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<ul><li>This is another case of a marquee private bank in India falling from grace amidst rising bad loans. </li><li>IndusInd Bank slumped over 7% after UBS downgraded stock to ‘Sell’ </li><li>The global investment bank said the credit risks are higher than expectations.</li></ul> The shares of IndusInd Bank slipped by over 7% at one point on Thursday after global investment bank UBS downgraded its stock to ‘sell’ and said that the credit risks may be more than twice as high compared to the company’s guidance. “The downside risk to IndusInd Bank’s earnings exists as believe credit costs could be higher at 150 basis points as compared to the company’s guidance of 65 basis points in 2019-20,” UBS said in its report on June 12. Business Insider <a href="https://www.businessinsider.in/indusind-bank-bad-loan-impact-from-ilfs-crisis/articleshow/69557477.cms">reported on May 31</a> that IndusInd Bank had made the same mistake as many other Indian banks trying to downplay the worst of its problems. What’s worse, according to UBS, there could be surprises. “Retail deposits, as a percentage of external liabilities for IndusInd is the lowest among banks in our coverage, at around 20%, which is a structural issue, in our view, and often manifests in credit quality surprises,” UBS said. Simply put, when compared to its peers, the bank has far fewer individual deposits to make up for any more loans that may turn sour in the days to come. The stock which is trading at a price close to its 52-week lows after the recent quarterly earnings showed that the bank’s net profit fell 62% to ₹3.6 billion. Moreover, the bank made a provision of ₹12.7 billion against its loan to the troubled infrastructure lender IL&amp;FS. A provision is the amount of money a bank sets aside to cover a loan which is unrecoverable. Not only did this amount come<a href="https://www.businessinsider.in/indusind-bank-bad-loan-impact-from-ilfs-crisis/articleshow/69557477.cms"> in too late</a>, but it also is not enough to cover its exposure to IL&amp;FS which turned insolvent last year. The bank had been changing goal posts of its extent of exposure almost every quarter since the crisis unfolded. “They should have told us (analysts) from day one about the provision, and not have guided lower numbers to us,” says Hemindra Hazari, an independent capital markets. He wrote a report on the bank titled ‘ Sell-Side Analysts’ Blind Faith in IndusInd Bank Need Not Blind Investors’. SEE ALSO <a href="https://www.businessinsider.in/indusind-bank-bad-loan-impact-from-ilfs-crisis/articleshow/69557477.cms">An Indian bank is still making the same mistake of hiding the worst and hoping for the best</a>

Investors lose over $600 million in a day in one stock as the management was more optimistic than cautious

