Category: Finance

Indian corporates are expected to witness an improved earnings in upcoming quarter which will drive in retuns in the new year, stated the Mirae Asset Mutual Funds stated in its Annual Market Outlook 2025 report.

However, the report highlighted that despite higher valuations at the start of the year, equities did well with mid and small caps delivering double digit returns.

It added that the stocks are still the favorite investment choice in the markets because they have the potential for good returns, but it’s important to have a mix of different types of investments (stocks, bonds, etc.) to reduce risk.

The report added that India’s medium to long term outlook remains robust driven by strong macro fundamentals deleveraged corporate balance sheets, robust asset quality, fiscal discipline, favourable demographics, digitization, rising income levels, etc.

Household debt levels are also reasonable compared to global standards. India’s aggregate debt to GDP is lower than in 2010, while it has risen globally, the annual market report added.

“We remain constructive on equities from a medium-term perspective driven by strong profitability and free cash flows. Earnings growth may be a key driver of returns in 2025.

Given that valuations are trading at a premium and there is froth in certain segments of the market, bottom up stock selection will be important,” the report added.

On the Sectoral front, the report expressed its confidence, adding that it remain constructive on Banking & Financial Services given the reasonable valuations and higher return ratios – ROE (Return on Equity) and ROA (Return on Assets).

“We are also hopeful of revival in consumption and positive on manufacturing given the Government’s thrust and China+1 strategy,” the report added.

Year 2024 was a year of elections with more than half of world’s economy by GDP and population undergoing elections including India and US.

While India is broadly seeing policy continuity, it would be interesting to watch out for policies adopted by the new administration in US particularly on trade, immigration, deregulation, taxes and government expenditure.

This will have a bearing on trade and financial markets globally, the report added.

Indian capital markets saw a record surge in primary equity issuances while domestic investors continued to be big buyers in secondary market.

Foreign Portfolio Investors (FPI), on the other hand, have remained on the side lines owing to their discomfort on higher valuations.

Any significant correction in Indian equities may lead to Foreign Portfolio Investor (FPI) inflows going ahead, the report added.

Reserve Bank of India on Tuesday imposed restrictions on withdrawals from Maharashtra-based Mantha Urban Cooperative Bank for six months.

The RBI, in a release, said it has issued certain directions to Mantha Urban Cooperative Bank, Mantha District Jalna, Maharashtra, from the close of business on November 17, 2020.

As per the directions, the bank will not, without prior approval of RBI in writing, grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment, among others.

“In particular, no deposit of the total balance across all savings bank or current account or any other account of a depositor may be allowed to be withdrawn” subject to conditions stated in the directions, the central bank said.

The directions will remain in force for a period of six months from the close of business of November 17, 2020 and are subject to review, it added.

It further said the issue of the directions by the RBI should not per se be construed as cancellation of banking license by RBI.

The bank will continue to undertake banking business with restrictions till its financial position improves, the central bank said, and added it may consider modifications of the directions depending upon circumstances.

In a separate release, RBI said it has imposed monetary penalty of Rs 20 lakh on Bengaluru-based Shushruati Souharda Sahakara Bank Niyamita for deficiencies in regulatory compliance.

The central bank also imposed a penalty of Rs 1 lakh on The Deccan Urban Co-operative Bank, Vijayapura, Karnataka, for contravention of the directions issued by it on prohibition of loans and advances to directors.
 

The story has been taken from a news agency

To ensure that entities seeking private banks licence remained adequately capitalised to meet any eventuality, a Reserve Bank of India internal committee has recommended nearly doubling of the initial capital and net worth requirements to be eligible for getting a banking licence.
 
 
 
 
 

The Reserve Bank of India’s (RBI) Twitter handle achieved 1 million followers on Sunday, turning it the first central bank in the world to achieve the feat.

The Indian banking sector`s largest union, the All India Bank Employees` Association (AIBEA), on Tuesday opposed the recommendations made by the Reserve Bank of India`s (RBI) Internal Working Group as they are “retrograde” and would endanger people`s money.
 
 
 
 
 

Swadeshi Jagran Manch has written to Shaktikanta Das Governor Reserve Bank of India, saying protection of the beleaguered Lakshmi Vilas Bank could be done without compromising national interests.

Lakshmi Vilas Bank (LVB) moratorium period will come to an end on Thursday and normal banking operations would commence thereafter, RBI-appointed administrator T.N. Manoharan said. That means cap on cash withdrawals for bank account holders goes too.
 
 
 
 
 

Lakshmi Vilas Bank shareholders compensation: Shareholders of the 94-year-old Lakshmi Vilas Bank (LVB) have started knocking the doors of justice for a fair valuation of their bank, the amalgamation of which takes effect from Friday onwards.

On Thursday, Indiabulls Housing Finance Ltd, Kare Electronics and Development Pvt Ltd and others filed a writ petition in the Bombay High Court praying for a stay of the notification issued by the Central government for amalgamating the LVB with DBS Bank India Ltd, a subsidiary of DBS Bank, Singapore.

The petitioners will also make DBS Bank as a party to the case by amending their petition.

“The petitioners had prayed for a stay of the Central Government notified scheme of amalgamation of LVB with DBS Bank India. The other prayer is to quash the writing off of the entire entire amount of the paid-up share capital and reserves and surplus, including the balances in the shares or securities premium account of the transferor bank and the delisting of the shares and debentures,” Paras Parekh, Partner, Parinam Law Associates representing Indiabulls Housing, told IANS from Mumbai.

