Indian Bank sees new opportunities with larger footprint after merger

Both the banks have come together amid the coronavirus (Covid-19) lockdown and started working as a single bank with a larger footprint.

After the merger of Allahabad Bank with it, Indian Bank sees growth in lending and deposits and new opportunities emerging despite the lockdown, according to Padmaja Chunduru, Managing Director & CEO of Indian Bank. Both the banks have come together amid the coronavirus (Covid-19) lockdown and started working as a single bank with a larger footprint.

Even during the lockdown period, both lending and deposits are growing. "We must be careful in assessing and giving the loans. We have been one of the earliest banks to announce emergency loans across the table. I think this opens up new opportunities. First of all we have to assess the risks because there are so many more sectors now and the whole paradigm is shifting," Chunduru said.

The merger was a big task in front of the bank, but when confronted with the Covid-19 issue, the whole bank came together and the safety of the employees became paramount. Safety measures have been implemented across the bank. On April 24, it was Allahabad Bank's Foundation Day, but the amalgamated entity could not celebrate due to the lock-down.

ALSO READ: Axis Bank reports Rs 1,878-crore pre-tax loss in Q4 on Covid-19 provisions

The bank has also launched an online learning management solution for the staff. The best the welfare measures that were offered by the two banks have been made applicable to all the employees and all of them have been well received. In terms of alignment of products of both the banks, especially those related to housing loans, Indian Bank had certain products which were more attractive to the customers and they were launched across the country.

Shanghai tops world's IPO league table despite coronavirus outbreak

Eight companies raised $2 billion that month and a further 5 deals in March were worth $615.5 million.

Shanghai has topped global initial public offering (IPO) league table for the first time in nearly three years, even as the coronavirus epidemic which originated in China rocked markets around the world.

A total of 33 companies raised $7.31 billion floating on the Shanghai main board and the city's start up-focused STAR market, according to Refinitiv data for the first quarter, easily outstripping New York's Nasdaq where 17 companies raised $5.13 billion via IPOs.

But even as Shanghai basks in success, for cash-seeking companies and their bankers the question is whether China can maintain this momentum as the coronavirus continues to cause massive disruption in global financial markets.

While Shanghai hosted the $4.4 billion IPO of Beijing-Shanghai Speed Railway early in January, accounting for most the funds on the main board, STAR market issuance held up even as the country went into virtual lockdown in February.

Eight companies raised $2 billion that month and a further 5 deals in March were worth $615.5 million.

ALSO READ: MARKET LIVE: Sensex off lows, down 500 pts; Bajaj Finance dips 8%

China's markets have fared better than many Western benchmarks, with the blue-chip CSI 300 down 9.4% for the year as of Friday March 27, compared with tumbles of 21% fall for the S&P 500 in New York and 25% for the pan-European STOXX 600 index.

EY Greater China IPO practice leader Terence Ho said the fiscal response from China's government - which accelerated a massive programme of economic stimulus measures - could help boost the prospects of companies looking to list on the mainland markets.

Bank is financially strong, well capitalised and profitable: RBL Bank

The bank's capital adequacy ratio is at 16.08 per cent, much higher than the regulatory requirement of 11.5 per cent.

Amid concerns over health of banks, private sector lender RBL Bank said on Wednesday that it is financially strong with strong governance set-up.

The bank's capital adequacy ratio is at 16.08 per cent, much higher than the regulatory requirement of 11.5 per cent.

In a press statement, RBL said that it is well-capitalised, profitable and a growing entity. Its stock on BSE was up 11.9 per cent at Rs 232.5 per share in morning trades.

RBL said there was no adverse change in asset quality and its guidance remained consistent.

The liquidity position of bank was healthy with the liquidity coverage ratio (LCR) at 145 per cent of statutory requirements at the end of last week, the statement said.

The statement added that all business segments were doing well, the bank continued to expand presence across newer geographies by adding branches and was also hiring more people as previously planned.

The bank is attracting additional deposits from retail, corporates and institutional segments, the statement added.

Market News

Is it a good time to buy gold as a safe-haven bet amid coronavirus fears?

Gold, which was hovering around $1,321 an ounce in January 2019, has already breached $1,600 per ounce in the past few sessions to a seven-year high.