<ul><li>IndusInd Bank’s provision for losses from IL&amp;FS may be too little too late, according to an analyst. </li><li>The provision for bad loans in the latest quarter should have come at least eight months ago, says Hemindra Hazari. </li></ul> To start with, Mumbai-based IndusInd’s profits fell by 62% in the fourth quarter compared to ₹9.5 billion to ₹3.6 billion. Yet, investors and analysts are happy. Their rationale -- bad loan burden due to its defaulter IL&amp;FS -- was not as bad as expected. Between January and March 2019, the bank made a provision of ₹12.7 billion against its loan to the troubled infrastructure lender, which had failed to pay back what it owes to banks, precipitating a liquidity crisis. A provision is where a bank sets aside some of its money to cover a loan that it believes is unrecoverable. For this, banks have to typically dip into their coffers, a step that can hurt its profits. Half truths But there are some who believe that the amount that IndusInd provisioned for the bad loan to IL&amp;FS, might not cover the extent of the exposure it has to IL&amp;FS. And, that there is an element of truth that may be missing from their statement. For one, it became obvious in September 2018 that IL&amp;FS had turned insolvent, but the full impact of it was not conveyed to analysts in a transparent manner. Added to that, the loan that IndusInd gave IL&amp;Fs is also unsecured, which means there is no collateral that the borrower has offered, which could have helped recover it. IndusInd chose to soften the blow to its investors by making only 13.8% (of the loan) provisioning in the second quarter ending September. It also assured the analysts that it may eventually go up by a further 20-25%. But this quarter ending March 2019, irrespective of the ‘maximum’ guidance it gave, the provision has risen to 70%. “They should have told us (analysts) from day one about the provision, and not have guided lower numbers to us,” says Hemindra Hazari, an independent capital markets. He wrote a report on the bank titled ‘<a href="http://hemindrahazari.com/2019/05/27/sell-side-analysts-blind-faith-in-indusind-bank-need-not-blind-investors/">Sell-Side Analysts’</a> Blind Faith in IndusInd Bank Need Not Blind Investors’. Staggering bad news This higher provision, as per an analyst report by Hazari, should have been made at least eight months back, when it had become obvious that IL&amp;FS had turned a toxic loan for every bank involved. “As per RBI norms, an unsecured non-performing loan requires 20-25% provisioning in the first year and requires 100% provisioning by the 366th day of remaining an NPA (non-performing asset),” said Hazari. The bank has not responded to Business Insider’s queries on the issue. In the second quarter analyst call, the managing director of the bank Ramesh Sobti had assured them saying, “So the best case scenario of course is that we don’t even provide this and we write it back and that scenario is equally possible. The scenario is possible that you make have to make another maybe 20 to 25% of this provisioning higher than this, is possible, so both scenarios are possible is the judgment call at this point of time that this is prudential in terms of our exposure.” Credibility of banks Changing stance regularly when a norm is in place usually affects the credibility of the management. Added to that, the bank has had several run-ins with regulators for incorrectly classifying its income. The banking regulator had imposed a <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/rbi-imposes-rs-3-crore-penalty-on-indusind-bank/articleshow/62055391.cms">Rs 3 crore fine</a> on IndusInd Bank in 2017 for violating its regulations on non-performing loans and extension of non-fund based limits. And here, the bank isn’t alone. Earlier, Hazari had also called out <a href="https://www.bloomberg.com/opinion/articles/2019-05-15/india-s-yes-bank-getting-a-director-from-rbi-signals-trouble?utm_medium=social&amp;cmpid%3D=socialflow-twitter-view&amp;utm_content=view&amp;utm_source=twitter&amp;utm_campaign=socialflow-organic">Yes Bank </a>and <a href="http://hemindrahazari.com/2017/12/13/wall-of-silence-sell-side-media-response-to-hdfc-banks-divergence/">HDFC Bank</a> both for inflating current profits using a tool called deferred tax asset--which will cause negative impact when it reverses in the following year. IndusInd Bank too had followed the same practice in its fourth quarter results. It is no secret that Indian banks are in trouble thanks to high profile defaults by Kingfisher Airlines head Vijay Mallya and diamantaire Nirav Modi, who have now fled the country. The grounding of Jet Airways and IL&amp;FS crisis is not helping no one. Yet, banks have chosen to provide a ‘feel good’ factor to investors, instead of giving forthright bad news. The <a href="https://www.thehindubusinessline.com/opinion/the-way-ahead-for-dealing-with-npas/article27198338.ece">total NPAs </a>for all scheduled commercial banks for the year 2017-18 stands at Rs 10.4 trillion. And, there is no way of underplaying this amount or an amount higher than this, or delay announcing bad loan news hoping for a better tomorrow. SEE ALSO: <a href="https://www.businessinsider.in/indias-lehman-moment-seems-closer-as-top-mutual-funds-defer-dues/articleshow/68831689.cms">India's 'Lehman moment' seems closer than ever as top mutual funds defer dues to investors</a>

An Indian bank is still making the same mistake of hiding the worst and hoping for the best

