Category: Finance

Ayodhya Shopkeepers #FeelingBlessed

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Malti Devi, 65, used to do household chores in Ayodhya for most of her life. But now, she says her life has found a new purpose as she has a means of living, thanks to Ram Lalla.

ALSO READ | Ayodhya Trip & Tips: Heading to Ram Mandir for Darshan? Keep These 5 Things in Mind

Devi is now selling Ram Lalla photographs and photo-frames on Ram Path leading to the Shri Ram Temple in Ayodhya and these items are flying off the shelves in the holy town as thousands are making a beeline to the temple daily. “Everyone wants Ram Lalla’s photograph. They want to take the picture home as a blessing from Ayodhya. I sell over 100 of these pictures daily. It is a noble work; I earn too,” Devi told News18.

Old-time shopkeepers on the Bhakti Path leading to the temple are only stocking items with ‘Ram Lalla’ pictures and models of ‘Ram Temple’ as they are high in demand. “Whatever stock we bring, it gets sold out daily. People buy such items by the dozen,” said Rajesh Asre, amid a heavy rush of pilgrims at his shop. The photographs, posters and photo frames of Ram Lalla cost anywhere between Rs 100 and Rs 1000, depending on the size.

Malti Devi, 65, used to do household chores in Ayodhya for most of her life. But now, she says her life has found a new purpose as she has a means of living, thanks to Ram Lalla.

ALSO READ | Ayodhya Trip & Tips: Heading to Ram Mandir for Darshan? Keep These 5 Things in Mind

Devi is now selling Ram Lalla photographs and photo-frames on Ram Path leading to the Shri Ram Temple in Ayodhya and these items are flying off the shelves in the holy town as thousands are making a beeline to the temple daily. “Everyone wants Ram Lalla’s photograph. They want to take the picture home as a blessing from Ayodhya. I sell over 100 of these pictures daily. It is a noble work; I earn too,” Devi told News18.

Old-time shopkeepers on the Bhakti Path leading to the temple are only stocking items with ‘Ram Lalla’ pictures and models of ‘Ram Temple’ as they are high in demand. “Whatever stock we bring, it gets sold out daily. People buy such items by the dozen,” said Rajesh Asre, amid a heavy rush of pilgrims at his shop. The photographs, posters and photo frames of Ram Lalla cost anywhere between Rs 100 and Rs 1000, depending on the size.

Malti Devi, 65, used to do household chores in Ayodhya for most of her life. But now, she says her life has found a new purpose as she has a means of living, thanks to Ram Lalla.

ALSO READ | Ayodhya Trip & Tips: Heading to Ram Mandir for Darshan? Keep These 5 Things in Mind

Devi is now selling Ram Lalla photographs and photo-frames on Ram Path leading to the Shri Ram Temple in Ayodhya and these items are flying off the shelves in the holy town as thousands are making a beeline to the temple daily. “Everyone wants Ram Lalla’s photograph. They want to take the picture home as a blessing from Ayodhya. I sell over 100 of these pictures daily. It is a noble work; I earn too,” Devi told News18.

Old-time shopkeepers on the Bhakti Path leading to the temple are only stocking items with ‘Ram Lalla’ pictures and models of ‘Ram Temple’ as they are high in demand. “Whatever stock we bring, it gets sold out daily. People buy such items by the dozen,” said Rajesh Asre, amid a heavy rush of pilgrims at his shop. The photographs, posters and photo frames of Ram Lalla cost anywhere between Rs 100 and Rs 1000, depending on the size.

Malti Devi, 65, used to do household chores in Ayodhya for most of her life. But now, she says her life has found a new purpose as she has a means of living, thanks to Ram Lalla.

ALSO READ | Ayodhya Trip & Tips: Heading to Ram Mandir for Darshan? Keep These 5 Things in Mind

Devi is now selling Ram Lalla photographs and photo-frames on Ram Path leading to the Shri Ram Temple in Ayodhya and these items are flying off the shelves in the holy town as thousands are making a beeline to the temple daily. “Everyone wants Ram Lalla’s photograph. They want to take the picture home as a blessing from Ayodhya. I sell over 100 of these pictures daily. It is a noble work; I earn too,” Devi told News18.

