit-breaker put in place after the financial crisis a decade ago, halting U.S. stock trading for 15 minutes.

The 10-year U.S. Treasury note’s yield slid as low as 0.318% – a level unthinkable just a week ago – as investors rushed to cut risk assets and snap up safe-havens.

The rout’s depth, sparked after Saudi Arabia stunned markets with plans to hike oil production sharply following the collapse of The Organization of the Petroleum Exporting Countries’ supply-cut agreement with Russia, unnerved investors.

“The oil price plunge adds a huge disruptive dynamic to markets that are already very fragile,” said Paul O’Connor, head of multi-asset at Janus Henderson.

“We are seeing this week, finally, a full-scale liquidation and signs of capitulation, full-scale panic – we see this in every asset,” O’Connor said.

Jim Vogel, interest rate strategist at FHN Financial in Memphis, Tennessee, said that “nobody thought that Saudi Arabia would start a price war. Suddenly you have to re-evaluate what else could impact this.”

Saudi Arabia’s grab for market share was reminiscent of a drive in 2014 that sent prices down by about two-thirds, while the renewed plunge on Wall Street came exactly 11 years after U.S. stocks touched bottom during the financial crisis.

Brent and U.S. crude futures slid $14 a barrel to as low as $31.02 and $27.34 in volatile trade.

Both crude benchmarks recouped some losses but were still off almost 20% – on track for their biggest daily fall since 1991, the start of the first Gulf War.

The Dow Jones Industrial Average fell 1,280.4 points, or 4.95 percent, to 24,584.38. The S&P 500 lost 143.44 points, or 4.83 percent, to 2,828.93 and the Nasdaq Composite dropped 372.11 points, or 4.34 percent, to 8,203.51.

Equity markets in Frankfurt and Paris tumbled about 8.5% and London tanked 12%. Italy’s main index slumped almost 15% after the government over the weekend ordered a lockdown of large parts of the north of the country, including the financial capital, Milan.

The pan-regional STOXX 600 fell into bear market territory – a drop of more than 20% – from an all-time high in February. Oil stocks sank, with Premier Oil down 54% and energy giant BP 20% lower.

The losses in Europe followed sharp declines in Asia. MSCI’s broadest index of Asia-Pacific shares ex-Japan lost 4.4% in its worst day since August 2015 and Japan’s Nikkei dropped 5.1%. Australia’s commodity-heavy market closed down 7.3%, its biggest daily fall since the 2008 global financial crisis.

‘DO SOMETHING!’

Investors piled into safe-haven debt, driving the 30-year U.S. Treasury yield below 1% on bets that the Federal Reserve will cut interest rates by at least 75 basis points when policy-makers meet next week.

The Fed last week cut rates by half a percentage point after an emergency meeting.

Katie Nixon, chief investment officer at Northern Trust Wealth Management in Chicago, said people know the turbulence will pass as in past crises and that ultimately, markets recover, but emotions can overcome rational behavior.”Our hearts, however, tell us to, ‘Do something!’ The sense of market chaos feeds into our most damaging behavioral biases,” Nixon said in a note to high net-worth clients.

The number of people worldwide infected with the coronavirus rose above 110,000, and 3,800 have died from the virus.

There were mounting worries that U.S. oil producers carrying a lot of debt would be made uneconomic by the price drop.

The mood was also hit by North Korea’s firing three projectiles off its eastern coast.

BOND BONANZA

The European Central Bank meets on Thursday and will be under intense pressure to act, but rates are already deeply negative.

The 10-year Bund yield – the euro zone’s leading safe asset – fell to a record low of -0.863%, while inflation expectations for the euro zone sank below 1% for the first time.

Data suggested the global economy toppled into recession this quarter. Figures from China over the weekend showed exports fell 17.2% in January-February from a year earlier.

The fall in U.S. yields and Fed rate expectations pushed the dollar to its largest weekly loss in four years before it recovered some ground.

The dollar extended its slide to 101.20 yen, depths not seen since late 2016. It was last down nearly 3% at 102.34.

The euro shot to the highest in over 13 months at $1.1492 and was last at $1.1431.

Gold initially cleared $1,700 per ounce to a seven-year peak, only to fall back to $1,669.02 amid talk some investors were selling to raise cash to cover margin calls in stocks.

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

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

YES Bank’s AT-1 debtors contest RBI decision to write off bond value

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

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The decision of the Reserve Bank of India (RBI) to write down the value of Yes Bank’s Additional Tier-1 (AT-1) bonds, worth Rs 8,415 crore, to zero has prompted bondholders to take the legal route.

Axis Trustee, in its capacity as the debenture trustee of the two tranches of AT-1 bonds in question, has filed the case on behalf of the bondholders.

The Bombay High Court will hear the matter on Wednesday, March 11 at 11 am.

In its petition to the Bombay HC, Axis Trustee said that AT-1 bonds ought to remain active as Yes Bank is still a going concern, financial speak for a company whose operations are still on.

Following the 2008 financial crisis, AT-1 bonds emerged as an instrument to help banks keep some cushion in case of large losses. These are typically perpetual bonds that can be written down in case of risk of liquidation even ahead of equity holders, as per Basel III norms.

Due to their higher risk compared to regular bonds, investors charge a premium to invest in AT-1 bonds.

But Axis Trustee argued in its petition that global best practices treat AT-1 bonds as senior or superior to equity and therefore, at best bondholders cannot be treated differently than equity stakeholders. As a result, it said that AT-1 bonds can be written down only when equity is completely eroded.

“Since the Reserve Bank of India’s draft restructuring scheme does not contemplate write-off of equity capital, the equity stakeholders will benefit from any turnaround, including the promoter family, which holds 8% in Yes Bank,” Axis Trustee argued in its petition. CNBC-TV18 has seen

The petition also said that RBI acted in haste in finalising the draft scheme as feedback window of 72 hours included a weekend.

This short notice, it said, deprives stakeholders of making comprehensive representations. As well, the petition points out that RBI is required to frame a scheme in the interests of the bank’s creditors but the consequences of the current draft are fait accompli to bondholders.

The implications of the Reserve Bank’s decision are big.

As of February 23, 2020, there are about Rs 91,000 crore worth of AT-1 bonds issued by various banks, which are outstanding. Of this, private banks account for Rs 38,000 crore.

An adverse ruling will cause AT-1 as a source of capital raising to likely dry up especially for the lower-rung banks.

It may also lead to a crisis of confidence among retail investors who have invested in these bonds either directly or via mutual funds and even through the employee provident fund.

Yes Bank AT-1 Bonds: Who owns how much?

Instrument 1 (Size: Rs 3,000 crore)

• Franklin MF – 20%
• UTI MF – 10%
• Barclays Bank PLC – 8%
• Nippon India MF – 7%
• Bajaj Allianz Life Insurance – 6%

Instrument 2 (Size: Rs 5,415 crore)

• Nippon India MF – 42%
• Indiabulls Housing Finance – 12%
• Chanakya – 6%
• Reliance Nippon Life Insurance – 5%

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

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