<ul><li>Former <keyword id="6354335" type="ORGANIZATION" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> (<keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword>) governor <keyword id="6358908" type="DEFINITION" weightage="20" keywordseo="raghuram-rajan">Raghuram Rajan</keyword> and former deputy governor <keyword id="6374379" type="PERSON" weightage="20" keywordseo="viral-acharya">Viral Acharya</keyword> believe that the move to let large corporations own <keyword id="6368751" type="UNKNOWN" weightage="20" keywordseo="banks">banks</keyword> is a ‘bad idea.’</li><li>Not only would this further consolidate financial power in the hands of the few, but it would essentially leave these companies open to the temptation of unlimited funding.</li><li>Analysts at Macquarie and Edelweiss Research have also warned that allowing corporates and NBCFs to bid for banking licenses would not be a wise choice.</li></ul>India’s banking sector has been lauded for its strength in the past, but that was before the <keyword id="6906241" type="UNKNOWN" weightage="20" keywordseo="ILFS-crisis">IL&amp;FS crisis</keyword> and the <a href="https://www.businessinsider.in/finance/banks/news/lakshmi-vilas-bank-is-the-fifth-financial-firm-after-ilfs-dhfl-yes-bank-and-pmc-bank-to-collapse-in-india/slidelist/79286096.cms">four other banks that fell thereafter</a>.Letting large corporations become promoters of banks would only rip down another safeguard of India’s banking sector. According to former RBI governor Raghuram Rajan and former deputy governor Viral Acharya, going down this path is a ‘<a href="https://www.linkedin.com/feed/update/urn:li:activity:6736517958199242753/">bad idea</a>’. If industrial houses have in-house banks, the level of governance and lack of transparency will deteriorate further. Their direct access into the financial veins of the system would only increase the concentration of economic power in the hands of the few at the top rather than be a force for equality. The second risk that lays ahead is that the more interdependent and connected the banking system — and the powers behind it — become, the greater the probability of banks becoming ‘too big to fail’, according to Rajan. That may be good for the customer in the short run, but in the long run it would leave India’s central bank with no option to bailout banks every time they miss a step. Global research company <a href="https://www.businessinsider.in/finance/banks/news/macquarie-warns-that-rbis-decision-on-new-bank-licenses-could-be-controversial-given-the-number-of-bank-failures-in-india/articleshow/79364026.cms">Macquarie</a> has also warned that allowing non-banking financial companies (NBFCs) and corporate houses to bid for a banking license would be very controversial in light of bank failures increasing in India. Why having on-tap funding is a bad idea One of the primary lessons that India has learned in the last decade is that if a corporation has access to funding without any checks in place, it tends to go the wrong way. One example would be of <a href="https://www.businessinsider.in/business/news/nirav-modi-punjab-national-bank-scandal-rolls-royce-and-the-rise-of-a-mumbai-auction-house/articleshow/74129339.cms">Nirav Modi</a>, once lauded as India’s top international jewelry designer but now dubbed a fugitive on the run. He’s on the hook for scamming the Punjab National Bank out of ₹11,356.84 crore by getting letters of undertaking without putting up any collateral. “Regulars can succumb to either political pressure or the urgency of the moment,” noted Rajan. In the Punjab and Maharashtra Cooperative (PMC) Bank scam, which is yet to be resolved, the bank’s chairman S Waryan Singh <a href="https://www.businessinsider.in/finance/banks/news/lakshmi-vilas-bank-is-the-fifth-financial-firm-after-ilfs-dhfl-yes-bank-and-pmc-bank-to-collapse-in-india/slidelist/79286096.cms">allegedly</a> created fake accounts to hide taking out loans for the almost-bankrupt HDIL in which he held 1.91% stake. Even in the YES Bank crisis, the bank’s founder and promoter <a href="https://www.businessinsider.in/finance/banks/news/lakshmi-vilas-bank-is-the-fifth-financial-firm-after-ilfs-dhfl-yes-bank-and-pmc-bank-to-collapse-in-india/slidelist/79286096.cms">Rana Kapoor took kickbacks</a> to give loans without conducting due diligence. These are just more examples of how having access to unfettered financing can be too much of a temptation for some, and there’s no test to determine the worthy from the unworthy. Not yet, anyway. “The history of such connected lending is invariably disastrous — how can the bank make good loans when it is owned by the borrower?” remarked Rajan. Deepening the division between the haves and the have nots The divide between the rich and the poor is already vast in India. The top 10% of the population accounts for 77% of the total national wealth, according to <a href="https://www.oxfam.org/en/press-releases/worlds-billionaires-have-more-wealth-46-billion-people">Oxfam’s Billionaires Report</a>. Even though there is no denying that banks will require capital infusion in the future, and even if banking licenses are allotted fairly — it will still be a biased process, according to Rajan. Those large business houses that already have the initial capital to put up will be at an advantage against others. “While rules can be black and white, fit and proper criteria and due diligence will remain a grey area, in our view,” noted Macquarie’s report. The bigger the bank is, the more interconnected, there will be more reason for the RBI to run to its rescue in order to safeguard the interests of the bank’s depositors. “The bailout costs to the exchequer could be significantly more when it comes to bank licenses to industrial houses, which will start out big,” said Rajan. The RBI has been down this road before with Times Bank and the Bank of Rajasthan. In both cases, corporate houses were allowed to run banks before ultimately collapsing. This time around, Larsen &amp; Toubro (L&amp;T) is likely to be first in line if the recommendation is approved. It has, in the past, requested a banking license and subsequently been denied. Other expected candidates include Bajaj, the Birlas and the Tatas, according to Edelweiss Securities. But even its optimism, Edelweiss concludes, “There will be blood.” SEE ALSO: <a href="https://www.businessinsider.in/science/health/news/oxford-and-astrazeneca-covid-19-vaccine-is-70-effective-and-india-may-authorise-emergency-use-after-uk-nod/articleshow/79365393.cms">Oxford and AstraZeneca COVID-19 vaccine is 70% effective — India may authorise emergency use after UK nod</a> <a href="https://www.businessinsider.in/stock-market/news/indusind-bank-idfc-first-bank-and-jk-bank-stocks-are-soaring-after-rbi-recommendation/articleshow/79363915.cms">IndusInd Bank surges over 4% after RBI committee proposes to increase the cap on promoter stake in private sector banks</a> <a href="https://www.businessinsider.in/tech/apps/news/how-to-earn-money-at-home-from-googles-task-mate/articleshow/79362215.cms">Google is testing ‘Task Mate’ in India, which lets users earn money for doing tasks on their smartphones</a>

