31.01.2024 : Today’s Banking / Financial News at a Glance
🍒 Govt reshuffles top executives at IOB, BoB : The Union government on January 30 announced reshuffling of top executives at two state-run banks—Indian Overseas Bank (IoB) and Bank of Baroda (BoB). According to a notification by the Appointments Committee of the Cabinet which Moneycontrol has reviewed, Sanjay Vinayak Mudaliar, who is currently an Executive Director (ED) at IOB, has been moved to BoB as ED for the remainder of his term, which ends on December 31, 2025. Also, Joydeep Dutta Roy, who is currently ED at BoB, has been moved to IoB for the remainder of his term which is up to October 20, 2024, or until further orders, whichever is earlier, the Government said. – moneycontrol.
🍒 Banks’ CASA ratio to remain stressed : Banks are unlikely to get any respite from declining current account-savings account (CASA) ratio in the first half of the current calendar year. Bankers do not expect any improvement in CASA ratio in near term as high interest rates on fixed deposits will keep attracting funds from current and savings accounts. “The gap between interest on term deposits and saving accounts has increased too much. So, a part of the amount lying in savings account has moved to term deposits,” said Atul Kumar Goel, MD and CEO, Punjab National Bank, in an earnings call. “Customers who do not need funds immediately would like to move some money from savings account to term deposits, so the pressure is expected to remain on CASA ratio,” he added. – financial express
🍒 BOBCARD Ltd: BOB Financial Solutions announces rebranding with new logo and positioning statement : Bank of Baroda’s wholly owned subsidiary, BOB Financial Solutions Limited (BFSL), on Tuesday announced rebranding itself to BOBCARD Limited. The company revealed a new logo, aligned with the positioning statement “Credit Reimagined.” “Beyond a mere visual transformation, the rebranding of BOBCARD embodies a revitalized commitment to reimagine the country’s credit landscape with excellent credit solutions and customer-centric offerings. The new brand promise “Credit Reimagined” is a conviction of a customer-centric, solution-driven assistance that assures service through innovation,” the company said in a press release. – economci times.
🍒 Finance Minister to address RBI board on Feb 12 : Finance Minister Nirmala Sitharaman is scheduled to address the Reserve Bank of India’s central board on February 12 and highlight key points of the interim Union Budget. Sitharaman will present the sixth Budget on February 1, where she will outline the roadmap for 2024-25. In the post-budget meeting, the finance minister will address the board members and talk about announcements made in the interim Budget 2024-25. The meeting is being held shortly after the Budget session, as well as the last session of the 17th Lok Sabha, which comes to an end on February 9. – moneycontrol.
🍒 Banks’ robust health sets stage for decade’s next credit boom: FinMin ; The Finance Ministry said on Monday that the slew of measures undertaken over the past decade, including recapitalisation of banks and enabling the restructuring of industry, have positioned the economy for the next round of credit and investment growth this decade. “With stronger balance sheets in the non-financial corporate and banking sectors, growth in investments and credit are poised to increase in this decade, as is already evident in the data for the last three years,” said a new report titled ‘The Indian Economy: A Review’, released by the Department of Economic Affairs (DEA) in the Finance Ministry. – Business Line.
🍒 RBI to make available additional ₹5,000 cr to Standalone Primary Dealers under Standing Liquidity Facility : In view of the liquidity deficit in the banking system, the Reserve Bank of India (RBI) has decided to make available an additional aggregate amount of ₹5,000 crore to Standalone Primary Dealers (SPDs) under the Standing Liquidity Facility at the prevailing repo rate starting from January 31, 2024. The central bank took this decision based on an assessment of the prevailing and evolving liquidity conditions. The incremental limit for individual SPDs is being conveyed to them separately, RBI said. The repo rate (the interest rate at which banks draw liquidity from the RBI to overcome short-term liquidity mismatches) is at 6.50 per cent. – Business Line.
🍒 With use of AI in financial sector, concerns arise about transparency, privacy: RBI Dy Guv Patra : While society harnesses the benefits of emerging technologies in the financial sector, regulators should pay careful attention to the underlying risks, said RBI Deputy Governor MD Patra. Hence, central banks should focus on responsible use, data security and privacy, legal compliance, and ethical questions when it comes to these technologies. New age technologies such as application programming interfaces (APIs), artificial intelligence (AI) and machine learning (ML), biometric-based identification and authentication (biometrics), cloud computing (CC) and distributed ledger technology (DLT) are currently powering innovations in the financial sector worldwide. Patra underscored that with the increasing use of AI, concerns arise about transparency, data biases, governance, privacy and the robustness of algorithms. – Business Line.
