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EXCLUSIVE
BANKS EYE BIG LOAN OPPORTUNITY IN ADANI GROUP'S ACQUISITION OF HOLCIM INDIA'S
ASSETS
The refinancing opportunity can arise after six months when the Adani group
looks for long-term funding. Recently SBI had underwritten the entire debt
requirement of Rs 12,770 crore for the Navi Mumbai Airport Project of Adani
Group
* ETBFSI
* May 18, 2022, 12:00 IST
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The $10.5 billion acquisition of Holcim's India assets by the Adani group are
set to provide a big financing opportunity for the banks.
Recently SBI underwrote the entire debt requirement of Rs 12,770 crore for the
Navi Mumbai Airport Project of Adani Group.
While Indian banks have restrictions for directly funding takeovers and
acquisitions, they can look at funding via overseas branches and subsidiaries
when the refinancing opportuntiy comes after six months.
As per the current practice, the acquirer takes bridge fundingfor up to six
months from private equity and institutional investors to make acquisitions.
After the takeover and related process including documentation is done, the
acquirer looks for bond or loan syndication, which is long term money of 3 to 5
years used to retire the short-term funding.
Foreign banks Standard Chartered Bank, Barclays and Deutsche are involved in
financing the acquisition.
Adani Group Chairman Gautam Adani with Holcim CEO Jan Jenisch.
The deal
Holcim had on Sunday signed a binding agreement with the Adani Group to sell its
business in India -- about a 63 per cent stake in Ambuja Cement, which owns a
54.53 stake in ACC (of which 4.48 per cent is direct shareholding).
As per the deal, Adani Group will acquire Holcim's full stake in Ambuja Cement
and ACC for CHF (Swiss franc) 6.4 billion (USD 6.38 billion).
A day after, Adani also made an open offer to acquire a 26 per cent stake each
in the two listed companies - Ambuja Cements and ACC Ltd -from public
shareholders.
The Adani family is routing the deal through Mauritius-based subsidiary
Endeavour Trade and Investment, which is promoted by Acropolis Trade and
Investment Ltd.
"The ultimate beneficial ownership of Acropolis Trade and Investment Ltd is held
by certain members of the Adani family," as per the open offer.
Holcim expects the deal to close in the second half of this year.
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BANKING
* 3 hrs ago
CENTRAL BANKS' HOPES FOR SUPPLY CHAIN MIRACLE MAY BE DASHED BY CHINA, UKRAINE
* 6 hrs ago
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told ETBFSI that he believes the reason why FinTechs are opting for lending
is because it is an untapped market in India. CASHe has a lending run rate of
around Rs 2,400 crore, with an average ticket size ranging from Rs 10,000 to
Rs 3 lakhs. "Proof of the pudding is how our business model works, and we
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EXCLUSIVE
CENTRAL BANKS' HOPES FOR SUPPLY CHAIN MIRACLE MAY BE DASHED BY CHINA, UKRAINE
The Fed and other major central banks are already raising interest rates or
laying plans to do so in an effort to curb inflation running far above the 2%
target that has become the norm for monetary policy in the world's major
developed economies.
* Reuters
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WASHINGTON: Global central banks hoping that high inflation would ease through
improving global supply chains saw little relief through April as new
coronavirus lockdowns in China and the war in Ukraine lengthened delivery times
and drove costs higher, new analyses from the New York Federal Reserve and
others indicates.
A global supply chain pressure index, released on Wednesday by the New York Fed,
rose in April after four months in which supply troubles appeared to ease, a
reversal that, if continued, potentially means more persistent inflation even as
central banks move to control rising prices.
The April index, combining an array of statistics on global transport costs,
delivery times, and other data, "suggests that the moderation we have observed
in recent months has been partially reversed, as lockdown measures in China and
geopolitical developments are putting further strains on delivery times and
transportation costs in China and the euro area," a team of New York Fed
economists wrote.
An Oxford Economics index of U.S. supply problems did ease last month, but the
improvement masked a drop-off in goods arriving from China - a factor that
helped relieve shortages in the trucking industry.
A Morning Consult poll found large numbers of U.S. consumers reported that
either goods were unavailable or harder to find in April, or that delivery times
for products ordered online had slowed. About 60% of grocery shoppers reported
"difficulty finding certain items," and 40% said deliveries of home improvement
goods had slowed, the poll showed.
