UNSECURED LOANS
NHPC shares rise 2% as board approves Rs 6,300-crore borrowing plan for FY26
NHPC's board has approved a borrowing plan to raise up to Rs 6,300 crore for FY26 through bonds and loans. The company recently reported a significant decline in quarterly profit by 47% and formed a joint venture for renewable energy projects with Andhra Pradesh Power Generation Corp.
IndusInd Bank shares rise over 1% as Crisil, CARE hold off on ratings watch
IndusInd Bank's shares surged 1.2% after Crisil decided against placing the lender on ratings watch, despite derivative discrepancies. Crisil and Moody’s will continue to monitor the situation, focusing on internal controls and management stability amidst these financial stressors.
Crisil holds off on rating watch for IndusInd Bank, awaits external agency's findings on derivatives discrepancies
Crisil refrains from placing IndusInd Bank on ratings watch but awaits the external agency's report to gauge the discrepancies in the derivatives portfolio. Despite expected one-time impact, the bank's pre-provisioning operating profitability and capital adequacy appear robust. Moody's reviews the bank's Ba1 rating due to internal control concerns.
Bank earnings growth could bottom out in FY26: Motilal Oswal
Indian banks’ earnings growth may bottom out next fiscal year due to slow GDP and sluggish credit growth, according to Motilal Oswal. Private banks could see growth bottoming at 11% in FY26, while public sector banks may experience 8% CAGR due to higher costs and limited loan growth. Large cap banks are favored for their strong balance sheets.
Companies with strong financials back in focus with rise in volatility
Amid market volatility, nine ET 500 companies, including Dixon Technologies, Zomato, and Suzlon, have exceeded FY24 revenue and profit levels in nine months of FY25, demonstrating strong financial performance despite uncertain demand.
Bank lending to large cos rose 6.4% in January
Bank lending to large companies is increasing, driven primarily by the need for working capital due to rising raw material costs. However, there is still minimal growth in private sector capacity expansion despite some investments in capital assets, potentially hindering strong credit growth.
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S&P upgrades ratings of Bajaj Finance, Shriram Finance and 4 other leading Indian NBFCs amid strengthened regulatory environment
S&P upgraded the ratings of several Indian NBFCs, including Shriram Finance, Muthoot Finance, and Sammaan Capital, citing improved regulatory environment. Bajaj Finance’s outlook was revised to positive due to strong asset quality and earnings stability. Enhanced RBI regulations are contributing to financial stability and sustainable growth among large NBFCs.
India's private sector is in better position to invest, compared with decade ago: Crisil Intelligence
India's private sector is better positioned for investments due to improved financial health and reduced debt levels, driven by low capex and government initiatives. While domestic demand is set to recover, global uncertainties pose challenges. Nonetheless, measures to boost consumption and lower interest rates are expected to gradually increase corporate investments.
IndusInd Bank shares rise over 1% as Moody’s affirms ratings, raising Rs 11,000 crore via CD
IndusInd Bank shares rose 1.5% to Rs 687.45 on Tuesday, March 18, after Moody’s reaffirmed its 'Ba1' rating. The bank also raised Rs 11,000 crore through certificates of deposit (CDs) to strengthen its funding position following deposit withdrawals triggered by a Rs 2,000 crore accounting discrepancy in its derivatives book.
Moody's places IndusInd Bank on ratings watch for downgrade amid derivatives accounting issues
Moody's has placed IndusInd Bank's baseline credit assessment under review for downgrade due to concerns over internal control discrepancies in derivative accounts and ongoing retail loan stress. The bank discovered a $175 million accounting discrepancy related to currency derivatives. Shares have dropped 28% since the central bank's decision on CEO Sumant Kathpalia's term extension.
Prudential steps on retail, NBFC loans helped lower risks: RBI
Reserve Bank of India’s measures to control credit offtake have successfully mitigated risks in unsecured loans. By increasing risk weights on these loans in November 2023, the growth in credit card dues and loans to non-bank lenders decelerated significantly. Following this moderation, the RBI plans to restore the original risk weights starting in FY26.
In near term, be overweight on NBFCs; shift towards banks in H2: Suresh Ganapathy
Suresh Ganapathy from Macquarie Capital predicts that banks will benefit from falling rates and easing liquidity, with private sector banks being more agile than PSUs. He suggests investing in NBFCs short-term due to immediate gains from rate cuts but advises a shift to banks for long-term growth as the credit cycle stabilizes.
NBFC sector strengthens with RBIs positive stance and rate cut support for growth: Jefferies
Non-Banking Financial Companies (NBFCs) are seeing improvements in asset quality, liquidity, and interest margins due to RBI's supportive measures and easing macroeconomic challenges. Government spending and reduced risk weights on bank lending to NBFCs boost funding access. While the microfinance segment faces stress, affordable housing finance and vehicle financing show potential, with Home First Finance being a top pick.
ICRA flags rising risks in unsecured securitised pools; collections of microfinance dropped to 90% in Q3 FY25
The collection efficiency for unsecured asset classes like microfinance, personal loans, and unsecured SME loans has seen a decline in recent months due to economic slowdown and borrower overleveraging. In contrast, secured asset classes have maintained healthy performance. The recent RBI repo rate cut could ease cash flow burdens and support better collection efficiencies, especially for vehicle loan pools.