For an asset class that has already seen an appreciation of around 25 per cent in a year, analysts expect the onset of coronavirus (Covid-19) to fuel a further upside in gold prices over the long-term should the panic spread. In the short-term (six months), however, they expect the upside to be limited given the rally since the past year.

Gold, which was hovering around $1,321 an ounce in January 2019, has already breached $1,600 per ounce in the past few sessions to a seven-year high.

“The effects of coronavirus is adding to global woes. At a time when we were beginning to think that there could be some resolution to the trade wars, the onset of coronavirus has dealt a double blow to an already slowing world economy,” says Kishore Narne, associate director for commodity research at Motilal Oswal Financial Services.

Meanwhile, the total number of coronavirus-related deaths in mainland China have crossed 2,700, while the number of confirmed cases in mainland China are above 78,400. Moody's Analytics has forecast a global recession if this health scare becomes a pandemic, and the odds of that are uncomfortably high and rising with infections surging in Italy and Korea.

“Gold prices are likely to remain range-bound in the next six months given the rally seen over the last one year. However, one needs to monitor coronavirus-related developments and how global economy plays out. A rise in cases / fatalities could push investors to safe-haven assets like gold and silver, which in turn will see their prices move up,” says G Chokkalingam, founder and managing director at Equinomics Research.

Policy-wise, global central banks are likely to resort to more stimulus measures in the form of rate cuts and/or pumping in more money to revive growth. All this can trigger a liquidity-driven rally in most asset classes, including gold.

How equities will react to this move will also depend on how corporate earnings play out, analysts say.

YES Bank to delay Dec-quarter results amid talks to raise capital

The bank and its financial advisors are in discussions with investors on commercial terms. The investments, including pricing and size of the stake to be acquired, are all subject to regulatory approve.

Market News : YES Bank will delay the announcement of its December quarter (Q3) results as it is in talks with potential investors, including J.C. Flowers and Silver Point Capital, for raising equity capital.

In a filing to the BSE, the lender said it had received non-binding expressions of interest (EoIs) from several investors including J.C. Flowers & Co, Tilden Park Capital Management, OHA (UK) LLP (part of Oak Hill Advisors), and Silver Point Capital.

The bank and its financial advisors are in discussions with these investors on commercial terms. The investments, including pricing and size of the stake to be acquired, are all subject to regulatory approval.

The current capital raising process is engaging the bank’s attention and hence it will publish its results for Q3 and the nine months ended December 31, on or before March 14, 2020. The bank added that this exceeds the 45-day period from the end of the relevant quarter to announce results, as stipulated by the Securities and Exchange Board of India. YES Bank shares closed 4.5 per cent lower at ~35.2 per share on the BSE. India Ratings has downgraded YES Bank’s long-term issuer rating to ‘A-’ from ‘A’, on account of the continued delay and inconclusive quantum of the anticipated equity infusion. It remains on Rating Watch Negative (RWN). This could adversely impact the bank’s franchise and potentially create challenges on asset and liability side, the rating agency said in a statement.

It has sizable foreign currency liabilities and institutional deposits. The required capital infusion is critical for providing sufficient cushion from the possible credit cost impact due to the stressed asset pool on regulatory capital requirement, in the short- and medium-term. The capital is also crucial for serving its customers adequately, said India Ratings.

YES Bank’s liquidity position seemed adequate as of September 2019 (liquidity coverage ratio of 114 per cent).

However, in the absence of any swift capital raise, the bank’s ability to manage its asset and liability maturities could get tested further. The lender continues to remain in discussions with potential investors. However, raising sizeable capital in the near term could be challenging and could require various approvals.

Falling deposits are the latest problem for Yes Bank after bad loans

The lender issued a statement last month assuring customers about its liquidity and stability and said it is making every effort "to financially strengthen the bank further."

When a former YES Bank executive started selling his stake in September, the lender’s top managers watched for any sign that the resulting drop in share price would trigger a rush to withdraw deposits.

The stock sales came as customers of a regional lender — Punjab & Maharashtra Co-operative Bank — were lining up outside its branches to withdraw their money following an alleged management fraud. Rampant speculation online about broader contagion forced the central bank to issue rare statements assuring the public of the safety of the financial system.