"Supply chain conditions remained highly strained in April ... Challenges within
logistics eased ... but we take this reading with a grain of salt since the
improvement was partly artificial as China's lockdowns slowed trade flows at
U.S. ports and weighed on business activity," wrote Oren Klachkin, lead U.S.
economist at Oxford.
OUT OF WHACK
The Fed and other major central banks are already raising interest rates or
laying plans to do so in an effort to curb inflation running far above the 2%
target that has become the norm for monetary policy in the world's major
developed economies.
The hope is to lower demand for goods and services, as higher interest rates
discourage homebuying and other major purchases, and in doing so to "get supply
and demand ... back together," Fed Chair Jerome Powell said on Tuesday.
The two have been out of whack throughout the pandemic, particularly in the
United States where trillions of dollars in COVID-related federal spending and
transfer payments left households, firms, and local governments with money to
use even as world supply chains sputtered through waves of infections and
lockdowns - and now a war in Europe.
But policymakers are also hoping, as Powell said, to "give the supply side a
chance to catch up and a chance for inflation to come down" of its own accord as
goods begin to flow more easily around the world.
How much and how fast that happens, however, has become both more uncertain, and
increasingly important to the pace of rate hikes that central banks may need to
impose and the ultimate level of interest rates required to rein in inflation.
The more global supply remains constrained, the stricter central banks may have
to be in their efforts to curb demand, growth, and potentially employment.
There are immediate concerns based on acute problems, a shortage of truckers in
Europe, for example, driven by Russia's invasion of Ukraine.
"Shortages in Europe's transport sector may become more severe because many
Ukrainian and Russian drivers are no longer available to work," Isabel Schnabel,
a member of the European Central Bank's executive board, said last week.
Over a longer time frame, the possibility of a more regionalized world economy,
cut into smaller geopolitical zones, might mean a costly and long adjustment to
a higher-price world.
"There is a real possibility that globalization will go into reverse to some
extent," Powell said. Even though local industries would adapt over time, "it
would be a very different world" than the one which produced roughly 30 years in
which prices increased slowly on the whole.
The situation has thrown a particular focus on whether China's strict COVID
containment policies will be relaxed and, if so, how fast the country's output
of manufactured goods and industrial products can recover.
China Beige Book, a data and analytics firm focused on the country, said in a
note last week that backlogs were likely to worsen, potentially causing the
Chinese economy to contract in the second quarter of the year and possibly
causing U.S. inflation to rise rather than peak in coming weeks.
Noting that Chinese ports "are seeing near-historic levels of backlog," the firm
wrote that "if supply chain backlogs from China cause a second wave of surging
prices in the U.S. into early summer, then the Fed will be completely pinned
down in terms of what it can do."
The lockdowns in China "look like they are impeding the production and flow of
goods and services, given how extensive they are, and compounding supply chain
difficulties that we have had that have boosted prices," U.S. Treasury Secretary
Janet Yellen said on Wednesday at a news conference in Bonn, where she will be
meeting with top finance officials from the Group of Seven leading developed
economies.
"China's economic performance really has spillover impacts on growth all around
the world," Yellen added.
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EXCLUSIVE
UJJIVAN SMALL FINANCE BANK TO HAVE 50 PER CENT IN SECURED LOANS OVER NEXT 2-3
YEARS
The Bengaluru-based lender, which began its operation as a micro-financier in
2005, converted itself into a small finance bank in 2017. It returned to black
in the March 2022 quarter with a net income of Rs 127 crore, but closed FY22
with a net loss of Rs 415 crore, mauled by the impact of the pandemic.
* PTI
Click Here to Read This Story
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Ujjivan Small Finance Bank, after facing headwinds amid the COVID-19 pandemic,
is charting out a more balanced growth path by increasing its secured loan book
to 50 per cent of total assets over the next two-three years. As part of its
asset diversification strategy, the lender has already resumed auto loans and
plans to enter the gold loan space shortly.
The Bengaluru-based lender, which began its operation as a micro-financier in
2005, converted itself into a small finance bank in 2017. It returned to black
in the March 2022 quarter with a net income of Rs 127 crore, but closed FY22
with a net loss of Rs 415 crore, mauled by the impact of the pandemic.
