It may be a 'no-go' for banking licences to large industrial houses.
Auto-debit payment bounces have gone up for the second consecutive month in May, emphasising the stress building up due to a halt in economic activities as authorities lock down various parts of the country to stop the spread of the virus in the second wave. According to the National Automated Clearing House (NACH) data, in May, of the 85.7 million transactions initiated, 35.91 per cent, or 30.8 million transactions, failed.
The committee said that to qualify as an NBFC-MFI, an NBFC should provide financial services predominantly to low-income borrowers.
To further strengthen the supervision on non-banking entities (NBFCs), the Reserve Bank on Tuesday issued revised guidelines on a Prompt Corrective Action (PCA) framework for such companies, excluding government-owned ones, effective from October 1, 2022, on the lines of what it had introduced for banks in 2002. The RBI came up with stricter supervisory norms under the PCA framework for banks after their bad loans mounted and balance-sheets bled badly. This involved restricting them from fresh lending, brand opening and, hiring, among others. The RBI said the revised PCA framework is also applicable to all deposit-taking non-banking financial companies (NBFCs), all non-deposit taking NBFCs in the middle, upper and top layers, including investment and credit companies, core investment companies, infrastructure debt funds, infrastructure finance companies and microfinance institutions.
All BSE sectoral indices ended in the red, with oil and gas, bankex, capital goods and finance falling up to 3.04 per cent.
For now, the concerns over bad loans have taken a back seat; a bigger challenge for the banking community is credit growth, explains Tamal Bandyopadhyay.
Stocks such as ICICI Bank, Axis Bank, State Bank of India, Bank of Baroda and HDFC Bank are among the top banking picks of analysts for 2017. A decline in cost of funds and treasury gains are expected to help stabilise their net interest margins
Superseding the boards of two non-banking financial companies (NBFCs) in the Srei group will neither create liquidity challenges for sound entities, nor build systemic crises because the markets have factored in the problems with the Kolkata-based firms. Such regulatory steps will help in making the NBFC space more robust, bankers and market experts said. The action should have begun earlier because the Reserve Bank of India (RBI) had done a special audit last financial year and asked the group to make provisions for assets considered stressed, analysts said.
Stemming from the default of IL&FS in September, on various debt instruments including commercial papers, bonds and loans, the financial sector has been facing a liquidity crunch for the last eight to ten weeks.
Gold loan is currently the fastest-growing loan category (among the various types disbursed to individuals). On February 26, 2021, the outstanding loan against gold jewellery stood at Rs 56,596 crore. By February 25, 2022, it had risen to Rs 71,408 crore, a year-on-year growth of 26.2 per cent, according to the Reserve Bank of India's (RBI's) data. Several factors are driving the demand for gold loans.
The RBI is of the view that it cannot carry out satisfactory due diligence for granting registration because the funding is from a jurisdiction that has been identified by FATF as having weak measures to combat money laundering and terrorist financing.
To meet the financing requirements of the infrastructural deficit, many more institutions are required to share this responsibility, Chidambaram said on Tuesday, while launching operations of India's first Infrastructure Debt Fund under the NBFC Structure by handing over the First IDF -- NBFC License to the Promoters of India Infra Debt Limited -- ICICI Bank, Bank of Baroda, Citibank and Life Insurance of Corporation.
Reliance Capital Ltd (RCL), part of the debt-ridden Anil Ambani-promoted Reliance Group, has received 10 more bids, including from SBI Life, for its subsidiaries, sources said. Earlier this month, the Committee of Debenture Holders had extended the last date for submission of expression of interest (EoI) to December 17, 2020. Following this, 10 new bids have come in for Reliance Capital's assets, taking the total number of bids to 70, the sources said.
Reserve Bank allowed banks to invest in long-term infrastructure bonds.
The Ministry of Corporate Affairs had taken various steps to protect small investors.
At least a 25 basis points hike can be expected on the October 5 policy
Allotment could be low, and expected listing-day gains can quickly morph into losses if sentiment takes a turn for the worse
After banks, it is now the turn of non-banking finance companies (NBFC) to see a spike in loan defaults and provisioning for non-performing assets ( NPAs ).
Top gainers in the Sensex pack were TCS, Bharti Airtel, Infosys, Axis Bank, L&T, ITC, PowerGrid, HCL Tech and Tata Steel, ending up to 2.39 per cent.