The Bombay High Court, admitting the writ petition, refused to stay the Central government`s notification amalgamating LVB with DBS Bank India, and fixed the next hearing for December 14.

The court said: “We are of the opinion, prima facie, that the petitioner`s claims being a monetary claim, can be considered at the time of disposal of the petitions.”

“The writ petition has been admitted and the other parties – Reserve Bank of India, Central Government, DBS Bank India will have to file their counters,” K.R. Pradeep, promoter of the LVB, told IANS.

With amalgamation of the LVB with DBS Bank India taking into effect from November 27 onwards, the entire balance sheet of the latter will be available for the shareholders of the former for working out the valuation and compensation.

As per the Central government scheme, the shareholders of the LVB including about 97,000 individual shareholders will not get anything out of the deal.

It is said, shareholders of LVB will also be filing cases against the LVB-DBS Bank India amalgamation scheme and claiming proper valuation of the former.

The story has been taken from a news agency

A day ahead of its merger with the Indian arm of Singapore-based DBS Bank, the debt-ridden Lakshmi Vilas Bank (LVB) on Thursday has written off bonds worth Rs 318.20 crore as per the existing provisions.

As per the effective date of merger notified by the Reserve Bank of India (RBI) on Wednesday, Lakshmi Vilas Bank will lose its identity on Friday as it amalgamates with DBS Bank India Ltd.

The RBI, vide their letter on Thursday, has advised the need to fully write down the Series VIII, Series IX and Series X Basel-III complaint tier-2 bonds before the amalgamation comes into effect from the appointed date (November 27), Lakshmi Vilas Bank said in one of its last communications to stock exchanges.

“If the relevant authorities decide to reconstitute the bank or amalgamate the bank with any other bank under the Section 45 of the Banking Regulation Act, such a bank shall be deemed as non-viable and both the pre-specified trigger and the trigger at the point of the point of non-viability for write-down of bonds shall be activated.

“Accordingly, the bonds shall be written off before amalgamation or reconstitution in accordance with applicable rules,” according to the terms of the information memorandum of the respective Basel-III Tier-2 bonds issued by the bank.

In the light of above provision, such Basel-III Tier-2 bonds would need to be fully written down before amalgamation of the bank comes into effect, Lakshmi Vilas Bank said quoting Thursday’s letter from the RBI.

On Wednesday, the RBI notified the effective date of merger of November 27 soon after the Union Cabinet headed by Prime Minister Narendra Modi approved the Scheme of Amalgamation of LVB with DBS Bank India Ltd (DBIL).

The RBI had superseded LVB’s board on November 17 after the private sector lender was placed under a 30-day moratorium restricting cash withdrawals at Rs 25,000 per depositor.

The RBI simultaneously placed in public domain a draft scheme of amalgamation of Lakshmi Vilas Bank with DBIL.

Started by a group of seven businessmen of Karur in Tamil Nadu under the leadership of V S N Ramalinga Chettiar in 1926, LVB has 566 branches and 973 ATMs spread across 19 states and Union Territories.

With non-performing assets (NPAs) soaring, the bank was put under the prompt corrective action framework of the Reserve Bank of India (RBI) in September 2019.

LVB is the second private sector bank after Yes Bank that has run into rough weather this year.

In March, capital-starved Yes Bank was placed under a moratorium. The government rescued Yes Bank by asking State Bank of India (SBI) to infuse Rs 7,250 crore and take 45 per cent stake in the lender.
 

The story has been taken from a news agency

ICICI Bank’s initiatives to de-risk loans have held it in good-stead with impact on asset quality likely to be manageable. An under-appreciated aspect is that its operating profit grew at 19-20% in FY19-20 & 18% YoY in first half of FY21. It has narrowed the gap with HDFC Bank and as retail growth & corporate-ecosystem banking pay-off with normal credit cost, ICICI Bank can grow normalised profits by 17-20%. Uptick in CASA growth is key for ICICI Bank.

More than six in 10 Indians (67 per cent) said that the majority of their mobile banking logins are simply to check account balances, a new report said on Monday.

According to the global IT services firm Accenture, only 42 per cent of respondents rated their primary bank’s customer service as excellent and more than half (54 per cent) had problems getting human support when they needed it.

“Banks in India have achieved significant digital penetration across their value chain. But they are now faced with the reality that digital channels are functionally correct but emotionally devoid. Banks need to bridge this divide by humanising and personalising digital transactions,” said Sonali Kulkarni, Lead — Financial Services, Accenture in India.

The report surveyed 49,000 consumers across 33 countries, including 2,000 in India.

Moreover, the report found that about 36 per cent rated their bank highly in terms of the range of products and services offered, and only 35 per cent rated their bank highly on the competency of tailored financial advice, leading consumers to seek out new providers.

Nearly nine in 10 (88 per cent) recently acquired a financial services product from a provider other than their main bank.

About 78 per cent of consumers in India across age groups like seeing branches in their neighbourhood, as they portray stability and availability.

In addition, seven in 10 (70 per cent) turn to branches to solve specific and complex problems.

The report further said that many consumers, especially younger age groups find it difficult to manage their growing number of financial service providers due to increased fragmentation.

Around 53 per cent of consumers often lose track of their financial products and services.

The report suggested that banks can leverage artificial intelligence, and data and analytics to better identify customers’ financial intent, have more personalised conversations that flow seamlessly across digital and physical channels, and deliver relevant and holistic products and services, including non-banking offerings.