The lender has 68 per cent of its assets in the unsecured micro loan segments as
of March 2022 and the remaining 32 per cent (up from 27 per cent in FY21) is
secured accounts with housing and small business loans.
"Microlending will continue to be the largest asset base for us in the
near-term, but over the next two-three years we want to increase the share of
our secured book to 50 per cent from the 32 per cent now, so that we don't fall
back into the bad loan piles as happened in the past two years, Ittira Davis,
managing director and chief executive of Ujjivan, told PTI.
"As part of this asset base diversification, we have just re-launched our auto
loan portfolio (two-wheeler financing), which we had discontinued during the
pandemic, and we hope to end this fiscal with book at Rs 120-150 crore, Davis
said.
"The second step is to enter the gold loan business which is a fully secured and
high-margin segment for all lenders. We hope to launch this by October/just
ahead of Diwali," he added.
He said almost 60 per cent of the auto loan customers are existing microlenders
while the rest are new customers.
Davis expects his asset base to touch Rs 20,000 crore this fiscal, up from Rs
18,162 crore in FY22.
The company registered a 20 per cent growth in asset base in FY22 as compared to
the preceding fiscal.
Davis said he expects the record loan sales in the fourth quarter to continue in
FY23 as well. In the March 2022 quarter, it disbursed the highest amount of
loans at Rs 4,870 crore, Davis said.
Ujjivan's deposits grew 39 per cent to Rs 18,292 crore, led by a 27 per cent
rise in current account saving account, Davis said.
The bank saw a turnaround in asset quality, with gross NPAs (Non-Performing
Assets) falling from 11.8 per cent in Q2 and 9.8 per cent in Q3 to 7.1 per cent
in Q4, as collection efficiency touched 100 per cent by March, and net NPAs
slipped to 0.6 per cent from 1.7 per cent.
The bank has a provision coverage ratio of 92 per cent with a floating provision
of Rs 260 crore, he said, adding it wrote off Rs 200 crore of bad loans in the
fourth quarter of FY22. Its total provisions stood at Rs 1,330 crore or covering
7.3 per cent of the loan book.
The company went public in December 2019 and has to increase public float to 25
per cent by this December from 18 per cent now. This is being done through a Rs
600-crore QIP issue, after which it will go for a reverse merger.
Davis expects the equity sale to happen in the second quarter of FY23.
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EXCLUSIVE
UCO BANK APPOINTS SUJOY DUTTA AS NEW CFO; J&K BANK GETS NEW GOVT NOMINEE
DIRECTOR
Dutta holds a bachelor degree in commerce from Calcutta University and he is a
member of the Institute of Chartered Accountant of India (ICAI). Prior to his
present position as deputy general manager (Finance) at bank's head office,
Kolkata, he was zonal head of bank's New Delhi zonal office, the state-owned
lender said.
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UCO Bank on Wednesday said it has designated Sujoy Dutta as the new chief
financial officer with immediate effect. "Sujoy Dutta, deputy general manager of
our bank, has been designated as new Chief Financial Officer (CFO) of the bank
with immediate effect in place of Shashi Kant Kumar, general manager of the
bank," UCO Bank said in a regulatory filing.
Dutta holds a bachelor degree in commerce from Calcutta University and he is a
member of the Institute of Chartered Accountant of India (ICAI).
Prior to his present position as deputy general manager (Finance) at bank's head
office, Kolkata, he was zonal head of bank's New Delhi zonal office, the
state-owned lender said.
Another lender J&K Bank said that government of Jammu & Kashmir vide an order
dated May 17, 2022 has nominated Vivek Bhardwaj, additional chief secretary,
Finance Department as government nominee director on the board of directors of
the bank, in place of Atal Dulloo, (additional chief secretary) with effect from
May 17, 2022.
As of May 18, 2022, J&K Bank has a total of 11 board members, including its
Managing Director and CEO Baldev Prakash.
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EXCLUSIVE
INDUSIND BANK SELLS PART OF PLEDGED SHARES OF BIRLA TYRES
New Delhi, May 18 (PTI) IndusInd Bank on Wednesday said it has sold over 38 lakh
shares of Birla Tyres Ltd in tranches in the last one week on invocation of
pledged shares. On May 10, the private sector lender had acquired 1,45,63,787
equity shares equivalent to 10.