YES Bank’s loss of mom-and-pop deposits in September was manageable in the end, though it pointed to a risk for the lender whose peers HDFC Bank and ICICI Bank drew more savings from customers during that period. India’s fourth-largest private lender has had a tumultuous 2019 with a new chief executive unable to raise the capital needed to bolster ratios that stand just above a regulatory minimum and quell analyst questions about its stability.

“It is now a vicious circle where a lack of capital is increasing concerns on the bank’s bad loans, creating uncertainty among investors and depositors, which is adding to the withdrawal of low cost and retail term deposits,” said Ravikant Anand Bhat, an analyst at IndiaNivesh Securities.

The lender’s share price tanked 74 per cent last year as soured debt mounted given its exposure to shadow banks entangled in a prolonged crunch in the local credit market. The plunge has continued this year, with shares dropping another 21 per cent even as a benchmark index remained little changed.

The bank is due to report results for the December quarter, which will show whether deposits eroded further in the last three months of 2019. Bhat expects total deposits to decline another 20 per cent, after they dropped 7.3 per cent from June to Rs 2.1 trillion ($29 billion) as of September 30.

YES Bank calls shareholders' meet on February 7 for nod on fundraising

There had been offers from Erwin Singh Braich, Citax Holdings and Citax Investment Group.

Market News : YES Bank has, it told the stock exchanges, convened an extraordinary general meeting of its shareholders on February 7 on fund raising for Rs 10,000 crore, and to authorise an expansion in its authorised capital from Rs 800 crore now to Rs 1,100 crore.

Last week, it notified the exchanges that its board of directors had approved the raising of funds up to Rs 10,000 crore in one or more tranches, through Qualified Institutional Placement, Global Depository Receipts, American Depository Receipts, Foreign Currency Convertible Bonds or any other method on a private placement basis.

Earlier, it was in talks with several investors in this regard but after months of uncertainty, scaled down the fund raising plan substantially. There had been offers from Erwin Singh Braich, Citax Holdings and Citax Investment Group. Braich updated its offer but the bank decided not to proceed with this. Citax’s offer will be taken up later, as “relevant conditions precedent could not be completed”. The bank’s core equity capital is 8.7 per cent of the total, against the minimum regulatory requirement of 8 per cent.

Its shares closed 8.4 per cent down on Tuesday, at Rs 38.55 on the BSE exchange.

YES Bank acquires 30% in Reliance Power arm

YES Bank on Tuesday said it had acquired around 30 per cent stake in a wholly-owned subsidiary of Reliance Power pursuant to invocation of pledged shares.

The bank has acquired 12,73,21,500 equity shares having nominal value of Rs 10 each per share constituting around 29.97 per cent of the post-issue paid-up share capital of Rosa Power Supply Company (RPSCL), a wholly-owned subsidiary of Reliance Power, YES Bank said in a regulatory filing.

“Shares have been acquired pursuant to invocation of pledge of shares to RPSCL subsequent to default/breach of terms of credit facilities sanctioned by YES Bank to Reliance Power,” it added. Incorporated in 1994, RPSCL is engaged in the business of power generation. The plant (1,200 Mw) in Uttar Pradesh, owned by the RPSCL generated 4,341 million units for the year ended March 31. (With PTI inputs)

Walmart India fires around 50 executives as part of restructuring: Report

The firings mostly affected executives in the company's real estate division because the growth in the wholesale model has not been that robust.

Walmart Inc, the world's largest retailer, has fired around 50 of its India executives as part of its restructuring in the country, three sources with direct knowledge told Reuters.

The move underscores the struggles Walmart has faced in expanding its wholesale business in India. The Bentonville, Ark. based company currently operates 28 wholesale stores where it sells goods to small shopkeepers, and not to retail consumers.

The firings mostly affected executives in the company's real estate division because the growth in the wholesale model has not been that robust, two of the sources said.

"It's happening because focus is shifting to e-commerce rather than physical (stores)," said one source, who declined to be identified as the decision is not public.

Walmart did not respond to a request for comment.

Walmart has placed bold bets on India's e-commerce sector.

In 2018, it paid $16 billion to acquire a majority stake in India's online marketplace Flipkart, in its biggest global acquisition.

The second source added that while Walmart could slow down the pace of opening new wholesale stores, the focus will increasingly be on boosting sales through business-to-business and retail e-commerce.

