Issue: 1299
·
Shabnam Sinha to replace Sunil Bharti Mittal as Airtel
Payments Bank chairperson.
·
RBI may incur $9-12 bn in FCNR(B) hedging costs.
·
Domestic lenders set record with $8 billion in dollar bond
sales.
·
Yes Bank makes bond market comeback after 2020 AT1 debt
write-off.
·
Axis Bank raises FCNR(B) rate to 6.4%, highest among large
banks.
·
India's unemployment rate eases to four-month low of 5.1% in
July.
India seeks WTO
consultations with US over 4-year quartz surface tariff quota: India has sought consultations at the World
Trade Organisation (WTO) with the United States over Washington’s new safeguard
measure on imports of quartz surface products, a move that could hit Indian
exporters who have emerged as one of the largest suppliers to the US market. The
US has imposed a four-year tariff-rate quota (TRQ) on imports of quartz surface
products, effective August 15, after the US International Trade Commission (USITC)
found that increased imports were causing serious injury to the American
industry. The measure covers quartz slabs and other fabricated quartz surface
products.
(Business Line)
$10.5 bn FCNR (B) swap cost
over 5 years is 1.45% of forex kitty: Report: The cost of the Reserve Bank
of India’s (RBI’s) concessional swap facility for FCNR(B) deposits is unlikely
to have been a factor behind the central bank’s decision to close the window a
month ahead of schedule, with the cumulative hedging cost estimated at around
$10.5 billion over five years, according to an SBI Research report. The report
estimates that FCNR(B) mobilisation could reach $60-65 billion, and $80-85
billion when overseas foreign currency borrowings (OFCBs) and external
commercial borrowings (ECBs) are included.
(Business Standard)
Rupee weakens, bond yields
harden as RBI shuts FCNR(B) swap window early: The rupee weakened and
government bond yields hardened on Monday after the Reserve Bank of India (RBI)
brought forward the closure of its concessional foreign exchange swap facility
for foreign currency non-resident (bank), or FCNR (B), deposits by a month,
dealers said. The rupee settled at 95.61 a
dollar, down 0.17 per cent from Friday’s close of 95.44. It opened at around
95.48 and touched an intraday low of 95.62. The yield on the benchmark 10-year
government bond rose to 6.81 per cent from 6.76 per cent, as the early closure
of the FCNR (B) swap window raised concerns about future dollar inflows and
liquidity. The central bank on Friday had
announced that the facility would now be available only for FCNR(B) deposits
mobilised until August 31, 2026, with banks able to avail themselves of swaps
with the RBI until September 11. Under the original schedule, deposits would
have been mobilised until September 30, with banks able to access the swaps
until October 16.
(Business Standard)
SEBI simplifies mutual fund
registration, replaces three forms with single application: The Securities and Exchange
Board of India has revised the registration process for mutual funds, replacing
three existing application forms with a single consolidated form covering both
the sponsor approval and final registration stages. The change was announced in a
circular dated August 17 and follows SEBI’s overhaul of the regulatory
framework governing mutual funds earlier this year. The regulator has retained
the existing two-stage registration process and said other conditions
prescribed under its March 20 Master Circular for Mutual Funds will remain
unchanged.
(Moneycontrol)
FM asks public sector banks
to leverage strong balance sheets for next phase of growth: Union Finance Minister Nirmala
Sitharaman called on Public Sector Banks (PSBs) to capitalise on their
historically low NPAs and robust balance sheets to drive economic expansion and
propel structural reforms. Speaking at a two-day conclave of PSB and financial
institution chiefs, Sitharaman announced that the high-level committee on
‘Banking for Viksit Bharat’, proposed in the Union Budget, will be constituted
shortly. Emphasising the urgency of the 2047 target, the Finance Minister noted
that Indian banking is positioned at an unprecedented point of financial
resilience after years of balance-sheet cleanup. Sitharaman stressed the need
for banks to focus particularly on the country’s young population, noting that
29% of Indians are in the 15-29 age group.
(Business Line)
Banks clock highest deposit
growth since Dec 2016: CareEdge: The growth in bank deposits
accelerated to 15.4% year-on-year as of July 31, the fastest pace since
December 2016, as strong mobilisation of foreign currency non-resident (bank)
{FCNR(B)} deposits under the Reserve Bank of India’s special swap facility
boosted the liability accretion, CareEdge Ratings said in a report. Deposit
growth had stood at 12.7% as of July 15 and 10% in the year-ago period.
Aggregate deposits rose to Rs 269.4 lakh crore, with incremental deposits
increasing by Rs 6.57 lakh crore during the fortnight. Time deposits led the
increase, growing 14.8% year-on-year to Rs 235.1 lakh crore and accounting for
87.3% of total deposits. Demand deposits grew 19.3%.
(Financial Express)
Banking reform panel likely
this month; Tems may include consolidation road map: The government will soon constitute the
proposed High-Level Committee on Banking for Viksit Bharat to initiate a new
phase of comprehensive banking sector reforms, Finance Minister Nirmala
Sitharaman said on Monday. “The intensive discussions of today and tomorrow
come at a time we expect the announcement on the high-powered committee to look
into banking for Viksit Bharat. Sooner, the committee will be announced,” she
said addressing the two-day Public Sector Banks Conclave here. Sources indicated that the panel may be
formed this month itself. Issues for the panel’s consideration might include
creating larger Indian banks through consolidation, raising foreign direct
investment limits in public sector banks, rationalising investor voting rights,
and reviewing regulatory requirements like the Cash Reserve Ratio and Statutory
Liquidity Ratio.
