Covid-19 crisis: SBI to disburse Rs 700 cr to MSMEs in Mumbai by June

Among all banks, SBI controls a market share of 22% in the MSME lending.

State Bank of India (SBI), the country's largest lender, has set a target of disbursing Rs 700 crore to MSMEs in the Mumbai circle by the end of June, to help them tide over liquidity crisis due to the Covid-19 lockdown.

Among all banks, SBI controls a market share of 22 per cent in the MSME lending.

"SBI will boost flow of credit to MSMEs (micro, small and medium enterprises) in this challenging period by reassessing their working capital limit and also by extending Covid-19 emergency loans.

"Overall, we expect to lend Rs 700 crore to MSMEs in four districts of Mumbai circle — Mumbai, Thane, Palghar and Raigad — by the end of June," the World Trade Centre said in a statement quoting Suresh Nair, deputy general manager (SMEs and financial inclusion) at SBI, as saying after a webinar.

ALSO READ: SBI, ICICI Bank: Are financial sector stocks a good bet post RBI measures?

Nair expressed hope that the pandemic will not lead to a sudden spurt in bad loans as the Reserve Bank of India has provided moratorium on all loan repayments.

"The impact of the crisis on NPAs (non-performing assets) will become clear after August depending on the evolving situation," Nair said.

Though SBI has provided sanction letter for additional loan facility to 67 per cent of all eligible borrowers, only 50 per cent of them could avail of the facility due to practical difficulties in executing documentation, he said.

SBI lowers lending rate by up to 15 bps; 10th cut in current fiscal

Overnight and one-month MCLRs have been reduced by 15 basis points to 7.45 per cent each. Three-month MCLR has been revised to 7.50 per cent from 7.65 per cent.

The country's largest lender State Bank of India (SBI) on Wednesday said it has reduced its marginal cost of fund-based lending rate (MCLR) by up to 15 basis points across various tenors, effective March 10.

The bank has reduced its one-year MCLR by 10 basis points to 7.75 per cent from 7.85 per cent earlier, the SBI said.

This is 10th consecutive cut in MCLR by the bank in the current fiscal.

Overnight and one-month MCLRs have been reduced by 15 basis points to 7.45 per cent each. Three-month MCLR has been revised to 7.50 per cent from 7.65 per cent.

The new two-year and three-year MCLRs stand reduced by 10 basis points to 7.95 per cent and 8.05 per cent, respectively.

On Monday, another state-run lender Union Bank of India had announced cut in its MCLR by 10 basis points across all tenors, effective March 11.

This is the ninth consecutive rate cut announced by the Mumbai-based bank, since July 2019.

The bank has cut its one-year MCLR to 8 per cent from 8.10 per cent. The overnight MCLR has been revised to 7.55 per cent, while the new one month rate stands at 7.60 per cent, the bank had said.

All may not be lost for YES Bank but insiders say its recovery to be slow

It will rely upon the obtaining bank or money related foundation's ability to hold the benefits till the market improves and sell them later to recuperate sizeable lump of the credits.

YES Bank Crisis : All may not be lost for emergency hit YES Bank with banking industry insiders calling attention to that the bank has rock solid insurance against advances.

It will, thusly, rely upon the procuring bank or monetary establishment's ability to hold the benefits till the market improves and sell them later to recuperate sizeable lump of the credits.

For example, if security is a private structure, it may not bring great cost in a discouraged market.

Yet, given that a portion of the enormous budgetary foundations, for example, IL&FS and DHFL have fell as of late, the market may not react well to YES Bank.


"This is the explanation we expect recovery of YES Bank to be extremely moderate," a Mumbai-based bank official said.
Indeed Bank had before put forth all potential attempts to raise development capital however hopelessly fizzled. Since the main private bank is very nearly breakdown, the administration has bumped the SBI to frame a consortium and salvage the bank.


The RBI, as controller, has come vigorously and finding a way to guarantee the bank makes a turnaround.
The circumstance at the YES Bank has arrived at disturbing level constraining the RBI to supplant its board. A breaking point has additionally been forced on withdrawal of stores in overabundance of Rs 50,000.


There is a developing recognition in the market that a sizeable piece of YES Bank's credits have transformed into non-performing resources (NPAs) which are not recoverable. This will prompt disintegration of its advantages yet given that the bank, before, took substantial guarantee for loaning, the market anticipates that the gaining element should recoup some portion of the credits by selling the benefits.

"Advances are unquestionably transforming into NPAs however does the basic security have showcase esteem and to what degree, would they be able to be recouped? What one sees is that bank has just made arrangements for awful credits however the bank has the option to sell the advantages sold with it," another financial industry official said.
The administration is found out to have requested that the SBI lead a consortium to purchase stake in YES Bank. This signals the legislature won't permit the bank to come up short.

TCS, DLF seek govt nod to set up IT SEZs in Haryana, Uttar Pradesh

TCS has proposed to set up an IT/ITeS SEZ at Noida in Uttar Pradesh in an area of 19.9 hectares.