Here's why former RBI governor Rajan and former deputy Acharya believe the plan to allow corporations to own banks is a 'bad idea'

<ul><li>Credit Suisse estimates that Indian banks will shore up $20 billion in capital to meet the demands of their debt.</li><li>Kotak Mahindra Bank already on the ball with a QIP worth ₹7,100 crore ($940 million) announced today.</li><li>Axis Bank is also reportedly in talks with Carlyle to raise $1 billion in funding.</li></ul>Unwilling to take risks and facing rating downgrades, India’s banks, including the biggest State Bank of India (SBI), and private lenders like Axis Bank, are on the hunt for fresh capital. However, most of it will go into filling up a massive hole left by bad loans. For other non-banking firms in the financial sector, refinancing isn’t going to come easy. Credit Suisse estimated that Indian banks will need to shore up nearly $20 billion in capital to hedge against upcoming risks as the coronavirus pandemic continues to bear heavily on the economy. More than half of the requirement, an estimated $13 billion, is going be from public sector banks, according to the investment bank. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div style='width:100%!;margin-top:4px!important;text-align:right!important;'><a class='flourish-credit' href='https://public.flourish.studio/visualisation/2596155/?utm_source=embed&utm_campaign=visualisation/2596155' target='_top' style='text-decoration:none!important'> </a></div>]]></cdata></div> “We estimate that 70% of the Indian financial system’s lending capacity is now constrained,” the report said estimating that 25% of the credit lies with public sector banks — excluding the State Bank of India (SBI) — are is yet to be free of the prior burden of non-performing assets (NPAs). Banks need money to repay about $2.9 billion worth bonds that are up for repayment in the next 12 months. “We estimate ₹2.5 trillion ($33 million) of debt is already downgraded to ratings that are likely to make refinancing challenging,” the financial services company said in its report. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div style='width:100%!;margin-top:4px!important;text-align:right!important;'><a class='flourish-credit' href='https://public.flourish.studio/visualisation/2596276/?utm_source=embed&utm_campaign=visualisation/2596276' target='_top' style='text-decoration:none!important'> </a></div>]]></cdata></div> Kotak Mahindra Bank launches its QIP Kotak Mahindra Bank is already on the ball with the launch of its ₹7,100 crore ($940 million) qualified institutional placement (<a href="https://www.bseindia.com/xml-data/corpfiling/AttachLive/c2ab6c3e-ef08-4347-9281-422fd21c483b.pdf">QIP</a>). This allows the private lender to raise capital from domestic markets without the need to submit at pre-issue filings with the market regulator, the Securities and Exchange Board of India (SEBI). The equity shares will be issued at a discount of 5% on the floor price, which is close to ₹1,148 per share. Kotak Mahindra Bank's share price rallied by more than 5% on May 27. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div style='width:100%!;margin-top:4px!important;text-align:right!important;'><a class='flourish-credit' href='https://public.flourish.studio/visualisation/2596375/?utm_source=embed&utm_campaign=visualisation/2596375' target='_top' style='text-decoration:none!important'> </a></div>]]></cdata></div> Axis Bank is looking to raise $1 billion Another private player, Axis Bank, is also looking to raise $1 billion to private equity firm Carlyle, according to <a href="https://economictimes.indiatimes.com/markets/stocks/news/axis-bank-board-to-meet-on-apr-25-to-consider-fundraising/articleshow/68598582.cms?from=mdr">PTI</a>. “The brass seems to be warming up to the idea of another deep-pocket marquee investor in recent weeks,” a source told the publication. An investment of this size will be that Carlyle will own between 5% to 8% stake in Axis Bank. Its share price jumped by over 13% on May 27. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div style='width:100%!;margin-top:4px!important;text-align:right!important;'><a class='flourish-credit' href='https://public.flourish.studio/visualisation/2596439/?utm_source=embed&utm_campaign=visualisation/2596439' target='_top' style='text-decoration:none!important'> </a></div>]]></cdata></div> IndusInd Bank’s Hinduja family wants to raise its stake Simultaneously, IndusInd Bank is reportedly in talks with Japan’s Nippon Life to battle the growing threat of bad loans and ratings downgrades. Like Uday Kotak, the owners of IndusInd Bank — the Hinduja family — is also looking to <a href="https://www.livemint.com/companies/news/indusind-bank-clarifies-on-fund-raising-reports-11585905610222.html">increase their stake</a> to 26% instead of the RBI’s mandated 15% in this time of crisis. Following in the steps of other banks, IndusInd Bank's share price was up by 5.8% on May 27. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div style='width:100%!;margin-top:4px!important;text-align:right!important;'><a class='flourish-credit' href='https://public.flourish.studio/visualisation/2596481/?utm_source=embed&utm_campaign=visualisation/2596481' target='_top' style='text-decoration:none!important'> </a></div>]]></cdata></div> Smaller players like RBL Bank, AU Small Finance Bank, IDFC First, Yes Banks and others are also looking to go down the QIP-route for undisclosed amounts to raise capital and shore up their balance sheets. They account for 8% of the credit in the Indian financial system and have been bearing the brunt of deposit outflows and liquidity constraints, according to Credit Suisse. It’s not just banks Banks are only a part of the liquidity crunch in the economy. Non-banking financing companies (NBFCs) have been pulling back on credit since the IL&amp;FS crisis of 2018. And, with mutual funds now frowning upon investing in NBFCs, they now have limited access to funding from the domestic debt market, according to Credit Suisse. “Asset Liability Management (ALM) challenges for NBFCs are turning more severe with access to funding differentiated and a 6-month moratorium on 30% to 70% of loans,” said the report. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div style='width:100%!;margin-top:4px!important;text-align:right!important;'><a class='flourish-credit' href='https://public.flourish.studio/visualisation/2596549/?utm_source=embed&utm_campaign=visualisation/2596549' target='_top' style='text-decoration:none!important'> </a></div>]]></cdata></div> Even though the Indian government announced multiple measures to try and help the sector, the benefits are likely to be limited. “The government has announced a ₹300 billion special liquidity window for purchasing the securities of NBFCs. However, the scheme is for short-term paper, and available to investment grade entities, which impacts its effectiveness,” said Credit Suisse. “Our analysis shows that around ₹640 billion of borrowings for 'AA'-and-below-rated NBFCs are coming up for refinancing from April to December 2020,” it added, pointing out that sell-downs and external commercial borrowings (ECBs) are now the key avenues for them to meet their refinancing needs. SEE ALSO: <a href="https://www.businessinsider.in/business/corporates/news/mukesh-ambani-may-not-be-done-selling-stake-in-jio-even-after-one-sixth-of-the-telco-is-already-out-of-his-hands/articleshow/75892898.cms">Mukesh Ambani may not be done selling stake in Jio even after one-sixth of the telco is already out of his hands</a> <a href="https://www.businessinsider.in/business/corporates/news/airtel-share-price-target-as-africa-unit-nears-a-billion-dollars-in-revenue/articleshow/75970641.cms">Airtel’s Africa unit is now a nearly-billion dollar business where every user pays 40% more than the one in India</a> <a href="https://www.businessinsider.in/tech/enterprise/news/three-ways-tcs-infosys-and-other-it-giants-in-india-are-trying-to-cut-costs-but-its-not-going-to-increase-their-profitability/articleshow/76021884.cms">Three ways TCS, Infosys and other IT giants in India are trying to cut costs — but it’s not going to increase their profitability</a>