Old-time shopkeepers on the Bhakti Path leading to the temple are only stocking items with ‘Ram Lalla’ pictures and models of ‘Ram Temple’ as they are high in demand. “Whatever stock we bring, it gets sold out daily. People buy such items by the dozen,” said Rajesh Asre, amid a heavy rush of pilgrims at his shop. The photographs, posters and photo frames of Ram Lalla cost anywhere between Rs 100 and Rs 1000, depending on the size.

Malti Devi, 65, used to do household chores in Ayodhya for most of her life. But now, she says her life has found a new purpose as she has a means of living, thanks to Ram Lalla.

ALSO READ | Ayodhya Trip & Tips: Heading to Ram Mandir for Darshan? Keep These 5 Things in Mind

Devi is now selling Ram Lalla photographs and photo-frames on Ram Path leading to the Shri Ram Temple in Ayodhya and these items are flying off the shelves in the holy town as thousands are making a beeline to the temple daily. “Everyone wants Ram Lalla’s photograph. They want to take the picture home as a blessing from Ayodhya. I sell over 100 of these pictures daily. It is a noble work; I earn too,” Devi told News18.

Old-time shopkeepers on the Bhakti Path leading to the temple are only stocking items with ‘Ram Lalla’ pictures and models of ‘Ram Temple’ as they are high in demand. “Whatever stock we bring, it gets sold out daily. People buy such items by the dozen,” said Rajesh Asre, amid a heavy rush of pilgrims at his shop. The photographs, posters and photo frames of Ram Lalla cost anywhere between Rs 100 and Rs 1000, depending on the size.

Malti Devi, 65, used to do household chores in Ayodhya for most of her life. But now, she says her life has found a new purpose as she has a means of living, thanks to Ram Lalla.

ALSO READ | Ayodhya Trip & Tips: Heading to Ram Mandir for Darshan? Keep These 5 Things in Mind

Devi is now selling Ram Lalla photographs and photo-frames on Ram Path leading to the Shri Ram Temple in Ayodhya and these items are flying off the shelves in the holy town as thousands are making a beeline to the temple daily. “Everyone wants Ram Lalla’s photograph. They want to take the picture home as a blessing from Ayodhya. I sell over 100 of these pictures daily. It is a noble work; I earn too,” Devi told News18.

Old-time shopkeepers on the Bhakti Path leading to the temple are only stocking items with ‘Ram Lalla’ pictures and models of ‘Ram Temple’ as they are high in demand. “Whatever stock we bring, it gets sold out daily. People buy such items by the dozen,” said Rajesh Asre, amid a heavy rush of pilgrims at his shop. The photographs, posters and photo frames of Ram Lalla cost anywhere between Rs 100 and Rs 1000, depending on the size.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Poonawalla Fincorp reiterates guidance after a record breaking quarter

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Poonawalla Fincorp gained over 2.7% on Friday (January 19), the day after the Pune-based shadow bank posted its best-ever quarterly profit of ₹150.4 crore.

In an exclusive interview with CNBC-TV18,  Managing Director Abhay Bhutada reiterated his earlier guidance for 35-40% loan growth over the long term. Long term refers to a period more than a year.

“Our incremental cost of fund is 8% and our average cost of borrowing for the quarter was 7.99%. So, almost flat on a quarter on quarter (QoQ) basis despite Reserve Bank of India (RBI) tightening the policy, increase in the interest rates and market condition, there is no impact on the overall cost of funds,” he added.

Poonawalla’s confidence stands out given the pervasive fears in the market about the shrinking profit margin for lenders, big or small.

Shares of HDFC Bank, one of India’s biggest banks, had its worst fall in three years after its latest earnings showed that the banking giant made less money on new loans; lesser than what the investors had anticipated.

“For one to two quarters, maybe liquidity will be tight in the market. So we don’t see a major impact,” Bhutada said. The company’s net interest margin was up 33 basis points in the latest December quarter.