🍒 AU SFB appoints former RBI deputy guv HR Khan as non-executive chairman : Private sector lender AU Small Finance Bank on Tuesday informed exchanges that it has appointed Harun Rashid Khan, former deputy governor of the Reserve Bank of India (RBI), as non-executive chairman following approval from the shareholders. The lender added that Khan’s tenure will begin from the date of taking charge, January 30, 2024, after approval from the Board of Directors and from the RBI and shareholders of the bank. – Business Standard
🍒 Ujjivan Small Finance Bank’s credit-deposit ratio comfortable, says MD : Ujjivan Small Finance Bank is comfortable with its current credit-deposit (CD) ratio of 89 percent, managing director Ittira Davis said, adding that the bank wants to avoid over-lending. In an exclusive interaction with Moneycontrol after announcing its October-December quarter results on January 28, Davis said the Bengaluru-based bank will keep its net interest margin guidance for FY24 at 8.9 percent to 9 percent. Davis said there was an 80 basis points (bps) impact on the bank’s capital ratio after the Reserve Bank of India increased the risk weight asset norms on personal, unsecured and other loans. – moneycontrol.
🍒 HDFC Bank holds 95% in HDB Financial. Not for much longer : HDFC Bank Ltd plans to sell some of its shareholding in subsidiary HDB Financial Services over some time, two people aware of the matter said on condition of anonymity. This will be done because the country’s largest private sector lender plans to get into similar lines of business as its subsidiary over the next few years and there could be overlaps. “HDB, as per regulations, has a listing requirement in calendar 2025. The bank currently holds HDB as a financial investment and will monetize over a period of time,” said the first person. “The bank does not appear to have taken a decision on the glide path towards the same.” – Live Mint.
🍒 HSBC fined £57 million by UK watchdog for mismarked deposits : HSBC Holdings Plc was fined £57.4 million ($73 million) by the UK for incorrectly excluding billions of pounds of its customers’ money from a depositor protection program. Imposing the penalty, the Prudential Regulation Authority said Tuesday that the lender failed to properly comply with deposit protection rules under the Financial Services Compensation Scheme over many years. The fine, PRA’s second highest, “reflects the seriousness of the failings” that occurred between 2015 and 2022, according to a statement from the arm of the Bank of England. – Live Mint.
🍒 NABARD to float bonds worth Rs 7,000 crore on January 31 : National Bank for Agriculture and Rural Development (NABARD) plans to raise up to Rs 7,000 crore through bonds maturing in five years, two months and 29 days, market sources have said. The bonds have a base issue of Rs 2,000 crore and oversubscription of Rs 5,000 crore as a greenshoe option. A greenshoe option gives the underwriter the right to sell investors more bonds than planned if the demand is higher than expected. The bidding for these bonds will take place on January 31 between 10.30 and and 11:30 am on the electronic bidding platform of BSE. – moneycontrol.
🍒 Bajaj Finserv health arm acquires Vidal Healthcare valued at Rs 325 crore : Bajaj Finserv Health, a wholly-owned subsidiary of Bajaj Finserv, on Tuesday acquired an entire stake in Vidal Healthcare Services at an enterprise value of Rs 325 crore. The Pune-based healthtech firm has a network of over 1,00,000 doctors, 5,500 labs and 2,100 hospitals. It is a partner with Ayushman Bharat Digital Mission and a key player in facilitating healthcare transactions on the unified health interface network as well. – economic times.
🍒 Bajaj Finance rejigs leadership team : In organisational changes, Bajaj Finance announced that executive director Rakesh Bhatt has resigned and decided to pursue new career pursuits outside the company after a 15-year tenure, a regulatory filing said. Bhatt will remain as an advisor to the company and will work with the MD till June 30, 2024. Executive director Anup Saha will be redesignated deputy MD and will oversee all the businesses of the company (excluding loan against securities and commercial lending). He will also have expanded functional responsibilities, assisted by three new COOs. Saha will continue to report to the MD. These changes will be effective from April 1, 2024. – financial express.
🍒 Muthoot Microfin lowers lending rates by 55 bps : Muthoot Microfin, the newly-listed lender to the bottom of the pyramid segment, has decided to reduce lending rates by up to 55 basis points on fresh loans to existing customers, after nearly two years of upward movement. This would not affect its net interest margin, which rose to 12.6% for the December 2023 quarter, as the lender managed to bring down its incremental cost of borrowing, chief executive Sadaf Sayeed said. – economic times
🍒 Muthoot Microfin Q3 net up 119% at ₹124.57 crore : Muthoot Microfin Ltd has reported a 119.06 per cent increase in net profit for the quarter ended December 31, 2023, at ₹124.57 crore (₹56.86 crore). The bottomline surge was aided by a 53.07 per cent increase in net interest income for the quarter under review at ₹343.07 crore (₹224.13 crore). This is the first quarterly results for the company after its recent public listing of shares. It had raised ₹960 crore through IPO. Asked as to what helped boost Q3 bottomline performance, Sadaf Sayeed, CEO, Muthoot Microfin, told businessline that the performance was bolstered by a 38.64 per cent year-on-year increase in gross loan portfolio at ₹11,458.14 crore (₹8,264.59 crore). – Business Line.