0% return in 10 years: CA highlights case of IndusInd Bank share saying Rs 1,000 in 2014, would still be Rs 1,000 in 2025
IndusInd Bank, India's fifth-largest private lender, suffered a massive stock decline of over 27% following revelations of a significant accounting discrepancy in its forex derivative transactions. The issue, amounting to Rs 1,577 crore post-tax, has raised serious concerns about governance, transparency, and regulatory scrutiny. With the Reserve Bank of India (RBI) stepping in to review other banks' hedging effectiveness, the crisis has sparked broader questions about the stability of India's financial sector.
IndusInd issue puts the spotlight on India's banking sector
IndusInd Bank discovered discrepancies in account balances related to currency derivatives. This prompted an internal review and raised concerns about other banks having similar issues. The RBI is investigating. Despite improvements in asset quality and profitability, concerns remain over unsecured retail loans, slow deposit growth, and rising micro-lending stress.
Vedanta cuts debt by $550 million, saves $90 million in interest costs
Vedanta has repaid a high-cost $900 million loan, reducing net debt by $550 million and saving $90 million annually in interest. The repayment was funded by a $1 billion QIP and a new $350 million facility at a lower rate. Vedanta's net debt-to-EBITDA ratio has significantly improved, with further debt reductions by its parent company.
Moody's maintains stable outlook for Indian banking sector amid expected asset quality deterioration
Moody’s maintains a stable outlook for the Indian banking sector but anticipates some asset quality deterioration in unsecured retail, microfinance, and small business loans. Bank growth is predicted to slow to 11%-13% by FY26. Non-performing loans are expected to rise moderately to 2%-3%, and profitability will weaken slightly yet remain adequate.
India's GDP growth to surpass 6.5% in FY26, driven by Sitharaman's tax cuts: Moody’s
India's real GDP growth is expected to exceed 6.5% in fiscal 2025-26, supported by higher government capex and consumption boost from tax cuts and interest rate reductions. Moody's forecasts a stable outlook for the banking sector, despite moderate deterioration in asset quality. Further rate cuts by the RBI are predicted to be cautious amid global economic uncertainties.
Fitch affirms Union Bank of India, PNB rating at BBB- with stable outlook
Fitch Ratings has affirmed the ratings of Union Bank of India and Punjab National Bank at 'BBB-' with a stable outlook, driven by government support, an improved risk profile, and enhanced asset quality. The banks' viability rating is upgraded to 'bb-' due to ongoing improvements in financial performance.
Indian banks continue to grapple with poor deposit growth
Indian banks are facing challenges in deposit mobilization, leading to a higher Loan-to-Deposit Ratio of nearly 126% as of February 2025. Despite lender programs, deposit growth remains sluggish, forcing banks to rely on alternative funding sources and intensifying competition for bulk deposits.
Bank loans continue to flow, deposits harder to come by
Indian banks are currently extending more loans than they are gathering deposits, with the incremental loan-to-deposit ratio reaching nearly 126%. This indicates a reliance on borrowed funds, as system-wide LDR hits its peak, leading to intensified competition for deposits particularly in low-cost CASA.
Credit growth slows, still outpaces deposits: RBI data
Credit growth continues to surpass deposit growth, albeit both have slowed, with bank deposits at Rs 222 lakh crore and credit at Rs 179.9 lakh crore as of February 21. Slower deposit growth and tightened lending norms have influenced this trend. Retail loans and NBFC lending have declined, prompting credit rating firms to revise credit growth estimates downward.
Muthoot Finance, Manppuram Finance shares in focus as RBI asks to tighten gold loans process
Since September 2024, gold loans from banks have risen by 50%, significantly outpacing the growth of overall loans. This increase is partly due to stricter regulations on unsecured lending. In India, the world's second-largest gold consumer, gold is traditionally bought for festivals and weddings, and with prices at record highs, gold loans have become an increasingly popular option.
Public sector banks eye fintech tie-ups; Blinkit, Zepto raise commissions
Happy Friday! Public sector banks are eyeing collaborations with fintech startups to boost lending to MSMEs. This and more in today’s ETtech Morning Dispatch.
RBI may make it tougher for you to get gold loans from banks
Gold Loans: India's central bank plans to enforce stricter underwriting processes for gold loans, ensuring ethical business practices and financial stability. This includes enhanced background checks on borrowers and monitoring the end-use of funds to prevent irregularities found in recent audits.
CBI books Jai Corporation and Promoters in cheating and fraud case
The Bombay High Court directed the CBI to investigate Jai Corporation and its promoter AnandJaikumar Jain for cheating and fraud. Allegations include conspiring to cheat investors by using forged documents, diverting funds to sister concerns and entities in Mauritius and Jersey for personal gain, and fraudulent exports to Australia and USA.
AU Bank can beat stress by growing its secured book
AU Small Finance Bank : AU Small Finance Bank (AUSFB) stock has declined 8% in the past month, underperforming the BSE Bankex. Higher NPAs and credit costs in microfinance and credit card segments have pressured earnings. The bank has lowered FY25 loan growth guidance to 20%, shifting focus to secured loans. A lower interest rate cycle may aid margin recovery, with credit costs expected to remain high before stabilizing in the next fiscal year.
Banks likely to go easy on funding to NBFCs
Indian banks are unlikely to resume significant lending to non-bank lenders and microlenders immediately, despite recent regulatory relaxations by the Reserve Bank. Asset quality is a major concern, with non-performing assets in the microfinance sector reaching an all-time high of ?50,000 crore as of December last year.
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