* PTI
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New Delhi, May 18 (PTI) IndusInd Bank on Wednesday said it has sold over 38 lakh
shares of Birla Tyres Ltd in tranches in the last one week on invocation of
pledged shares. On May 10, the private sector lender had acquired 1,45,63,787
equity shares equivalent to 10.214 per cent of paid-up equity share capital of
Birla Tyres Ltd on invocation of pledge of shares.
"...the bank has in tranches sold 38,72,595 shares of Birla Tyres Ltd during the
period May 11, 2022 to May 17, 2022," IndusInd Bank said in a regulatory filing.
After the sale of shares, the bank's holding now stands at 1,06,91,192
equivalent to nearly 7.50 per cent stake in Birla Tyres, as per data provided by
the bank.
Shares of Birla Tyres held by Manav Investment & Trading Company were pledged
with IndusInd Bank for securing the outstanding dues under Emergency Credit Line
Guarantee Scheme (ECLGS) facility from the bank to the borrower company --
Cygnet Industries Limited (CIL).
However there was a fall in security value, following which the borrower and
pledger both voluntarily requested for sale of Birla Tyre shares pledged with
the bank and adjust the proceeds towards part prepayment of the ECLGS loan.
Part of Kesoram Industries, Birla Tyres is into manufacturing of tyres for
automobiles, motorcycles, commercial vehicles, farm vehicles and heavy
earth-moving machinery.
Stock of IndusInd Bank closed at Rs 902.90 apiece on BSE, down 0.11 per cent.
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EXCLUSIVE
IDBI BANK DIVESTS ENTIRE 19.18 PC STAKE IN ARCIL
"IDBI Bank has sold its entire holding of 6,23,23,800 fully paid-up equity
shares constituting 19.18 per cent of the total equity share capital of Asset
Reconstruction Company (India) Ltd. (ARCIL) on May 18, 2022 to Avenue India
Resurgence Pte. Ltd," IDBI Bank said in a regulatory filing.
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IDBI Bank on Wednesday said it has divested its entire stake of over 19 per cent
in ARCIL to Avenue India Resurgence Pte. The lender, however, did not disclose
the deal value.
"...IDBI Bank has sold its entire holding of 6,23,23,800 fully paid-up equity
shares constituting 19.18 per cent of the total equity share capital of Asset
Reconstruction Company (India) Ltd. (ARCIL) on May 18, 2022 to Avenue India
Resurgence Pte. Ltd," IDBI Bank said in a regulatory filing.
With this, the LIC-controlled lender said it ceases to be a sponsor shareholder
of ARCIL.
Stock of IDBI Bank closed 0.39 per cent down at Rs 38.10 apiece on BSE.
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EXCLUSIVE
SETTLEMENT PROPOSAL WITH BANK SUBMITTED IN NCLAT, ERSTWHILE MANAGEMENT OF
SUPERTECH TO SC
A bench of Justices DY Chandrachud, Surya Kant, and PS Narasimha was told by
senior advocate S Ganesh, appearing for erstwhile management, that they have
submitted the proposal and urged the court to direct the NCLAT to consider it.
The bench said, "You have placed it. They (NCLAT) will consider it. We should
not be issuing any such direction for consideration. It is not appropriate for
us to direct them".
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The erstwhile management of realty firm Supertech Ltd Wednesday informed the
Supreme Court that it has submitted a settlement proposal with the financial
creditor Union Bank of India to resolve the dispute over payment of dues with
the National Company Law Appellate Tribunal (NCLAT). A bench of Justices DY
Chandrachud, Surya Kant, and PS Narasimha was told by senior advocate S Ganesh,
appearing for erstwhile management, that they have submitted the proposal and
urged the court to direct the NCLAT to consider it.
The bench said, "You have placed it. They (NCLAT) will consider it. We should
not be issuing any such direction for consideration. It is not appropriate for
us to direct them".
At the outset, amicus curiae advocate Gaurav Agrawal informed the court that the
matter before the NCLAT was listed for hearing on May 17 but it was adjourned.
Counsel appearing for Interim Resolution Professional (IRP) which has been
appointed by NCLT submitted that erstwhile management had issued cheques to
several home buyers, which have now been dishonoured due to insufficient funds
and they have now started instituting legal proceedings against him.