🍒 BFSI firms ramp up legal teams : Demand for specialist legal and compliance professionals has surged in the banking, financial services and insurance (BFSI) sector in the past one year with banks, non-banking financial companies (NBFCs), insurance and fintech companies beefing up their senior leadership teams, driven by an increasing need for regulatory adherence and zero tolerance from boards.There was a sixfold jump in managing director level movement in legal and compliance functions in the financial services sector in the past one year, according to data from executive search firm Native. Companies sought to bolster their in-house legal teams with chief legal officers, chiefs of compliance and general counsels amid a push from stricter regulatory guidelines, constantly evolving governance structure and accelerated digitisation of the legal system, according to industry experts. – economic times.
🍒 M&M Financial Services Q3 net down 12% on higher expenses, provisions : Mahindra & Mahindra Financial Services posted a net profit of ₹553 crore for Q3 FY24, down 12 per cent on year, largely due to a 16 per cent rise in total expenses at ₹753 crore. A jump in provisions and write-offs to ₹328 crore from ₹155 crore also weighed on the bottomline. Sequentially, the profit after tax was up over two-fold from ₹235 crore in Q2. Net interest income (NII) grew 10 per cent y-o-y and 8 per cent q-o-q to ₹1,779 crore. Net interest margin (NIM) for the quarter was at 6.8 per cent, up from 6.5 per cent a quarter ago, but lower than 7.4 per cent a year ago. – Business Line.
🍒 LIC’s $30 billion market rally gives IPO investors chance at redemption : It’s taken almost two years but a 75% rally since late March has brought investors who purchased shares of Life Insurance Corp. of India in the nation’s biggest initial public offering close to recovering their investment. The state-owned life insurer’s stock climbed 1.9% Tuesday, to close at its highest level since its IPO in May 2022. The climb over the past 10 months has coincided with a broader surge in Indian equities that’s added some $30 billion to LIC’s market value. Prime Minister Narendra Modi’s government raised a record $2.7 billion by selling shares in the country’s largest life insurance firm to investors that included millions of families that own the company’s policies. Concerns over LIC’s size, low-profit margins and rigid sales model compared with more agile private peers saw the stock at one point fall more than 40% below its offering price – Business Standard
🍒 Shriram General Insurance net profit jumps 51 per cent to Rs 117 crore in Q3 : Shriram General Insurance reported a 51 per cent growth in net profit to Rs 117 crore for the December quarter on higher premium income, market gains, and better claims management. The company said its premium income grew 41 per cent during the quarter, led by motor business that rose 42 per cent, personal accident segment that clipped past 57 per cent, and fire insurance grew 14 per cent, taking the gross written premium during the period to Rs 850 crore. – financial express
🍒 Rupee rises 5 paise to 83.11 against US dollar : The rupe appreciated 5 paise to 83.11 (provisional) against the US dollar on Tuesday, following a weak greenback against major currencies overseas amid a muted trend in domestic equities. At the interbank foreign exchange market, the local unit opened at 83.14 against the greenback. Moving in a very tight range, the unit hit an intraday low of 83.15 and a high of 83.11 against the greenback. The local unit finally settled at 83.11 against the dollar, higher by 5 paise (provisional) from its previous close. – Business Line.
🍒 Nifty, Sensex extend losses in late session; BPCL, Tata Motors top gainers on Nifty : Sensex, Nifty updates on 30 January 2024: At close, the Nifty was at 21,572, down 165 points or 0.76 per cent. Sensex was at 71,139, down 801.67 points or 1.11 per cent. On the 30-share Sensex, 11 stocks had advanced, while 19 traded in the red. Benchmark equity indices declined on Tuesday, a day after recording sharp gains, with the BSE Sensex falling over 1 per cent due to selling in Reliance Industries, ITC and Bajaj Finance. The 30-share BSE Sensex fell by 801.67 points or 1.11 per cent to settle at 71,139.90. During the day, it plummeted 865.85 points or 1.20 per cent to 71,075.72. The Nifty declined 215.50 points or 0.99 per cent to 21,522.10. Among the Sensex firms, Bajaj Finance fell by 5.03 per cent after its December quarter earnings failed to cheer investors. BPCL, Tata Motors, Hindustan Unilever, Adani Ent and Eicher Motors were the top gainers on the NSE, while Bajaj Finance led the losers. V K Vijayakumar notes strong DII and retail support influencing FIIs. Analysts point to the interim budget and Fed policy as major triggers for domestic equities. Nifty’s Monday bull candle suggests potential resistance at 21851-21970, with support at 21482. Prashanth Tapse recommends HAL stock amid positive global factors. Foreign institutional investors rebounded after a seven-session sell-off, while domestic investors remained net buyers, adding shares worth ₹3,221 crore. – Business Line.
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