1.Banks Stare at Rs 53,000-cr Electricity Boards NPA on July 1 - BS
A whopping Rs 53,000-crore exposure of Indian banks to seven state electricity boards (SEBs) has a “very high probability” of turning into non-performing assets (NPAs) in the quarter ending September, the Reserve Bank of India (RBI) said in its Financial Stability Report, released on Thursday.
These loans were restructured in 2012, with a three-year moratorium for the principal amount of Rs 43,000 crore. If distribution companies fail to pay interest and/or the principal by June 30 (90 days from the date the moratorium ended), these will turn into NPAs.
“Considering the inadequate fiscal space, it is quite likely the government might not be in a position to repay the overdue principal/instalments in time,” the report said
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2.Rahul Yadav Leaves Housing Without a Housemaster – ET
Rahul Yadav has agreed to step down as the CEO of Housing.com, bringing the curtains down on a tempestuous saga at one of India’s most-watched startups. His resignation at the behest of the board of the Mumbai-based company comes less than two months after he wrote an ill-tempered letter to investors offering to step down as CEO. That offer was rejected.
This time, however, the board took the initiative, and Yadav acquiesced in their decision, said two people directly aware of the development.
3.RBI Extends Deadline to Exchange Pre-2005 Notes Till December 31 – PTI
The Reserve Bank on Thursday extended the deadline for exchanging pre-2005 currency notes of various denominations, including of Rs 500 and Rs 1,000, by six months till December 31, 2015.
The earlier deadline was expiring on June 30. “The Reserve Bank of India has extended the date for the public to exchange their pre-2005 banknotes till December 31, 2015,” it said in a press release. RBI had, in December 2014, set the last date for public to exchange these notes as June end.
It is easy to identify pre-2005 notes. The currency notes issued before 2005 do not have the year of printing on the reverse side. In notes issued post 2005, the year of printing is visible at the bottom on the reverse.
4.Bharti Airtel Buys OneWeb Stake to Beat Spectrum Crunch - FE
Ahead of the launch of Digital India week on July 1, Sunil Bharti Mittal-led Bharti Enterprises has participated in a satellite-based global initiative to enable internet penetration in rural areas at low costs and to help operators tide over the spectrum crunch and overloaded and congested networks.
The net impact will be internet for all at affordable rates and goodbye to call drops and congested networks, without the need to set up more towers. Speaking to FE from London, Mittal said the initiative will be a game-changer for India: “Not only would it help us connect most rural parts of the country with internet at most affordable rates, it would also do away with the problem of erecting more towers.”
5.Jet Airways Shareholders Approve $ 400 million Fund Raising Proposal - BS
Jet Airways plans to raise $400 million (about Rs 2,500 crore) through non-convertible debentures or bonds to fund expansion. Last week, the airline notified the stock exchanges that it had secured shareholder approval to raise the debt. An extra-ordinary general body meeting to approve the plan was held last month.
Jet Airways founder-promoter Naresh Goyal owns 51 per cent in the airline. In 2013, Etihad picked up a 24 per cent stake in Jet investing $379 million (Rs 2,057 crore).
Etihad has denied media reports that it is in talks to raise its stake in Jet Airways.
6.ICICI Bank Cuts Base Rate to Match Rivals - FE
Faced with tepid credit growth, private sector lender ICICI Bank on Thursday reduced it base rate by 5 bps to 9.7%, bringing it on a par with industry leader SBI and HDFC Bank. The bank had earlier cut base rate by 25 bps in April.
“ICICI Bank has announced a reduction of 0.05% in the ICICI Bank Base Rate (“I-Base”),” ICICI Bank said in a BSE filing. With credit growth not picking up, banks have been left with no option but to reduce lending rates. Although banks have been reducing deposit rates since October last year to facilitate a lending rate cut, the reduction in cost of funds reflects only after eight to nine months.
However, lenders said with a cut in base rate, all loans become cheaper immediately, affecting their margins. RBI data showed that between April 3 and June 12, deposits have fallen 1.63% or Rs 1.45 lakh crore.
7.Banks Allowed to Borrow from Global Institutions -Hindu
The Reserve Bank of India had decided to allow banks to borrow from global multilateral financial institutions for general banking business. They can do so without seeking the central bank’s approval. The objective is to make the funding process easier.
The RBI, however, has made it clear that such borrowings should not be for capital augmentation. Such borrowings, however, would be subject to the applicable prudential norms, it added.
With a view to providing greater flexibility in seeking access to overseas funds, it has now been decided to permit AD Category-I banks to borrow from international/multilateral financial institutions without approaching Reserve Bank for a case-by-case approval.
– RBI
8.Monsoon Covers Country, But Expected to Weaken In July - LiveMint
Despite a late start, the monsoon covered the entire country, except west Rajasthan, on Thursday, after rapidly advancing over central and north India, according to the India Meteorological Department (IMD).
The rainfall so far is 28% higher than the long-period average, but is likely to weaken substantially in July, said the government weather forecaster in its weekly update. “(There will be) a considerable decrease in rainfall activity over northwest, central and parts of Peninsular India during the next 15 days (after 30 June),” said the update.
However, the first 10 days of July will see near-normal rainfall in parts of east and north-east India.
9.Assets Managed by MF Distributors to Triple by 2020: Report
Assets under management (AUM) of mutual fund distributors could nearly triple from Rs 8 lakh crore ($127 billion) to Rs 23 lakh crore ($368 billion) by 2020, a research report said on Thursday.
The increase would be led by gains in equity funds, as retail and high net-worth investors hop on to the economic growth bandwagon, a joint report by Crisil Research and the Financial Intermediaries Association of India (FIAI) stated.
It would tantamount to a compound annual growth rate of over 20 per cent and mean that the financial distribution industry is at an inflection point. Such growth would also redirect some of the high level of personal savings to capital markets, the report stated.
The report estimated that life insurance distribution premium could also triple from Rs 3 lakh crore to nearly Rs 9 lakh crore while non-life distribution premium would increase from Rs 0.50 lakh crore to Rs 1.31 lakh crore.
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