The bench said it needs to protect the IRP and directed that no such proceedings
be initiated against him.
A counsel for home buyers said that the legal proceedings for cheque bounce are
barred by limitation and if they do not initiate such proceedings within a
stipulated time, they will lose the remedy under the Negotiable Instrument Act.
The bench, then exercising its power under Article 142 of the Constitution
extended the limitation period, till further orders.
Earlier, on May 6, the embattled real estate major Supertech Ltd had informed
the top court that it is in talks with the financial creditor Union Bank of
India to resolve the dispute over the payment of dues.
The top court was also informed by Agrawal that the company Supertech Ltd does
not have sufficient amount in its account to make the refund to home buyers of
the to be razed twin towers in the Emerald Court project in Noida.
The bench had told Agrawal that a way out had to be found to pay the home buyers
of the Twin Towers as per the orders of the court.
On April 4, the top court said it will protect the interest of home buyers of 40
storey twin-towers of Emerald Court project of real estate developer Supertech
Ltd, which has been now declared bankrupt by NCLT, and directed them to file by
April 15 their claims for refund of payments.
The realty firm had informed the top court that it will be filing an appeal
against the order of the National Company Law Tribunal (NCLT) declaring it
bankrupt on a plea filed by the Union Bank of India for non-payment of around Rs
432 crore worth of dues.
The amicus had earlier said that there were a total of 711 home buyers of the
twin towers out of which the company had settled the claim of 652 home buyers.
On February 28, the NOIDA authority informed the top court that the work for the
demolition of Supertech's twin 40-storey towers in its Emerald Court project,
which have been held illegal for a violation of norms, has commenced and will be
razed completely.
The authority in the status report said that after the demolition of these
massive structures, the entire debris will be cleared of the site by August 22.
The top court had asked all the stakeholders including NOIDA and Supertech Ltd
to strictly abide by the timeline given in the status report and listed the
matter for further hearing on May 17.
On August 31 last year, the top court had ordered the demolition of Supertech
Ltd's twin 40-storey towers under construction within three months for violation
of building norms in "collusion" with NOIDA officials, holding that illegal
construction has to be dealt with strictly to ensure compliance with the rule of
law.
The NOIDA authority had received a rap on its knuckles as the top court pointed
out multiple incidents of collusion of its officials with Supertech Ltd in the
Emerald Court project and violations of norms by the realty major in the
construction of the twin towers.
The top court had directed that the entire amount of home buyers be refunded
with 12 percent interest from the time of the booking and the RWA of Emerald
Court project be paid Rs 2 crore for the harassment caused due to the
construction of the twin towers, which would have blocked sunlight and fresh air
to the existing residents of the housing project adjoining the national capital.
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EXCLUSIVE
INDIAN OVERSEAS BANK NET PROFIT JUMPS 58 PC TO RS 552 CRORE
New Delhi, May 18 (PTI) State-owned Indian Overseas Bank (IOB) on Wednesday
reported a nearly 58 per cent jump in net profit at Rs 552 crore in the quarter
ended March 2022, mainly due to lower provisioning for bad loans. The bank had
posted a net profit of Rs 350 crore in the year-ago period.
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New Delhi, May 18 (PTI) State-owned Indian Overseas Bank (IOB) on Wednesday
reported a nearly 58 per cent jump in net profit at Rs 552 crore in the quarter
ended March 2022, mainly due to lower provisioning for bad loans. The bank had
posted a net profit of Rs 350 crore in the year-ago period.
However, the total income of the bank during the latest March quarter fell to Rs
5,719 crore as against Rs 6,074 crore in the same period a year ago, according
to a regulatory filing.
The bank's interest income rose by 4 per cent in the fourth quarter ended March
to Rs 4,215 crore.
There was an improvement in the asset quality as the gross Non-Performing Assets
(NPAs) declined to 9.82 per cent of the gross advances as of March 31, 2022 from
11.69 per cent in the year-ago period. The same was at 10.40 per cent at the end
of December 2021.
The net NPAs or bad loans fell to 2.65 per cent from 3.58 per cent on an annual
basis. Sequentially, it was slightly high compared to 2.63 per cent at the end
of December 2021.
