Category: Finance

Certification must for AIF Manager’s investment team: SEBI

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

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Securities Exchange Board of India (SEBI) has amended rules making it mandatory for at least one key personnel within an investment team of an Alternative Investment Fund (AIF) manager to obtain requisite certification.

The new requirement is aimed at boosting competency and professionalism in the AIF space.

In a notification dated May 10, SEBI said, ”At least one key personnel, amongst the associated persons functioning in the key investment team of the Manager of an Alternative Investment Fund, shall obtain certification from the National Institute of Securities Market (NISM) by passing the NISM Series-XIX-C.”

To give this effect, the Securities and Exchange Board of India (SEBI) has amended AIF rules.

The new rules have been made applicable from the same date.

Through this requirement of certification for key personnel, the capital markets regulator is looking to ensure a higher proficiency in managing AIFs.

Last month, SEBI announced that certain changes in the private placement memorandum of AIFs can be submitted directly to the regulator rather than through a merchant banker in a bid to facilitate ease of doing business.

Also, the move is aimed at rationalising the cost of compliance for alternative investment funds.

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

Indian banks’ underwriting standards at risk amid rapid consumer loan growth: Fitch

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

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Asset quality of Indian banks’ consumer loans has held up well so far, but an accumulation of ”untested risks” due to rapid growth may challenge lenders’ underwriting standards and risk controls, Fitch Ratings said on Monday.

”Fitch’s assessment of Indian banks’ risk profiles also factors in lower transparency in terms of data disclosures on retail underwriting, such as loan-to-value ratio, borrower debt serviceability, credit bureau scores, and recovery rates, than most Asian banking systems,” the rating agency said in a statement.

Indian banks have reported strong loan growth over the last few quarters, boosted by consumer spending amid firm economic growth.

Banks’ loans rose 19% in the two weeks to April 19 from a year earlier, latest data from the central bank showed.

Retail loans, or loans given to consumers, which constitute about 10% of all bank loans, have grown at an annual rate of 20% since 2020-21, Fitch estimates.

Most lenders have reported an improvement in their asset quality, but have banked on unsecured credit to expand margins.

The Reserve Bank of India (RBI), in November, increased risk-weights on certain loan categories to improve buffers against the potential for build-up of risks. It has also applied business restrictions on certain entities in case of supervisory concerns, and is proposing to increase provisioning on project finance.

While the RBI’s measures can foster greater caution towards risk-taking, their effectiveness ”through the cycle” is not yet proven, Fitch said.

Asset quality pressures from the previous credit cycle are subsiding, creating a favorable business environment. Still, loss absorption buffers, particularly at state-run banks, remain ”moderate” against high concentration risks and renewed interest towards sectors such as infrastructure and construction, Fitch said.

Banks’ risk appetite through higher loan growth will remain a key consideration for their intrinsic creditworthiness despite improved financial performance, it said.

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

RBI appoints R Lakshmi Kanth Rao as executive director

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

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The Reserve Bank of India (RBI) on Friday (May 10) said it has appointed R. Lakshmi Kanth Rao as executive director (ED) with effect from May 10, 2024. Prior to being promoted to ED, Rao was serving as chief general manager-in-charge in the Department of Regulation.

Rao has experience of over three decades in the Reserve Bank of India (RBI), having worked in the areas of regulation of banks and NBFCs, and supervision of banks and consumer protection.

He had served as banking ombudsman at RBI Chennai and as regional director of Uttar Pradesh at the Lucknow office. He has also served as a member of several committees and working groups and has been contributing to policy formulation.

Also Read: RBI tells NBFCs to ‘strictly adhere’ to cash disbursal limits as per IT rules

As executive director, Rao will look after Deposit lnsurance and Credit Guarantee Corporation, the Right to lnformation Act (FAA) and the Department of Communication.

Rao is a graduate of commerce. He holds a master’s degree in business administration (finance) from Sri Venkateswara University, Tirupati and a diploma in TIRM (IIBF). He is also a certified associate of IIBF.

