Weekly Top Finance News - Economy-Banking- FOR RBI GRADE B & SEBI GRADE A - 17 AUGUST- 23 AUGUST 2020 - Oliveboard
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Weekly Top
Economy-Banking-
Finance News
17 AUGUST- 23 AUGUST 2020
FOR RBI GRADE B & SEBI GRADE A
Weekly Top Economy-Banking-Finance News Free GA e-book
Weekly Top Economy-Banking-Finance News
17th – 23rd August 2020
1. NTPC gets Niti Aayog, DIPAM nod to set up renewable energy biz arm
• State-owned power giant NTPC said it has received the approval of Niti Aayog and
Department of Investment and Public Asset Management to set up a wholly owned
company for its renewable energy business.
• Now, NTPC will move to form a subsidiary firm for the renewable energy business, as
it has requisite approvals for the purpose.
• Concurrence had been obtained from NITI Aayog and Department of Investment and
Public Asset Management (DIPAM), Ministry of Finance for the formation of a wholly
owned subsidiary for NTPC Renewable Energy Business.
• The wholly owned subsidiary will be incorporated under the provisions of
the Companies Act, 2013.
• The development assumes significance because the NTPC targets to generate nearly
30 per cent or 39 GW of its overall power capacity from renewable energy sources by
2032.
• This is also consistent with India’s ambitious target of having 175GW clean energy by
2022. NTPC is planning to have 10GW of solar energy by 2022, which entails an
investment of around Rs 50,000 crore.
• NTPC has planned to be a 130 GW company by 2032 with diversified fuel mix and a
600 BU (billion units per annum) firm in terms of power generation.
• The company is aiming to have 30 GW of solar and two GW of other renewable energy
sources-based power generation capacity by 2032. Besides, it will have 5 GW of
hydropower and 2 GW of nuclear energy by 2032, taking the total clean energy
capacity to 39 GW.
• The non-fossil fuel-based capacity would achieve a share of 30 per cent and thermal-
based generating capacity share would be 70 per cent by 2032.
2. PSBs to need Rs 2.1 trillion over next 2 yrs; govt support to continue:
Moody’s
• Public sector banks will need external capital of up to Rs 2.1 trillion over the next two
years and the most likely source to plug this shortfall will be government support,
Moody’s Investors Service said.
• According to Moody’s, the sharp slowdown in India’s economic growth, exacerbated
by the virus outbreak, will hurt the asset quality of public sector banks (PSBs) and
drive up credit costs.
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3. Kamath committee recommendations will be out by September 6: RBI
Governor
• The guidelines on the K.V. Kamath committee recommendations will be out by
September 6, Reserve Bank of India (RBI) governor Shaktikanta Das said.
• The committee on business loan resolution would submit its recommendations within
one month and the central bank will soon release its final guidelines on the issue. Both
the process will be done within 30 days from the date of original notification on August
6, Das said in an interview.
• The committee will look after business loans above Rs 1,500 crore, while retail loan
resolution will be taken care of by bank boards.
4. RBI’s first Monetary Policy Committee bows out with CPI above target
• The Reserve Bank of India’s first Monetary Policy Committee completes its four-year
term with a mixed record.
• While the six-member panel managed to keep inflation within the 2% to 6% target
band for most of that time, it ends the period with consumer-price growth well above
that range.
• If inflation exceeds the upper limit of the target band for three consecutive quarters,
the RBI Act requires Governor Shaktikanta Das to write a letter to the government to
explain why the MPC failed to meet its goal. Average inflation in each of the first two
quarters has already exceeded 6% and will likely remain elevated after consumer
prices grew 6.93% in July, driven by higher food prices.
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5. Rs 1.5 trillion sanctioned by banks under MSME lending scheme so far
• Almost three months down the line since its announcement, banks have sanctioned
almost half of the money promised under the Emergency Credit Line Guarantee
Scheme (ECLGS).
• Public and private sector banks have sanctioned a bit over Rs 1.5 trillion as on August
18.
• As much as Rs three trillion was promised to be lent under the scheme, fully
guaranteed by the government.