Software firm TCS and realty major DLF have sought government nod to set up special economic zones (SEZ) for IT sector in Haryana and Uttar Pradesh.

These proposals will be taken up by the Board of Approval, the highest decision-making body for SEZ, in its meeting on February 26 here. The inter-ministerial body is chaired by the commerce secretary.

TCS has proposed to set up an IT/ITeS SEZ at Noida in Uttar Pradesh in an area of 19.9 hectares, according to the agenda paper of the board meeting.

The total proposed investment for the project is Rs 2,433.72 crore.

Development Commissioner of Noida SEZ has recommended the proposal for grant of formal approval for setting up the zone.

On the other hand, DLF has proposed to set up two SEZs in Haryana. The proposed investments for these projects are Rs 793.95 crore and Rs 761.54 crore.

The requests of these two companies have been placed before the Board of Approval for consideration, it said.

SEZs are major export hubs in the country as the government provides several incentives and single-window clearance system.

As on November 14, 2019, the government has approved 417 such zones in the country. Out of this, 238 zones are operational.

Exports from these zones grew by about 14.5 per cent to Rs 3.82 lakh crore in April-September 2019-20. It was Rs 7.02 lakh crore in entire 2018-19 financial year.

Why India's asset managers are trouncing their global peers this year

Industry bulls say domestic asset managers' profits are growing as they expand. That's in contrast with many global peers.

Market News : Indian asset managers’ shares are trouncing global peers this year as domestic money managers benefit from the tectonic shift in savings from gold and real estate to stocks and bonds.

Reliance Nippon Life Asset Management Ltd. and HDFC Asset Management Co., whose shares have more than doubled in 2019, are the third- and fourth-best performers among 36 peers with a market value of at least $2 billion, data compiled by Bloomberg show.

Retail investors piled into mutual funds after the government ban on high-value currency bills in 2016 hurt returns from gold and property. While total assets have more than tripled to $382 billion in the past five years, only 1.5% of Indians own funds, suggesting a long runway for growth. And passive investing that’s decimated fees for U.S. managers is still to take hold in India.

“Mutual funds have become an asset class of choice with policy makers pushing for the formalization of savings,” Sundeep Sikka, chief executive officer of Reliance Nippon, said in an interview. The decline in deposit rates has also made funds more popular than other financial products, he said.

The parabolic surge in Reliance Nippon and HDFC Asset is also down to the fact that the duo is India’s only listed fund houses. The shortage could ease after UTI Asset Management Co. goes public next year.

To be sure, the two stocks have come off their peaks in recent days as above-average valuations deterred buyers. Problem is, they’re still expensive relative to history and trade at prices slightly above their 12-month targets, data compiled by Bloomberg show.

That’s as inflows to equity funds, the most profitable category for asset mangers, shrank to the lowest in over three years in November even as the main indexes hit new highs. The S&P BSE Sensex held at a record on Wednesday, and is set for the biggest annual gain since 2017.

“We are watching to see whether the slowdown continues for the next few months,” said Sikka. “If the manager has scale and sticky investors, this can be ridden out like in the previous cycles.”

Industry bulls say domestic asset managers’ profits are growing as they expand. That’s in contrast with many global peers, many of whom could become “zombie firms” unable to attract new flows, according to PGIM chief executive officer David Hunt.

Analysts see Tata Steel stock rising in 2020 as firm revamps Europe biz

Tata Steel has been closing and selling plants in the UK since the 2008 financial crisis to make its business there more profitable.

Market News : A revamp of its European operations, an improved product mix and a ban on cheaper steel imports to India may bolster the fortunes of Tata Steel Ltd.’s shares, the least valued stock on the South Asian nation’s benchmark equities gauge.

Tata Steel shares have lost nearly half of their value since Jan. 2018 to trade at a price-to-earnings ratio of 4.7, the lowest on the S&P BSE Sensex Index. The company, which last year got more than 50 per cent of its sales abroad, last week outlined job cuts and other measures aimed at cutting costs in Europe, which it called a “dumping ground” for steel.

“Indian steel prices may have found a floor, thanks to the minimum import price, and have already started moving up,” said Siddharth Gadekar, an analyst at Equirus Securities Pvt., “That kind of stability in prices gives investors confidence.”

Tata Steel has been closing and selling plants in the UK since the 2008 financial crisis to make its business there more profitable.

It’s now focusing on India, and aims to ramp up capacity as demand is set to expand by as much as 7 per cent in 2020, according to the World Steel Association. That’s the most among the top 10 steel using countries.

While protection from cheaper shipments from abroad will also benefit Tata Steel’s domestic peers, its valuation advantage, product mix and debt reduction steps may increase its appeal to investors. India imposed a minimum import price for steel products in 2016.

“Tata’s volume of sales should beat the rest of the industry because of their value for money offering, and their entrance into the pipeline steel category,” said Richard Leung, an analyst with Bloomberg Intelligence, “The rest of the industry may see muted growth next year because of reliance on legacy demand like automobiles.”

