Daily Banking News for 24th August 2022. Get the latest Banking & Financial Updates from around the web from all the financial resources for you. A daily feed for bankers.
NO PLANS FOR CHARGES ON UPI TRANSACTIONS: FinMin: Finance Ministry on Sunday made it clear that there is no thinking of imposing a charge for Unified Payment Interface (UPI) transactions. This statement came two days after RBI raised the issue of levying charges through a discussion paper. Earlier, the RBI’s discussion paper had sought feedback on levying charges
INFOSYS CUTS AVERAGE VARIABLE PAYOUT TO 70% FOR Q1 ON MARGIN PRESSURE: Infosys has reduced the variable payout for employees for the first quarter of FY23 due to the impact on margins. An email sent to employees, said that at an organization level, the average variable payout is 70 percent. Infosys’s operating margin contracted to 20.1 percent in Q1FY23, as opposed to 23.7 percent in Q1FY22 and 21.5 percent in Q4FY22.
ADB, INDIA SIGN $96.3 MILLION LOAN TO IMPROVE WATER SUPPLY AND SANITATION SERVICES IN HIMACHAL PRADESH: The Asian Development Bank (ADB) and the Government of India today signed a $96.3-million loan agreement to provide safe drinking water and improve water supply and sanitation services in the state of Himachal Pradesh.
BANKS STEP UP CREDIT CARD PLAY AHEAD OF FESTIVE SEASON: As the pandemic ebbs, banks are pushing the pedal on credit card issuances, betting that an economic revival will lift consumer spending and lead to lower delinquencies. Outstanding credit cards in force increased from 7.03 crore to 7.87 crore between January and June this year, according to central bank data. In June itself, the total number of credit cards rose more than 25 percent year on year. Total credit card spends have stayed above the Rs 1 lakh crore mark for four consecutive months through June.
TATA TRUSTS TO EARN RS 266 CR AS DIVIDEND INCOME FROM TATA SONS IN FY22: Tata Trusts will earn Rs 267 crore as dividend income from Tata Sons for 2021-22 (FY22). About 66 per cent of the group’s equity capital is with the trusts owned by the Tata family.Tata Sons, the unlisted holding company of Tata Group of companies, has announced a dividend of Rs 10,000 per share at the rate of 1,000 per cent.
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PRIVATE SECTOR CAPEX LIKELY TO LIFT OFF THIS FISCAL, SAYS RBI STUDY: Although private-sector capital expenditure (capex) is expected to lift off in the quarters ahead, a recent study by the RBI shows project loan demand by Indian companies for capex in 2021-22 (FY22) did not pick up like it did in the preceding years. Even though the envisioned total project cost of Rs 1.43 trillion nearly doubled in contrast with the record low of Rs 75,558 crore in 2020-21 (FY21), it still remained lower than pre–Covid levels. It is below the Rs 4-trillion annual loans sanctioned for projects since the glory days of corporate investment in 2010-11.A study on project loans to the private sector by banks reveals fresh sanctions at 1.3 per cent of loans in FY22, against 0.7 per cent in FY21, and pending disbursements at 0.9 per cent of total loans. According to the RBI, the infrastructure (infra) sector accounted for 57 per cent of loan sanctions in FY22.
FINANCIAL CREDITORS TO FUTURE RETAIL PLACE CLAIMS WORTH RS 21,000 CR: Future Retail has received claims of Rs 21,057 crore from 33 financial creditors, according to data released by the company that is under the corporate insolvency resolution process. US-based Bank of New York Mellon, a financial creditor, has claimed Rs 4,669 crore, of which Rs 4,109 has been verified. State Bank of India, Union Bank of India, Bank of Baroda, Central Bank of India, Indian Bank, Punjab National Bank, UCO Bank, Indian Overseas Bank all state-owned lenders and a few others have claimed over Rs 12,755 crore. (Business Standard)
RETAIL INFLATION LIKELY TO EASE BELOW 6% BY MARCH QUARTER, SAY ANALYSTS: India's headline retail inflation may ease below 6% by the fourth quarter of this financial year, bringing an end to the current cycle of rate hikes, analysts said over the weekend. Following the release of minutes from the central bank's monetary policy committee on Friday, analysts said the Reserve Bank of India (RBI) may hike repo rates by 50-60 basis points by December. India's consumer inflation dipped to 6.71% in July, easing for the third month in a row, but remained above the RBI's mandated target band of 2%-6% for a seventh straight month.
INDIAN BANKS ISSUE MORE CERTIFICATES OF DEPOSITS TO SECURE CHEAP FUNDING: Indian banks have increased their fundraising activity through the issuance of certificates of deposits, as funding in the banking system continues to contract, analysts said."Banks are not raising deposit rates, as they are able to get funds easily from money market by issuing CDs, and that too cheaply. Indian Banks have raised around Rs 30,000 crore ($3.76 billion) through twomonth to one-year CDs in the two weeks to Aug. 19, sharply higher than the roughly Rs 5,000 crore in the previous two weeks, data compiled by Reuters showed. India’s banking system liquidity surplus has dropped below Rs 1 trillion, and has averaged around Rs 1.4 trillion in August, falling further from Rs 1.9 trillion in July and Rs 2.92 trillion in June. (Business Standard)
IDBI BANK ANNOUNCES AMRIT MAHOTSAV FD SCHEME: IDBI Bank has introduced a limited period special 500 days deposit under the Amrit Mahotsav FD scheme, which will offer 6.70 per cent interest rates. Further, a special bucket of 500 days for US dollar designated FCNR (B) deposits is also introduced offering a peak rate of 3.63 per cent.
BANKS’ AT-1 BOND ISSUANCES LIKELY TO DECLINE TO RS 20,000 CRORE IN FY23: The issuance of Additional Tier-1 (AT1) bonds by banks is likely to more than halve to Rs 20,000 crore this fiscal compared to the all-time high amount of Rs 42,800 crore raised in FY22, says a report. AT-1 bonds are those debt instruments without a terminal maturity date. Majority of the bonds have a call option in the fifth year, resulting in the significant jump in new issuances which are basically for refinancing the earlier obligations. (Financial Express)
US DEMAND TO LIFT INDIA’S LAB-MADE DIAMOND EXPORTS TO $8 BILLION: India, which cuts or polishes about 90% of the diamonds sold in the world, is ramping up sales of laboratorymade gems as demand from the US surges and they become more accepted in other markets. Exports of polished lab-grown diamonds may double in the current financial year started April 1 from $1.3 billion in the prior year, Vipul Shah, vice chairman of the Gem & Jewellery Export Promotion Council, said in an interview. “We have a huge potential to grow exports to $7 billion-$8 billion in the next few years on the back of US demand and acceptability in the UK and Australia,” he said. (Economic Times)
FinMin IN CONSULTATION WITH RBI AMENDS OVERSEAS INVESTMENT RULES: The Centre has announced an amendment in the Foreign Exchange Management (Overseas Investment) Rules. Currently, the overseas investment by a person resident in India is governed by the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 and the Foreign Exchange Management (Acquisition and Transfer of Immovable Property Outside India) Regulations, 2015.Under the new amendment, the net worth of a registered partnership firm or LLP will be the sum of the capital contribution of partners and undistributed profits of the partners after deducting there from the aggregate value of the accumulated losses, deferred expenditure, and miscellaneous expenditure not written off, as per the last audited balance sheet. The amendment guides where investment by a person resident in India in the equity capital of a foreign entity is classified as ODI (Overseas Direct Investment), such investment will continue to be treated as ODI even if the investment falls to a level below 10% of the paid-up equity capital or such person loses control in the foreign entity.