Indian lenders like SBI, Axis Bank and others need $20 billion⁠ in capital— most of it will go into filling up NPA holes

<ul><li>The Reserve Bank of India’s (RBI) Internal Working Group (IWG) has proposed 12 changes to ownership guidelines and corporate structure for Indian private sector banks.</li><li>The committee has recommended increasing the cap of promoters’ stake in the long run from the current level of 15% to 26%.</li><li>Other proposed changes include the provision for non-banking financial corporations (NBFCs) to turn into banks, and the possibility of corporates being allowed to become promoters. </li></ul>The Reserve Bank of India’s (RBI) Internal Working Group, formed on June 12 this year, has come out with a set of recommendations that could redefine the face of private bank ownership. Some of the most staggering changes proposed include higher promoter shareholding, the provision for non-banking financial corporations (NBFCs) to turn into banks, and the possibility of corporates being allowed to become promoters. India’s apex banking institution has granted stakeholders time till January 15, 2021, to submit their suggestions and objections before the RBI takes its final call. Increasing the level of promoter shareholding The RBI committee has recommended increasing the cap of promoters’ stake in the long run — that is, 15 years — from the current level of 15% to 26% stake in the paid up share capital of the bank. For some, this may be a new opportunity; for others, it’s been a long lingering pain point. Billionaire banker <keyword id="45051" type="PERSON" weightage="20" keywordseo="Uday-Kotak">Uday Kotak</keyword>, for instance, has been at odds with RBI to reduce his stake in <keyword id="46013" type="CITY" weightage="20" keywordseo="Kotak-Mahindra-Bank">Kotak Mahindra Bank</keyword>. He even dragged the apex bank to the Bombay High Court in December 2018 to argue against the issue of having to reduce his stake to 15%. Should this regulation be implemented, Kotak will only have to sell 0.1% of his stake to meet the requirement. In June 2020, he sold 2.8% of his share for around ₹6,900 crore bringing his overall holding in the bank down from 28.93% to 26.1%. <keyword id="46717" type="CITY" weightage="20" keywordseo="IndusInd-Bank">IndusInd bank</keyword> promoters Hinduja brothers will also have the flexibility to raise their stake. They had earlier indicated their wish to <a href="https://economictimes.indiatimes.com/markets/stocks/news/indusind-promoters-still-in-dialogue-with-rbi-to-raise-stake-to-26/articleshow/76262736.cms?from=mdr">pump in more capital</a>. They bought in for <a href="https://m.economictimes.com/markets/stocks/news/indusind-bank-raises-rs-3288-crore-via-preferential-issuance-of-shares/articleshow/77933465.cms">over 57 lakh shares at ₹299 crore</a> in September during the bank’s endeavour to raise ₹3,288 crore through peripheral allotment of shares. When it comes to other shareholders, who aren’t promoters, the committee has recommended that there should be a uniform 15% cap. Non-banking institutions could be turned into banks Currently, NBFCs don’t have any way to convert into banks. This means those looking to downsize don’t have an option. And, this applies to all 9,601 of India’s shadow banks. The top 50 account for 80% of the market share when it comes to loans. While the RBI and regulators, in general, may not want any overlap between shadow banking and commercial banking, the two have invariably deepened their co-dependence. At the end of the last financial year, NBFCs were the latest net borrowers of funds from the financial system. More than half of these funds were from banks. The liquidity crunch since the <a href="https://www.businessinsider.in/finance/banks/news/lakshmi-vilas-bank-is-the-fifth-financial-firm-after-ilfs-dhfl-yes-bank-and-pmc-bank-to-collapse-in-india/slidelist/79286096.cms#slideid=79286434">IL&amp;FS crisis of 2018</a> has only added to the cash crunch that NBFCs are facing. Corporates may be allowed to become bank promoters with the right changes to the Banking Regulation Act COVID-19 has been tough on the Indian economy. While the pandemic may exacerbate the effects, the country’s economy was already slowing down before that. Instead of depending on rich bankers to step in, this rule will allow large corporates and industrial houses to become promoters of banks. However, the RBI committee has laid the condition that this could only be allowed once the necessary changes have been made to the Banking Regulations Act. Other suggested changes laid out by the committee include provisions for payments banks for converting into small finance banks. They also suggested that small finance banks and payments banks may be listed within six years from the date “of reaching net worth equivalent to prevalent entry capital requirement prescribed for universal banks” or ten years “from the date of commencement of operations”, whichever is earlier. The RBI committee is also advocating that the licensing new banks should be enhanced from ₹500 crore to ₹1000 crore for universal banks, and from ₹200 crore to ₹300 crore for small finance banks. These recommendations from the RBI working group provides a roadmap that could have far-reaching implications for the banking sector. But it will be a while before they come to fruition — if at all. SEE ALSO: <a href="https://www.businessinsider.in/tech/news/mumbais-massive-power-cut-last-month-may-have-been-the-work-of-hackers/articleshow/79318282.cms">Mumbai’s massive power cut last month may have been the work of hackers</a> <a href="https://www.businessinsider.in/stock-market/news/vodafone-idea-shares-jump-after-selling-stake-in-indus-towers-for-3760-crore/articleshow/79316662.cms">Vodafone Idea soars nearly 5% on fund infusion from Indus Towers stake sale</a> <a href="https://www.businessinsider.in/tech/apps/news/pubg-mobile-india-was-supposed-to-launch-today/articleshow/79315462.cms">PUBG Mobile India was rumoured to launch today — but there is no official update from the company</a>