For a non-banking financier (NBFC) like Poonawalla, the cost of funds would be more expensive due to a recent RBI mandate assigning higher risk weights on unsecured loans. “We don’t see any impact of this RBI circular – we are getting advantage. Because of this lot of players are not able to raise the funds. There is opportunity and we lend to only above ₹50,000 ticket size and the major impact is for the smaller ticket size – those who are lending below ₹ 50,000,” he explained.

Shares of Poonawalla Fincorp (market capitalisation of over ₹38,000 crore as on January 19) have gained over 11% in the last one month.

For more, watch the accompanying video

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

South Indian Bank’s CEO addresses loan growth drivers, flags net interest margin challenges

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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P R Seshadri, Managing Director and CEO of South Indian Bank, on Friday, January 19, said that the lender’s loan growth has been fueled by a strategic focus on corporates, personal loans, credit cards, and gold loans. His comments came a day after the bank reported a 35.91% increase to ₹578 crore in its personal loan book on a year-on-year (YoY) basis.

Simultaneously, the gold loan portfolio expanded by 17.74% to ₹15,369 crore for the third quarter of FY23.

Addressing concerns about asset quality, Seshadri pointed out that the bank’s gross non-performing asset (NPA) ratio has shown a consistent decline, standing at 4.74% for the reported quarter compared to 5.48% in the same period last year.

Furthermore, the net NPA ratio demonstrated improvement, reaching 1.6% down from 2.26% year-on-year.

South Indian Bank’s CEO acknowledged challenges related to the cost of liability growth, which has been impacting the Net Interest Margin (NIM).

For the quarter, the NIM stood at 3.19% as against 3.52% in the year-ago quarter and 3.31% in the previous quarter.

Despite the hurdles, the bank remains confident in the trend line of improving asset quality, expressing optimism that this positive trajectory will persist in the future.

Looking ahead, Seshadri expects the bank’s business to experience growth in the early teens next year.

However, he anticipates continued pressure on the Net Interest Margin, emphasising the need for strategic planning to navigate these challenges effectively.

Seshadri highlighted the bank’s proactive approach to exploring all possibilities related to fundraising.

Meanwhile, South Indian Bank reported a net profit of ₹305.6 crore for the October-December quarter of 2023-24, making a 197.42% jump from ₹102.75 crore in the year-ago period.

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RBI has not mandated any number for banks’ CD ratio: Gov Shaktikanta Das clears the air

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India (RBI) Governor on Thursday stated that the regulator has not prescribed any credit-deposit (CD) ratio for banks to maintain, nor does it propose to do so at the moment.

Speaking to CNBC-TV18 on the sidelines of the World Economic Forum at Davos, Governor Shaktikanta Das said that as the regulator, the RBI simply wants to ensure that there is no unnecessary exuberance in lending and that there remains some sort of correlation between the credit extended by banks and the deposits available with them.

“We have not mandated any (CD ratio) number… that this shall be the CD ratio.. and at the moment we don’t propose to, because the credit-deposit ratio is just one of the parameters to assess the health of the bank; there are several other parameters. So you have to look at it in totality,” Das said.

The comments come after there were indications over the past few weeks that the banking regulator is uneasy about the elevated credit-deposit (CD) ratio of certain banks, which could potentially pose a credit or liquidity risk.

The Governor added that the RBI was only concerned that there is no exuberance in lending and a mismatch in assets and liabilities that could lead to risk build-up.

“There should not be exuberance in lending, and there should be some correlation between deposit base and credit growth. But in terms of hard-coding it in terms of a particular number, there is no proposal in our mind, and we have not prescribed any such number.”

“Our deposit growth in the last 1-2 years has been around 12-13% and credit growth has been about 15%.. You see it is not that you get an X amount of deposit and you extend the X amount as loans. It’s not like that. Money creates money; there’s a money multiplier in the market, so obviously credit will be a little higher. The question is if credit is unduly higher or if it has some correlation with the deposit base. At the systemic level and at the individual entity level, at the moment we don’t see any risk,” Das told CNBC-TV18.

