Indian Banking Industry Update

07 Feb 2017

RBI / MoF / Govt. PoliciesDigital payment volumes down 10%: RBI data

Bank's can't escape responsibility of NPAs: RBI Governor C Rangarajan

Public Sector Banks / Private China could play spoilsport; Rupee may depreciate by 3-4% in 2017: Ashish Parthasarthy, HDFC Bank

IDBI Bank, YES Bank cut marginal cost of funds-based lending rates

IDBI Bank cuts lending rate by 30-35 bps

Oriental Bank of Commerce shares tank over 4% as bank reports Rs 130 crore loss in Q3

Bank of Maharashtra ties up with Cigna TTK

IndusInd Bank appoints Gaurav Kapur as its chief economist

Axis Bank ties up with Earthport

Bankers fight note ban blues on cricket field

IDFC Bank buys 5% stake in IIFL Holdings for Rs 502 crore

Post demonetisation, two-wheeler loan demand hit the most

Banks ask jewellery industry to improve transparency, governance

Bank stocks outperform key indices

Major banks cut lending rates by 60-115 bps since June

Banks to push deals with pvt road developers

Banks have preceded monetary policy cuts: Chanda Kochchar

Gadkari meets bankers to get up highway projects

Co-operative Banks/RRBsForeign Banks / FIIs / I-BanksRating & Research

Rupee gathers momentum

RBI may cut rate by 0.25% in policy review: ICRA

Higher other income led to sharp rise in PAT: Rajesh Mokashi, CARE Ratings

ATMs, Credit & Pre-paid CardsMastercard, CAIT plan campaign to promote digital payments among traders

Housing FinanceDevelopment BanksNBFCs / FIs / MFI

10 NBFCs surrender registration certificate

Niche banks opt for rate bait

Ujjivan SFB plans Rs. 400-cr tech spend to offer better services

Ujjivan Small Finance Bank launches operations

Ujjivan sets lofty target

75% of our customers will be from MFI client base, says Ittira Davis of Ujjivan Small Finance Bank

Being a new bank, we will focus on mid- and lower-income segments: Govind Singh, MD & CEO, Small Finance Bank Ltd

Mutual Funds & AMCs Mutual funds see record inflows; assets cross landmark

Budget 2017: ETF may include PSB shares, government holding in private firms

Debt mutual fund investors are in for a treat

HDFC MF plans new cancer fund from March

Affordable housing sector best placed for growth: Jinesh Gopani, senior fund manager, Axis Mutual Fund

Equities, Pvt. Equity & Hedge FundsFPIs turn sellers, offload equities worth $60 million

Qatar Holding agrees to invest $250 million in ArthVeda's fund

Govt. Securities & Bonds New RBI norms on AT-1 bond a huge capital respite for PSBs: rating agency Icra

ReNew Power raises $475 million at cheaper cost

Bonds fall, call rate ends higher

Brokers / DistributorsContra call now would be SBI and ICICI Bank: Sanjay Dutt, Director, Quantum Securities

BoursesSebi seeks clarification on NSE's Rs 10,000 cr IPO

BSE shares slip 4% following stellar debut on Friday

International ABN Amro slashes 60% of senior management as bank shrinks

EconomyRupee gains 9 paise to end at 67.22 against US dollar

For fourth straight day, Sensex hits 4-month high

ClosingLast Financial Closing....

RBI / MoF / Govt. Policies

Digital payment volumes down 10%: RBI data Anup RoyBusiness Standard

Mumbai: Digital payments were 10.2 per cent lower by volume and 7 per cent lower by value in January 2017 against December2016, according to representative data released by the Reserve Bank of India (RBI).

The number of digital transactions fell from 1,027.7 million in December to 922.9 million in January. In value terms, the numberdeclined from Rs 105.4 lakh crore in December to Rs 98 lakh crore in January. This data included transactions on credit and debitcards, electronic fund transfers, digital wallets and mobile banking transactions.

RBI started releasing representative data on payment systems on a daily basis since December 2, 2016. This comes after thegovernment had announced the note ban on November 8.

The data capture card transactions of four banks, prepaid instruments from eight non-banks and mobile banking figures from fivebanks. It is not definitive as all banks are not included, but the data indicate a trend.

Within digital transactions, debit and credit transactions at point-of-sale terminals declined 18.6 per cent month-on-month (m-o-m) inJanuary, indicating some people’s preference for cash. Mobile banking transactions declined 7.6 per cent month-on-month.

However, there was an uptick in other modes of digital payment in January. For example, the Immediate Payment Service (IMPS),used to transfer money in an instant, saw 18 per cent increase in volumes in January. Similarly, the Unified Payments Interface(UPI) of the National Payments Corporation of India was seen gaining traction. In November, only 0.3 million transactions happenedthrough UPI. In December, the number of transactions rose to 2 million and in January, it was 4.2 million. The values transactedwere Rs 91 crore, Rs 700 crore and Rs 1,666 crore, respectively, said the NPCI data shared with RBI. Value and volume changesin pre-paid instruments, which largely comprise mobile wallets, were flat.

There were restrictions on cash withdrawal in January, but the situation was not as bad as in December. RBI Governor Urjit Pateltold a parliamentary standing committee that by January 18, the central bank had remonetised 60 per cent of the cash scrapped onNovember 8. The RBI had by that time put back into the system Rs 9.2 lakh crore of the Rs 15.44 lakh crore demonetised.http://www.business-standard.com/article/finance/digital-payment-volumes-down-10-rbi-data-117020601305_1.html

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Bank's can't escape responsibility of NPAs: RBI Governor C Rangarajan PTISee this story in: The Economic Times

Hyderabad: Former Reserve Bank of India Governor C Rangarajan today said banks cannot escape from the responsibility ofcontrolling Non-Performing Assets (NPA) in their balance sheets.

At a panel discussion on 'Union Budget-2017', Rangarajan also said that though the adverse impact of demonetisation will wear offas the currency availability improves, some affects will not go away even as sectors like real estate will have to rethink theirbusiness models.

"The banking system is undoubtedly under stress. How to resolve that particular problem is only through capitalisation. Pleaseremember even in good old Basil-I, the capital is 8 per cent of the risk weighted assets. So Rs 10,000 crore (capital infusion tobanks in 2017-18 as mentioned in the budget) should not be compared with Rs 1 lakh crore or Rs 2 lakh crore," he said.

"I think that the general scene is that the capital provided is not adequate...I think this cannot let the banks escape the responsibilityfor the non-performing assets that they have in their asset portfolio.

"It is best to take steps to ensure that they collect as much as possible from the non-performing assets," Rangarajan said, whenasked about Rs 10,000 crore capital infusion for banks next year would be sufficient in the wake of mounting NPAs.

Earlier, giving his opinion on the recent budget speech by Finance Minister Arun Jaitley, the former chairman of Economic AdvisoryCouncil to Prime Minister said the budget is well intentioned, and actions should match the intentions.

"The adverse impact of demonetisation will wear off as currency availability approaches normalcy. But some affects will not goaway. Sectors like real estate will have to rethink of how to run their businesses," he opined.

Rangarajan said the revenue projections in the budget have been done conservatively and therefore will hold.

According to him, the budget acted prudently to keep the fiscal deficit at 3.2 per cent of the GDP in 2017-18, which is lower than 3.5per cent during the current fiscal and slightly higher than 3 per cent which was indicated earlier.http://economictimes.indiatimes.com/industry/banking/finance/banking/banks-cant-escape-responsibility-of-npas-rbi-governor-c-rangarajan/articleshow/57000524.cms

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Public Sector Banks / Private

China could play spoilsport; Rupee may depreciate by 3-4% in 2017: Ashish Parthasarthy, HDFC Bank Kshitij AnandThe Economic Times

In an exclusive interview with Kshitij Anand of ETMarkets.com, Ashish Parthasarthy, Treasurer, HDFC Bank, says that China on anormal course will depreciate its currency.

Edited excerpts

What is your take on the budget and the fiscal deficit target which is set out by the government?

To me, the Budget and the estimates were very reasonable. Growth could exceed expectations. The fiscal deficit target of 3.2 percent is largely in line with market expectations which was somewhere around 3.2-3.3 per cent rather than 3.5 per cent.

So, from that perspective, Budget 2017 looks quite realistic. The only number which we need to watch out for is the divestmenttarget set out by the government. The amount being raised via divestment in FY18 at around Rs 72,500 crore is quite large. Wehave not seen that kind of divestment ever.

What is your call on the rupee?

The currency to some extent could depreciate by anywhere around 3 per cent. But, at this point, it is very difficult to say. It could beanything between 3 and 4 per cent in the current calendar year.

How do you see the US Fed going about rates?

There is a lot of discussion around the trajectory of US rates. Two to three hikes are largely built in. I would not be surprised if thereare three hikes.

Would China devalue its currency in the near future?

It is very difficult to say what will happen on trades and how China would react. There is a lot of debate in the market.

However, China on a normal course will depreciate and it would depreciate slightly more than the rupee. I am not expecting anysharp moves, but it will be gradual. But, one thing is certain that it will be more than the rupee.

The government took care to limit the market borrowings to Rs 3.4 lakh crore after buybacks which was lower than Rs 4.25 lakhcrore in the previous year. Do you think it will be a tough road to walk?

We look at the numbers in a slightly different way. My estimation for this year was closer to Rs 3.6 lakh crore compared with Rs3.48 crore proposed.

There is another theme which is coming out from the budget. The government has walked on a tight rope, keeping in mind therating agencies. What is your take on that?

Rating agencies is just one aspect. If you see our deficit numbers compared to most of the other emerging economies, we are large.There is a need for fiscal consolidation and that must be done by both the centre and the state.

A large fiscal deficit number is something which will adversely impact our ratings. We had a current account deficit of 3.3 per cent,which is not that large. On an overall basis, it is not a tightrope walk only for rating agencies but generally the macro picture in theeconomy.

What is your outlook for credit growth year this?

The way the government has put it - the estimates for credit growth looks conservative. This financial year, if the economy registersa nominal growth of 11.75 per cent, then we should end up with a credit growth of around somewhere 12-13 per cent. If that doesnot happen, then there needs to be some other providers of credit.

Will FIIs be the one who will provide the credit? I do not know. I am not very sure. Even the Indian yields, Indian rates are trendingdownwards and at the same time, US yields are trending upwards.

Do you see a sharp cut in interest rates by RBI?

RBI policy rates are dependent on inflation. Very clearly, it is now linked to where we see inflation. The forecast of inflation would besomewhere less than 5 per cent for the next year.

There is still some scope for RBI to reduce policy rates. Unfortunately, at best, there could just be one cut of 25 bps. I think thechances of a 50 bps cut is low and can be ruled out.

What is your outlook for overseas capital flows and a rising dollar?

Overseas capital flows will be a very early call to take right now, But, there could be capital outflows for debt. It may not be ashealthy as they were earlier.

The comfort which possibly investors can get would be relatively stable. But, equities are different, and we should continue to seethe good flows on the equity side. However, on the debt side, the number could be flat to negative. It will be lower than 2016.http://economictimes.indiatimes.com/markets/expert-view/china-could-play-spoilsport-rupee-may-depreciate-by-3-4-in-2017-ashish-parthasarthy-hdfc-bank/articleshow/56995979.cms

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IDBI Bank, YES Bank cut marginal cost of funds-based lending rates The Financial Express

Mumbai: State-owned lender IDBI Bank and its private sector peer YES Bank have reduced their marginal cost of funds-basedlending rates (MCLR). The new rates will be effective from February 1.While IDBI Bank’s one-year MCLR now stands 35 basis points (bps) lower at 8.80%, the corresponding figure for YES Bankcame down 10 bps to 8.85%.

IDBI Bank’s overnight MCLR now stands at 8.20% and those on tenures between one month and three years range between8.40% and 8.95%. Rates are down 30-35 bps across tenures.

YES Bank slashed MCLRs by 10 bps, with the overnight rate now standing at 8.15%, and those on tenures between one month andone year range between 8.15% and 8.85%.With these cuts, IDBI and YES Bank join Union Bank of India and Kotak Mahindra Bank,who had announced their reductions in MCLR on Friday. State-owned Dena Bank, on the other hand, had raised MCLR by 5-15 bpsacross tenures.

In January, Dena Bank had slashed its one-year MCLR by 75 bps. Most major banks had lowered their MCLRs last month inreaction to a demonetisation-induced deluge of deposits and a resultant drop in their marginal cost of funds. As per the MCLRregime, which replaced the base rate regime in April 2016, banks review their benchmark lending rates every month on the basis oftheir incremental cost of funds.SBI, ICICI Bank and PNB have left their MCLRs unchanged in February.

As banks begin to assess the stickiness of the deposits received in the wake of demonetisation, rate reductions may become moreinfrequent.http://www.financialexpress.com/industry/banking-finance/idbi-bank-yes-bank-cut-marginal-cost-of-funds-based-lending-rates/540264/

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IDBI Bank cuts lending rate by 30-35 bps PTISee this story in: mint

Mumbai: State-run IDBI Bank on Monday said it has reduced its marginal cost of funds based lending rate (MCLR) by 30-35 basispoints across various tenors, effective 1 February.