The Reserve Bank of India has issued several warnings that the public should not fall prey to such unscrupulous activities and verify the companies offering loans online and through apps.
Amid slowdown blues, the government has unveiled a raft of measures over the past few months aimed at improving liquidity in the system, moderating interest rates as well as credit growth apart from addressing stress in the NBFC sector.
Fitch reaffirmed India's rating at 'BBB-' with a Stable Outlook saying the rating balances a still strong medium-term growth outlook compared with similar category peers and relative external resilience stemming from solid foreign-reserve buffers against high public debt, a weak financial sector and some lagging structural factors, including governance indicators and GDP per capita.
The demand environment is expected to improve over the next three quarters, aided by a recovery in demand from the construction sector, following release of payments to contractors after elections.
Reserve Bank of India Deputy Governor M Rajeshwar Rao on Wednesday said while the central bank will foster growth in the microfinance (MFI) sector, the lenders in the space should not throw caution to the wind to achieve higher asset growth and returns. MFIs should not try to mimic the strategies of mainstream finance, as those serving the microfinance borrowers have a greater need to balance the social objectives with their lending operations, he said.
'The government is trying to kickstart the investment cycle in India and while the corporate investments are yet to gather momentum, there are early signs of the same.'
What is a non-banking financial company (NBFC)? How does it differ from a bank? Get the answers to these and many more questions on NBFCs.
Customers are increasingly preferring to pay through EMIs while buying high-value consumer items, as affordability has become a key factor in the post-pandemic scenario, payments solution provider Ezetap said on Thursday. Buying ability of consumers across the country has been significantly reduced due to the pandemic. They are either avoiding a single big payment or entirely skipping to buy any new item, Ezetap said.
Nearly three-fourths of the debt money, as of April 30, 2019, was invested in securities with duration of less than three years.
'Periods of high volatility are usually bad for mid-caps and this is something that has to be kept in mind.' 'Focus on quality is of paramount importance.'
63 Moons Technologies that has a claim of Rs 200 crore from Dewan Housing Finance, which is being taken over by the Piramal Group for as low as Rs 37,500 crore against a total claim of close to Rs 85,000 crore, on Tuesday said it will challenge the resolution at the NCLAT shortly. On Tuesday, making an about-turn, the Mumbai bench of the National Company Law Tribunal (NCLT) chaired by HP Chaturvedi and Ravikumar Duraisamy, allowed Piramal Group to take over DHFL under the bankruptcy code for as low as Rs 37,500 crore against a claim of close to Rs 85,000 crore. It had on May 25 asked the committee of creditors to consider the Wadhawans offer of paying back almost Rs 93,000 crore to the lenders and creditors, which was stayed by the NCLAT after the Pirmal group challenged it.
In HDFC Life, the company has to pare 1.43 per cent, and in HDFC Ergo, it has to pare only 0.58 per cent.
More and more PE players are willing to test the waters now, just in case they become early entrants in a future booming business.
'The economy is expected to bounce back and things are expected to recover faster than what we previously thought.'
While lenders create a hype around the services offered on digital platforms, customers think otherwise, given that frustration due to the quality of service has only increased, over the years.
A lot depends on how Srei shapes up under the new administrator and his team, which is critical for investors' interest.
The Nifty Bank index has come off 15 per cent from its peak in February, underperforming the benchmark Nifty which is down 6%.
A bunch of CEOs in their mid-30s and early 40s are trying to rectify the scenario where shady lending applications trap hapless borrowers with astronomically high interest rates and even bodily harm if the money was repaid. Anup Roy reports.
A series of steps taken by the government to promote ease of doing business and liberalisation of foreign direct investment norms have helped India receive record FDI inflows so far this year, and implementation of measures like PM Gati Shakti, single window clearance and GIS-mapped land bank are expected to further push investments in 2022. Notwithstanding the global slowdown and the COVID-19 pandemic, total foreign direct investments into India rose to a record $81.72 billion in 2020-21. During April-July this fiscal, FDI (foreign direct investment) into the country increased by 62 per cent to $27.37 billion.
'It is easy to dramatise the events of today, but it is far more important to focus on the fact that we have a radically overvalued financial sector. It is a house of cards.'
'When an institution believes its knowledge and capability is superior to everyone, it behaves like a frog in the well.' 'And this is precisely the cause for the mess,' says J N Gupta.