Some of the executives were sacked last week and more could be let go on Monday, two sources said.

In a statement to India's Economic Times newspaper, which first reported the news, Walmart said it was always looking for ways to operate more effectively and that "this requires us to review our corporate structure to ensure that we are organised in the right way to best meet the needs of our members".

Walmart has around 600 staff in its India head office out of a total of around 5,300 nationally, one of the sources said.

Read More : Market News

Use volatility in markets to book profit in global funds, say advisors

Experts say investors can use this opportunity to re-balance their portfolio.

Market News : International funds — which have been the top performing ones over the last one year with gains of over 20 per cent — are being recommended by advisors for booking partial profits, with escalating tensions between the US and Iran threatening to spill over to and also impact global indices. “Investors can use this volatility in global markets to take some profits off the table, especially those investors that are close to their investment horizon,” said Amol Joshi, founder of Plan Rupee Investment Services. In the last one-year period, international funds have delivered returns of 25.49 per cent, outperforming large-cap funds by a wide margin. The latter has delivered returns of 10.63 per cent, thanks to polarisation in markets that favoured large-cap stocks.

Experts say investors can use this opportunity to re-balance their portfolio.

“Investors can re-align their portfolio, in-line with their original allocations. With value of investments in international funds going up, investor allocations are likely to have also gone higher to these funds,” said Vidya Bala, co-founder at Primeinvestor.in. According to industry observers, international funds had been attracting investor interest as domestic-focused funds have struggled to beat their benchmark returns.

According to a study, around 50 per cent of 200 actively-managed equity schemes had underperformed their benchmarks in CY19. Mid-cap and small-cap schemes — where retail investors had expected to make robust returns — have been the worst of the lot. The mid-cap and small-cap funds have delivered 3.5 per cent and 0.08 per cent returns in one year.

Advisors say that while investors can book partial profits in these schemes, they should continue to maintain some allocation. “International funds help from the point of view of diversification. Investors get exposure to different markets, rather just being exposed to domestic markets. Second, it also gives currency hedge, if the investor has dollar expenditure for foreign travel or for higher education of children,” Bala added.

According to experts, a weaker rupee and strong dollar is also a factor that can benefit international funds.

“International funds largely invest in companies that earn their revenues in dollar terms. This works favourably when rupee is seeing a depreciation,” said a fund manager. The rupee is expected to depreciate further as tension brewing between US and Iran can lead to spike in oil prices, and lead to further widening of current account deficit. Amid fears of spike in oil, the rupee breached the 72-mark against the dollar this week

Broadcasters, channels decline after Trai caps MRP on individual channels

Sun TV Network slipped over 6 per cent, while Balaji Telefilms and Sahara One Media dipped over 4 per cent.

Market News : Shares of channels and operators declined on Thursday after Telecom Regulatory Authority of India (Trai) made amendments to the new regulatory frameworks to allow TV users access to more channels at lower subscription price.

Among individual stocks, Sun TV Network slipped over 6 per cent, while Balaji Telefilms and Sahara One Media dipped over 4 per cent each, and Zee Entertainment and Den Networks both slid over 3 per cent in early morning trade today. The Nifty Media index dipped over 1.4 per cent as compared to the benchmark Nifty50 index's gain of 0.3 per cent.

However, most of these stocks recovered from their intra-day low and were trading in green by 10:30 AM. On the other hand, Sun TV Network and Zee Entertainment were trading lower by 3 per cent and 1 per cent, respectively.

The Trai has made the amendments to the New Tariff Order (NTO) according to which cable operators will have to provide 200 channels for Rs 153. The regulatory authority has also reviewed the pricing of channel bouquets compared to a la carte ones. The regulator has now set January 15 as the deadline for broadcasters to announce their new pricing structure.

At present, direct-to-home (DTH) or cable TV operators provide only 100 channels for a network capacity fee (NCF) levy of Rs 153 (Rs 130 excluding taxes).

According to the NTO that was released last year, consumers were given the option to pay only for the channels that they chose to watch, at the maximum retail price (MRP). Earlier, they were offered pre-set channel bouquets. The NTO was expected to bring monthly bills down, but it was the opposite that happened.