(Financial Express)
Banks may rush to tap short
loans abroad:
Bankers said
some lenders now plan to borrow more short-term funds, possibly at a higher
rate, to finance the promised leverage to FCNR(B) clients after the Reserve
Bank of India advanced the deadline for swap support. These funds will have to
be replaced with a long-term loan or bond later, leading to a temporary
mismatch between banks' foreign deposits and borrowings.
(Economic Times)
Govt clears 31 electronics
component applications worth Rs 7,877 crore under ECMS 2.0: The Ministry of Electronics and Information
Technology (MeitY) has cleared nearly 31 applications involving investments of
Rs 7,877 crore under the Electronics Components Manufacturing Scheme (ECMS),
MeitY Secretary S Krishnan said, as the government accelerates efforts to build
a domestic electronics component ecosystem. The projects span 10 states and are expected to
generate Rs 82,243 crore in production and create close to 10,000 jobs,
Krishnan said. With the latest approvals, the government has now cleared 106
applications covering around 30 product categories across 15 states under the
ECMS. The approved projects represent cumulative investments of Rs 69,548
crore, surpassing the scheme's original investment target of Rs 59,350 crore.
(Moneycontrol)
FIDC to flag NBFC concerns
over RBI's proposed revolving credit ban: The Finance Industry Development Council
(FIDC), the self-regulatory organisation (SRO) for the non-banking finance
company (NBFC) sector, is set to flag divergent concerns among lenders over the
Reserve Bank of India’s (RBI’s) proposed ban on revolving credit products, with
the industry arguing that the move could create regulatory arbitrage in favour
of banks. The industry body is collating views from NBFCs,
including those engaged in supply-chain finance, loan against property (LAP)
and micro, small and medium enterprise (MSME) lending, before submitting its
feedback to the central bank within the prescribed deadline.
(Business Standard)
Swiggy launches AI
Assistant named 'Guru' for restaurant partners: Food delivery aggregator Swiggy on Monday
announced the rollout of its AI Assistant 'Guru' for its restaurant partners,
to track payouts and monitor the performance of their campaigns across over 720
cities and accessible to 2.7 lakh restaurants. Menu insights on Guru allow partners to add items,
generate descriptions, and highlight top-selling items to deliver personalised
insights, by analysing the category performance and what is working for them,
Swiggy said.
(Business Standard)
Govt to examine litigation
funding for PUFE deals under insolvency regime: The Ministry of Corporate Affairs (MCA) will
examine litigation funding for preferential, undervalued, fraudulent, and
extortionate (PUFE) transactions under the insolvency regime to improve
recoveries, the ministry told a parliamentary standing committee in a written
reply. “Litigation funding for PUFE transactions will be examined in light of
global best practices and refined through detailed consultation with all
relevant stakeholders,” the MCA said. The ministry in its comments highlighted
that the market for litigation funding remains nascent in India.
(Business Standard)
Sebi eyes SLBM reforms; may
allow net settlement to boost market liquidity: Reforms are under way to deepen India’s securities
lending and borrowing (SLB) market as the Securities and Exchange Board of
India (Sebi) is stepping up efforts to improve liquidity in the cash market and
strengthen its infrastructure, which underpins its recently introduced closing
auction session (CAS). It is discussing a set of changes to the securities
lending and borrowing mechanism (SLBM), including expanding the universe of
eligible stocks, allowing net settlement within the SLB segment and with the
cash market, enabling interoperability between stock exchanges, and improve the
links between the cash and derivatives markets, according to people familiar
with the developments.
(Business Standard)
Sebi launches portals to
strengthen cybersecurity incident reporting: The Securities and Exchange Board of India
(Sebi) on Monday launched the Incident Reporting Portal and Cyber Suraksha
Portal to streamline communication from market intermediaries about
cybersecurity incidents. The incident reporting portal will make reporting
cybersecurity incidents more structured and timely, aligning it with the
Financial Stability Board’s format. Meanwhile the Cyber Suraksha Portal will
act as a central hub for sharing cybersecurity knowledge, vulnerability
warnings, policy measures, and incident insights across the securities market
ecosystem.
(Business Standard)
ECONOMIC MOAT
·
An Economic Moat refers to a sustainable competitive
advantage that allows a business to protect its market position, profitability
and customer base from competitors over a long period. The term was popularised
by investor Warren Buffett, who compared a strong business advantage to a moat
protecting a castle.
· Just as a moat protects a
castle from attackers, an economic moat protects a company from competitors
trying to take away its customers and profits.
· A strong brand creates customer
loyalty and allows a company to command premium pricing. Example: Customers may
prefer a trusted bank even when another bank offers marginally better pricing.
RBI KEY RATES
Repo
Rate: 5.25%
SDF:
5.00%
MSF
/Bank Rate: 5.50%
CRR:
3.00%
SLR:
18.00%
FOREX RATES (RBI REF. RATE)
INR
/ 1 USD : 95.6019
INR
/ 1 GBP : 129.5638
INR
/ 1 EUR : 110.7621
INR
/100 JPY: 60.0900
EQUITY INDEX
Sensex:
77728.16 (-281.09)
NIFTY:
24287.65 (-78.35)
Bnk NIFTY: 57497.80 (+6.70)
Historical
events: August 18 marks major historical milestones,
notably the reported passing of freedom fighter Netaji Subhas Chandra Bose in a
1945 plane crash in Taiwan, the 1800 founding of Fort William College in
Calcutta, the 1868 discovery of helium, and the 1900 birth of Indian diplomat
Vijaya Lakshmi Pandit.
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