For overnight tenor, the bank has reduced its minimum lending rate to 8.20% from 8.50%, it said in a statement here on Monday.For one month loan, the new lending rate has been set to 8.40% from 8.75%. One year MCLR has been reduced to 8.80% from9.15%.

“The reduction in MCLR is expected to positively impact loan growth; both in the retail consumer segment and corporatesector lending, thereby supporting the growth impulses in the economy,” the bank said.

This is the second reduction by the bank in the last two months. Banks, in January, have reduced their minimum lending rates orMCLR after surge in deposits post the government’s decision to demonetise old high value currency notes.http://www.livemint.com/Industry/DsMpPZc2Ivy83TXx8LdIfN/IDBI-Bank-cuts-lending-rate-by-3035-bps.html

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Oriental Bank of Commerce shares tank over 4% as bank reports Rs 130 crore loss in Q3 The Economic Times

New Delhi: Shares of state-run Oriental Bank of Commerce (OBC) tumbled over 4 per cent on Monday after the bank reportedlosses for December quarter amid deterioration in asset quality.

The bank reported a net loss of Rs 130 crore for the quarter, which was lower than Rs 424.70 crore loss it reported for the year-agoquarter. The stock fell 4.13 per cent to hit a low of Rs 125.30 on BSE.

Total income of the lender rose to Rs 5,415.97 crore in December quarter from Rs 5,350.48 crore reported for the same quarter ayear ago, the lender said in a filing to BSE.

The bank’s interest income fell to Rs 4,438.62 crore during the October-December period against Rs 4,955.96 crore a yearago.

Asset quality of the bank deteriorated, with gross non-performing assets (NPAs) rising to 13.80 per cent of the gross advancesduring the quarter from 7.75 per cent a year earlier.

In absolute terms, gross NPAs stood at Rs 20,492.18 crore against Rs 11,824.90 crore reported for the year-ago period.http://economictimes.indiatimes.com/markets/stocks/news/oriental-bank-of-commerce-shares-tank-over-2-as-bank-reports-rs-130-crore-loss-in-q3/articleshow/56994844.cms

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Bank of Maharashtra ties up with Cigna TTK Pratik BhaktaThe Economic Times

Mumbai: Public sector lender Bank of Maharashtra has partnered with insurance company Cigna TTK Health to market theinsurer’s products in the bank’s branches across the entire country. Under the agreement, the bank will offer the all ofCigna TTK’s superior health insurance products to its 2 crore customers through its network of over 1,896 branches, its14,000 bank employees across the country as well as through its digital platforms.

“Bank of Maharashtra’s tie-up with Cigna TTK will bolster penetration of health insurance in the country, which iscurrently between 5-7%. Additionally, the World Health Organization’s (WHO) Sustainable Development Goals 2030 includeensuring healthy lives and promoting well-being for all at all ages, with a specific focus on India. The bancassurance tie-up will be apositive step towards this end,” said Ravindra Marathe, Managing Director, Bank of Maharashtra.

“Bank of Maharashtra enjoys great visibility in a large number of tier III and tier IV cities, helping expand Cigna TTK’sfootprint across previously unchartered territories, helping to offer affordable health insurance solutions to an increasing number ofpeople,” said Sandeep Patel, chief executive officer, Cigna TTK Health Insurance Company.http://economictimes.indiatimes.com/industry/banking/finance/banking/bank-of-maharashtra-ties-up-with-cigna-ttk/articleshow/56999162.cms

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IndusInd Bank appoints Gaurav Kapur as its chief economist Pratik BhaktaThe Economic Times

Mumbai: Private sector lender IndusInd Bank said that it has appointed Gaurav Kapur, as the chief economist of the bank, as a part

of the Global Markets Team.

Gaurav will be based in Mumbai and will be responsible for formulating IndusInd Bank's economic forecasts and developingcross-border thematic research.

He will also look at tracking the local and global macro-economic environment and formulating views, opinions and forecasts aboutthe Indian economy, markets and policy environment. He has extensive experience in the field of country risk management andsovereign ratings and has worked on the credit ratings review of key economies in Asia including India.

Gaurav is a Post-graduate in Economics from Delhi School of Economics and holds PG certification in management from XLRI,Jamshedpur. He has built an illustrious 18 year career as an economist, advising senior management on macro andmicro-economic trends in the country.

Starting with Indian Council for Research on International Economic Relationship (ICRIER) he worked for the last 16 years as asenior economist with Royal Bank of Scotland, erstwhile ABN AMRO Bank - India. Gaurav was also amember on the RBI'scommittee for review of the national household inflation expectations survey, which is now a key input for monetary policy.

" We are very happy to have Gaurav on board and are confident that his in-depth research and analysis of local and global macroeconomies will give a broader framework to develop our strategy to help us achieve excellence in our business ," said RomeshSobti, chief executive of IndusInd Bank.http://economictimes.indiatimes.com/industry/banking/finance/banking/indusind-bank-appoints-gaurav-kapur-as-its-chief-economist/articleshow/57004010.cms

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Axis Bank ties up with Earthport Pratik BhaktaThe Economic Times

Mumbai: India's third largest private bank, Axis Bank, has tied up with Earthport Plc, a cross-border payment network, to enablefaster outbound cross-border payments for its customers through Earthport’s state-of-the-art global payments network.

Axis Bank has become the first bank in India to connect with Earthport’s global payments network, which spans over 60countries. The Bank joins a growing number of major banks across the globe that can, through a single connection with Earthport,send payments seamlessly to almost any bank account in the world on behalf of their clients, while delivering a faster, more efficientand cost-effective service.

This agreement also marks Earthport’s entry into India, the world’s fastest growing major economy in line with itsstrategy to become the preferred provider of cross-border payment services to major banks, financial institutions, ecommercecompanies and other payment aggregators globally.

"Through this strategic partnership with Earthport, we shall offer our customers faster remittances with complete transparency onthe final amount and time taken to credit beneficiaries overseas with real-time end-to-end tracking," said Sidharth Rath, GroupExecutive, Corporate Banking, Axis Bank.http://economictimes.indiatimes.com/industry/banking/finance/banking/axis-bank-ties-up-with-earthport/articleshow/56999530.cms

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Bankers fight note ban blues on cricket field The Hindu Business Line

Ahmedabad: In a unique sporting event, senior bankers from the public sector lender, Dena Bank fought it out on the playgroundwith the Gujarat government bureaucrats in a friendly limited-over cricket event ‘Confluence’ on Sunday at SardarPatel Stadium here.

Dena Bank, the Convenor of State Level Bankers’ Committee (SLBC) for Gujarat for the last 30, years had organised theevent to get its employees out of the hangover of the demonetisation.

Ashwani Kumar, Chairman and Managing Director, Dena Bank and Chairman for SLBC (Gujarat), was the captain of Dena BankTeam. Ashwani Kumar said that the match came at an apt time in the backdrop of demonetisation and made all-round efforts to givea big boost to ‘Payment through Digital Banking modes.’

The Gujarat bureaucracy was led by Additional Chief Secretary - Government of Gujarat, P K Taneja, who captained IAS-XIofficers’ team.

Last three months remained very strenuous for banks and the State administration. Such event would help them unwind andrevitalise their energy and motivation to keep moving forward with the same zeal, observed Vikramaditya Singh Khichi, FieldGeneral Manager (Gujarat), Dena Bank and Convenor, SLBC (Gujarat) adding that the match was aimed at strengthening theexisting professional ties between State Level Bankers’ Committee and the State Government.

Pankaj Kumar, Principal Secretary, Health and Family Welfare department, Government of Gujarat led the IAS-XI team on the field.Although, the match was won by IAS-XI by 15 runs, the winning smile was seen on bankers, who sailed people through thechallenging times of demonetisation.http://www.thehindubusinessline.com/news/sports/bankers-fight-note-ban-blues-on-cricket-field/article9524733.ece

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IDFC Bank buys 5% stake in IIFL Holdings for Rs 502 crore PTISee this story in: The Economic Times

New Delhi: Private lender IDFC Bank today picked up a 5 per cent stake in financial services major IIFL Holdings for over Rs 502crore through an open market transaction.

The shares were offloaded by Copthall Mauritius Investment.

According to bulk deal data available with BSE, IDFC Bank purchased 15,853,000 shares, amounting to 4.99 per cent stake, of IIFLHoldings.

The shares were purchased on an average price of Rs 317 valuing the transaction at Rs 502.54 crore.

As of December quarter, Copthall Mauritius Investment held 5.13 per cent in IIFL Holdings.

During October-December of the current fiscal, IIFL Holdings reported a 62 per cent jump in consolidated net profit at Rs 222 crore.It had posted a net profit of Rs 137.2 crore in the year-ago period.

The company's income rose 34 per cent to Rs 746 crore in the three months ended December 2016.

The stock of IIFL Holdings today closed at Rs 322.90 on BSE, 2.23 per cent higher from the previous close.http://economictimes.indiatimes.com/markets/stocks/news/idfc-bank-buys-5-stake-in-iifl-holdings-for-rs-502-crore/articleshow/57005254.cms

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Post demonetisation, two-wheeler loan demand hit the most The Economic Times

Mumbai: Consumer loan demand for two-wheeler and consumer durable loans has seen significant drops since the November 8,2016 demonetisation announcement, according to a new analysis by TransUnion CIBIL.

At the same time, demand for other consumer loan types, including credit cards and auto loans, have crept up through December2016, after a sharp decline that was the immediate response to the announcement, it said.

Prior to November 8, credit demand was growing at an average 35% on an annual basis across all loan products, with significantyear-over-year growth in demand for consumer loans (up 71%) and credit cards (up 41%). This growth was seen broadly across thespectrum of lenders.

TranUnion CIBIL study indicated a broad-based growth across all geographies and were accompanied by historically lownon-performing asset (NPA) rates as banks instituted strong, data-driven risk management practices.

"In the week after the demonetisation announcement, TransUnion CIBIL saw a significant decrease in new credit demand, with thefocus for both consumers and bankers being cash exchange and collections," said Amrita Mitra, Vice President- financial ServicesResearch and Consulting at TransUnion CIBIL.

Two-wheeler and consumer durable loans, usually serviced by Private Banks and NBFCs, were most negativelyimpacted-significantly in key geographies like Maharashtra, Gujarat, Andhra Pradesh & West Bengal.http://auto.economictimes.indiatimes.com/news/auto-finance/post-demonetisation-two-wheeler-loan-demand-hit-the-most/57000367

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Banks ask jewellery industry to improve transparency, governance Dilip Kumar Jha & Abhijit LeleBusiness Standard

Mumbai: Turning cautious from many loans going bad, banks are seeking more transparency and better corporate governance inthe jewellery industry.

Karnam Sekar, deputy managing director and chief credit officer, State Bank of India, said as these businesses grew in size,partnership firms needed to morph into a corporate structure with improved governance practices. Most of jewellery units worked ina family atmosphere and there was need for professional management, he said.

Bankers said payments discipline among jewellery units was high about 10 years ago but many units defaulted after the globalfinancial crisis.

Some failed to pay due to a slump in business but many promoters defaulted despite having the ability to pay.

Winsome Diamonds and Jewellery, with a default of over Rs 2,000 crore, figures among the top loan defaulters to public sectorbanks and financial institutions.

PS Jaykumar, managing director and chief executive officer of Bank of Baroda, said bigger jewellery units must take responsibilityfor enhanced levels of governance. The level of non-performing loans in this industry was higher than the average level of NPAs, headded.

Varda Shine, CEO mentor and business adviser, said banks throughout the world had concerns with the diamond industry overtransparency, lack of collateral, and the perception of no growth in the industry.

Reflecting the slowdown in jewellery exports, credit to the industry remained stagnant in 2015 and outstanding loans declined nextyear to Rs 68,600 crore, according to Reserve Bank of India data.

After a record $43.38 billion in 2010-11, India’s jewellery exports fell steadily to $31.98 billion in 2015-16 in the aftermath ofthe global economic crisis.http://www.business-standard.com/article/markets/banks-ask-jewellery-industry-to-improve-transparency-governance-117020601049_1.html

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Bank stocks outperform key indices Ravi Ranjan PrasadFinancial Chronicle

Mumbai: Bank stocks, by and large, outperformed the market benchmarks in the past three month period, which also saw banksgetting surplus deposits due to demonetisation of high value currency notes of Rs 500 and Rs 1,000.

The BSE Bankex gave a return of 6.23 per cent in the last three month period as against Sensex and Nifty 50 giving returns of 3.5per cent.

In the run up to the budget, banking stocks’ universe gained as the BSE Bankex index was up 7.53 per cent betweenJanuary 1 and February 1.

Post-budget, public sector bank stocks rallied for three consecutive sessions and saw some profit taking on Monday. The BSEBankex index has gained 4.67 per cent between January 31 and February 6.