To be sure, Tata Steel’s debt-to-equity ratio is higher than most local peers, largely due to its 2007 purchase of Corus Group Plc for about $13 billion and its acquisition of Bhushan Steel for about $5.3 billion last year. Still, Moody’s Investors Service said in a Nov. 25 note that the company’s European cost cuts will support a turnaround in less profitable operations that have hurt the company’s overall credit quality.

“In a down cycle the companies that have higher debt tend to trade at a discount,” said Equirus Securities’ Gadekar, “With their earnings profile and current steel prices, they can service their debt easily.”

Shadow bank woes may continue to haunt stock market after disrupting rally

The S&P BSE Sensex Index posted its third day of losses on Tuesday, ending a surge since the Sept 20 announcement of the tax cuts.

Business Standard : India’s shadow banking crisis has sucked in more financial firms this week, eroding a stock market rally that’s been driven by a surprise $20 billion tax cut package.

The S&P BSE Sensex Index posted its third day of losses on Tuesday, ending a surge since the Sept. 20 announcement of the tax cuts. Financial stocks, which account for 45 per cent of the benchmark index, contributed the most to the declines since late last week, according to data compiled by Bloomberg.

Debt concerns at lenders including Indiabulls Housing Finance Ltd. and a co-operative bank, and worries a cleanup in corporate debt could be prolonged, have spooked the financial markets. The sight of depositors lining up to pull their money from Punjab & Maharashtra Co-operative Bank Ltd., after the central bank put limits on lending, has also been unsettling.

The Reserve Bank of India on Friday tweeted the “banking system is safe and stable and there is no need to panic.” The nation’s stock markets will reopen Thursday after a one-day holiday.

Banking Troubles

Punjab & Maharashtra Co-operative Bank concealed large exposures from RBI since 2008, a former managing director said

Central bank put restrictions on Lakshmi Vilas Bank Ltd., which Indiabulls Housing plans to acquire

Yes Bank Ltd.’s shares plunged almost 34 per cent in two days on concerns a cleanup in corporate debt could drag on

Here is what the analysts are saying:

Stay Selective

Negative news flow around lenders has “overshadowed the recent tax cut tailwind, bringing focus back on sector issues: liquidity issues and contagion risks,” Jefferies Financial Group Inc. analysts including Bhaskar Basu wrote in a note on Tuesday.

Basu said he likes non-bank lenders with a strong liability base, low asset quality risks and good earnings visibility. He prefers stocks including Bajaj Finance Ltd. and Mahindra & Mahindra Financial Services Ltd.

RIL topples IOC to become the biggest Indian company in revenue terms

RIL was also the most profitable company in the country with a net profit of more than double that of IOC in FY2019.

Business Standard : Richest Indian Mukesh Ambani's oil-to-telecom conglomerate Reliance Industries has toppled state-owned Indian Oil Corp (IOC) to become the country's biggest company by revenue.

Reliance in the 2018-19 fiscal year that ended March 31, reported a turnover of Rs 6.23 trillion. In comparison, IOC posted a turnover of Rs 6.17 trillion for the fiscal, according to regulatory filings by the two companies.

It was also the most profitable company in the country with a net profit of more than double that of IOC in FY2019.

Reliance Industries, which was about half the size of IOC till about a decade back but its bet on burgeoning consumer base and foray into new businesses such as telecom, retail, and digital services vastly expanded its business, clocked a net profit of Rs 39,588 crore in FY19. IOC, on the other hand, ended the year with a net profit of Rs 17.274 crore.

IOC till last year was the most profitable PSU but may have lost this position to Oil and Natural Gas Corp (ONGC) in 2018-19. ONGC is yet to declare its FY19 earnings but it had clocked a net profit of Rs 22,671 crore in the first nine months of the fiscal year.

Net profit of IOC, which depends on oil refining, petrochemicals and gas business for its revenue, had in 2018-19 declined by 23.6 per cent over Rs 22,189.45 crore net profit it had earned in 2017-18.

Reliance, on the other hand, posted a 13 per cent rise in profits over Rs 34,988 crore recorded in 2017-18.

ONGC had a net profit of Rs 19,945.26 crore in 2017-18 fiscal, lagging behind IOC.

With this milestone, Reliance has achieved the numero uno position in terms of all three parameters revenue, profit, and market capitalisation.

With strong refining margin and robust retail business, Reliance clocked a 44 per cent in revenue in FY19 over the previous year and posted a compounded annual growth rate of over 14 per cent between FY10 and FY19. In contrast, IOC turnover rose 20 per cent in FY19 and 6.3 per cent during FY10 and FY19.

At Tuesday's trading price of Rs 1,345, Reliance boasts of a market capitalisation of Rs 8.52 lakh crore.

Interestingly, Reliance which boasts of the highest cash reserves of Rs 1.33 lakh crore on the book, also has the highest gross debt of Rs 2.87 lakh crore at the end of March 2019.

In contrast, IOC had short and long-term loans totaling Rs 92,700 crore.