Plan and Policy

Plan & Policy

Bank stocks begin slow climb

Lending rate cuts announced by banks have provided a glimpse of better days ahead, though with a lag due to short-term demonetisation impact.
The Prime Minister announced interest rate subvention for low cost housing, which hurt bank stocks as trading in banks stocks began in the new year. The bank stocks have so far have taken it on the chin in the new year as investors saw lending rate cut hurting banks’ profitability. But, bank stocks bounced back on Thursday but, say analysts, banks will have to take innovative steps to perform well.

Buying sentiment nosedives in top cities in December

Thanks to demonetisation, Indian consumers’ keenness towards making purchases has fallen 61 per cent in December, the lowest level in nine months. Among the top cities, Delhi’s buying propensity fell the most, as it went into the negative territory.
India’s Buying Propensity Index (BPI), measured regularly by brand intelligence company TRA Research, stood at 0.26 in December, down 61 per cent or 0.42 points from 0.68 in November.

As bad loans run deep, banks mull ‘deep rejig’

The asset quality review has completed one year but the problem of bad loans is far from over. Against this background, bankers are brainstorming a new proposal on ‘deep restructuring’ to revive stressed assets. Sources said the Indian Banks Association (IBA) has held three meetings on this and another one would be held of January 17 to decide the broad contours of such a scheme. They will later submit the plan to central bank for approval.
In a deep restructuring, banks typically convert a portion of debt into equity and also extend the repayment period for the rest of the loan.

Bonus, ESOPs on the cards for bank staff from FY18

Banks Board Bureau (BBB) chief Vinod Rai (in pic) on Thursday suggested fixing a minimum six-year term for appointment to senior positions in state-run banks. This is expected to ensure greater stability and accountability in the public sector banks.
Rai also said that employees of the public sector banks would get higher pay package and attractive perks from next fiscal so as to attract the best talent from the market and retain them. On the lines of the private sector, bank executives would get bonuses, variable pay and ESOPs as part of the total compensation.

SBI blocks transfer of cash to e-wallets via netbanking

The country’s largest lender State Bank of India (SBI) continues to block its users from transferring money using its internet banking portal to mobile wallet services such as Paytm, FreeCharge, Mobilkwik, Jio Money and Airtel Money. However, SBI customers can top-up their e-wallets via debit and credit cards. An SBI official alleged that wallets were encouraging customers to siphon off money from their SBI accounts to other bank accounts, besides citing security issues.

Rupee to head towards 70 against the dollar

The rupee has shown some signs of being jittery which is being driven by both fundamentals and sentiment. Going ahead, a lot will be driven by what transpires in the US as well as how our balance of payments fares.
Two defining factors would be what US President-elect Donald Trump will do when he takes over as President and second, how our balance of trade develops in the light of the developments in the global commodity markets.

Strong dollar set to bring relief to IT industry

For the Indian IT industry, which has been thriving and growing on the US economy’s appetite for outsourcing to save costs, the recent concerns have been the impact of automation on the industry’s employment capability and the ascendency of Donald Trump to the US presidential seat later this month.

HDFC Bank cuts lending rate by up to 0.90%

HDFC Bank — India’s second biggest private sector lender — on Wednesday cut its benchmark lending rate by up to 0.90 per cent, joining over a dozen banks and housing finance companies that have slashed rates in the last few days. The bank's asset liability committee decided for a cut of 0.75-0.90 per cent in marginal cost of funds-based lending rate (MCLR) across multiple tenures.
The bank’s executive director Kaizad Bharucha said the move has primarily been driven by the huge amount of liquidity in the system due to demonetisation.

Re likely to hit all-time low against $ in 2017

The rupee is likely to stay under pressure due to evolving domestic uncertainties, weakening foreign trade and improving US monetary conditions. Frantic investment outflows from the country against the backdrop of buoyant dollar sentiment is likely to keep the home currency under immense pressure with currency experts forecasting a range of 66 to 72 levels in 2017.

M&A deals hit record high in 2016

The value of announced mergers and acquisitions (M&A) deals involving Indian companies reached an all-time high with $72.4 billion in 2016, up 97.1 per cent compared with 2015. The growth was driven by industry consolidations, restructurings and asset sales. This is also the highest-ever annual period for overall Indian announced M&A in terms of deal value, surpassing the annual record set in 2007 with $67 billion.