Incidentally, Axis Bank chief Amitabh Chaudhry also recently told CNBC-TV18 in an interview on the sidelines of the World Economic Forum at Davos that if the RBI were to mandate a number for banks on the credit-deposit ratio, every bank would have to re-look at their balance sheets. He said that while the RBI was worried about some exuberance it was seeing on the credit growth side, especially for unsecured retail loans, he didn’t think the RBI would “ever mandate a number on banks’ CD ratio.”

What is the credit-deposit ratio anyway?

The credit-deposit ratio (CDR) is a financial metric representing the percentage of loans a bank has issued relative to its total deposits. Calculated by dividing total loans by total deposits and multiplying by 100, the CDR offers insights into a bank’s lending practices and risk exposure.

To explain, consider a hypothetical entity, Happy Bank, which has total loans amounting to $80 million and total deposits of $100 million. The credit-deposit ratio (CDR) for the bank can be calculated using the formula:
CDR= (Total Loans/Total Deposits) x 100

In this example, Happy Bank’s credit-deposit ratio is 80%. This means that 80% of the bank’s deposits are being utilised for lending activities.

A higher CDR suggests that a significant portion of the bank’s resources are allocated to loans, indicating a more aggressive lending strategy. It could potentially stimulate economic growth but also implies higher risk, as a large portion of the bank’s assets are tied up in loans. Conversely, a lower CDR would indicate a more conservative approach, with a larger proportion of funds held in liquid assets or lower-risk investments. Regulators often monitor CDR to ensure banks maintain a prudent balance between lending and risk management.

Typically, in the case of Indian banks, the regulator does not prescribe a specific number to banks and leaves it to their commercial decision. However, if the CDR is excessively high for individual banks or the system and could turn into a potential risk, the RBI as the supervisor and regulator of these financial entities, could point out the risk.

Current CD ratio, credit and deposit growth rates

Credit offtake increased by 20% year-on-year (YoY) for the fortnight ended December 29, 2023, at ₹159.6 lakh crore. These YoY figures are not directly comparable, as the data reported by the RBI as of December 29, 2023, includes the impact of the merger of HDFC with HDFC Bank. Excluding the impact of the merger, the growth stood at 15.7% YoY for the fortnight.
At the same time, deposits rose at 13.2% YoY (or 12.6% ex of the HDFC merger) for the fortnight to reach ₹200.8 lakh crore as of December 29, 2023.

At a system-wide level across all scheduled commercial banks, the latest data from RBI shows that the Credit-deposit ratio stood at 79.48% as on December 29, 2023, compared to 75.02% as on December 30, 2022, 71.93% as on December 31, 2021, and 76.47% as on December 20, 2019.

Why has the CD ratio been going up?

Bank deposit rates have yet to catch up with the 250 basis point rate hike undertaken by the RBI, with lending rates increasing faster than deposit rates in the cycle of monetary tightening. This has made deposits relatively unattractive, with investors diverting some of their funds towards the market instead of bank deposits to chase better returns. At the same time, credit growth has been growing in double digits.

This aggressive credit expansion, coupled with slow deposit growth, has led to CD ratios going up.

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RBI always monitoring the credit growth, will act as and when needed: Gov Shaktikanta Das

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India (RBI) Governor Shaktikanta Das acknowledged signs of exuberance and stress in personal loans, especially unsecured loans, on Thursday, January 18. In an exclusive interview with CNBC-TV18 at the World Economic Forum summit in Davos, Das said that the RBI has acted pre-emptively to avert potential stress or exuberance in credit growth.

He stated that when signs of a potential problem becoming widespread emerge, the central bank takes prompt action.

Responding to concerns about lending practices, Das clarified, “We have not stopped any lending. We have only suggested that banks should provide for any further lending in their accounts.”

He asserted that the decision was well thought out to prevent a new source of stress for the Indian banking sector.

Das revealed that stress tests indicated banks’ capital adequacy at 16.8%, assuring that banks would maintain capital levels even in extreme stress scenarios.