RBI panel proposes recommendations that could redefine private bank ownership

<ul><li>The first burst of quarterly earnings are out and six large companies HDFC Bank, Reliance Industries, TCS, Wipro, Infosys, and IndusInd Bank have declared their performance.</li><li>While the trend has been positive in all but one case, the management commentary has been negative in three companies.</li><li>HDFC Bank, the latest among the blue-chips to declare its earnings, lost over 3% in share value on Monday.</li></ul> Six companies from the Sensex list -- HDFC Bank, Reliance Industries, TCS, Wipro, Infosys, IndusInd Bank and Yes Bank -- have declared their quarterly earnings so far. <a href="https://www.marketsmojo.com/mojo/resultcorner?RefBse=1" data-type="tilCustomLink" target="_blank">Markets Mojo</a>, a gauge of the market mood on the website of the Bombay Stock Exchange (BSE), shows that the performance of four out of the six stocks are positive, the commentary around the prospects for these companies have turned down in three cases. 
	
	
	
	
	
	
 
 
 
 
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 Banks in a bind HDFC Bank, the latest among the blue-chips to declare its earnings, lost over 3% in share value on Monday. It was not just because the earnings were poor. Yes, the margin shrank a bit and the amount of bad loans rose but it was the pessimism in the management's commentary that did the stock in. “The tone of management commentary may spook the markets. However, it is still one of the best managed banks out there,” Jefferies said in its report. HDFC Bank has reported a 23% growth in revenue and a 21% rise in net profit compared to a year earlier. The rise in bad loans from farmers was offset by a spike in other income. IndusInd Bank, whose reported profit grew 38%, suffered from the fears of a spike in bad loans because of the company's exposure to the infrastructure lending giant IL&amp;FS that has gone bust. The IL&amp;FS crisis has cast a shadow of doubt on the entire financial sector in the country. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 The slump in demand for cars and two-wheelers, the lack of enthusiasm among home buyers, and spiralling consumer demand overall have dented bank earnings overall. Yes Bank's <a href="https://www.businessinsider.in/yes-bank-q1-earnings-report-yes-bank-share-price-q1-earnings-repor/articleshow/70261380.cms" data-type="tilCustomLink" target="_blank">quarterly profit between April and June 2019 fell 91%</a> compared to the same period a year ago, but it was still way better than estimates-- showing the lack of investor confidence. What propped up the stock on Monday were reports of a <a href="https://economictimes.indiatimes.com/markets/stocks/news/yes-bank-shares-rally-7-on-dhfl-deal-buzz/articleshow/70325293.cms" data-type="tilCustomLink" target="_blank">possible fund infusion</a> in the troubled housing finance company DHFL, to which Yes Bank has lent money. 
 
 
 
 
 
 
 
 
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 The elephant in the room The stock of Reliance Industries (RIL), one of India's biggest conglomerates, got a fillip on the first trading day after its earnings. But truly, the investors were just celebrating the fact that <a href="https://www.businessinsider.in/mukesh-ambanis-reliance-industries-profit-grows-6-8-even-as-gross-refining-margin-hits-the-lowest-in-18-quarters/articleshow/70294401.cms" data-type="tilCustomLink" target="_blank">the company's mainstay petrochemicals business</a>was not doing as badly as they had feared. That alone was enough to prop up RIL's share price by over 2% on Monday. The Mukesh Ambani-owned company has seen very good traction in its relatively new businesses like Reliance Jio and Reliance Retail but, as many analysts have pointed out, the core businesses petrochemicals and refining -- which make for the lion's share of the company's gross revenue-- are under threat. "Reduction in heavy crude oil supply post US sanctions, global refining capacity addition this year exceeding expected incremental demand, and slowdown in petchem demand as a result of the US-China spat will weigh on RIL’s refining and petchem business," a HDFC Securities report said. Tech: Tightrope walk India's top-tier software and IT service companies, TCS and Infosys, have had a bittersweet response from investors so far. The slowdown in TCS' revenue and profit were on expected lines, according to the broking house Motilal Oswal. But investors have been driven the stock down since the earnings despite the company <a href="https://www.businessinsider.in/tcs-plans-to-hire-18000-freshers-in-next-3-months/articleshow/70146189.cms" data-type="tilCustomLink" target="_blank">hinting at a double-digit growth</a> for the full year. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 Infosys did not have a standout quarter but the optimism in its outlook had investors upbeat. Infosys had projected a total growth 8.5% to 10% for the full year ending March 2020, which would imply a compounded quarterly growth 1.6% to 1.9%, according to a BOBCAPS research report. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 SEE ALSO: <a href="https://www.businessinsider.in/wipro-profit-growth-beats-tcs-and-infosys/articleshow/70262851.cms" data-type="tilCustomLink" target="_blank">Share buybacks and new deals are keeping the hopes up for Wipro's investors</a>