The provisions for bad loans and contingencies for the March 2022 quarter fell
to Rs 1,014 crore as against Rs 1,380 crore in the year-ago period.
On a full year basis, the bank reported an 106 per cent increase in net profit
at Rs 1,710 crore in 2021-22. It was at Rs 831 crore in 2020-21.
However, yearly income dropped to Rs 21,633 crore as against Rs 22,525 crore in
previous fiscal ended March 2021.
Stock of the bank closed 4.12 per cent up at Rs 17.70 apiece on BSE. PTI KPM RAM
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EXCLUSIVE
REMAIN WATCHFUL OF RECENT GEOPOLITICAL DEVELOPMENTS, RBI GOVERNOR TO BANKS
He also asked the public and private banks to remain watchful of the recent
geopolitical developments and emerging trends to lessen the potential effect on
balance sheets and focus on the revival of economic activity in the country.
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The Reserve Bank of India (RBI) Governor, Shaktikanta Das, suggested banks to
take proactive measures like raising capitals and pay significant attention to
improving grievance redress systems in a meeting held on 17-18 May, 2022.
He also asked the public and private banks to remain watchful of the recent
geopolitical developments and emerging trends to lessen the potential effect on
balance sheets and focus on the revival of economic activity in the country.
In his introductory remarks, the Governor praised the banks for remaining strong
throughout the pandemic and supporting economic recovery.
The meeting was addressed to MDs and CEOs of various public and private banks
along with senior RBI officials where issues like credit off-take, outlook on
asset quality, collection efficiency, setting up of Digital Banking Units,
resilience of IT infrastructure and cyber security defenses in banks were
discussed.
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EXCLUSIVE
AXIS BANK INCREASES MCLR ON LOANS
A rise in the MCLR will typically result in an increase in interest due by
borrowers. The increase in the MCLR will affect existing borrowers' EMIs when
their loan reset dates arrive.
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Axis Bank has announced yet another hike in marginal cost-based lending rates of
loans. The new MCLR rates will be effective from May 18, 2022.
The overnight, one-month, three-month, and six-month MCLR of Axis Bank have been
raised to 7.55 percent, 7.55 percent, 7.65 percent, and 7.70 percent,
respectively. Similarly, MCLR for the tenor of one year stands at 7.75 percent,
two year at 7.85 percent, and three years at 7.90 percent. These rates will be
valid till the next review, stated the Axis Bank website.
Source: Axis Bank website
Axis Bank had last increased MCLR interest rates in April.
A rise in the MCLR will typically result in an increase in interest due by
borrowers. The increase in the MCLR will affect existing borrowers' EMIs when
their loan reset dates arrive.
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EXCLUSIVE
HDFC BANK HIKES FD INTEREST RATES BY UP TO 20 BPS FOR THESE TENORS
Seniors citizens will continue to earn an additional 50 bps interest on FDs over
what general investors earn. HDFC Bank had last increased FD interest rates in
April 2022.
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HDFC Bank has raised fixed deposit interest rates of select tenors of amount
less than Rs 2 crore. The FD rates have been hiked by up to 20 bps. The new
interest rates come into effect from May 18, 2022, according to the HDFC Bank
website.
According to the HDFC Bank website, 2 years 1 day - 3 years FD will now earn an
interest rate of 5.4% up from 5.2%, 3 year 1 day- 5 years FDs will earn 5.60% up
from 5.45%, and 5 years 1 day - 10 years up from 5.6%.
Source: HDFC Bank website
Seniors citizens will continue to earn an additional 50 bps interest on FDs over
what general investors earn.
HDFC Bank had last increased FD interest rates in April 2022.
How FD interest rate is calculated
When you open a Fixed deposit with HDFC Bank, interest on FD is calculated as
below:
1) Fixed Deposits for the tenor <= 6 months : Simple Interest is paid
2) Fixed Deposits for the tenor > 6 months with Quarterly Interest Payout option
: On a Quarterly basis
3) Fixed Deposits for the tenor > 6 months with Monthly Interest Payout option :
Interest is calculated for the quarter and paid monthly at a discounted rate
over the standard deposit rate
4) Fixed Deposits for the tenor > 6 months with Interest Reinvestment option :
Cumulative Interest for the Quarter is added to the Principal in subsequent
quarter and interest is calculated on total amount
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