Bank of India profit zooms 100% to Rs 1,051 crore on low provisions

 Its net interest income, the interest earnings minus expense, fell 14.32 per cent in the reporting quarter to Rs 3,523 crore in Q2FY22

Bank of India’s net profit zoomed 99.89 per cent year-on-year (YoY) to Rs 1,051 crore for the second quarter of Q2FY22 on improvement in non-interest income and fall in the provisions for bad loans.

The public sector bank had posted a net profit of Rs 526 crore in the year-ago quarter. Sequentially, net profit was 45.97 per cent from Rs 720 crore a year ago.

However, its net interest income (NII), the interest earnings minus expense, fell 14.32 per cent in the reporting quarter to Rs 3,523 crore in Q2FY22.

In a post results media call, Managing Director and Chief Executive A K Das said the growth in advance was muted impacting the interest income. Its advances rose just 2.7 per cent YoY to Rs 418,895 crore by September 2021, less than over 6 per cent growth of the Indian banking system. The bank has guided for 6-7 per cent rise in advances in FY22 on the back of pick-up in demand and credit outreach programme. Its deposits rose by 0.89 per cent YoY to Rs 6,12,961 crore in September 2021. Its stock closed 3.48 per cent up at Rs 62.5 per share on BSE.

The non-interest income covering fees, commission, profit from sale of investments and recoveries from written-off accounts went up by 58.71 per cent YoY to Rs 2,136 crore. It declined sequentially from Rs 2,320 crore a Q1FY21.

Its provisions for NPAs declined to Rs 241 crore in Q2 from Rs 2,134 crore in the year-ago period and Rs 873 crore in Q1FY22. The provision coverage ratio was stable at 87.81 per cent in September against 87.91 per cent a year ago and 86.17 per cent in June 2021.

Sebi forms IT project advisory committee to provide technical expertise

 It will provide technical expertise to Sebi in various stages of IT solution procurement as members of the Tender Evaluation Committee.

Sebi has constituted IT Projects Advisory Committee that will advise the markets regulator on projects aimed to utilise advanced technologies such as artificial intelligence, machine learning, data analytics and cloud computing.

The seven-member committee, headed by Abhay Karandikar, a director at IIT Kanpur, will provide guidance to upgrade existing Sebi's IT systems and solutions with the latest IT practices, techniques, tools and technologies, an update available with the regulator showed.

It will provide technical expertise to Sebi in various stages of IT solution procurement as members of the Tender Evaluation Committee.

Besides, it will provide technical insights during the implementation of the project, including user acceptance, final acceptance, and warranty initiation.

Further, members of the IT Projects Advisory Committee or IT-PAC may also be nominated in the expert committee for dispute resolution in IT projects at Sebi.

Other members of the panel are -- S Ganesh Kumar former ED at RBI; Sanjay Bahl Director General at Indian Computer Emergency Response Team (ICERT); G Sivakumar Professor at IIT Bombay; Ankur Kulkarni Associate Professor at IIT Bombay; Joy Kuri, Department of Electronic System Engineering, IISc Bangalore and Manindra Agarwal, Professor at IIT Kanpur.

Separately, the Securities and Exchange Board of India (Sebi) has reconstituted its technical advisory committee that recommends measures for changes and improvements in the market structure given the technological changes.

SBI ex-chief Pratip Chaudhuri arrested, sent to 14-day judicial custody

 Case related to bad loan, sale of NPA at low value

The Rajasthan Police on Sunday arrested Pratip Chaudhuri, former State Bank of India chairman, in Delhi in connection with an alleged loan scam. He’s been sent to judicial custody for 14 days for an alleged sale of a non-performing asset (NPA)—Hotel Gaudavan—to Alchemist ARC at a low value.

The arrest was made on the basis of a protest petition filed by former directors of Hotel Gaudavan before the Chief Judicial Magistrate (CJM) Jaisalmer.

State Bank of India and Alchemist Asset Reconstruction Company (ARC) have maintained that a fair and transparent process was followed by the bank for assigning the non-performing asset (NPA) or the bad loan on March 20, 2014.

The petition was accepted, and non-bailable warrants were issued against Chaudhuri and Alok Dhir, promoter of the ARC, without issuing any summons or notice, alleged Manish Nihalani, chief operating officer, Alchemist ARC.

Industry lobby Indian Banks' Association (IBA) is in the process of taking up the matter with the Union finance ministry and Rajasthan government for prompt resolution.

Sunil Mehta, chief executive, IBA, said the lending and sale of assets are financial decisions and that these are executed by adhering to strict due diligence norms. Such arrests are a grave matter and the association will raise the issue with the Department of Financial Services and Rajasthan government, he said.

Robust indicators and strong global cues lift benchmark indices

 All eyes now on US Fed meet this week, say analysts

The benchmark indices rebounded on Monday, rising 1.4 per cent, after three consecutive days of declines buoyed by interest in IT and banking majors, optimism surrounding manufacturing data, and favourable global cues. The benchmark Sensex rose 831 points and closed at 60,138, while the Nifty rose 258 points to close at 17,946.

The indices had fallen sharply last week due to institutional selling and downgrade by some foreign brokerages citing valuation concerns. However, data on India’s manufacturing activity released on Monday brought some cheer.

The purchasing managers’ index (PMI) rose to 55.9 against 53.7 in September. This came on the back of new orders and improved production. However, higher input costs are denting profits.