Analysts see better performance by banks in the next few quarters as their earnings improve.http://www.mydigitalfc.com/news/bank-stocks-outperform-key-indices-966 

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Major banks cut lending rates by 60-115 bps since June The Financial Express

Mumbai: Leading banks have lowered their incremental lending rates by between 60 and 115 basis points (bps) since June, evenas the Reserve Bank of India (RBI) lowered the repo rate by only 25 bps during the period, reports fe Bureau in Mumbai.

Much of the reduction in rates followed the deluge of deposits into banks in the wake of demonetisation and a resultant drop in theircost of funds. Under the marginal cost of funds-based lending rate (MCLR) regime, banks have to review their lending rates everymonth on the basis of their incremental cost of funds, among other factors.

While the repo rate has moved to 6.25% from 6.5% at the beginning of June, the country’s largest lender, State Bank ofIndia, has reduced its one-year MCLR to 8% from 9.15% over the same period. The rate on SBI term deposits with maturity of oneyear has dropped to 6.9% from 7.25% at the beginning of June.The corporate bond market too has seen a fair bit of transmission.

The FIMMDA yield on one-year AAA-rated paper has fallen 97 bps since the beginning of June to 6.9155% on February 3.

ICICI Bank, HDFC Bank and Axis Bank have cut their one-year MCLRs by 95 bps, 100 bps and 110 bps respectively since June.http://www.financialexpress.com/industry/banking-finance/major-banks-cut-lending-rates-by-60-115-bps-since-june/540266/

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Banks to push deals with pvt road developers Dipak DashThe Times of India

New Delhi:  Over a dozen banks and financial institutions have assured NHAI to fast-track financing agreements with privatehighway developers for over a dozen projects worth Rs 14,000 crore, which have been awarded under “hybrid

annuity“ model.

Under this model, NHAI pays 40% of the project cost during construction and refunds the rest of the cost in instalments over aperiod of 10 years in 20 equated instalments.

Sources said the deadline to tie up funds is already over in seven cases, which pushed the highways minister Nitin Gadkari andNHAI to reach out to banks on Monday. TOI has learnt that top executives of 16 banks, including SBI, Central Bank of India, CanaraBank, IDBI, ICICI Bank and IIFCL, attended the meeting in Mumbai.

Sources said while a couple of “hybrid annuity“ contracts awarded may be terminated, in all other cases the financialclosure will happen soon. Banks have also shown interest in providing funding for another five projects worth Rs 7,700 crore, whichhave been awarded under build, operate and transfer (BOT) mode.

“We also discussed issues relating to 11 stressed projects involving nearly Rs 10,000 crore investment where banks are alsofacing problem because of no or slow progress. In some cases, lack of liquidity has hit the projects. Government has approvedone-time funding to complete such projects, so that toll collection can start to repay loans,“ said a source.

He added Gadkari has asked NHAI to have one representative each from the bank concerned and highway authority for everystressed project to find out quick solution so that work can start at the earliest.

On Monday, NHAI also showcased how there is huge investment opportunity for banks as it plans to roll out projects worth Rs60,000 crore in the next 3-4 months.

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Banks have preceded monetary policy cuts: Chanda Kochchar Latha Venkateshmint

The overall deposit costs determine a bank’s lending rates and not just the monetary policy, said Chanda Kochhar,managing director and chief executive of ICICI Bank Ltd. While the central bank has cut interest rates by about 50 basis points inthe current financial year, banks have trimmed rates by about a percentage point in the same period, Kochhar said in an interview.

Edited excerpts:

What is the monetary policy looking like to you? Should we expect a cut?

If I talk about the monetary policy, you see that inflation maybe, by end of this year, will actually probably undershoot the target. Thebudget comes up with a lot of fiscal discipline. There is some positive movement happening around the floors to the emergingmarkets again. So, those are some positives, but at the same time, there are concerns about what would happen to inflation thenext year given commodity prices and the pay commission and so on. But I actually want to turn the question the other way to say,let us look at the lending rates because that is what you always ask whenever there is a monetary policy.

What will happen to my EMI rates? So, if I talk about that, this time around, the banks have actually preceded, in that sense, themonetary policy cuts. If you see from April to now, the monetary policy cut has been about 50 basis points whereas the MarginalCost of funds-based Lending Rates (MCLR) of the banks have come down by about 100 basis points.

So, given the fact that we always used to say that it is not just the monetary policy, it is the overall cost of deposits that determinesthe bank’s lending rates, the banks have proven this, that as the cost of funds went down, even though the monetary policywent down 50 basis points, even though the retail deposit rates went down 50-60 basis points or so, the MCLRs have gone down100 basis points because we got current and savings accounts (CASA) which is indeed a lower cost of funds.

That was going to be my next question that if the governor were to cut, what would bankers like you do. But let me ask you thefollow-up. Therefore would you say that the governor should not waste his cut and he may choose not to waste the cut and probablygive cuts in April or so? Is that the baseline expectation that you are going with?

I do not know. I would really never second-guess a regulator.

As I said, there are a lot of points that are actually moving quite positively and the inflation, the reinforcement of the fiscal prudenceof the budget and so on. But whether RBI looks at it as this year’s inflation, next year’s inflation, but I would say thatcurrently, for the customers, it is the lending rate that is important and the lending rate has already come down.

What is your sense about the large increase in savings that you yourself reported, 44% is your CASA (current account/ savingsaccount) now? How much of the newly acquired savings will stay, you think, 10%, 30%, 50%?

Our CASA ratio is actually now almost close to 49%. So yes, a very robust increase in the CASA ratio. Some part of this increasewill definitely stay in the formal sector because this is just dormant savings of people that have come into the formal sector, and thatis very good for the economy. Some part of it will go back into circulation, which is what it should be because that is what createsthe multiplier impact on the economy.

So, very difficult to assign a percentage currently. We will have to watch this quarter, but definitely the increase in the CASA basewill happen and will be meaningful. I think it is going to be too early to assign any specific percentages here. But the other thing Iwould say is, as the formal savings go up, in fact, it will mean an increase for the entire financial services business, not justdeposits, insurance, asset management and so on.

More quickly on the follow through of the budget. There has been a discussion of the bad bank or what they called a public sectorasset reconstruction companies (ARC) in the eco-nomic survey. We are lately getting feelers from the government that they may nothurry with it and they want the RBI’s tools to be followed through. What is your sense? Nevertheless, will Public Sector AssetRehabilitation Agency (PARA) or a public sector ARC or a bad bank in some form help?

My belief always has been that the focus should be resolution and that is very important. Then, whether it happens within the bankbalance sheets or whether it happens in a separate entity outside the bank balance sheets, that is not material. What is material is,will the entire ecosystem move towards resolution and that is what we should focus on. If we focus on resolution, even from thebank balance sheets, we can resolve these issues. If we do not allow resolution to happen, then even if we park them somewhereelse, I do not think that is really creating the productive use out of the asset.

So, my focus always has been that yes, recognition of nonperforming assets (NPA) is one issue. Recognition has been happening.We should all focus on resolution. For focus on resolution, we have to, of course, use the RBI tools to the extent possible, but also,we have got to get the entire banking system to move quickly towards decision making, we have to have the judicial system move intandem and so on. So, resolution is very important. To me, the rest of it is really form.

So, you do not want another form, you are saying? The forms that you have are good enough?

I am saying that the form really does not matter because it does not change the productive use of the asset, so it has to be moreresolution. But if this form can expedite decision making and resolution in some way, then it would be useful. So, if one can say thatall the bank credit to a particular case, therefore, moves under one umbrella and therefore, it is easier and faster to resolve, thenmaybe it is useful. But we should first figure what will be our method of resolution, our approach towards resolution. Only then weshould decide on the form.

I am not able to make out. You think then a structure like this is welcome, public sector ARC?

Provided we back it up with focus on resolution, that is what I am saying because otherwise, if you see the current ARCs, I do notthink the debt aggregation has happened, I do not think too much of resolution has happened. So I am saying, if we back it up witha focus on resolution, then yes, otherwise the form itself is not going to help.So, what is your sense? Is resolution happening? Should we hear of some happy cases from you in particular, or from the bankersin general?

The 2-3 large cases that we have been talking about, those should very soon come to kind of conclusion. Some of the large salesthat we spoke about, of the cement company, of some other company, they are all moving well as far as the regulatory approvalsare concerned. So, we are quite hopeful that one by one, those deals should get concluded.

As far as the rest of the cases are concerned, the banks are really meeting frequently, meeting together, trying to resolve, but itdoes take time for these decisions to happen, it does take time for either to find buyers or to get the promoters to bring in moreequity. So, I do not think we can really predict which quarter, what resolution will take place. We will just have to keep working hardtowards it.

I am tempted to ask this. your own stock has gone up like a rocket from late last month. All of February, the stock has shot up fromRs265 levels to Rs290 levels. Something like a 15% rally in your

stock in the last 3-4 days. And today, Jaypee Infratech stock is up 15%. The market is very much looking for a resolution on thatcounter. Should we expect one?

I generally would not want to talk company specific, but just on this, there is one deal which is already public knowledge, so that onecan talk about, which is the sale of Jaypee Cement assets to UltraTech Cement. So, that deal is moving. It is going throughregulatory approvals. But beyond that, I will not talk any company specific.

But, can we expect any resolutions in steel?

The banks are working towards it, but you have to remember that in every resolution, we must follow due process. We must look atall the options that are available to us and then decide. So, as we look at each and every option, as we look at the various options, Iwould say that it is taking a little bit of time for all of us to sit together and arrive at decisions in each of these cases. But the goodpoint I would say here is that the steel companies are making earnings before interest, taxes, depreciation and amortisation(EBITDA), the steel companies are servicing part of the interest towards the loans. So, there is definitely an upward movement.

Even in tough times, the private sector banks have gone ahead and done a lot of mergers and acquisitions (M&A). We alreadyknow about that Kotak deal that is over a year old. We have very strong cues from IndusInd Bank coming. You have been in theforefront in M&A, should we hear from you?

M&A always depends on the strategic requirements of each entity at that point in time, given the requirement for scale, theopportunity that you get. I always say that we are always open to it, but at the same time, I must say that there is nothing that weare looking at as of now.

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Gadkari meets bankers to get up highway projects Megha ManchandaBusiness Standard

New Delhi:  Road Transport Minister Nitin Gadkari on Monday met top bankers in Mumbai to ease the bottlenecks plaguing highway

contracts of worth Rs 20,000 crore.

According to sources, Gadkari met the chairmen and managing directors of banks including ICICI Bank, HDFC Bank, SBI and AxisBank and discussed issues affecting at least 10 BOT (build, operate, transfer) and 13 hybrid-annuity projects. 

Hybrid-annuity projects are the ones where 40% financing is done by the government and the remaining by the contract developer.

Meanwhile, the Ministry of Road Transport and Highways has prepared a list of national highway projects that turned“chronic” primarily due to issues relating to land acquisition, which impaired construction. Banks are reluctant tore-finance these projects because of their non-performing assets position.

Even as the government and the National Highways Authority of India (NHAI) re-tendered some contracts, global investors such asMacquarie, Brookfield and Cube Highways picked up equity in highway projects from private promoters.

Experts are of the view that some road developers had been aggressive while bidding for projects but faced difficulties in arrangingequity because their balance sheets were leveraged. Also traffic projections for highway contracts made by the companies wereoverestimated.

Some highway projects saw a pullback from foreign institutional investors because of issues such as land acquisition, environmentand forest clearance.

These investments came after the Cabinet in May 2015 approved an exit policy that permitted concessionaires to divest 100 percent two years after the completion of construction.

Gadkari is believed to have discussed radio frequency identification with the banks. NHAI introduced radio frequency identification(RFID) technology at toll plazas in February 2014. The Indian Highways Management Company (IHMC) was given the job ofimplementing ETC (electronic toll collection) projects.

Currently, four banks — State Bank of India, ICICI Bank, Axis Bank and IDFC Bank — are authorised to issue theRFID tag. http://www.business-standard.com/article/economy-policy/gadkari-meets-bankers-to-get-up-highway-projects-117020601310_1.html 

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Co-operative Banks/RRBs

Foreign Banks / FIIs / I-Banks

Rating & Research

Rupee gathers momentum Gurumurthy KThe Hindu Business Line

Six long weeks of a narrow sideways consolidation between 67.7 and 68.35 in the Indian rupee came to an end last week.

The rupee strengthened, decisively breaking the range above 67.7. It opened with a gap-up and continued to strengthen against thedollar all through the week. It made a high of 67.15 on Monday before closing at 67.22, up 1.1 per cent for the week. Weak dollar,coupled with a strong rally in domestic equity indices, helped the rupee gain ground.

Dollar outlookThe US dollar index has been falling continuously for more than a month since the last week of December 2016. The index iscurrently finding support around 99.30. It made a low of 99.23 on Friday and has bounced back from there to trade at 99.65 now.The 38.2 per cent Fibonacci retracement support is at 99.23. If the index manages to sustain above this support, a range-boundmove between 99.23 and 101 is possible for some time. But, a strong break below 99.23 may increase the downside pressure anddrag the dollar index lower to 98 and 97.7.

Crucial resistance for the dollar index is in the 101.5 and 101.7 zone. The downside pressure will ease only if the index breachesabove 101.7 decisively. But such a strong rally looks less probable at the moment.

Data watchThe coming week is packed with a series of important data releases. It starts with the Reserve Bank of India’s monetarypolicy meeting on Wednesday. This becomes a key event to watch out for, especially after the Budget, as expectations are high fora 25-basis point rate cut.

The outcome of the RBI meeting may play a significant role in deciding on whether or not the rupee could strengthen further againstthe dollar. This will be followed by the Index of Industrial Production (IIP) and the Consumer Price Index (CPI) inflation numbers onFriday and Monday, respectively.

Rupee outlook

The strong rally in the past week breaking the prolonged narrow consolidation is a positive for the rupee. However, there is a crucialsupport near current levels at 67.10.

Whether or not the rupee breaks above this support will decide the next move for it. Inability to break above 67.1 and a strongreversal from there may have the potential to take the rupee lower to 68 and even 68.35 in the short term.

On the other hand, if the rupee decisively manages to surpass the hurdle at 67.10, it can move higher to 66.90 initially. Furtherbreak above 66.90 may see the rupee strengthening to 66.30 or even 66 thereafter.http://www.thehindubusinessline.com/money-and-banking/currency-call-rupee/article9524998.ece

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RBI may cut rate by 0.25% in policy review: ICRA PTISee this story in: The Economic Times

New Delhi: Reserve Bank is expected to slash repo rate by 0.25 per cent at its policy review on Wednesday, followed by anextended pause, ICRA said today.

The rate cut would be supported by the modest CPI inflation, which is expected to undershoot the March 2017 target set byReserve Bank of India (RBI) and the continued fiscal consolidation attempted in the Union Budget for FY2018, the rating agencysaid.

"There is a high likelihood of a 25 bps cut in the repo rate in the upcoming policy review in February 2017. The CPI inflation in theongoing quarter is expected to remain below the forecast of 5 per cent.

"Moreover, the Union Budget for FY2018 has balanced fiscal consolidation with increased capital spending, which would revivegrowth in a non-inflationary manner," Naresh Takkar, Managing Director and Group CEO, ICRA, said.

Besides, with limited evidence so far that the rebound in Q4 FY2017 would be strong, ICRA expects the monetary policy committeeto pare its baseline gross value added (GVA) growth forecast for FY2017 downward from 7.1 per cent, and indicate a modestimprovement in FY2018.

ICRA's own baseline estimates forecast a pickup in GVA growth from 6.6 per cent in FY2017 to 7 per cent in FY2018.

ICRA expects the CPI inflation to undershoot the RBI's projection of 5 per cent for Q4 FY2017.

The limited space for further monetary easing by the RBI, the mild rise in the net long-term borrowings of the Government of India,and an anticipated uptick in state governments' market borrowings in FY2018, suggest that Indian bond yields are unlikely to easesignificantly below current levels, the rating agency said.

With greater emphasis being laid on bringing inflation in a durable manner to 4 per cent, i.e. the mid-point of the CPI inflation bandof 2-6 per cent, the anticipated rate cut in February 2017 is likely to be followed by an extended pause. The CPI inflation target setby the RBI's Monetary Policy Committee (MPC) for March 2018 is awaited.

Following the surge in deposits and liquidity after the note ban, banks had cut both deposit and lending rates. With the easing oflimits on withdrawals, bank deposit growth on a YoY basis has eased from 15.9 per cent on November 25, 2016 to 13.9 per cent onJanuary 20, 2017; ICRA expects deposit growth to ease further to 12 per cent by end-March 2017.http://economictimes.indiatimes.com/news/economy/policy/rbi-may-cut-rate-by-0-25-in-policy-review-icra/articleshow/57001759.cms

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Higher other income led to sharp rise in PAT: Rajesh Mokashi, CARE Ratings The Economic Times

In an exclusive chat with ET Now, Rajesh Mokashi, MD, CARE Ratings, said bond markets are looking very attractive at this point oftime.

Edited excerpts...

ET Now: Now first up, there has been a huge growth on your bottom line a profit growth of over 65%, how have your revenue orrather have your rating revenues shaped up?

Rajesh Mokashi: I think you mentioned that the operating revenues have grown up 7.8% for the nine months period whereas theother income from investment is one of the higher things which causing the profits to go substantially higher but operating incomehas grown by around 8%, nine months period. And the other numbers have moved up correspondingly.

ET Now: But I wanted to look closely at your quarter three numbers and the kind of growth that you have seen on year-on-yearbasis, your total income is up about 4.8% but profits have grown to Rs 45 versus Rs 27 crore, what I want to understand is what ledto that and is this number can you repeat these kind of numbers?

Rajesh Mokashi: The real reason is that we carry a roughly around 400 crore of investments in our books and some of them have

been FMPs, fixed maturity plans which have matured in that particular quarter and that is the reason why this particular quarter thebottom line has suddenly shot up. But if you look at the operating income it is more or less in line with the top line which is there,however of course our expenses have slightly reduced as the ESOP charge is not there which was there corresponding for theprevious quarter and that is why the operating profits have grown slightly better but otherwise it is the other income which is causingthat net profit to jump substantially which is as a result of the booking of FMP income which have matured as such.

ET Now: So this is just essentially a one off entry that has actually aided your profits, is that right?

Rajesh Mokashi: Yes that is of course the re-accounting treatment is given otherwise if you are doing a accrual kind of accountingthis would not have appeared in a particular quarter it would have been throughout the year as such. It is an income per se but howit is recognised is important.

ET Now: We have seen a significant increase in debt and bond financing for corporates recently, what incremental demand do yousee from this for CARE and what is the overall growth size of the industry?

Rajesh Mokashi: I think the macro has been going through a very interesting phase with the demonetisation coming in, a bit ofslowdown, you know add to it the higher level of NPLs in the banking system but generally the interest rates were on their pathdownwards and the demonetisation has also further added a fillip to the reduction of interest as such. And going forward, I mean,the banking challenge remains as such but the bond markets are looking much more attractive. We have seen a substantial jump inthe bond raising for the nine months period by around 40% rise in the amount raised in the bond markets. Our own rated volumehas grown up around 28% substantially driven by again long term and bond market activity rather than bank loans as such and Isee that the falling interest rate scenario really would be helpful for companies to refinance some of their bank loans using the bondmarket route at a much more lower price. That definitely looks attractive.

Add to it, things like the compulsory rating requirement for unrated instruments by June of this year which is a RBI requirement thatentities which have no ratings in place will carry a 150% risk weight if their exposure is more than 200 crore. All this augurs well foreven some pickup in the bond market-- bank loan rating as such. And another guideline which the RBI has recently issued which isthe draft guideline which talks about two ratings for commercial paper issuances, the ticket size is lower and some more flexibilitygiven to issuers and entities as such, that also augurs well for the short term instrument like CPs and multiple rating requirements.So generally I think things are settling down after demonetisation as such, of course the GST will be a bit of an structuraltransformation again which we have to wait and watch how it sort of pans out going forward.

ET Now: And you recently signed that MOU pact with Japan credit rating agency to act as a strategic business partner, can you justtell us what is the development and what is revenue and profit contribution from this MOU?

Rajesh Mokashi: I think it is very early stages for our MOU with Japan credit rating. Basically it is an MOU to help each other interms of business possibilities. There could be Indian issuers who may approach Samurai bond market with even masala bondissues, the Japanese interest rates are pretty attractive and this opens a completely new window for Indian foreign currencyborrowers or masala bond borrowers in terms of interest rates and institutional investors in Japan as such. So, early stage but weare looking forward to that.http://economictimes.indiatimes.com/opinion/interviews/higher-other-income-led-to-sharp-rise-in-pat-rajesh-mokashi-care-ratings/articleshow/56995890.cms

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ATMs, Credit & Pre-paid Cards

Mastercard, CAIT plan campaign to promote digital payments among traders K. R. SrivatsThe Hindu Business Line

New Delhi: Taking their two-year-old partnership to the next level, global technology company Mastercard and traders' body CAIThave launched a new campaign to accelerate adoption of digital payments among traders and to help them grow their businesses.

The campaign, titled Digital Apnao Vyapar Badhao (Adopt Digital and Build Business), will be rolled out across 30 cities over aperiod of 90 days, CAIT and Mastercard announced on Monday.

As part of the campaign, 500 camps will be organised to on-board five lakh merchants and traders by bringing together financialinstitutions and other payment facilitators under one roof, Ravi Aurora, Senior Vice-President, Global Policy Affairs and CommunityRelations, Mastercard, said.

Aurora said the campaign is in continuation of Mastercard and CAIT's partnership to promote financial awareness and literacyamong traders through educational training sessions 'Master your Card' across the country.

"We share the Government's vision of creating a less cash economy and bringing more people under the ambit of financialinclusion. The Digital Apnao campaign that we are launching is in line with our commitment to create awareness about the benefitsof a less cash economy and the opportunity that new payments technology can bring to the untapped SME sector," Aurora added.

The first of the 500 camps will be launched in Nagpur on Tuesday, Praveen Khandelwal, Secretary-General, CAIT said.http://www.thehindubusinessline.com/money-and-banking/mastercard-cait-plan-campaign-to-promote-digital-payments-among-traders/article9524373.ece

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Housing Finance

Development Banks

NBFCs / FIs / MFI

10 NBFCs surrender registration certificate PTISee this story in: The Economic Times

New Delhi: Reserve Bank today said 10 Non Banking Finance Companies (NBFCs), including Supreme Securities and IslandLeasing, have surrendered their registration certificate.

The central bank also said it has cancelled the certificate of registration of nine NBFCs.

"(Ten) NBFCs have surrendered the Certificate of Registration granted to them by the Reserve Bank of India...(and) has thereforecancelled their Certificate of Registration," it said in a statement.

The other NBFCs, which surrendered their registration certificate, are Pinnacle Trades and Investments, Kalyani Mfg and Leasing,Sahyog Credits, M CT M Global Investments, Sree Sankari Benefit Funds, Wham Investments, M K W Finance and ShasunLeasing and Finance.

In a separate statement, RBI said it has also cancelled the registration of The Instalment Supply, Sunshine Finlink, Link BenefitFund, Mani and Money, Hanumangarh Finvest, Vijaya Finance, Westend Management Technologies, HNM Leasing and Financeand Paras Hire Purchase Company.

Now, all these 19 NBFCs cannot transact the business of a Non-Banking Financial Institution, the RBI added.http://economictimes.indiatimes.com/industry/banking/finance/10-nbfcs-surrender-registration-certificate/articleshow/57000710.cms

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Niche banks opt for rate baitPinak GhoshThe Telegraph

Bangalore: Small finance banks are relying on high interest rates to shore up their deposits and compete with universal commercialbanks.

With term deposit rates as high as 9 per cent (on specific tenures) and savings rate of over 6 per cent, the move is seen not only asa means to attract customers but also to manage the cost of funds.

Chennai-based Equitas and Mumbai-based Suryoday are both offering savings rate of more than 6 per cent, higher than evenBandhan Bank, one of the two latest universal bank licensees.

The term deposit rates offered by Equitas and Suryoday are in the range of 7-9 per cent, which are either on a par or higher thanmany commercial banks for similar tenures.

Ujjivan, which launched its small finance bank today with five branches on a pilot basis, has played safe, keeping the savings rate at4 per cent. Rates on 1-year and 5-year fixed deposits are 8 per cent and 6.5 per cent, respectively. Senior citizens get a benefit ofan additional 0.5 per cent on term deposits.

"Savings account is a transactionary account and is not interest-rate sensitive. We have kept the savings account at market rateand are loading it up with all the benefits which would normally be available to a premier customer. People are interest-sensitive onfixed deposits. That we have kept about 1 per cent over the market," said Samit Ghosh, managing director and CEO of UjjivanSmall Finance Bank.

According to bankers, deposit rates have come under pressure on account of high liquidity following demonetisation, forcing banksto adjust rates for both assets (loan) and liabilities (deposit).

Many of the new small finance bank licensees were microfinance institutions and non-banking finance companies. An executivedirector of a public sector bank said these finance companies were earlier relying on banks as their source of funds at rates in therange of 12-14 per cent. On that, they were charging an additional 10-12 per cent, taking the credit rates to 22-24 per cent.

"Now, they will be able to mobilise deposits, lower the cost of funds, offer comparative credit rates and improve bottomline. So, as apart of that exercise, they have to offer rates which are more competitive than banks," he said.

Ghosh said he expected the cost of funds to go down and interest rates on loan products were expected to moderate in a couple of

years.

"Retail deposits take a lot of time to build up. Probably we would be able to reduce our cost of funds by 1-2 per cent and we maystart seeing interest rates dropping two years down the road," he said.

Further, small finance banks will also have to compete with each other in mobilising deposits in both urban and rural locations.Therefore, rates not only have to be competitive compared with universal banks, but competitive in respect of other small financebanks as well. "This will further the financial inclusion drive of the RBI, a specific purpose which the regulator hopes to achieve fromthe new licensees," an industry source said.https://www.telegraphindia.com/1170207/jsp/business/story_134411.jsp#.WJkqQGOqBkg

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Ujjivan SFB plans Rs. 400-cr tech spend to offer better services The Hindu Business Line

Bengaluru: Ujjivan Small Finance Bank (Ujjivan SFB) rolled out full-fledged banking operations with five pilot branches in Bengaluruon Monday. The bank plans to be tech-driven for its pan-India roll-out and also to boost its day-to-day business.

Samit Ghosh, MD and CEO of Ujjivan Small Finance Bank, said, “We will be spending heavily on technology; Rs.400 crorespending is planned for five years and will be mainly towards developing new technologies that may ease operations both at thefront-end and the back-end. We will have to see how it works.”

The bank began its operations on pilot basis offering services to unserved and underserved customers.

“The bank has developed technologies that will provide a host of services such as door-step and paperless banking, mobile,Internet and phone banking, access to biometric ATMs and Aadhaar-enabled debit cards. These benefits are normally availableonly to premier customers of commercial banks,” said Ghosh.

He further added: “With technology and digitisation, our drive is Aadhaar-enabled KYC and our simplified process will enableaccount opening in five to seven minutes using biometric authentication on a hand-held device.”

On the effect of demonetisation on the bank, Ghosh said: “Before demonetisation, we had good repayment and almost nilNPAs. Even now there are nil NPAs. But due to demonetisation and lack of currency notes in circulation, many of our customerscould not repay and have asked us for additional time to repay.”

“Repayment prior to demonetisation was 99 per cent month-on-month. During the demonetisation period, i.e. November– December 2016, repayment fell to 90 per cent. Now with fresh currency coming into circulation, we are inching closer tonormalcy at around 97 per cent repayment,” he explained.

“It may take another six months for total normalcy to set in,” Ghosh said.

On challenges faced by micro-finance institutions (MFIs) transforming into full-fledged banks, Ghosh and Ittira Davis, COO ofUjjivan Small Finance Bank, said technology is a challenge. Retaining staff and training them is another challenge.http://www.thehindubusinessline.com/money-and-banking/ujjivan-bank-tech-spend/article9524999.ece

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Ujjivan Small Finance Bank launches operations PTISee this story in: The Economic Times

Bengaluru: Ujjivan Small Finance Bank today officially started its services with five pilot branches from here, aiming to become aleading mass market retail bank over the next five years by catering to the un-served and under-served customers.

"With a customer base of 35 lakh people, we are now focusing on the under-served. In the last two years, we have done a lot ofmarket research. There is a huge gap in market potential. We want to grow as a major player in retail banking in next five years,"said Samit Ghosh, MD and CEO, Ujjivan Small Finance Bank, at the launch.

Ujjivan Financial Services, a non-banking financial company, is the holding company of the small finance bank. It was among the 10entities to get license from the Reserve Bank late last year to commence small finance banking operations.

Ghosh said people are very sensitive about interest rate on fixed deposits, which was why Ujjivan will offer rates of one percentagepoint above the prevailing market rates.

Ujjivan Small Finance Bank will offer interest rates on fixed deposit and recurring deposit in range of 5.5-8 per cent, which is higherthan the average rate of interest offered by most banks, it said in a statement.

There will also be an additional benefit of 0.5 percentage points for senior citizens. The bank will offer interest rates of 4 per cent onsavings accounts.

It will offer full range of services with benefits of doorstep and paperless banking, besides internet and phone banking, biometric

ATMs as well as Aadhaar-linked debit card.

"These benefits are normally available to premier customers of commercial banks. We will be educating our customers to use debitcards for normal transactions. We want to make it very easy for our customers to transact in a savings account and give them wideaccess to all the channels which are possible," Ghosh said.

On bringing the costs of funds down over time, he said retail deposits take a lot of time to build up.

The bank has a loan portfolio of Rs 6,525 crore as on date.

"We will possibly be able to reduce our finding cost by may be, 1-2 percentage in one-and-a-half years because it takes a long timeto build up," Ghosh said.

It will extend its services across 457 branches in 24 states in a phased manner over the next few months.

The bank will offer customers unlimited transactions from its own ATM network and a total of six free transactions on other bankATM networks. It will also offer remittance services to transfer money within Ujjivan and other bank accounts in an affordablemanner.

Ghosh said the SFB has 10,000 head count, including 2,000 new recruits with banking background to embark on the new journey.http://economictimes.indiatimes.com/industry/banking/finance/banking/ujjivan-small-finance-bank-launches-operations/articleshow/56998434.cms

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Ujjivan sets lofty target The Telegraph

Bangalore: Ujjivan Small Finance Bank is likely to apply for a universal banking licence after five years.

The move will be based on the performance of the small finance bank and allow the latest entrant in the banking space to break freeof operational limitations. According to the RBI norms, these differentiated banks will have to extend 75 per cent of the credit topriority sectors such as agriculture and MSMEs (micro, small and medium enterprises) and at least 50 per cent of the loan portfolioshould constitute advances of up to Rs 25 lakh.

"We want to grow from a small finance bank and become a major player in mass market retail banking in five years. If therestrictions inhibit us, we could apply for a universal licence. But we would always focus on remaining in the mass market retailbanking space," said Samit Ghosh, managing director and CEO of Ujjivan Small Finance Bank.

The lender hopes to convert all 457 microfinance branches in 24 states into bank branches by October and gradually bring theexisting 3.5-million customers within the banking fold.

"In addition to our microfinance customers, we are also focusing on the underserved customers who probably have a bank accountbut don't transact in those accounts. We are trying to get these people moved from the unorganised sectors where they save moneyand to us, thus bringing them within the formal banking system. That's our objective. We are not competing with regular commercialbanks," Ghosh said.

Ujjivan will also open 66 branches in unbanked rural areas to comply with the regulatory requirement of having 25 per cent of thebranches in those areas. The bank will also offer unlimited access to ATM transactions on Ujjivan's ATM network and six freetransactions on other banks' ATM network. The bank will also leverage the Aadhar database for the opening of accounts.https://www.telegraphindia.com/1170207/jsp/business/story_134413.jsp#.WJkqZGOqBkg

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75% of our customers will be from MFI client base, says Ittira Davis of Ujjivan Small Finance Bank The Financial Express

Mumbai: As it makes the transition to a bank from a microfinance institution, Ujjivan Small Finance Bank will take all its existingcustomers along as deposit holders, chief operating officer and head of transition, Ittira Davis, told fe Bureau in Mumbai.

Edited excerpts:

To what extent will your cost of funds fall as a result of the transition?

Right now, because the interest rate cycle is on the way down, we should be able to reduce our rates, like everybody else in theindustry. But, if you look at the difference between us being a microfinance institution and becoming a banking institution, we caneasily see in the next financial year, a 100-basis point (bp), or 1% drop in rates.

What will your lending and deposit rates be like?

On savings bank (accounts), we’ll be like most of the other banks, offering 4%, but on the term deposits and recurringdeposits, we’ll be paying slightly higher than the average market rates. In some tenures, that may go up to 1% above what isthe average currently. On a one-year (term deposit), we are looking at 8% rate for normal deposits and 8.5% for senior citizens.

On lending rates, we still have the microfinance lending rates, which will eventually have to give way to some other products whichwe’re introducing gradually. Ninety-nine percent of our portfolio is still microfinance loans.

What percentage of your bank clients will come from your MFI client base?

If you are looking at the next financial year, 75% of our customers would be from the existing (base) because what we are doing is,every borrowing customer today on our books will be moved into a deposit as a regular banking customer. Of course, if theydon’t want to operate their account, that’s fine, but we expect that because of these services we are providing,including assisted services, 99% of our customers will at least open and operate their accounts. Over the next year to 18 months,we expect to get 20-25% more customers from the open market.

What are your plans for going digital?

We are focused on being digital, in the sense that all our ATMs, for example, are biometric-enabled. Our RuPay cards also have theAadhaar number within the microstrip. That becomes the base for doing business in those areas.

Finally, there will be 5,000 people in the field carrying our handheld devices by the end of the calendar year. It will be a mini ATM toopen an account, carry out a certain amount of cash transactions and even make transfers from the field. We are also looking atsome of the newer things such as UPI and BHIM and trying to see what makes sense for our customers. We can’t doeverything because of the costs attached to it. But whatever is the best out of these, we’ll bring that to our customers.

Where would you like to limit delinquencies and write-offs?

Our performing loans are over 99.5% and we’d like to have that, but obviously, the impact of demonetisation in the shortterm may be there. We’re seeing an improvement every month. November was a little difficult, but repayments from theNovember loans has crossed 97%. We feel that by March-end, the November repayments may cross 99%. We are trying to keep itat 99%-plus on a portfolio level.http://www.financialexpress.com/market/75-of-our-customers-will-be-from-mfi-client-base-says-ittira-davis-of-ujjivan-small-finance-bank/540257/

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Being a new bank, we will focus on mid- and lower-income segments: Govind Singh, MD & CEO, Small Finance Bank Ltd Vivina Vishwanathanmint

In retail banking, how different is a small finance bank compared with payment banks and universal banks?

A small finance bank is comparable to a mainstream bank such as State Bank of India (SBI), from a regulatory and product offeringangle.

The major differentiation between payments banks and other banks is that payments banks come with limitations and will largelydepend on technology.

In case of small finance banks, from a retail consumer’s angle, we are like any other universal bank. We have all kinds ofactivities that an SBI can offer for its customers—be it deposits, loans or third-party products such as insurance, mutual fundsand pension schemes.

On the loans side, we can do any type of loans—micro, small and medium enterprises (MSME) loans; housing loans;corporate lending and retail lending. Being a new bank, we will be focusing on mid- and lower-income segments.

From a compliance and regulatory point of view, what differentiates us from universal banks is that 50%-plus of our portfolio shouldcome from loans of sizes below Rs25 lakh.

Second, priority sector lending (which is normally 40% for all universal banks) for small finance banks is 75%. The direction we havegot from the regulator and the government is that we should focus on mid- and lower segments and that is how we need to positionourselves.

So we will be focusing more on MSMEs, affordable housing and a segment below that (i.e., lower income groups). We have been amicro-finance institution (MFI) for the past 7 years. And our loan ticket size is on the lower side. Our average loan ticket size forMSMEs is Rs90,000 and for micro finance the ticket size is Rs13,000-14,000. We are not going for Rs25-100 crore ticket sizes. Weare going to continue focusing on MSMEs, small and medium-sized enterprises (SMEs) and housing—where we will not bedoing products for more than Rs25 lakh.

Is there an income group that you would like to address in particular?

We are not looking at a specific income group because of two things.

One, we are raising money now. If we have to raise money on the deposit side, we will be agnostic: whether it is a wealth customerwho can give me Rs50 lakh to Rs1 crore in fixed deposits or customers who can only give me Rs2,000 to Rs3,000 in Jan Dhanaccounts. We are looking at all segments of the society.

We will be competing with banks such as Punjab National Bank and Axis Bank Ltd.

Our differentiation, I would say, comes more on the lending side. We won’t be doing large corporate loans.

In housing loans, we will not do more than Rs25 lakh. We are not there in the Rs1 crore housing-loan segment.

What are the interest rates that you are offering? What are the focus areas for attracting customers?

For savings account deposits, we will be offering 6% for any amount of deposit.

For fixed deposits, we are focusing on the 1-3-year maturity basket and there we are paying 125-150 basis points (bps) higher thanSBI’s reference rate. (One basis point is one-hundredth of a percentage point.) But again, this is only for tenures of 1year-plus. We are not going to give higher rates for 15-day or 30-day fixed deposits. We are offering 8.25-8.40% for 1-year-plustenures.

In the initial stages, one differentiator is higher interest rate. However, what should differentiate us from the rest of the banks is ourcustomer service. We will have both doorstep and branch models.

Doorstep banking is going to be one of our key differentiators. And in branch banking, when people come to us, we will havededicated service desks and we will take care of end-to-end requirements. It is not interest rate, but service that is the big puller. Wedo doorstep banking through our own network. We have more than 2,000 employees right now. We are in the process of enablingbusiness correspondents. It is part of our next 6 months’ plan. The number of business correspondents will depend on thekind of tie-ups we have. If I get an institutional business correspondent, then I will get a large number of business correspondents.We are looking for 18-20 business correspondent outlets in each branch.

As a micro-finance institution, we had 351 branches. We will open an additional 100 branches in the next 6 months. So, broadly,there will be about 450 touch points by June this year. Our major focus for branch locations will be Uttar Pradesh and Bihar.

Till 18 March, we will largely be in our current core areas such as Uttar Pradesh, Bihar, Jharkhand and Chhattisgarh; some portionsof Madhya Pradesh and Maharashtra; the National Capital Region; Uttarakhand and Haryana; besides other strategic location suchas Mumbai, Lucknow and Kanpur.

As a non-banking financial company (NBFC), you used to borrow at 12%. With higher deposit rates, will your cost of funds comedown? What impact will it have on your lending rates?

As an NBFC-micro-finance institution, our cost of funds is in the range of 12%. Higher fixed deposit rates, at 8.25-8.40%, makesense for us as our cost of funds will gradually come down—may be by 100-150 bps in 1 year.

We are a new bank and our CASA (current account savings account balance) may not be sizable in the first year. We will get mostof the money through fixed deposits. So, we might end up with a cost of funds in the range of 10.5%, at the end of March 2018. Weare expecting to raise Rs2,000 crore through overall deposits—retail as well as wholesale—by April 2018.

We are looking to reduce interest rates on the lending side by around 100 bps in April this year. And in the next 9-12 months weshould be able to reduce the lending rates by another 100-150 bps. The benefits of cheaper cost of funds from public deposits willbe passed on to borrowers. Currently, for affordable housing loans, the interest rate is at 15% and the ticket size is Rs5-5.5 lakh.Going forward, we may increase the ticket size so that we get efficiency of operations, coupled with reduced cost of funds.

What are the other products and services that you plan to offer?

Initially, we will have ATMs in all the 100 branches that we are opening. Besides this, we will have ATMs in select pockets. Wecould end up having 30-35 ATM machines in the first 6 months in select areas. We will end up having maybe 150 ATMs in the next6-7 months. Currently, we are exploring personal loans and agricultural loans, such as tractor loans, which we plan to launch in 6months, after due assessment.

In the debit card space, we are starting with RuPay debit cards. Before March 2018, we plan to offer a co-branded credit card. Weare talking to banks and exploring that area. In 6-9 months we will explore to see if we want our own credit card brand.http://www.livemint.com/Money/Rh2OUM1dtENaV5PBmABy0N/Being-a-new-bank-we-will-focus-on-mid-and-lowerincome-seg.html

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Mutual Funds & AMCs

Mutual funds see record inflows; assets cross landmark The Hindu Business Line

Mumbai: Investment into mutual funds continued growing at a strong pace this year, with January seeing net inflows of Rs53,817crore. This is five times the corresponding figure for December at Rs10,923 crore. For the financial year to date, inflows now standat Rs3.67 lakh crore.

This is double the inflow for the same period in January 2016 of Rs 1.84 lakh crore.

Assets under management of the mutual fund industry crossed another landmark, touching Rs 17.37 lakh crore at the end ofJanuary.

Optimum use of income funds

Income funds, which invest primarily in debt, have been reporting high inflows continually as investors lock down before interestrates fall further. Income funds as a category saw inflows of Rs 28,588 crore, reversing the trend in December which saw netoutflow of Rs 33,182 crore. Equity funds suffered as a result, with net inflows falling to Rs 3,714 crore in January, against Rs 9,196crore in December. Inflows into balanced funds remained flat, by and large, between the two months, at Rs 3,304 crore in January.The ETF category saw a spurt in net inflow at Rs 6,748 crore in January, against Rs 4,349 crore in December.

Last month, the government completed a further fund offer of the CPSE ETF to divest Rs 6,000 crore worth of shares in severalpublic sector companies. The ETF is being managed by Reliance Mutual Fund.

Indexation benefitDespite several demands from the mutual fund industry on easing tax rules for investors and allowing the industry to offer pensionproducts, Budget 2017-18 didn’t offer much to the players or investors. However, Finance Minister Arun Jaitley’sproposal to change the base year used for calculating indexation benefit from 1981 to 2001, investors in debt mutual funds maystand to benefit, some experts say. Such funds qualify for long-term capital gains tax of 20 per cent with indexation benefit if held formore than three years. With the base year change, the tax liability is likely to fall.http://www.thehindubusinessline.com/markets/stock-markets/mutual-funds-see-record-inflows-assets-cross-landmark/article9524955.ece

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Budget 2017: ETF may include PSB shares, government holding in private firms Dheeraj TiwariThe Economic Times

New Delhi: The government may consider offering shares of public sector banks (PSBs) and its holding in private firms in the newexchange traded fund proposed in the budget for 2017-18, said a senior government official. “There’s no reason whythe new ETF can’t have banking stocks in its portfolio,” the official said on condition of anonymity.

The government may divest its holding in Hindustan Zinc through this route since plans to sell its stake strategically have beenstuck for a long time, the official said. State-run IDBI Bank, in which the government has been unable to divest its holdingstrategically, could also be part of the new ETF structure.

Another government official said ETF could help the government get around state-run banks that have been reluctant to tap into thestock market despite requisite clearances. “The money raised through such stake sale can be ploughed back forcapitalisation purposes, if so needed,” the official said. The government garnered about Rs 6,000 crore from the last ETF,which mostly comprised of infrastructure stocks.

Finance minister Arun Jaitley in his budget speech said that a new ETF with diversified stocks of central public sector enterprisesand other government holdings will be launched in 2017-18. “Our ETF, comprising shares of ten CPSEs, has receivedoverwhelming response in the recent further fund offering. We will continue to use ETF as a vehicle for further disinvestment ofshares,” Jaitley said.

Last week, economic affairs secretary Shaktikanta Das told ET that the government is examining various options to value IDBIBank’s large property holdings. The government currently holds 73.98% stake in IDBI and 29.59% stake in Hindustan Zinc.For 2017-18, the government has set a mammoth disinvestment target of Rs 72,500 crore, of which Rs 46,500 crore is to comefrom regular stake sales including ETFs.

The government has allocated only Rs 10,000 crore for bank capitalisation in the next fiscal as part of its seven-pronged IndraDhanush revamp plan for state-run banks. As per the government’s estimates banks will raise about Rs 1.1 lakh crore fromthe markets till 2018-19. “Most banks have raised only a little amount through additional tier I bonds to maintain theregulatory capital,” the second official cited earlier said.http://economictimes.indiatimes.com/news/economy/policy/budget-2017-etf-may-include-psb-shares-government-holding-in-private-firms/articleshow/57009534.cms

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Debt mutual fund investors are in for a treat Aakar RastogiThe Economic Times

Debt mutual fund investors have some reasons to cheer. Albeit for a short period. Mutual fund experts believe that a lower fiscaldeficit and a likely rate cut by the Reserve Bank of India this week are likely to push up the Net Asset Values (NAVs) of debt mutualfunds.

"I am expecting a rate cut of at least 25 bps in the next monetary policy," says Rajesh Bhatia, a mutual fund advisor based in Delhi.The RBI policy review is scheduled on Wednesday. Bond yields and prices have an inverse relationship. That means when theinterest rate (yields on bonds) goes down, their prices will go up and vice versa.

The new fiscal deficit number has also fuelled hopes of a lower interest rate scenario. The finance minister has announced in thebudget that he is sticking to the roadmap on fiscal deficit numbers. He pegged the figure to 3.2 per cent and assured that he iscommitted to bring it down to 3 per cent.

Fiscal deficit is the excess of government's expenditure over its revenue. A lower fiscal deficit means lower goverment borrowingand the government is likely to issue less number of bonds to finance the deficit. A fall in bond issues will make increase in the

demand for bonds in circulation and the extra demand would push the bond prices up.

"A decrease in fiscal deficit could lead to a downfall in yields from government bonds," says Arvind Chari, Head - Fixed Income andAlternatives, Quantum Advisors. A fall in yield will be followed by an upward movement in its price.

An increase in the prices of both government and corporate bonds would boost the fortunes of debt mutual funds.

How long will it last?

"The expectation of drop in yields and rate cuts by the RBI could have some positive impact on bond funds in the very short term.But the outlook for the long term is unclear," says Chari. The positive impact is expected to last around three to six months.

However, certain uncertainties hovering in the horzion are making it difficult to forecast a long-term view. "One potential source ofbonds, Foreign Institutional Investors (FIIs), is missing, and also if the CPI remains sticky, continuity in rate easing may become achallenge," says Lakshmi Iyer, chief investment officer (debt) and head products, Kotak Mutual Fund.

Bhatia believes that "this might be the right time to book profits if you have held your investments for three years." Debt mutualfunds held over three years qualify for long-term capital gains tax of 20 per cent with indexation benefit.

"Retail investors should avoid investing in long term bond funds at this stage and existing investors in dynamic bond funds shouldalso lower their return expectations," says Chari.http://economictimes.indiatimes.com/mf/analysis/debt-mutual-fund-investors-are-in-for-a-treat/articleshow/57002607.cms

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HDFC MF plans new cancer fund from March Ravi Ranjan PrasadFinancial Chronicle

Mumbai: Encouraged by the success of its first cancer fund, HDFC Mutual Fund has filed a draft offer document with the Securitiesand Exchange Board of India (Sebi) for its second cancer fund -- HDFC Charity Fund for Cancer Cure.

HDFC Mutual Fund’s first cancer fund — HDFC Debt Fund for Cancer Cure, a three-year close-ended capitalprotection scheme — was launched in March 2011 in association with the Indian Cancer Society (ICS). Investors have theoption to donate 50 per cent or 100 per cent of their dividend income earned from their investments in the cancer fund to IndianCancer Society for funding the treatment of needy cancer patients.

Every year, 1 million new patients are diagnosed with cancer in India. The cost of treatment could range anywhere between Rs 1lakh and Rs 10 lakh or more. Many patients fail to start their treatment or once started, do not complete it due to lack of funds.

The money raised through donation of dividend income by unit holders of HDFC Debt Fund for Cancer Cure 2014 was utilised byICS to fund treatment costs of needy cancer patients under the Indian Cancer Society-Cancer Cure Fund project (ICCF). Sinceinception, ICCF has received total donation of Rs 52.47 crore and so far money has been sanctioned for the treatment of 2,944patients.

Such investments also get tax benefit under Section 80 G of the Income Tax Act, 1961. HDFC Debt Fund for Cancer Cure 2014,which is due for maturity in March 2017, has asset under management of Rs 176 crore as on December 31, 2016, and has givenreturn of 9.37 per cent since its launch in 2014.

“To continue philanthropic activities and provide assistance to needy cancer patients, HDFC AMC proposes to launch HDFCCharity Fund for Cancer Cure in March 2017,” HDFC Mutual Fund said in its scheme information document filed with Sebi.

While the first cancer fund was a pure debt fund, the new scheme proposes to have arbitrage plan and debt plan. Under arbitrageplan, the scheme aims to generate money by 65 to 90 per cent of the fund corpus in equity and equity related instruments and 10 to35 per cent in debt instruments. The arbitrage plan aims to exploit available arbitrage opportunities in the markets and throughinvestment in debt and money market instruments.

Under the debt plan, up to 100 per cent of the fund corpus would get invested in debt instruments.http://www.mydigitalfc.com/news/hdfc-mf-plans-new-cancer-fund-march-975

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Affordable housing sector best placed for growth: Jinesh Gopani, senior fund manager, Axis Mutual Fund Anandi ChandrashekharThe Economic Times

Jinesh Gopani, senior fund manager, Axis Mutual Fund in a chat said financials and affordable housing are best placed for growthand returns currently.

Excerpts from a chat

What are the key takeaways for you from the budget?

From the equity market point of view, there has been nothing negative, in terms of LTCG - be it higher tax or change in tenure. Wesaw a relief rally in response to this. The good part is that it was a prudent budget with no deterioration in fiscal targets, no populistmeasures which could rattle the market. Fiscal prudence has been maintained.

Good that post demonetization the government has focussed on the rural side of the economy. After demonetization the sense wegot from our channel checks is that urban India has recovered but not rural India. So emphasis on infrastructure and sops inschemes linked to rural economy are positives.

Also the kind of measures taken in the budget in the real estate side, which includes giving more sops to the affordable housing andrestricting second buyer, are very good moves. You have genuine buyers getting an opportunity to buy rather than speculators.

What were the biggest disappointments and surprises from the budget?

There were no surprises in the budget really. On the negative front, there was expectations for the corporate tax rate to come down;so may be next year it could come down.

Post budget now and taking into account the impact of Trump's policies where do you think the market is headed?

We don't see a reason why the markets should not go up. There would be hiccups in the form of global events that may unfold.What China does will be very critical for emerging market currencies and similarly what US administration does will impact Indiasince we have exposure in terms of IT and Pharma.

On the domestic side, we find no reason to be extremely negative. A 30,000 Sensex target easily achievable. In a 12 month viewwe are on the upward trajectory, unless there's some unknown like a bad monsoon.

Which sectors look attractively placed to you this year?

Biggest beneficiary after taking into account all the events including demonetization has been the financial sector. They have hugedeposit accretion, their costs of funds have come down, and they have a huge market to penetrate - where good banks can garnera good market share. Financials including NBFCs are a good bet to play.

Second would be affordable housing led sectors, be it real estate, a housing finance company, a paint company or a buildingmaterial company or cement over a period of time.

Third would be anything related to rural India be it agrochemicals, seed companies, tractors, rural infrastructure led beneficiaries. Allof these would have a good run if the monsoon is good and the GST is implemented well. Others would be consumer led like autoand FMCG companies.

Once the GST rates get revised would there not be a short-term slowdown at least, in consumption?

If the implementation part is executed well, of course there would be some slowdown in one or two months or even a quarter but ifyou take the run after that for the listed companies who are paying taxes and having an organized business - they will have a goodlevel playing field to garner market share; consumption related themes can be bought on dips.

Nobody wants to buy IT or Pharma now, what are your views?

There is unnecessary noise that is rupturing the market in one sense. I'm not saying nothing will happen, but our view is that themagnitude will not be as high as it is being made out to be. There will be noise for another 12 months, but will it lead to all ITcompanies heading towards a de-growth scenario? Maybe not.http://economictimes.indiatimes.com/markets/expert-view/affordable-housing-sector-best-placed-for-growth-jinesh-gopani-senior-fund-manager-axis-mutual-fund/articleshow/57004727.cms

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Equities, Pvt. Equity & Hedge Funds

FPIs turn sellers, offload equities worth $60 million The Indian Express

Mumbai: Foreign portfolio investors (FPIs) who were buyers for three consecutive sessions starting February 1, buying $371.11million worth of stocks and bonds, on Monday offloaded equities worth about $60 million, provisional data from BSE showed.

The government successfully dispelled apprehensions of foreign investors who feared they would be taxed on indirect transfer. FPIsinfused a net sum of $207.4 million in equities during February 1-3 and another $163.71 million in the debt segment.

Union finance minister Arun Jaitley, in his Budget speech, proposed that FPIs from category I and II should be exempted fromtaxation on indirect transfers. However, the indirect tax provisions will still apply to category III FPIs.

“The clarification by the finance minster certainly clears the ambiguity on taxation of indirect transfer provision, this move islikely to encourage FPIs to invest on Indian market,” said Rajendra Nayak, tax partner, Ernst & Young Services.

FPIs pulled out equities and bonds worth just $388.4 million in January following sales of $5.4 billion in November and $3.6 billion inDecember. A series of events — the election of Donald Trump as President of the US, the hike in Fed rates and

India’s decision to demonetise high-value currency notes — resulted in a heavy bout of profit taking towards the endof 2016.

Though in CY2016 foreign investors had bought stocks worth $2.9 billion and pulled out debt instruments worth $6.5 billion fromIndian market, an economic/strategy report by Kotak Institutional Equities, which was published in February 2, said,

“Our analysis of bond demand-supply suggests that demand is likely to undershoot supply by Rs 600 billion in FY2018 in theabsence of OMO purchases and limited participation by FPIs.”

Most other emerging markets have seen FPI inflows in January although in India overseas investors were net sellers in five monthsof CY16.http://indianexpress.com/article/business/business-others/fpis-turn-sellers-offload-equities-worth-60-million-4511489/

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Qatar Holding agrees to invest $250 million in ArthVeda's fund Bindu D MenonThe Hindu Business Line

Mumbai: Mumbai-based ArthVeda Fund Management said Qatar Holding has agreed to invest $250 million ( Rs. 1,663 crore) in itsaffordable low and middle income (LMI) fund.

This comes days after the Union Budget gave the affordable housing category an infrastructure tag to give a fillip to the‘Housing for all’ by 2022 initiative .

Bikram Sen, CEO, Arthveda, said the subscription of the entire corpus of its FDI-compliant affordable housing fund by Qatar Holdingwas the first substantial foreign investment into India’s affordable housing segment spanning LMI residences after the UnionBudget.

According to ArthVeda, India needs to build 19 million urban housing units in the low and mid-income category by 2022 across Tier1, 2 and 3 cities, requiring capital of $1 trillion.

AVFM is part of Wadhawan Global Capital, a financial services conglomerate, with Dewan Housing Finance Corp Ltd (DHFL) as theflagship entity.

DHFL has lent over $25 billion to the LMI segment, and overall, DHFL along with its associate housing finance company, AadharHousing Finance, lends on average $350 million in a month to home buyers at more than 500 locations in India.

“AVFM’s Affordable Housing Fund leverages our entire group’s leadership in the LMI lending segment andapplies that to investments in affordable housing,” said Kapil Wadhawan, CMD, DHFL and ArthVeda.

AVFM’s domestic $17 million Dream Fund, which exited in 2015, gave a gross IRR of 17 per cent (net to investors).

A mid-income $22 million domestic Star Fund I, which is due to exit from its investments in the next couple of months, will givesimilar returns.

Investments into the AVFM fund were raised in collaboration with the Dubai-based CI Holding Global, founded and run by OmarFarooqui.http://www.thehindubusinessline.com/todays-paper/qatar-holding-agrees-to-invest-250-million-in-arthvedas-fund/article9525083.ece

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Govt. Securities & Bonds

New RBI norms on AT-1 bond a huge capital respite for PSBs: rating agency Icra PTISee this story in: The Economic Times

Mumbai: The new Reserve Bank guidelines on Basel III-compliant additional tier-1 (AT-1) bonds have partially reduced the defaultrisks for many state-run banks like Central Bank, IOB and United Bank, who had negative distributable reserves under the earlierguidelines. This will have positive reserves under the new norms, says a report by rating agency Icra.

While three of the 21 state-run banks Central Bank of India, Indian Overseas Bank and United Bank of India had negativedistributable reserves as percentage of their risk weighted assets at -0.69, -1.63 as per the earlier guidelines, respectively, butunder the new guidelines the same will turn positive at 0.39, 0.66 and 2.72, respectively, notes Icra.

This can help ensure that these three banks can avoid the imminent risk of default on the coupon payments. As of September 2016,the statutory distributable reserves of 21 state-run banks, excluding the five SBI associates, stood at around Rs 1.28 lakh crore.

Despite the risks associated with these instruments, the banks have sold AT-1 bonds aggregating to over Rs 46,000 crore (PSBs

Rs 39,000 crore) till date of which around Rs 28,100 crore (PSBs Rs 21,600 crore) has been raised in the current fiscal alone, saysthe report.

"Under the new guidelines that include the profit/loss reported by PSBs during the first half of fiscal 2017, the reserves that are nowavailable for servicing the coupon have increased by 2.9 times to Rs 2.72 lakh crore from Rs 94,000 crore in September 2016" saysKarthik Srinivasan, a senior vice-president at Icra.

"The revised guidelines by the Reserve Bank on Basel III-compliant additional tier-1 (AT-1) bonds have strengthened the banks'ability to service the coupons, thereby partially reducing the risks associated with such instruments," Srinivasan added.

Banks are required to appropriate 25 per cent of their annual net profit towards statutory reserves.

According to another rating agency Crisil, the total reserves available with state-run banks to service AT1 bond coupons, underrevised guidelines, is nearly double at Rs 2.34 lakh crore from Rs 1.24 lakh crore earlier.

The reserves available for AT-1 coupon servicing, under the new norms, include the reserves representing appropriation of netprofits - which include statutory reserves, capital reserves on sale of investments, other capital reserves--special reserves andrevenue and other reserves, adjusted for accumulated losses and deferred revenue expenditure.

The development that came in last Friday assumes importance as the Budget 2018 has allocated just Rs 10,000 crore capitalinfusion into state-run banks, while the actual requirement for them till FY2019 is around 1.8 trillion.

"Public sector banks' capital requirements is in the range of Rs 1.5-1.8 lakh crore till FY19 of which only Rs 65,000 -75,000 crorecan be by way of AT-1 issuances," he said, adding thus the new norms will enable weaker banks like CBI, IOB and United Bank toraise capital through AT-1 instruments.

If a bank reports losses, the revised guidelines allow it to service the AT-1 coupons by additionally dipping into the reserves createdthrough appropriation of profits (including statutory reserves, capital reserves created from sale of investments and specialreserves) as against earlier guidelines that allowed only utilisation of distributable reserves (revenue reserves and surplus in P&Laccount).

The new RBI circular also removes the ambiguity on definition of distributable reserves as it specifically states that the accumulatedlosses should be set off while computing the reserves eligible to service these bonds.

"With the risk on these instruments reducing post the revised guidelines, we expect an improved investor appetite leading to moreissuances of AT-1 bonds at lower coupons in the near to medium-term," said Srinivasan.

This can also help state-run banks increase the proportion of AT-1 instruments at lower costs to meet their capital requirements atleast over the near-term.

However, Icra maintains that the sustainability of the profitability and internal capital generation will continue to remain the key driverfor the credit profile of the banks.

As per Icra, based on the Q2 profits, the new distributable reserves for Allahabad Bank will be 4.51 per cent from 1.42, AndhraBank's at 4.52 per cent from 1.82, BoB at 5.99 per cent from 2.29, BoI at 3.78 per cent from 0.75, BoM at 2.54 per cent from 0.66,Canara Bank at 6.05 per cent from 1.89.

For Corporation Bank it will be at 5.44 per cent from 1.67, Dena Bank at 3.51 per cent from 0.97, IDBI Bank at 2.65 per cent from1.31, Indian Bank will have the highest at 10.51 per cent from 6.28 which is also the highest, Oriental Bank at 5.75 per cent from2.43, PNB at 6.20 per cent from 3.07, Punjab & Sind Bank at 5.86 per cent from 3.61.

The largest lender SBI's reserves will more than double to 5.22 per cent 2.16 per cent, while that of Syndicate it will be 4.79 per centfrom 2.30, Uco Bank at 1.97 per cent from 0.24, Union Bank at 5.83 per cent from 1.89 and Vijaya Bank at 5.17 per cent from 1.98.http://economictimes.indiatimes.com/industry/banking/finance/banking/new-rbi-norns-on-at-1-bond-a-huge-capital-respite-for-psbs-rating-agency-icra/articleshow/57005826.cms

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ReNew Power raises $475 million at cheaper cost Saikat DasThe Economic Times

Mumbai: ReNew Power Ventures has raised $475 million by selling green bonds to overseas investors as the solar and wind energyproducer plans to refinance debt.

The bond yielded 6% at the close of subscription on Monday. The yield was about 38 basis points tighter than the initial guidance, amove that will help the clean energy company save borrowing costs.

“We will use the proceeds to refinance our existing debt,” Ravi Seth, CFO of ReNew Power Ventures, told ET,confirming the matter. “We are currently running 13 green projects. We have planned to refinance the debt involved in thoseprojects.”

Funds raised through green bonds are mandated to be deployed in clean energy projects.

Bank of America Merrill Lynch, JP Morgan and HSBC were some of the bankers that arranged the deal.

“This transaction demonstrates the quality of the assets and also indicates the rising confidence investors have in greenbonds,” said Gaurav Singhal, director investment banking, Bank of America Merrill Lynch. “The fund-raising will helpthe company diversify its borrowing resources by tapping into one of the deepest pools of capital.”

The bonds are priced after adding a mark-up over and above the five-year US Treasury bonds, which now yield 1.88%. Thesecurities will be listed on the Singapore Stock Exchange.

Institutional investors across Asia, Europe and the US invested in the paper, known as Regulation S 144A in market parlance.Global rating companies Moody’s Investors Service and Fitch classified the bonds as Ba3 and B+, about three notches lowerthan investment grade (BBB-).

ReNew Power owns wind and solar power generating assets located in Andhra Pradesh, Gujarat, Jharkhand, Karnataka, MadhyaPradesh and Telangana.http://economictimes.indiatimes.com/markets/bonds/renew-power-raises-475-million-at-cheaper-cost/articleshow/57006078.cms

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Bonds fall, call rate ends higher PTISee this story in: The Hindu Business Line

Mumbai: Government bonds (G-Secs) dropped further on sustained selling pressure from banks and corporates, but the overnightcall money turned higher due to good demand from borrowing banks amid tight liquidity in the banking system. The 6.97 per cent10-year benchmark bond maturing in 2026 slipped to Rs.103.93 from Rs.103.97, while its yield held steady to 6.41 per cent. Theovernight call money rates finished higher at 6.25 per cent from Friday’s level of 5.80 per cent. It opened at 6.15 per centand moved in a range of 6.25 per cent and 6 per cent.

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Brokers / Distributors

Contra call now would be SBI and ICICI Bank: Sanjay Dutt, Director, Quantum Securities The Economic Times

In a conversation with ET Now, Sanjay Dutt, Director, Quantum Securities, says loan demand will pick up from June quarteronwards.

He says he is bullish on the markets because intelligent buyers on the Street are looking for good investment ideas. Editedexcerpts:

The market seems to be in a good mood and companies coming out with good numbers or good commentary are gettingrewarded...

Yes. In fact, even the companies which are not coming out with good numbers, but with numbers which are better than anticipated-keeping in mind the demonetisation impact -are doing well. That is why the market has rallied substantially. I would attribute atleast 300-400 points rise in the Nifty to that rather than any other development.

What is it that you like within the PSU pack? Would you still be a little circumspect about investing there?

No, by and large they would do well.Select stocks need to be looked at.Oil refining companies have done well. They will continue todo better.But you may not want to buy them immediately. You may want to wait for a few bad days to buy them. Similarly, some ofthe good quality PSU banks make sense. Within the engineering capital goods space, the likes of BEL and BEML will also startlooking up because a substantial amount of infra, defence spending will benefit them. There are good opportunities there but thetiming is very critical because they have run up quite a bit. A lot of euphoria is there around them. Some of them may be a tadoverbought.

You were one of the few analysts who were bullish post demonetisation. But now after a 10% run-up from the recent low, what isthe risk-reward ratio? If someone wants to be a buyer at 8,900, do you think the chances of losing money are higher?

I am more bullish now because of the fact that people have now started looking for ideas. Whatever I hear from the smart moneyright now, the intelligent buyers on the Dalal Street are looking for good investment ideas. They had all held back thinking that thedemonetisation impact would continue for a longer period and that the Trump victory was a problem. There is a phenomenalopportunity in the market and one needs to look at that. In fact, most of the headwinds are now more or less out of the way.

The biggest story which I told you last time is that while we quibble about 25-50 bps of policy rate cut, on ground there actually hasbeen a 200 bps rate cut for consumers and industry from September-October days to now. Global attention is turning to Indiabecause the equations that Trump has with a lot of countries are making us a safe ally to do business with. All these factors arereally falling in place and the good run has just begun.

You have been famous for contra calls. What is that contra sector that you are betting on this year?

I have never really given a call on private banks like ICICI Bank, but the contra call here would be now State Bank of India and ICICIBank because the opportunity that these two banks are sitting on is huge. If you see the impact of demonetisation, the biggestbeneficiaries are these two banks. The largest banks would be able to retain a substantial amount of deposits in CASA or in someother form. Their margins would improve and if the investment demand picks up, capex demand picks up, the economy picks up,and you will see their bottom lines expand. Among largecaps, these two banks look very exciting.

But where is the credit growth?

Do not look at the rear-view mirror.It is exactly like what we did when demonetisation was announced when everyone saideverything is collapsing and this quarter would be dead and we do not know when demand would revive, when the consumer willcome back to buy, etc.

Markets start to discount things well in advance. I have no second thoughts that credit demand will pick up and you are alreadyseeing that scene change. People are missing it. Banks are consciously shifting to consumer-led demand more than industry-feddemand. That means banks are trying to focus on individual balance sheets of consumers by wanting to give out a large amount ofhousing loans, loans against property, loans for private consumption, loans for buying durables, non-durables, everything else,personal loans because they see that in a time like this when industry demand is not picking up, we are still managing to disburse ahuge amount.

I see a large number of banks doing that including ICICI Bank, and in the next two to three months, you will see industry demandpicking up. The problem we have with the industry right now is that some of the top 10 or 15 borrowers in the country have a majorissue in terms of their balance sheets being leveraged and skewed towards extra debt and not managing to service it.

Today banks actually are scared of lending. We have seen a recent example of the chairman of a bank being arrested. I am notpassing a verdict whether it was right or wrong, but there is genuinely a little bit of fear among large lenders to take exposure orrestructure some of the debt. I see that going away because the government is moving in that direction as totally in charge of thisproblem. I am not worried that corporate demand or the industrial demand for loans will not pick up. It will pick up from June quarteronwards and even if it does not pick up, the risk-reward ratio is still okay.You would not end up losing much if you bought banks onany decline.

We have seen multiple block deals happening in the NBFC space. What pocket within the NBFC space are you bullish on?

Some of these microfinance lenders look a little expensive right now. On a correction, I would want to buy them. Something like anUjjivan looks good. Mortgage financers, such as Indiabulls, Capital First, PNB Housing, Repco Finance, are some of the interestingcompanies that can be looked at for long term. But obviously you need to understand that when there is froth.

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Bourses

Sebi seeks clarification on NSE's Rs 10,000 cr IPO PTISee this story in: The Economic Times

New Delhi: Markets regulator Sebi has sought clarification on the proposed Rs 10,000 crore initial public offering of top bourseNational Stock Exchange (NSE).

Without disclosing details of the clarifications sought, Sebi has said 'clarifications (are) awaited from lead manager' for the proposedpublic issue.

As per the latest weekly update of processing status of draft offer documents filed with Sebi, the regulator has said clarifications areawaited on the proposed IPO of NSE as on February 3.

The next update would be available on February 13.

Sebi said that it might issue observations on NSE's IPO document within 30 days from the date of receipt of satisfactory reply fromthe lead merchant bankers to the clarification or additional information sought.

NSE, in late December, had filed draft papers with Sebi for its much-awaited IPO, expected to be one of the biggest in recent times.

The IPO would see existing shareholders offloading 20-25 per cent shares to the public through the OFS route.

The offer may give the exchange a valuation of Rs 50,000-55,000 crore, sources said, adding that the IPO itself could be worthabout Rs 10,000 crore.

The IPO is being managed by Citigroup, Morgan Stanley, JM Financial Institutional Securities and Kotak Mahindra CapitalCompany.

Apart from NSE, Securities and Exchange Board of India (Sebi) has sought clarification on the proposed initial public offerings ofGTPL Hathway, Proseed India, PSP Projects, Central Depository Services Ltd, Housing and Urban Development Corporation andZenotech Laboratories.http://economictimes.indiatimes.com/markets/stocks/news/sebi-seeks-clarification-on-nses-rs-10000-cr-ipo/articleshow/57003827.cms

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BSE shares slip 4% following stellar debut on Friday The Economic Times

New Delhi: Shares of BSE, the 140-year-old stock exchange, slipped as much as 2.70 per cent on Monday after witnessing robustgains on the listing day on Friday.

The stock ended at Rs 1,027.00, down by Rs 42.20 or 3.95 per cent

On Friday, the BSE stock made a stellar debut on NSE, with the scrip registering 33 per cent listing day gain amid high turnover.The stock settled the day at Rs 1,070, up 33 per cent over the issue price of Rs 806 apiece.

This was the first-ever listing of a stock exchange in India. MCX was the first commodity exchange to list on stock exchanges onMarch 9, 2012.

Analysts believe short-term traders should book profit on the stock, while investors with a time horizon of over three years can holdthe stock as the exchange can offer decent growth opportunities. They noted that low penetration of equity investments in Indiapromises immense opportunities and venturing into newer segments and taking a lead in them hold the key to growth for theexchange.

“While the stock is fairly priced, only long-term investors should stay invested. Short-term investors can book profit at currentlevel. India has a number of companies that are likely to get listed going ahead. The penetration of corporate and individuals in themarket would rise in a big way in the long run,” said GChokkalingam, Founder, Equinomics Research & Advisory.http://economictimes.indiatimes.com/markets/stocks/news/bse-shares-slip-over-2-intraday-following-stellar-debut-on-friday/articleshow/56997720.cms

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International

ABN Amro slashes 60% of senior management as bank shrinks Ross Larsen & Jeffrey Vögeli / BloombergSee this story in: mint

London/ Zurich: ABN Amro Bank NV plans cut 60 of its 100 senior management jobs and reduce the number of top executives bymore than half in a revamp that reflects the bank’s shrinking size.

A new management board will include the heads of retail, commercial, corporate and institutional, and private banking, theAmsterdam-based lender said in a statement on Monday. It will include chief executive officer Kees van Dijkhuizen as well as thevice chairman and a chief financial officer who hasn’t yet been appointed.

“ABN Amro has done a lot of restructuring and I think the top structure was not completely aligned with the rest of thecompany,” said Bart Horsten, an Amsterdam-based analyst at Kempen & Co who rates the stock buy. “It will make thecompany a bit more lean and mean in terms of decision making.”

ABN Amro, which is 70% owned by the Dutch government following a state rescue, said in November it would cut 1,500 jobs as itsteps up cost reductions. The bank, which employed 26,500 people last year, said its total workforce is expected to decline by 13%by 2020. The Dutch government has said it plans to gradually exit its holding in the bank.

Under the new structure, the composition of the remaining 40 executives will be reviewed annually. The number of executives onthe managing board and the senior managing directors will be reduced to nine from 19. Chris Vogelzang will resign from his positionas the management board member responsible for retail and private banking after eight years in the role, the bank said.

“In recent years, the bank’s total staff has decreased significantly, but the size of the senior management level hasremained unchanged,” Van Dijkhuizen said in the statement. “The structure and composition of the management levelbelow the executive committee will be reviewed: reduced in size, with a stronger strategic involvement.”

ABN Amro climbed 1.2% to €22.74 in Amsterdam trading as of 10:56am. The stock has increased 8.1% this year, compared with a4.2% gain on the STOXX Europe 600 Banks Price Index.http://www.livemint.com/Industry/VVqOw2Zdlj2NMnDsHJACgM/ABN-Amro-slashes-60-of-senior-management-as-bank-shrinks.html

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Economy

Rupee gains 9 paise to end at 67.22 against US dollar PTI

The Hindu Business Line

Mumbai: The rupee rose 9 paise to end at 67.22 against the US dollar following sustained bouts of dollar selling by banks andexporters on the back of firm domestic equity market.

67.2100 67.2350 67.1400 67.2200

The rupee opened higher by 10 paise at 67.21 as against Friday’s closing level of 67.31 per dollar at the Interbank ForeignExchange (Forex) Market.

The domestic unit hovered between 67.23 and 67.14 per dollar in intra-day deals.

Overseas, the dollar started the week on the back foot after US data showed a smaller—than—expected rise in wagesin January that reinforced expectations the Federal Reserve will refrain from raising interest rates next month.http://www.thehindubusinessline.com/markets/forex/rupee-live-update/article9523242.ece

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For fourth straight day, Sensex hits 4-month high PTISee this story in: The Economic Times

Mumbai: The Budget-induced optimism got a leg to stand on as the Sensex on Monday pushed higher for the fourth day by scoring199 points to close at 28,439 -- a 4-month high -- after hopes built up that RBI might go in for a rate cut at the Wednesday's policymeet.

The NSE Nifty retook the crucial 8,800-mark on Monday.

At its last policy review in December, RBI in a surprise move had decided to leave rates unchanged, but this time a lower retailinflation and fiscal discipline as shown in the Budget have prompted calls for RBI to remain accommodative.

Global leads aligned as most Asian shares ended higher, tracking weekend gains in the US on better-than-expected jump in USjobs and a move by President Donald Trump to cut back financial regulations, accelerating buying pace by investors.

The 30-share Sensex ended up 198.76 points, or 0.70 per cent at 28,439.28, its highest closing since September 23 last year whenit had closed at 28,668.22. Intra-day, it sprang to a high of 28,487.28. The gauge had rallied 584.56 points in the previous threesessions after the presentation of the Budget on February 1.

The NSE Nifty regained control of the 8,800-mark and added 60.10 points, or 0.69 per cent, at 8,801.05 at the close. On September23, the index finished at 8,831.55. "Markets continued to be buoyant on the expectation of rate cut by RBI and positive global cues.

We are seeing continuation of rally in the rate sensitive sectors led by reality, banks and FMCG which were also supported byBudget related sops," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services. Major European indices stayed inthe positive zone, too. Data showed that foreign institutional investors bought shares worth Rs 353.84 crore last Friday, adding tothe level of optimism.

The rupee appreciated for the 9th straight day to trade at a fresh 2-1/2 month high of 67.14 (intra-day) against the dollar, keepingthe overall mood upbeat.

A good 22 stocks in the 30-share Sensex pack advanced while 8 turned lower. Sun Pharma led the charge by surging 4.20 per centwhile ICICI Bank zoomed 3.18 per cent.

Adani Ports, Axis Bank, Hero MotoCorp, ITC, HUL, GAIL, NTPC, Asian Paints, Wipro, RIL, Tata Motors, Maruti Suzuki and L&Tsupported the ongoing bull run.

BSE realty jumped the most (up 1.90 per cent) followed by FMCG (1.28 per cent), healthcare (1.27 per cent) and consumerdurables (1.27 per cent).Broader markets remained in the green too, with the mid-cap index advancing 1.10 per cent and small-cap 0.88 per cent. Realtystocks continued their upward journey, buoyed by the infrastructure status to affordable housing in the Budget 2017-18 toencourage investment in the segment, which offered tax sops to developers to complete unsold inventories.

In the realty space, HDIL soared 7.80 per cent, Godrej Properties surged 3.32 per cent, Prestige Estates Projects 2.83 per cent andDLF 1.32 per cent. Asian shares, led by Hong Kong, closed higher. In Europe, London's FTSE was up 0.23 per cent and Paris CAC40 0.14 per cent while Frankfurt edged down 0.14 per cent.http://auto.economictimes.indiatimes.com/news/industry/for-fourth-straight-day-sensex-hits-4-month-high/57008008

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Closing

Last Financial Closing....

 

Sensex  28,439.28 (+198.76)NSE  8,801.05 (+60.10)US$ spot Rs.67.22US$ Y.111.7900US$ 6 months Rs.Yen Rs.60Euro spot Rs.72.13

Gold (10gm) Rs.29,104Silver (1kg) Rs.42,286.00

 

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