Six Indian blue-chip companies have declared earnings so far - most of them lack the 'markets mojo'

Mumbai, <keyword id="9292761" type="UNKNOWN" weightage="20" keywordseo="equity-benchmark-sensex">Equity benchmark Sensex</keyword> jumped over 350 points in opening trade on Thursday, tracking gains in index majors <keyword id="6355199" type="DOMAIN" weightage="20" keywordseo="reliance-industries">Reliance Industries</keyword>, <keyword id="6652791" type="UNKNOWN" weightage="20" keywordseo="HDFC-Twins">HDFC twins</keyword> and ICICI Bank amid positive cues from global markets. The 30-share BSE index was trading 355.23 points or 0.76% higher at 46,799.41, and the broader NSE Nifty surged 109.25 points or 0.80% to 13,710.35. ONGC was the top gainer in the Sensex pack, rising around 5%, followed by Bharti Airtel, Bajaj Auto, Axis Bank, <keyword id="45179" type="DOMAIN" weightage="20" keywordseo="NTPC">NTPC</keyword>, Bajaj Finance, Titan, IndusInd Bank, HDFC duo and Reliance Industries. On the other hand, Asian Paints, Infosys, Dr Reddy's Lab, TCS and Nestle India were among the laggards. In the previous session, Sensex rallied 437.49 points or 0.95% to close at 46,444.18, and Nifty surged 134.80 points or 1% to 13,601.10. Foreign portfolio investors (FPIs) were net buyers in the capital market as they purchased shares worth ₹536.13 crore on a net basis on Wednesday, according to provisional exchange data. Domestic equities look to be good at the moment, said Binod Modi Head-Strategy at Reliance Securities, adding that Asian markets are trading positive as the outline of Brexit trade deal was reached. "Further, fear of a new coronavirus strain seems to be easing out now with select European countries opening borders for Britain. FPIs flow continues to remain a key driving force for domestic equities, which is expected to sustain in the near term in the backdrop of weak dollar, soft monetary policies of global central bankers and fiscal stimulus in the USA. "Sustainability of recovery in key economic data and 3QFY21 earnings are likely to play important roles for domestic markets for the sustainability of premium valuations in the near term," he said. US equities finished mostly higher as investors monitored the progress of the coronavirus vaccine and chances of a revived economy in 2021. However, President Donald Trump's opposition to recent bills passed by the Congress offered some discomfort towards the last session of trade. Elsewhere in Asia, bourses in Seoul, Hong Kong and Tokyo were trading on a positive note in mid-session deals, while Shanghai was in the red. Meanwhile, the global oil benchmark Brent crude futures were trading 0.41% higher at USD 51.45 per barrel. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/top-stocks-to-watch-mrs-bectors-ril-bharti-airtel-vodafone-idea-ilfs-interglobe-aviation-future-group-deepak-nitrite-jubilant-foodworks-and-others/articleshow/79933826.cms">Top stocks to watch – Mrs Bectors, RIL, Bharti Airtel, Vodafone Idea, IL&amp;FS, InterGlobe Aviation, Future Group, Deepak Nitrite, Jubilant FoodWorks, and others</a> <a href="https://www.businessinsider.in/business/corporates/news/india-will-have-to-pay-cairn-1-2-billion-ending-one-of-the-biggest-tax-disputes-of-the-decade/articleshow/79934284.cms">India will have to pay Cairn $1.2 billion ending one of the biggest tax disputes of the decade</a>

You Searched For "indusind ilfs" and got 7 results

Investors lose over $600 million in a day in one stock as the management was more optimistic than cautious

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An Indian bank is still making the same mistake of hiding the worst and hoping for the best

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Here's why former RBI governor Rajan and former deputy Acharya believe the plan to allow corporations to own banks is a 'bad idea'

Prabhjote Gill

Indian lenders like SBI, Axis Bank and others need $20 billion⁠ in capital— most of it will go into filling up NPA holes

Prabhjote Gill

RBI panel proposes recommendations that could redefine private bank ownership

Prabhjote Gill

Six Indian blue-chip companies have declared earnings so far - most of them lack the 'markets mojo'

Sriram Iyer

Sensex rallies over 350 points in early trade; Nifty tops 13,700

PTI

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