Also Read: RBI bars Kotak Bank from onboarding new online customers, issuing new credit cards

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

AMFI to soon unveil guidelines to curb front-running and insider trading in mutual fund houses

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

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The Association of Mutual Funds in India (AMFI) will introduce a standardised operating procedure (SOP) for asset management companies (AMCs) within a month. This will be in order to curb potential market abuse, including front-running and insider trading, AMFI Chief Executive Venkat Chalasani said while making the monthly mutual fund data announcement.

This decision follows a directive from the Securities and Exchange Board of India (SEBI) on April 30, urging AMCs to establish a structured institutional mechanism for identifying and deterring market abuse.

SEBI will outline broad guidelines, with AMFI tasked to develop specific standards.

The regulator aims to enhance surveillance and internal control procedures within AMCs to detect misconduct and prevent misuse of sensitive information.

Additionally, SEBI plans to increase accountability among AMC management for any instances of misconduct.

To ensure transparency and accountability, AMCs will be required to implement a whistle-blower mechanism. This mechanism is intended to encourage employees to report any suspicious activities without fear of reprisal.

The need for such measures became apparent following instances where mutual fund employees were implicated in front-running trades for personal gain.

In response, SEBI imposed stricter norms on MF staff and fund managers. At present, AMC employees must document all face-to-face communications during market hours, including those that occur outside the office.

However, SEBI may grant exemptions to these requirements once the institutional mechanism is in place.

Previously, SEBI had brought mutual fund units under its prohibition of insider trading regulations to prevent employees and key staff from engaging in dealings based on unpublished price-sensitive information (UPSI).

Certain cases revealed key personnel redeeming their holdings in schemes before information was shared with other unit holders, prompting regulatory action.

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 to delay payments market cap, helping Walmart-backed PhonePe, Google Pay

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

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India will again delay caps on market share for a popular digital payments method, two sources told Reuters, benefiting Google Pay and Walmart-backed PhonePe as the authorities prioritise growth over concerns about market concentration.

The National Payments Corporation of India (NPCI), the quasi-regulator, will extend by as much as two years a year-end deadline to cap at 30% the market share of any company processing payments via the Unified Payment Interface (UPI), the sources with direct knowledge of the matter told Reuters.

PhonePe’s share of UPI payments has risen to 48.3% from 37% in April 2020, while Google Pay’s share has declined to 37.4% from 44%, according to NPCI data.

The two processed a combined 11.5 billion transactions in April, the data showed.

NPCI and Google Pay declined to comment.

PhonePe did not respond to an email seeking comment.

India launched UPI in 2016 but barred companies from charging for the instant digital payments service in an effort to promote online transactions and reduce the use of cash in Asia’s third-largest economy.

Because they cannot charge for it, India’s banks and others like Meta-owned WhatsApp and Amazon Pay have not pushed UPI-based payments aggressively, leaving authorities worried about a concentration risk.

While their apps do not earn money from the payments, PhonePe and Google Pay have been able to use their UPI customer base to sell services such as loans and insurance.

NPCI, which has a regulatory mandate from the central bank, announced the 30% cap in 2020 but later extended the deadline by two years to the end of 2024.

The deadline will have to be extended again, said one of the sources, as it is not possible for PhonePe and Google Pay to reduce their market shares without hurting UPI payments growth.

A final decision on the extension will be communicated closer to the deadline, said the sources, who asked not to be identified because they are not allowed to speak to the media.

NPCI had hoped for more competition when WhatsApp was permitted to offer UPI-based payments in February 2020, but the company had just 0.2% market share as of April.

India’s Paytm, with the third-highest share, has experienced a decline in payments processed through its platforms after regulators placed curbs on a group entity.

Payment firms want the market-share cap removed, asking NPCI to let them charge for UPI payments to encourage competition, said an official at a payment company.

The government will decide whether to allow firms to charge for UPI payments, the two sources said, but one said NPCI does not favour removing the share cap.

The volume of UPI transactions rose 49.5% in April from a year earlier, less than the 54% rise logged March.

The central bank met on Tuesday with industry executives to brainstorm on ways to expand the UPI user base, which was about 300 million users and 50 million merchants late last year, according to the most recent data.

