MICROFINANCE CREDIT CONTRACTION
Make microlending reg activity-based
Microfinance lending is experiencing stress due to regulatory changes aimed at curbing over-lending. Relaxed rules in 2022 fueled a surge in unsecured credit, leading to new restrictions on loan numbers and borrowers. While this has caused a credit squeeze and increased delinquency, it's expected that government spending and economic recovery will eventually stabilize the sector.
Pickup in govt spending can boost market amid earnings downgrades: Raj Vyas, Teji Mandi
The market has seen a recent correction due to a slowdown in earnings and government spending. However, a good monsoon and potential pickup in government spending in H2FY25 could be a positive trigger, says Raj Vyas, Vice President ¨C Research, Teji Mandi.
Is it time to buy the dip in banks? Sandip Sabharwal answers
?It is important that RBI starts using policy now because otherwise the stress will rise further. But nevertheless, this was something which was expected. Now, credit costs for banks have been going up.
IndusInd provides more for loan losses, Q2 net profit falls 39%
The lender posted a 5% growth in its net interest income to ?5,347 crore. Meanwhile, the net interest margin for the quarter under review stood at 4.08%, down by 21 bps from 4.29% reported in the quarter last year.
Retail asset securitisation volumes at Rs 48,000 crore in June quarter: CARE Ratings
Retail asset securitisation market shrinks by 13% to Rs 48,000 crore in June quarter. Originators flush with liquidity cited as primary reason. Increase in investor demand for PSL assets noted. MBS transactions lead DA volumes. Prediction of strong market performance in FY25.
Restructuring impacts even the smallest player: 5 not so much talked about PSU banks
When it comes to PSU banks, all the limelight is taken by the top players, like SBI, BoB, PNB and one or two others. But the fact is that there are many other small PSU banks, which of course have smaller books and less of national presence, but the fact is that they have been also the beneficiary of the ¡° reconstruction and restructuring" (R&R) which both government and RBI have done in the banking sector in the last seven years. The good part of any R&R exercise in banking is that all the players whether it is small or large have to follow the rules and that ensures that the operating matrix improves across the sector and which leads to long term beneficial impact. We take a look at 5 small PSU banks, which are not normally in news, but over years they have also seen an improvement in their working. Yes, they have their own risks in terms of loan book and other business risk, but then because they are under owned in institutional space, a bit of institutional buying can lead to sharp re-rating.
This banking stock gave 22% returns last year; is Equitas Small Finance Bank stock a good buy now?
Equitas Small Finance Bank¡¯s 2022-23 annual report expects a Rs.22 lakh crore market for small business lending, backed by residential property. A recent Centrum Broking report states that the company is poised to double its AUM within the next three years, supported by its improving deposit franchise and distinct client segments. Its comfortable valuations at 1.4 times based on 2025-26 P/ABV (price to adjusted book value) presents an appealing opportunity for entry, adds the Centrum report. Should you invest in Equitas Small Finance Bank now?
Will new RBI's guidelines make them Universal and get re-rated ? 4 small finance banks with upside potential of up to 24%
While they have been in work for quite some time, yesterday, RBI released the guidelines for small finance banks to turn themselves into universal banks. While most of the guidelines are not something these banks cannot follow, but one where some of them would face issues but only for short term would be the NPA, as per guidelines, the gross NPA should be less than 3 % and Net NPA should be less than 1 % for the last two years. Now some of them are already meeting this criteria. So, they would like to become a universal bank and move into new areas. The winner would be one, who would be able to ensure that net interest margins are not hit that badly as they are bound when new business gets added. But surely this space would see some action sooner than later, in terms of some of them getting re-rated.
Does the microfinance cycle have more legs? Ishmohit Arora answers
?There is still some juice to go because there are still few sectors which look very like reasonably valued, maybe not that cheap like six to seven months ago, but some of them look reasonably valued.
Year-End Special: Markets are now expecting a slowdown in rate hikes
Amidst the war between supply driven inflation and economic slowdown, finally there has been some respite with inflation coming down. This is further expected to ease with the UN food index coming down from highs of around 40-45 to 50 in October and also commodity prices (Base metals, crude, agricultural products) are showing a downtrend now.
How to break through the transmission bottlenecks for small non-banks
This 'transmission conundrum' is not new. Rate reductions against the backdrop of difficult economic situations have often been negated by increasing credit spreads charged by financial intermediaries with direct and greater access to central bank money.
Economic activity down in April, May but shock less severe than 2020: Fitch
The global rating agency said there are growing indications that the latest wave of COVID-19 infections will add to risks among financial institutions (FIs) and anticipates that the Reserve Bank of India (RBI) may introduce additional measures to support the financial sector if indications of economic stress mount.
Millions of defaults threaten microfinance's future in India
Borrowers around the world have been hit hard but perhaps nowhere more so than in India. It¡¯s the global leader in microfinance, the financial service that offers loans to entrepreneurs too poor to qualify for bank loans. Individually, these loans aren¡¯t big ¡ª only around Rs 35,000 on average ¡ª but the number of people taking them out is huge.
Loans to bottom of pyramid pick up, but repayments still a concern
As the loan moratorium period came to a close in August 2020, early delinquencies by value risky portfolio which were upto 30 days past due spiked up to as high as 15.7% as of September 2020.
NBFCs' loan collections improved in September quarter, says report
The build-up in provisions will help non-banking finance companies (NBFCs) against incremental uncertainties, Icra said in a report, adding that such bodies are carrying about 50 per cent higher provisions at 3.1 per cent of the assets under management (AUM) as against 2 per cent in the year-ago period.
Unpaid dues from previous months may keep credit cost higher for MFIs
Cumulative repayments continue to be low in the range of 60-70%, industry organization Sa-Dhan said. Another area of concern for the sector is that 4-5% of customers are yet to begin repayments.
Didn¡¯t skip EMIs during lockdown? Get cashback from your bank
The government on Friday spelt out the details of the waiver of interest on interest on loans up to Rs 2 crore where borrowers had taken moratorium during the lockdown and also made it clear that those who didn¡¯t opt for it will get an ex gratia payment or a cashback.
Finance Ministry writes to states on additional 2 per cent borrowing
As part of the Aatmanirbhar Bharat package announced in May, Finance Minister Nirmala Sitharaman had announced that the Centre has decided to accede to the request and increase borrowing limits of states from 3 per cent to 5 per cent, for 2020-21, which will make available extra resources of Rs 4.28 lakh crore.
Bharat Financial enters exclusivity contract with IndusInd Bank for merger
The implied price is likely be set at 10-12 per cent premium over the prevailing market price of Bharat Financial Inclusion, ET Now had reported.
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