He noted a real improvement in risk management and governance practices at banks.

On the NBFC sector, Das expressed optimism, saying, “NBFCs have definitely rebounded, and the numbers are quite robust.”

He acknowledged the crisis of confidence in the NBFC space post-ILFS and highlighted that the RBI’s measures have successfully addressed these concerns.

Speaking on the digital lending landscape, Das acknowledged the exponential growth of fintech companies.

He emphasised the need for regulation, stating that the RBI has appointed a panel to build a framework for regulating digital lending and has issued guidelines.

“RBI was not trying to stifle digital lending activity. Guidelines have increased trust and confidence in the practice,” Das asserted.

Das stated that efforts are underway to encourage technological innovation, but within well-formed parameters. He mentioned the establishment of a Self-Regulation Organization (SRO) as an intermediary body for the fintech sector.

While discussions are ongoing regarding the ambit and structure of the SRO, Das emphasised the goal is to ensure that the fintech ecosystem grows robustly within a properly regulated environment.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

IIFL Finance CFO says cost of borrowings rose at 28 bps in last 12 months

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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IIFL Finance Chief Financial Officer (CFO) Kapish Jain has said the cost of borrowings for the company experienced 28 basis points growth in the past 12 months. He attributed this stability to the firm’s strategic funding approach, including raising capital through External Commercial Borrowings (ECBs) and engaging with multi-lateral agencies.

Jain’s comments came a day after the non-banking financial company (NBFC) announced performance for the December quarter, with a 29% surge in net profit to ₹545 crore.

“The recent positive change in the company’s credit rating played a pivotal role in aiding the cost of funds, further supporting its financial position,” he told CNBC-TV18.

The CFO added that IIFL Finance has maintained a Compound Annual Growth Rate (CAGR) of 23% for loans over the past five years.

While acknowledging potential challenges in the environment, Jain expressed confidence in the company’s ability to navigate and sustain growth.

He further emphasised the company’s commitment to digital transformation, with digital loans constituting approximately 5% of the overall portfolio.

He discussed a recent realignment in digital loans, with a focus on offering personal loans to captive customers and incorporating supply chain management into the digital lending space.

IIFL Finance anticipates disbursal growth in the same range for gold financing, with confidence in the continued support from branch additions.

The CFO expressed optimism regarding the company’s performance in the fourth quarter of the fiscal year 2023-24, expecting it to be robust.

Meanwhile, IIFL Finance reported growth in various segments in the third quarter. Microfinance witnessed a 54% surge to ₹12,090 crore, digital loans soared by 96% to ₹3,905 crore, and loans against property jumped 27% to ₹7,862 crore.

Construction and real estate books stood at ₹2,889 crore.

The company’s total income exhibited 28% growth, reaching ₹1,687.5 crore.

Additionally, there was an improvement in asset quality, with the gross non-performing assets ratio declining to 1.7% and the net non-performing assets ratio declining to 0.9%.

Nirmal Jain, the founder of IIFL Finance, highlighted the positive trend in asset quality and expressed confidence in the company’s ability to navigate the changing financial landscape.

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HDFC Bank is now the 8th Indian firm to have over two lakh employees

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The headcounts at HDFC Bank surpassed the two lakh mark in the December 2023 quarter, after the largest private lender in the country went on an aggressive hiring spree to support its expansion plans and to rein in increased attrition. With the latest addition, the total number of employees at the bank has almost doubled in four-and-a-half years.

In fact, there are only eight companies in India that boast a workforce of minimum two lakh. While the IT bellwether Tata Consultancy Services (TCS) tops the list with a headcount of over six lakh employees, Reliance Industries (RIL) occupies second spot with close to four lakh employees.

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While all the top four IT services companies are part of the list, state-owned firms like State Bank of India and Coal India are also among the companies that have two lakh employees on their rolls. However, except HCL Technologies, the other three IT services firms have reported a drop in employee count in the December quarter.

Interestingly, expansion in the workforce in the banking sector comes alongside lower intake in the IT sector. Banks, especially private ones have been experiencing higher attrition over the last many quarters and a significant part of which was at the ‘non-supervisory staff’ levels, which includes sales officers.