In order to address the huge discounts offered for bouquets, vis-a-vis the sum of a la carte channels, Trai has set two conditions to ensure the pricing of a-la carte channels does not become illusionary. First, the sum of the a la carte rates of pay channels forming part of a bouquet is not to exceed 1.5x the rate of the bouquet of which such channels are a part.

Slowdown blues: Bank credit growth may fall to 6.5-7% in FY20, says Icra

According to ICRA, even in a high-growth scenario, wherein the second half of FY20 sees the incremental bank credit rise to Rs 6.5-7 trillion, there will still be a 40-45% year-on-year (YoY) decline.

Market News : With the Indian economy caught in a slowdown, bank credit is expected to expand at a muted 6.5-7 per cent in 2019-20 (FY20) from 13.3 per cent in FY19, rating agency ICRA said in a report. This will be the lowest in 58 years, mainly on account of lower working capital requirements by companies and risk aversion among lenders.

According to ICRA, even in a high-growth scenario, wherein the second half of FY20 sees the incremental bank credit rise to Rs 6.5-7 trillion, there will still be a 40-45 per cent year-on-year (YoY) decline.

As of December 6, 2019, incremental bank credit increased by Rs 80,000 crore, whereas banks disbursed Rs 5.4 trillion during the same period in FY 19 and Rs 1.7 trillion in FY18 (till December 2017).

Bankers said that with private investment practically coming to a halt, there was little demand for corporate credit. While activity may show an uptick in the second half, it will hardly compensate for the extended slowdown seen since the beginning of the year. Companies are battling stress and are deleveraging wherever possible. The retail segment is showing steady growth, but it is not in a position to make up for the slump in the industry segment.

According to ICRA’s assessment of 37 scheduled commercial banks, the YoY credit growth was 7.9 per cent as of September 2019. While credit growth in public sector banks was merely 4.4 per cent, private banks registered 15 per cent growth in the same period.

Dinesh Khara, managing director, State Bank of India, said, “The private sector investment and consumption has been impacted in the context of slow economic growth. This led to deceleration in credit growth in the current financial year. However, things are expected to change for better in the second quarter (July-September 2020) of the next financial year (FY21).”

Bad loans taken over by ARCs rose 17.4% in 12 months ended June 2019

The amount they bought of such NPAs in the 12-month period was less, at Rs 57,506 cr, from the Rs 67,830 cr they acquired in the previous such one-year period.

Market News : The total of loans classified as non-performing by lenders and acquired by asset reconstruction companies (ARCs) rose 17.4 per cent to Rs 3.8 trillion in the 12 months ended June 2019.

However, the amount they bought of such non-performing assets (NPAs) in the 12-month period was less, at Rs 57,506 crore, from the Rs 67,830 crore they acquired in the previous such one-year period.

According to the Reserve Bank of India (RBI) data, security receipts (SRs) redeemed by ARCs jumped to Rs 12,906 crore as on June 2019, from Rs 8,830 crore in June 2018.

This is payout to the investors in the SRs, says the report on Trend and progress on banking in India 2018-19, issued on Tuesday. Unredeemed SRs rose to Rs 114,615 crore in June, from Rs 98,118 crore a year ago.

As cases referred for recovery through legal mechanisms shot up, cleaning up of balance sheets via sale of stressed assets to ARCs decelerated on a year-on-year basis, and declined as a proportion to gross NPAs at the beginning of 2018-19.

However, the acquisition cost of ARCs as a proportion to the book value of assets increased further, indicating banks had to incur less of write-offs on account of these sales.

The share of subscriptions by banks to SRs issued by ARCs declined to 69.5 per cent by end-June, from 79.8 per cent a year ago. This was in line with the agenda to reduce their investments in SRs and to diversify the investor base in these, says the RBI.

Business Standard

Rise in defaults could make things even worse for India, China in 2020

Defaults in China will likely rise in both the onshore and offshore bond markets next year amid a tightening in funding.

Market News : Defaults across Asia may be headed even higher next year, with trouble seen especially in China and India. Many investors expect fewer bailouts by the Chinese government after it recently let commodities trader Tewoo Group default in the biggest failure on a dollar bond by a state-owned firm in two decades.

Companies in the region have been on a buying spree fueled by debt. Those factors could make things even worse in 2020 after China onshore defaults rose to a record in 2019.