• The lenders have disbursed Rs 1.02 trillion to 2.37 million accounts. The scheme was
primarily aimed at the micro, small and medium enterprises (MSMEs), hit hard by
lockdowns due to the outbreak of Covid-19.
6. SEBI proposes to increase minimum free float for firm’s post-insolvency
• The Securities and Exchange Board of India (SEBI) has proposed to increase the
minimum free float for companies relisting after undergoing the corporate insolvency
resolution process (CIRP). The capital markets regulator has also called for greater
disclosures to ensure better price discovery and transparency.
• The move is triggered by the extreme movement in the Ruchi Soya Industries’ stock.
The company’s shares had surged more than 450 times after it got relisted following
the acquisition by Pantanjali Ayurved under the CIRP. The sharp rise on the ultra-low
free float of less than a per cent had sparked a debate about whether Sebi and the
stock exchanges should revisit rules to ensure fair price discovery.
• SEBI sought the market’s feedback on whether the threshold for minimum public
shareholding (MPS) at the time of relisting should be set at 5 per cent or whether
companies should be allowed to relist with any float on the condition that they will
increase it to 10 per cent within six months.
• At present, companies that get listed following their initial public offer (IPO) need to
have at least 10 per cent public shareholding, and the same needs to be increased to
25 per cent within three years. However, companies listing after undergoing the
insolvency resolution process are not required to have any minimum free float. Ruchi
Soya, for instance, had less than 1 per cent free float when trading resumed in the
counter after relisting in January.
• Currently, SEBI provides up to 18 months for companies listing under the CIRP to hike
their MPS to 10 per cent and another 18 months to take it to 25 per cent.
• Also, the regulations mandate one-year lock-in on incoming promoter shares.
• This rule prevents companies from increasing public float. SEBI, however, has
proposed to relax this rule.
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7. State Bank of India looks to raise Rs 8,931 crore via tier-II bonds
• India’s largest bank looks to raise Rs 8,931 crore ($1.19 billion) through 15-year bonds
that comply with Basel III capital norms, according to a person familiar with the
matter. The notes carry a coupon of 6.8 per cent, the lowest pricing on such debt
issued by any lender since the country started implementing the stringent capital
norms in 2013, the data compiled by Bloomberg shows.
• The tier-II notes rated AAA, have a call option at the end of 10 years and every year
thereafter, the person said, asking not to be identified as the details are private. The
issuance is solely being managed by SBI Capital Markets.
Weekly Top Economy-Banking-Finance News Free GA e-book
8. Reliance Retail acquires majority stake in Netmeds for Rs 620 crore
• The Mukesh Ambani-owned conglomerate announced the acquisition of a majority
equity stake in Chennai-based online pharmacy delivery startup Netmeds (Vitalic
Health Pvt. Ltd) for a cash consideration of approximately Rs 620 crore.
• This investment represents 60 per cent holding in the equity share capital of Vitalic
and 100 per cent direct equity ownership of its subsidiaries – Tresara Health Private
Limited, Netmeds Market Place Limited, and Dadha Pharma Distribution Pvt. Limited.
• Promoted by Dadha Pharma, Chennai-based Netmeds is one of the earliest players in
this space having incorporated in 2015. The company which connects customers to
pharmacists and enable doorstep delivery of medicines, nutritional health and
wellness products, is said to have raised close to $100 million funding so far from
investors such as Tanncam, Sistema and Daun Penh. Till date, the company has served
close to 4 million customers across over 610 cities and towns.
9. 18.9 mn salaried people lost jobs since April 5 mn in July, says CMIE
The number of salaried people losing their jobs amid the coronavirus pandemic has surged to
18.9 million since April, with around 5 million jobs lost last month, according to data from the
Centre for Monitoring Indian Economy (CMIE).
10. Crisil downgrades Indian Bank’s tier I bonds on lower reserves position
• Rating agency Crisil has downgraded public sector lender Indian Bank’s tier I bonds
from “AA+” to “AA” due to lower eligible reserves position of the merged bank.
Another public sector lender Allahabad Bank merged with Indian Bank from April 01,
2020.