Also Read: This Indian IT services firm is the only one among top four that wants to increase headcount in Q4

The number of employees at HDFC Bank has increased by 10,167 in the December quarter to 2,08,066. At a 5.1% rise in the number of employees, the lender clocked its highest sequential growth in the last one year, barring the September quarter. “In order to position us for greater engagement, we have added 41,000 employees over the last 12 months and 10,000 during the quarter,” said Srinivasan Vaidyanathan, CFO of HDFC Bank post the third quarter earnings.

HDFC Bank — the largest lender by market cap — had witnessed an attrition of 34.15% in FY23, as against an industry average of 24.7%. A total of 53,760 employees quit the bank in FY23, while 85,814 were added.

Further, HDFC Ltd, which was amalgamated with the bank in July 2023 had an headcount of about 4,000 at the end of FY23.

Companies with a market capitalisation of Rs 10,000 crore and above are included in this study.

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This analyst is cautious on Bajaj Finance and bullish on CV finance space

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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GreenEdge Wealth Services founder Digant Haria on Wednesday, January 17, expressed caution on Bajaj Finance while being optimistic about the commercial vehicle (CV) finance sector.

According to Haria, Bajaj Finance has been a champion in the traditional lending space, reaching new customers with loans.

However, the digital world is bringing new challenges and competitors.

Haria highlighted concerns raised by the Reserve Bank of India (RBI) about the personal loan space.

He pointed out that Bajaj Finance faced hurdles, such as a credit card extension restriction with RBL partnership.

Despite reporting positive numbers for the past two quarters, Haria anticipated a phase of consolidation for Bajaj Finance.

He suggested that the company might stabilise without significant growth in the coming quarters.

However, he said, “There’s no reason to be negative on Bajaj Finance in my view, nor should we expect any magic from Bajaj Finance.”

In contrast, Haria expressed bullish sentiments towards the commercial vehicle (CV) finance space. He identified Shriram Finance and M&M Finance as promising players in this sector.

Haria cited the strong prices of used trucks and increased rural infrastructure activities as positive factors.

With these conditions, the cash flows for individuals using trucks and tractors are expected to improve.

Haria further pointed out that gold is poised to reach a lifetime high, providing tailwinds for gold finance companies.

In the current heated market, he added that investing in housing finance could offer a favourable risk-reward balance for medium to long-term investors.

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Why Manish Gunwani of Bandhan AMC is cautious about private banks

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Manish Gunwani of Bandhan AMC is cautious on private banks at this juncture as he believes they do not offer a great risk-reward balance both from a cyclical and structural perspective.

From a cycle perspective, with low credit costs, most banks appear similarly positioned in terms of profitability and growth. However, there’s still a valuation gap between low and high price-to-book financials that I believe will converge, he explained. This convergence might affect the perceived value of these institutions, he noted.

Structurally, he observed signs of changing customer behavior, particularly in the current account/savings account (CASA) segment.

“A lot of the high price-to-book private banks have business models centered around granular deposit franchises with the assumption of CASA growth. But, due to technological advancements and financial shifts, if CASA is becoming an issue, then the high multiples these banks enjoy are at risk,” Gunwani elaborated.

He suggested that if CASA growth stalls, the resulting pressure on spreads could significantly impact profitability.

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Gunwani also touched upon various sectors, noting the attractive nature of oil and gas companies and the potential tactical trade opportunities in the information technology (IT) sector, given expectations of a soft landing.

He also mentioned the increasing allure of unlisted companies attracting talent, hinting at possible wage pressures in the market.

“I think the big return globally in equities can only be made in 2024. If the Western Central Bank, specifically the Fed is more dovish than what general expectation is,” he said.

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On a positive note, Gunwani identified oil and gas companies, especially those involved in divestment plays, as attractive investment opportunities. Despite challenges in various sectors, these companies seem to present promising prospects for investors seeking opportunities in the current market conditions.

For more, watch the accompanying video

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow