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SBI Cards and Payment Services slips 9%, hits new low since listing

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Shares of and Payment Services slipped 9 per cent to Rs 495 on the BSE on Friday after the Reserve Bank of India (RBI) today announced an extension of the moratorium on loan EMIs by three months. The RBI commentary indicates that the stress in the economy on both demand and supply is likely to continue.

The non-banking finance company’s stock was trading at its lowest level since listing on March 16, 2020. It has fallen below its previous low of Rs 501 touched on April 16, 2020. The stock has now fallen 34 per cent against its issue price of Rs 755 per share.

In a new set of measures to trim the impact of coronavirus on the economy, the RBI today decided to cut the policy rate by 40 basis points from 4.4 per cent to 4 per cent. The reverse repo rate has been reduced to 3.35 per cent. It has also extended the moratorium on loan repayments by three more months.

For the working capital facilities, the interest payment has been deferred by another three months, in-line with extension of moratorium on term loans. The accumulated interest for the deferment period can be covered into a funded interest term loan payable be end of the current fiscal. Thus, borrowers need not pay accumulated interest in one shot immediately after the deferment period, which is a big relief for them.

“There is a risk of moral hazard issue creeping in, as borrowers who have the ability to pay, may even opt for moratorium. For MFIs and NBFCs catering to bottom of the pyramid customers, the risk of repayment behavior getting disturbed is higher,” Amar Ambani, Senior President and Head of Research – Institutional Equities, YES Securities said.

is the second largest credit card issuer in India. It offers various types of credit cards considering the need of retail clients (viz. Lifestyle Cards, Rewards, Shopping, Travel and Fuel). It also offers corporate cards and is the largest co-brand credit card issuer in India. It also issues card in partnership with smaller or regional banks.

reported a 71 per cent year-on-year (YoY) decline in pre-tax profit at Rs 112 crore in March 2020 quarter (Q4), due to additional bad loan provisioning of Rs 489 crore factoring in Covid-related disruption. The management of the company said the current quarter will get impacted because they are not able source new cards, and the collections are also down.

“While and loss of business have direct bearing on spends (16.7 per cent YoY growth in FY21E vs 27 per cent in FY20) and fees (23 per cent de-growth as against 32 per cent YoY growth in FY20) coupled with NPA spike (4-6 per cent over FY21-22E), we had to prune down FY21 earnings by 48 per cent,” analysts at Prabhudas Lilladher said in a results update.

FY22 should witness return to normalcy attributed to Co.’s SBI association, existing sophisticated technology infrastructure and data analytics. Valuation multiple stands trimmed as it reflects the vulnerability of unsecured nature of business to pandemic shocks, it added.


At 01:51 pm, SBI Cards was trading 5.5 per cent lower at Rs 513 on the BSE, as compared to a 0.89 per cent decline in the S&P BSE Sensex. A combined 3.9 million equity shares changed hands on the counter on the NSE and BSE so far.

Source: Business Standard

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Govt seeks to raise Rs 14,000 cr from second tranche of Bharat Bond ETF

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Two new series will have maturities of April 2025 and April 2031.

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govt bonds

Jash Kriplani  |  Mumbai 

The government will be launching the second tranche of Bharat Bond ETF, seeking to raise Rs 14,000 crore in July.

The two new Bharat Bond ETF series will have maturities of April 2025 and April 2031. The base issue size of the ETF is Rs 3,000 crore, with a green shoe option of Rs 11,000 crore based on market demand.

“After an overwhelming response to the first tranche of Bharat Bond ETF in December last year, we are excited to announce this next tranche of two new maturity series. The launch is in line with our vision to create a ladder of Bharat Bond ETFs across various maturities on the yield curve. This will provide more options for investors to match their investment needs with different time horizons,” said Radhika Gupta, chief executive officer of Edelweiss Mutual Fund (MF).

ALSO READ: Sudden spike in bond yield amid coronavirus outbreak signals trouble

Edelweiss MF was given the mandate to manage Bharat Bond ETF by the Department of Investment and Public Asset Management.

The ETF will invest in constituents of the NIFTY BHARAT Bond Indices, consisting of AAA rated public sector units (PSUs). Bharat Bond Fund-of-Funds (FOF) with similar maturities will also be launched for investors, who do not have demat accounts.

Unlike other government ETFs, where investors can invest in equity shares of diverse government PSUs, Bharat Bond ETF allows investors to take exposure to a portfolio of debt papers of government PSUs.

The first launch of Bharat Bond ETF had raised over Rs 12,400 crore.

First Published: Fri, May 22 2020. 15:01 IST

Source: Business Standard

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Experts disagree with MPC stance that inflation will fall below 4% in H2

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The Reserve Bank of India’s monetary policy committee (MPC) has cut the repo rate by 40 basis points despite the “highly uncertain” outlook on retail inflation. MPC expected the high inflation rate regime to be short-lived and said it would fall below four per cent in the second half of the current financial year.

However, experts are not on the same page as the MPC on inflation. Madan Sabnavis, chief economist at CARE Ratings, did not agree with MPC’s assessment that inflation would fall below four per cent in the third and fourth quarters of the current financial eyar.

He said,”Inflation would remain above four per cent, closer to five per cent, in the remaining months of FY21.”

ALSO READ: Covid-19 impact: Centre releases truncated WPI inflation data for April

According to Sabnavis, while demand in the non-food segment is low, supply has also been disrupted, which is why inflation would remain high. On the food side, inflation has not come down despite good Rabi output, as there is tendency to recoup earlier losses. This is likely to happen for Kharif crops as well, he said.

RBI also feared that the high food inflation may persist for a few more months, depending on the extent of the lockdown and restoration of the supply chains.

The consumer price index (CPI) for food and beverages rose to 151.4 points in April from 148.9 points in the previous months. However, a caution should be exercised in interpreting this number as many sub-groups such as meat and fish are missing in the April data due to lockdown.

The central bank was particularly worried about inflation in pulses and wanted the government to “reappraise” import duties, besides taking other supply side measures.

CPI in pulses stood at 150.4 points in April against 141.1 points.

RBI also wanted the Food Corporation of India (FCI) to offload some part of excess cereal stocks to cool down ceareal prices and create room for rabi procurement.

The RBi has also, for the first time, acknowledged that the economy will contract in the current financial year even as independent experts have already assessed so.


ALSO READ: RBI says India GDP will contract in FY21, cuts repo rate by 40 bps to 4%

However, RBI governor Shaktikanta Das did not give exact figure of fall in the gross domestic product (GDP). He looked forward to release of GDP data for 2019-20 by the statistics office next week to make a specific projection.

The governor expected gradual revival of the economy in the second half due to possible lifting of lockdown and fiscal/monetary stimulus. However, this has a downward bias as the governor said much depended on how quickly the Covid curve flattens and begins to moderate.

The RBI’s assessment came even as independent experts feared the economy to contract between five to seven per cent in FY’21.

Even today, ICRA further cut its projections for the economic contraction. From earlier expectation of one to two per cent fall in GDP for 2020 21, it now expected the decline to be five per cent.

“We now expect GDP to report contractions of 25 per cent and 2.1 per cent for Q1 and Q2 of FY’21, which implies that a recession is underway,” ICRA principal economist Aditi Nayar said.

On the assumption that the lockdown will be lifted within the first quarter of 2020-21, Nayar expected a V-shaped recovery.

“However, if there is a second wave of infections that forces subsequent lockdowns either in India or globally, the ensuing demand uncertainty and supply chain hiccups could result in a W- shaped economic cycle, the inflection points of which can’t be gauged at this stage,” she said.

First Published: Fri, May 22 2020. 14:51 IST

Source: Business Standard

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Government borrowed £62BILLION in April the highest on record

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The scale of the coronavirus hit on the public finances was laid bare today with figures showing the government borrowed a record £62.1 billion in April.

The eye-watering figure was the highest for any month on record, amid desperate moves to bail out millions of workers and businesses.  

It was even higher than analysts had predicted, with a consensus of economists predicting £30.7billion for the month.

The sum is thought to have pushed total public debt to the brink of the £2trillion mark for the first time – roughly the same size as the entire economy. 

The Office for National Statistics (ONS) said borrowing was £51.1 billion higher than the same month last year

The Office for National Statistics (ONS) said borrowing was £51.1 billion higher than the same month last year

The Office for National Statistics (ONS) said borrowing was £51.1 billion higher than the same month last year

The figures appear to be even worse than the doomladen estimates produced by the independent OBR watchdog last week

The figures appear to be even worse than the doomladen estimates produced by the independent OBR watchdog last week

The figures appear to be even worse than the doomladen estimates produced by the independent OBR watchdog last week

The Office for National Statistics (ONS) said borrowing was £51.1billion higher than the same month last year. 

The sum for April was almost the same as the entire financial year from April 2019 to March this year – estimated at £62.7 billion.

Some £14billion of the borrowing came from the furlough scheme, the biggest of the government’s bailout. It is covering 80 per cent of income for around 7.5million employees, up to a ceiling of £2,500 a month.

Meanwhile, state borrowing in March 2020 has been revised up by £11.7billion to £14.7billion.

It said this was driven by a reduction in previous estimates of tax receipts and National Insurance contributions.

It comes after the Chancellor stepped up financial support for businesses and employees after vast areas of the economy were forced to halt due to the coronavirus lockdown.

As a result of the jump in borrowing, public sector debt rose to £1,887.6 billion at the end of April – £118.4billion higher than April 2019.

The ONS said that the Government borrowed £62.7billion over the 12 months to the end of March, representing a £22.5 billion rise on the previous year. 

The Office of Budget Responsibility has warned that the government could borrow £300billion this year.  

Apocalyptic predictions from the Bank and England and others show the UK is on track for the worst recession in 300 years, when the Great Frost swept Europe

Apocalyptic predictions from the Bank and England and others show the UK is on track for the worst recession in 300 years, when the Great Frost swept Europe

Apocalyptic predictions from the Bank and England and others show the UK is on track for the worst recession in 300 years, when the Great Frost swept Europe

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