• The capital adequacy ratio of Chennai-based lender stood at 13.45 per cent with tier I
of 10.47 per cent at the end of June 2020. Its stock was trading 2.2 per cent higher at
Rs 64.55 per share on BSE.
• Crisil has also reaffirmed its ‘CRISIL AAA’ rating and assigned a ‘Negative’ outlook to
various bonds including tier I (under Basel III), Tier II Bonds (under Basel III). The
‘Negative’ outlook reflects the potential stress that the bank’s asset quality and
consequently its profitability may witness due to the challenging macro environment.
• Post the amalgamation, Indian Bank’s asset quality metrics have weakened as
compared to peers in the rating category. Gross non-performing assets (NPAs) of the
bank stood at 11.4% as on April 01, 2020. Also, the combined entity reported a loss of
Rs 4,643 crore for fiscal 2020 with a return on assets (RoA) of -0.8 per cent for the
period.
Weekly Top Economy-Banking-Finance News Free GA e-book
11. People’s Bank of China picks up stake in ICICI Bank via QIP issue
• After picking up a stake in housing finance major HDFC, the Chinese central bank
People’s Bank of China has acquired a very small stake in ICICI Bank through the
recently closed Rs 15,000 crore share sale by the country’s second-largest private
sector lender.
• The People’s Bank of China was among 357 institutional investors which included
domestic mutual funds, insurance firms and global institutions that subscribed to the
issue, sources said.
• According to sources, the Chinese central bank has picked up shares worth Rs 15 crore
in Rs 15,000 crore qualified institutional placement (QIP) issue. At current market
capitalisation, the stake of the People’s Bank of China in ICICI Bank is about 0.0065 per
cent. The ICICI Bank spokesperson was not available for comment immediately.
12. Covid-19 impact: GDP to contract 16.5% in the first quarter, says SBI
report
• SBI Research has projected gross domestic product (GDP) contraction at 16.5 per cent
in the first quarter of 2020-21, against a 30 per cent decline estimated earlier.
• It attributed the revision mainly to smaller gross value added (GVA) degrowth by listed
companies for the quarter.Weekly Top Economy-Banking-Finance News Free GA e-book
13. Credit guarantee scheme for NBFC papers extended by three months
• With a view to providing additional liquidity to crisis ridden NBFCs and housing finance
companies (HFCs), the government on Monday relaxed norms for Partial Credit
Guarantee Scheme (PCGS) for purchase of bonds and commercial papers by public
sector banks and extended its period by three months.
• The government has extended the partial credit guarantee scheme (PCGS) 2.0 for
three months till November 19 and offered greater flexibility under the plan.
• As part of Aatmanirbhar Bharat Abhiyan, the scheme was launched to provide
portfolio guarantee for the purchase of bonds or commercial papers (CPs) with a
rating of AA and below issued by non-banking finance companies, housing finance
companies and microfinance institutions by public sector banks (PSBs).
• It was envisaged to purchase these papers of Rs 45,000 crore under PCGS 2.0, of which
the maximum headroom permissible was 25 per cent of the total portfolio–Rs 11,250
crore.
• This has been raised to 50 per cent of the total portfolio now.
• This is expected to provide greater flexibility to PSBs in purchasing the papers.
• Under PCGS 2.0, PSBs have approved the purchase of papers rated AA and AA- issued
by 28 entities and papers rated below that issued by 62 entities amounting to Rs
21,262 crore overall.
• The average ticket size of papers rated below AA- is significantly lower than the
average ticket size of above-rated papers.
14. India to propose the creation of World Solar Bank at ISA’s next summit
• The Indian government will propose a World Solar Bank during the next assembly
of International Solar Alliance (ISA) scheduled to be held in October.
• The proposed financing agency is aimed to pool resources from across the globe and
use them to fund solar power projects in ISA member countries.
• The proposed capital size of the World Solar Bank would be $10 billion. ISA officials
said the country that would request to host the headquarters of the bank would have
to contribute 30 per cent of the proposed capital.