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

PNB shares rise after strong Q4 results; Some brokerages still stick to ‘sell’ recommendation

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

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Shares of Punjab National Bank (PNB) rose nearly 2% on Friday (May 10), following the announcement of its robust performance in the fourth quarter of the financial year 2023-24. The bank’s net profit more than doubled year-on-year to ₹3,010 crore.

According to the bank, this growth was underpinned by various strategic measures and improvements in asset quality. However,  even with the positive market sentiment, brokerages expressed varying perspectives on PNB stock.

Kotak Institutional Equities analysts reiterated a ‘sell’ rating on PNB, citing a recent sharp rally in the stock. The brokerage valued the bank at 1x BVPS (adjusted) and 8x March 2026E EPS, projecting a target price of ₹105 per share.

Kotak’s assessment hinges on the expectation of a 12% return on equity (RoE) in the medium term.

Similarly, Nirmal Bang also advocated a ‘sell’ stance on PNB, setting a target price of ₹110 per share, reflecting a downside risk of over 12% from current levels.

While analysts revised earning estimates for FY26 upward by 3.5%, they underscored concerns regarding the forecasted return on asset (RoA) and return on equity (RoE) for the financial year 2025-26.

Conversely, Jefferies upgraded its recommendation on PNB to ‘Buy,’ raising the target price to ₹145 per share.

Jeffries highlighted the bank’s fourth-quarter profit, which surpassed estimates due to lower credit costs and higher other income.

Moreover, this brokerage emphasised the stability in asset quality, with negative net slippages and a robust coverage ratio of 88%. It foresee a potential increase in RoA, buoyed by a probable decline in the tax rate.

In contrast, Morgan Stanley (MS) remained cautious on PNB, maintaining an ‘underweight’ call with a target price of ₹70 per share.

Despite steady asset quality and improved coverage, MS pointed out a core pre-provision operating profit miss due to higher provisions related to employees. Additionally, the brokerage expressed concerns over expensive valuations, indicating a preference for an underweight position.

In response to the earnings and market dynamics, Atul Kumar Goel, MD, and CEO of Punjab National Bank, emphasised the bank’s consistent loan growth, in-line with previous quarters, and provided guidance for FY25, including a net interest margin target of 2.90%-3%. Goel was sharing insights on the bank’s performance in an interview with CNBC-TV18.

Goel highlighted expectations of recoveries, a strong balance sheet for provisions, and strategic focus areas for loan growth, such as retail, agriculture, and MSME sectors.

At the time of writing this report, the shares of PNB were trading 1.72% higher at ₹124.15 apiece on the BSE.

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

Life insurance April premiums look better than what they are. Here’s why

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

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Life insurance industry posted a robust business performance in April. The total premium collection for the life insurance industry (private + LIC) surged by 61% compared to the same month last year.

This strong growth was primarily driven by a 113% increase in premium collection by the Life Insurance Corporation of India (LIC) in April 2024.

Private players also saw growth, with their premium collection rising by 17% in April 2024.

While the business performance appears strong when viewed in isolation for April, considering the favorable base effect from April 2023 alters the narrative for many life insurance companies, revealing weaker aspects.

For HDFC Life Insurance, premium collection grew by only 4% in April 2024, which is notably weak.

Furthermore, when contextualised with the base effect, the weakness becomes more pronounced.

HDFC Life’s premium collection in April 2024 increased by 4% against a favorable base of just 0.5% growth in April 2023, resulting in a net premium collection growth in the low single digits.

Annualised Premium Equivalent (APE) for HDFC Life grew by 21%, with a base growth of 5%.

Additionally, on the Retail APE side, HDFC Life recorded a 30% premium increase in April 2024 with a base growth of 7%. While HDFC Life experienced weak premium collection growth, it showed strong APE and Retail APE growth.

Similarly, for ICICI Prudential Life Insurance, total premium collection in April 2024 grew by 28%, but April 2023 saw a 17% contraction in premium collection. Factoring in the base effect, the net premium collection growth for ICICI Prudential Life was only in the mid-single digits.

Total APE growth for ICICI Prudential Life in April 2024 stood at 36%, with a favorable base of negative 22%. Retail APE growth for the company was a robust 72% in April 2024 over a contraction of 31% in April 2023.