“Today’s rally provided relief to the investors post the recent sell-off. Good earnings season and strong macro data uplifted confidence with regards to economic recovery. Corporate commentaries continue to remain upbeat, with managements across sectors alluding to strong demand trends. With the economic cycle picking up, we expect the corporate earnings growth to revive, which has been lacking for many years now,” said Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services.

Global markets, too, gained as robust earnings offset concerns about inflation and supply-side woes as a result of the pandemic. Investors are keenly watching central bank meetings in the US and some other developed countries to gauge how the tapering of bond purchases will pan out. The US Federal Reserve is likely to announce its plans for stimulus tapering during its meeting this week.

No tie-up with airlines for govt staff after Air India-Tata deal

 The government is not mandating travel by any particular airline, going forward, after handing over Air India because there won't be any state-owned airline, said DIPAM secretary

Post handing over of Air India to the Tatas, government officials will be free to book their travel with any airline that offers them the best price.

And, the Centre will not have a tie up with any carrier, department of investment and public asset management (DIPAM) Secretary Tuhin Kanta Pandey said.

“The government is not mandating travel by any particular airline, going forward, after handing over Air India because there won’t be any state-owned airline,” he said.

The department of expenditure (DoE) will soon issue instructions to government departments for official travel as this needs to be done before handing over Air India to the new buyer, he said.

The government plans to hand over Air India to Tata Sons by December-end. Tata Sons-backed special purpose vehicle (SPV) Talace has won the bid to buy out the government's shareholding in Air India. Talace had placed a bid to acquire Air India for Rs 18,000 crore, which involved retaining debt of Rs 15,300 crore of the national carrier, and a cash component of Rs 2,700 crore. Travel by Air India was mandated because the government was trying to secure a certain amount of revenue for the airline. “That’s not going to happen now.”

Government officials had to seek permission from higher ups to travel by other airlines in case tickets were cheaper there than what was offered by Air India. They could also take other airlines if the national carrier’s flights were not operating on the routes concerned.

For leave travel concession benefits that central government staff are entitled to, the DoE will work out a policy, Pandey said. The Centre had asked all ministries and departments to clear dues of Air India immediately.

EV startup Rivian could be worth nearly as much as Honda in U.S. IPO

 The startup is looking to raise up to $8.4 billion, setting it up to be the third-largest initial public offering (IPO) by funds raised in the past decade in the United States.

Rivian Automotive Inc, which is backed by Amazon.com Inc, is targeting a valuation of more than $53 billion for its U.S. debut, making the electric vehicle manufacturer potentially almost as valuable as rival Honda Motor.

The startup is looking to raise up to $8.4 billion, setting it up to be the third-largest initial public offering (IPO) by funds raised in the past decade in the United States.

Only three other companies have raised more than $8 billion while going public since 2011, according to data from Dealogic.

Alibaba raised a record $25 billion in 2014, Meta Platforms Inc garnered $16 billion in 2012, while Uber made $8.1 billion in 2019.

Since last year, companies in the EV space have emerged as some of the hottest investments, especially among SPAC investors on the hunt for the next Tesla Inc.

While Rivian has yet to sell any significant volume of its electric vans or trucks, it could likely be valued higher than Ferrari, although less than Honda, General Motors or its backer Ford Motor Co.

Founded in 2009 as Mainstream Motors by R. J. Scaringe, the company changed to Rivian in 2011, a name that is derived from "Indian River" in Florida, a place Scaringe frequented in a rowboat as a youth.

The startup has been investing heavily to ramp up production, including for its upscale all-electric R1T pickup truck, which was launched in September, beating out competition from established rivals such as Tesla, General Motors and Ford.

Rivian, which disclosed nearly $1 billion in losses for the first half of this year, had about 48,390 pre-orders for its pickup trucks and R1S SUVs in the United States and Canada as of September.

Decoded: What is arbitrage, how does it work, and what are its limitations?

 The opportunities for arbitrage lie in price deviations among asset classes. But how does arbitrage work? And what are the limitations? Let's look at the meaning, trading style, and limitations in arb

While talking about market participants, one usually refers to either long-term investors or intra-day traders, conveniently leaving out a third category – that of arbitrageurs.
Arbitrageurs are the traders who undertake risk-less trades across global markets through a method known as arbitrage.
Now, what is an arbitrage?
Simply put, arbitrage is a trading practice wherein one buys an asset from one market and sells it in another market to make a quick buck.
The practice exploits the assumptions of “efficient market” theory which suggests that a security or an asset, offering similar returns and having similar risks, should be valued at the same price across markets.
However, as we know, prices can vary across markets due to factors like different foreign exchange rates, supply constraints, or demand exuberance.
Thus, when price of a security is low in one market and high in another, arbitrageurs undertake trades to make “risk-less” profit.
If one ounce of gold trades at $1,700 in one market and at $1,780 in another, an arbitrageur can easily earn profit of $80.
Further, take a closer look around you and you would notice that arbitrage opportunity exists even at local levels.
For example, if a loaf of bread is sold at Rs 30 in Delhi and at Rs 35 in Noida, then someone interested in bakery business can easily earn a profit of Rs 5 per loaf by buying in Delhi and supplying it in Noida.
In the stock market, too, there is an opportunity for arbitrage in a scrip. However, such opportunities are usually rare.