15. RBI lifts curbs on Bandhan Bank CEO’s pay package after promoter cuts
stake
The Reserve Bank of India (RBI) has lifted the restrictions imposed on the remuneration of
private lender Bandhan Bank’s managing director and chief executive officer (MD&CEO) –
Chandra Shekhar Ghosh, after the bank’s promoter, Bandhan Financial Holdings, reduced its
stake in the bank to 40 per cent by offloading 21 per cent stake earlier this month, to meet
the regulator’s ownership norms.Weekly Top Economy-Banking-Finance News Free GA e-book
16. Sebi imposes Rs 1 million fine on Bank of Baroda for violating MF norms
• The Securities and Exchange Board of India (Sebi) in the exercise of power has imposed
penalty aggregating to Rs 10 lakh on the bank for non-compliance of Regulation 7B of
Sebi (Mutual Fund Regulations), 1996 with the directions issued by Sebi in the case of
holding, more than prescribed limit, equity shares of UTI Asset Management Company
Ltd and UTI Trustee Pvt Ltd,” Bank of Baroda said in a regulatory filing.
• Whole-time member of the Sebi had earlier directed the bank to comply with the
guidelines on or before December 31, 2020.
17. Peoples Bank of China among 357 investors to acquire a stake in ICICI
Bank
• After the disclosure of a holding in HDFC, the Chinese central bank Peoples Bank of
China has now acquired an equity stake in ICICI Bank.
• The government had in April notified new norms for FDI investments by neighbouring
countries which would require approvals. It is not clear if portfolio investments need
to go through some vetting process or the government will continue with this open
route till the time no FDI approval is required.
• The investment by the Chinese central bank in ICICI Bank is modest. It subscribed to
the recent ICICI Bank’s Rs 15,000 crore capital qualified institutional investors (QIP)
placement and invested Rs 15 crore.
• The Chinese central bank was among the 357 institutional investors which included
domestic mutual funds, insurance companies and global institutions that subscribed
to the issue.
• Earlier, a disclosure by HDFC had caused a flutter after PBOC holding breached 1 per
cent mark. HDFC had clarified that Chinese central bank, People’s Bank of China
(PBOC) has been an existing shareholder of the company and only the disclosure was
being made as they hit the 1 per cent threshold.
• HDFC’s Vice Chairman and CEO Keki Mistry had told IANS that the PBOC had been an
existing shareholder and had owned 0.8 per cent in the company as of March 2019.
• Thereafter, there have been reports that PBOC has cut its stake in HDFC.
18. Classification of Micro, Small & Medium Enterprises
An enterprise shall be classified as a Micro, Small or Medium enterprise on the basis of the
following criteria, namely:
• A micro enterprise, where the investment in plant and machinery or equipment does not
exceed one crore rupees and turnover does not exceed five crore rupees.
• A small enterprise, where the investment in plant and machinery or equipment does not
exceed ten crore rupees and turnover does not exceed fifty crore rupees: andWeekly Top Economy-Banking-Finance News Free GA e-book
• A medium enterprise, where the investment in plant and machinery or equipment does
not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore
rupees
19. Digital payments in India likely to grow to Rs 7,092 trn by 2025: Report
• Digital payments in India are expected to grow over three-folds to Rs 7,092 trillion by
2025 on account of government policies around financial inclusion and the growing
digitisation of merchants, according to a research report.
• The country's digital payment market was worth around Rs 2,162 trillion in 2019-
20, RedSeer Consulting said in its report.
• "The current 160 million unique mobile payment users will multiply by 5 times to
reach nearly 800 million by 2025. This growth will be driven by a number of demand
and supply-side drivers," the Bengaluru-based management consultancy said.
• "Mobile payments will drive around 3.5 per cent of total digital payments of Rs 7,092
trillion by financial year 2025, up from the current 1 per cent. The total mobile
payment users who currently stand at about 162 million would reach around 800
million during this period," the report said.
• According to the report, wallets will continue to play a key role in its growth with the
continuous increase in both frequency and user base.
• By 2025, wallets are expected to have a higher penetration and lower-income would
eventually drive multiple small-ticket transactions, it said.
Source: Business StandardWeekly Top Economy-Banking-Finance News Free GA e-book
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