Despite the favorable base in Retail APE, April 2024 still saw strong growth. For ICICI Prudential Life, April exhibited weak premium and APE growth but strong Retail APE growth.

For Max Life Insurance, total premium collection in April 2024 grew by 41% on a flat base, indicating a net premium collection increase of over 20%.

Total APE and Retail APE grew at 35% and 32%, respectively, against a base contraction of negative 1% and negative 4%. April proved to be an all-round positive month for Max Life Insurance, with strong premium and APE growth along with solid Retail APE growth.

SBI Life Insurance saw premium collection grow by 26% in April 2024 compared to 8% growth in April 2023, resulting in an average net premium growth of 17%.

Total and Retail APE premium collections for SBI Life were at 21% and 20%, respectively, against a base of negative 7% and negative 5%. April 2024 represented a strong month for premium growth for SBI Life, with weak growth seen in Total and Retail APE.

Finally, LIC exhibited a premium collection growth of 113% in April 2024. Despite facing an extremely supportive base of negative 51% in April 2023, the net premium growth for LIC exceeded 30%.

LIC’s Total APE in April 2024 grew by 31%, albeit on a weak base of negative 21%, while its Retail APE increased by 18% in April 2024 against a base that contracted by 5%. April 2024 was characterised by very strong premium growth for LIC, with weak total and retail APE growth.

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

Interview: SBI has ₹4 lakh crore worth of loan proposals in pipeline, says Chairman Dinesh Khara

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

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The State Bank of India (SBI) announced its financial results for the fourth quarter on Thursday, May 9. The state-owned lender’s profits rose by 24% over the previous year, far above street estimates.

Net interest income (NII) inched up by more than 3% year-on-year, while asset quality improved, and advances in deposit growth were positive as well.

Speaking to CNBC-TV18, Chairman Dinesh Kumar Khara stated he expects growth in advances to continue.

He added that SBI has ₹4 lakh crore worth of loan proposals in the pipeline.

Khara also discussed the bank’s stance on RBI’s draft project financing rules.

Here are the edited excerpts:

Q: SBI’s advances growth looks strong, at 5% sequentially. What target do you have for FY25 considering your pipeline, both in the private and government sectors?

A: We anticipate similar trends in advances growth, around 16%, across corporate, SME, retail, and agriculture sectors. The GDP growth outlook supports this confidence. Capacity utilisation has improved to 35%, and working capital facilities have increased by over 10%. Additionally, our unavailed term loans decreased to about 18%. These factors, coupled with a pipeline of ₹4 lakh crore worth of proposals, indicate promising growth for the current financial year.

Q: Your capital adequacy stands at 14.28%, comfortable for a ₹37 lakh crore book. What growth rates can this level of capital support, and when might you consider raising equity?

A: With our current capital adequacy, we can support a growth of up to 20%, equivalent to ₹7 trillion. However, we’ll monitor capital requirements closely, ensuring our Return on Equity (ROE) exceeds loan book growth. We plan to raise tier-I capital this year and may consider further capital raise if needed, though profit plough-back remains a viable option.

Q: Deposits have grown by over 11% year-on-year this quarter. Do you expect this growth rate to continue?

A: Term deposits grew by about 16%, largely due to increased interest rates introduced in October. We anticipate sustained deposit growth and aim to enhance it further through strategic actions in savings and current accounts.

Q: Despite the size of your book, gross slippage remains relatively low. Where do these slippages originate, and do you foresee improvement in FY25?

A: Slippages mainly stem from agriculture and SME sectors. Of the ₹3,886 crore slippages in the last quarter, we’ve already recovered over ₹886 crore. We aim to maintain tight control on slippages going forward.

Q: You closed the year with recoveries and upgrades exceeding ₹11,400 crores. What are your expectations for FY25, especially regarding recovery from large accounts?

A: FY25 may see a slight reduction in recoveries due to fewer high-value accounts in our NPAs and AUCA book. However, we’ll leverage all resources to maximize recovery efforts.

Q: Considering the current deposit cost plateau, do you foresee maintaining or expanding current margin levels?