As some economies in Asia slow, companies are left vulnerable to any tightening in liquidity. A rise in defaults would likely further weigh on investor sentiment, and raise the cost of borrowing for the riskiest firms.

Defaults in China will likely rise in both the onshore and offshore bond markets next year amid a tightening in funding, and weaker state-owned firms and local government financing vehicles may be at risk, according to Monica Hsiao, chief investment officer at hedge fund Triada Capital. The nation’s real estate firms, traditionally seen as the bulwark of the economy, could also be vulnerable.

“We should not assume that the China property sector is immune if conditions continue to tighten for small over-levered developers that do not have stakeholders with strong political ties, for example,” said Hsiao.

A wave of acquisitions has also prompted companies with overextended balance sheets to stumble. Shandong Ruyi Technology Group Co., which made a string of overseas purchases, including U.K. trench coat maker Aquascutum, has been struggling to repay debt. Singapore-headquartered MMI International Ltd., which was sold to a Chinese buyout group, has missed loan repayments.

Consumer durables report steady growth in 2019; slowdown a threat in 2020

The consumer durables sector, estimated to be around Rs 76,400 crore in FY'19, logged a growth rate of about 10 per cent, largely helped by long and harsh summer.

Market News : The consumer durables industry returned to a steady growth path in 2019 after almost two flat years but might not be able to repeat the feat in the coming year as broader market indicates economic slowdown.

The consumer durables sector, estimated to be around Rs 76,400 crore in FY'19, logged a growth rate of about 10 per cent, largely helped by long and harsh summer, which lifted sales of compressor-based cooling products such as AC and refrigerators.

The industry, however, continued to face challenges in segments like TV panels and microwave, which failed to deliver a notable performance during 2019.

The Consumer Electronics and Appliances Manufacturers Association (CEAMA), however, is hopeful that the demand of cooling products next year will be high as well.

"Given current sentiments, 2020 may not register high growth but weather is expected to play a key level for growth. A hot elongated summer may drive growth for cooling products in the first half," CEAMA President Kamal Nandi told PTI.

The consumer durables industry, which received several incentives in 2019 from the government in form of reduction in customs duty on import of TV panels (open cells), among others, expects the ratio of localisation and backward integration to increase and contribute more towards Make-in-India.

"In the past 5 years, overall approximately Rs 7,500 crore investment has been made by manufacturers - mainly for capacity expansion and new capacity development. This trend will continue in future as well," said Nandi, who is also Godrej Appliances Business Head and Executive Vice President.

Echoing similar views, Panasonic India and South Asia President and CEO Manish Sharma said local production of the components used in assembling a final product is going to increase, helped by the new duty structures, which now make more sense to produce here.

"The need of the hour is backward integration and starting component production in India. Those steps are happening now," he said adding that "we are working very closely with our suppliers and encouraging them to start local manufacturing in India. Definitely next year localisation of components would definitely improve".

Bank of Baroda underreported bad loans by Rs 5,250 cr in FY19: RBI report

In recent months, there have been several instances of under-reporting of bad loans by lenders.

Government-owned Bank of Baroda has reported a Rs 5,250-crore divergence in the calculation of bad loans for the 2018-19 financial year.

The Reserve Bank of India's (RBI's) assessment of its gross non-performing assets (NPAs) for the year is Rs 75,174 crore. Against this, the bank had reported GNPAs of Rs 69,924 crore, it told the BSE exchange. All figures are for the recently amalgamated entity, wherein Vijaya Bank and Dena Bank were merged with BoB.

After the disclosure, BoB's share price fell by 3.3 per cent to Rs 98.9 on Wednesday. Net NPAs assessed by the RBI for FY19 are Rs 29,045 crore, as compared to BoB's own calculation of Rs 23,795 crore. The provisioning BoB had made on its balance sheet for NPAs were Rs 46,001 crore for the year; RBI says this has to be Rs 50,091 crore, an additional Rs 4,090 crore.

The bank has said of this Rs 4,090 crore divergence, it had already made a provision of Rs 1,475 crore in the current financial year. Leaving an additional impact of Rs 2,615 crore. Consequently, the adjusted net loss for FY19 is Rs 10,998 crore, in place of the earlier reported net loss of Rs 8,339 crore.

In recent months, there have been several instances of under-reporting of bad loans by lenders, prompting regulatory action by the central bank.

Last month, the capital markets regulator, Sebi, had said disclosures in respect of divergence and provisioning are in the nature of material events and, hence, necessitate immediate disclosure.

Further, this information is price-sensitive, requiring prompt disclosure by a listed entity. It has asked banks listed on the stock exchanges to make disclosure of divergences and provisioning beyond a specified threshold as soon as reasonably possible and not later than 24 hours upon receipt of RBI’s Final Risk Assessment Report.

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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.

Infosys fined $800,000 for worker misclassification, tax fraud in US

California initiated legal actions against Infosys after a compliant was filed by whistleblower Jack 'Jay' Palmer, a former Infosys employee.

Market News : Infosys, India's top IT major, has agreed to pay $800,000 to settle allegations of misclassification of foreign workers and tax fraud, officials announced Tuesday.

Infosys will pay California $800,000 (nearly Rs 56 crore) to resolve allegations that between 2006 and 2017, approximately 500 Infosys employees were working in the State on Infosys-sponsored B-1 visas rather than H-1B visas, California Attorney General Xavier Becerra said.

This misclassification resulted in Infosys avoiding California payroll taxes such as the unemployment insurance, disability insurance, and employment training taxes.

H-1B visas also require employers to pay workers at the local prevailing wage, an official statement said.

"Today's settlement shows that attempting to evade California law doesn't pay. Infosys brought in workers on the wrong visas in order to underpay them and avoid paying taxes. With this settlement, California has been made whole," Becca said.

In the settlement, Infosys, however, denied the allegations and asserted of no wrongdoings.

In 2017, Infosys had agreed to pay the State of New York $1 million to settle allegations of submitting wrong documents to federal authorities.

The Californian settlement that was carried out in November was released to the media on Tuesday.

California initiated legal actions against Infosys after a compliant was filed by whistleblower Jack "Jay" Palmer, a former Infosys employee.

Palmer had sued the Indian company in 2017.

Business Standard

Retail, telecom help RIL beat Indian Oil to be number one player by revenue

Fortune India list shows RIL as India's top firm in FY19.

Reliance Industries (RIL) has emerged as the number one company in terms of revenue in the Fortune India 500 list for 2019, pipping Indian Oil Corporation (IOC). RIL revenues crossed Rs 5.81 trillion in FY19 against IOC’s Rs 5.36 trillion.

Since it was first published in 2010, IOC has been topping the list.

RIL’s race to the top was powered by consumer-facing businesses like organised retail and telecom.

In terms of profits too, Mukesh Ambani-led RIL’s FY19 net profit was ahead at Rs 39,588 crore against IOC’s Rs 17,377 crore.

Over the past 10 years, RIL’s profit has been an average 3.01 times higher than that of IOC. The highest this went was up to 4.8 times in FY15.

Another interesting aspect of the 2019 list is the divergence in the fortunes of the public and private sector banks as 14 of the 22 public sector banks reported cumulative losses of Rs 74,253 crore, while the cumulative profit of 24 of the total private sector banks (including foreign banks and cooperative banks) touched Rs 60,747 crore — 6.16 per cent higher than FY18.

Just two private sector banks posted losses with IDFC First Bank reporting a loss of Rs 1,908 crore and Lakshmi Vilas Bank at Rs 894 crore.

The public sector banks made huge losses after several companies in the roads, power and steel sector failed to repay their loans. Many of these companies are now facing bankruptcy proceedings in courts across the country.

The top 500 list also showed that the combined revenue and profit of the companies in 2019 grew by 9.53 per cent and 11.8 per cent, respectively, even as 57 companies dropped off for reasons, including consolidation within the public sector banks and public sector undertakings space. The top 500 companies reported profit of Rs 4.55 trillion and revenues of Rs 91.7 trillion in the FY19 (see chart).

A total of 65 companies posted a cumulative loss of Rs 1.67 trillion, as compared to last year’s Rs 2 trillion racked up by 79 firms.

The list does not take into account subsidiaries of companies, hence many of the takeovers resulted in the acquired companies being excluded such as Hindustan Petroleum Corporation, which was acquired by Oil and Natural Gas Corporation, Rural Electrification Corporation acquired by Power Finance Corporation, Vijaya Bank and Dena Bank (merged into Bank of Baroda).Keep Reading : Stock Market News