A: Market uncertainties necessitate cautious underwriting to ensure asset quality. While I refrain from over-committing, our focus remains on prudent management to sustain or enhance margin levels.

Q: Regarding RBI’s draft proposals on project finances, what impact do you foresee on SBI, especially in terms of additional provisioning?

A: The 5% increase in general provisions, if implemented, will likely be phased over three years, providing adequate adjustment time. While the discussion is ongoing, we’re not overly concerned about its impact.

Q: Some stakeholders suggest these guidelines might affect sentiment around project financing. What’s your view on RBI’s approach?

A: Lenders must account for risk premiums adequately to avoid adverse outcomes. Mindful pricing should mitigate concerns surrounding project financing.

Q: You mentioned areas of improvement for SBI. Can you elaborate on these and what to expect for FY25?

A: Efforts to strengthen the CASA ratio are underway, focusing on supporting savings and current accounts. Initial progress is promising, and we aim to harness the collective energy of our branch network to drive deposit growth.

ALSO READ | SBI share price can go up to ₹1,000, say analysts post Q4 results

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

RBI’s draft norms on project financing will not impact credit cost: Canara Bank

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

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Satyanarayana Raju, Managing Director and CEO of Canara Bank, on Thursday (May 9) said the Reserve Bank of India’s (RBI) proposed regulations on project financing will not significantly affect the net interest margin (NIM) or credit costs of the lender.

“We have passed on RBI’s burden to customers,” Raju told CNBC-TV18.

Despite FY24 being labelled as the toughest financial year for the bank, he remained optimistic about Canara Bank’s ability to navigate challenges effectively.

Expressing the need for clarifications from the RBI, Raju stated, “There are several clarifications we need from RBI,” hinting at ongoing discussions between the regulatory authorities and financial institutions to address concerns and ensure a smooth transition.

Addressing concerns about project finance, Raju conveyed confidence in the bank’s ability to sustain its support for project financing initiatives.

“We don’t see an impact on project finance or projects coming up for financing,” he assured.

Regarding other financial indicators, Raju provided insights into Canara Bank’s corporate book, stating that it stands at ₹3.6 lakh crore, with a significant portion dedicated to state government lending and project finance.

Despite acknowledging the burden imposed by RBI’s regulations, Raju asserted that the bank is resilient and remains committed to its customers.

Further, the bank’s MD discussed lender’s performance metrics, including the bank’s NIM and the gold loan book, which currently stands at ₹1.51 lakh crore.

He noted a shift in the bank’s strategy regarding interest subvention on gold loans, expecting a slowdown in gold loan growth. However, he expressed openness to exploring opportunities in the gold financing sector, especially in light of potential restrictions faced by non-banking financial companies (NBFCs).

Looking ahead, Raju projected optimism regarding Canara Bank’s credit growth, highlighting incremental growth in advances in April 2024. He said, “Don’t expect loan growth below 12% for FY25.”

In the financial results for the March 2024 quarter, Canara Bank reported a net profit of ₹3,757 crore, marking an 18% year-on-year increase.

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

Home First Finance to open 20-25 branches a year

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

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Home First Finance Company aims to open around 20-25 branches a year, said MD and CEO Manoj Viswanathan in an interview with CNBC-TV18.

The company has 321 touchpoints currently and it aims to take it up to 400 in the times to come, he added.

This affordable housing financier reported a 31% increase in net profit over last year at ₹84 crore for January-March period.

He believes the demand on the ground has been fairly strong. “Post-COVID we saw a surge in interest in the construction of houses, purchase of houses.”

For April-March 2024-25, Viswanathan expects loan growth of more than 30%.

Also Read | Home First Finance rises 4% on insurance regulator’s composite license approval

After general elections 2024, he also expects some schemes to boost affordable housing. “That is likely to give further thrust to the momentum, which is there in the industry already,” he said.

The average ticket size is at ₹12-13 lakh, he said.

He expects the cost-to-income ratio to be around 33-35%. In the fourth quarter, the cost-to-income ratio was around 34%.

The current market capitalisation of the company is ₹7,748 crore.

For more, watch the accompanying video

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