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The rising demand for credit in last couple of days has prompted banks to garner funds aggressively through certificates of deposits (CD), bonds, and fixed deposits (FD). The need for aggressive fund raising arose after the surplus liquidity in the banking system dropped sharply from the record high. According to the data compiled by Prime database, banks have so far raised around Rs 42,000 crore through CDs. This was even after the rates on this instruments are rising sharply. The data also showed that Indian Bank, topped the fund raising list via CDs, raising worth Rs 13,550 crore, which was followed by <keyword id="6357149" type="General" weightage="80" keywordseo="hdfc-bank" source="Orion">HDFC Bank</keyword> raising Rs 6,550 crore and <keyword id="62034" type="General" weightage="80" keywordseo="punjab-national-bank" source="Orion">Punjab National Bank</keyword> raising Rs 2,875 crore so far in August. Apart from this, there are various banks such as <keyword id="6354731" type="General" weightage="80" keywordseo="state-bank-of-india" source="Orion">State Bank of India</keyword> (SBI), Indian Overseas Bank, Indian Bank, Punjab National Bank, <keyword id="46013" type="General" weightage="80" keywordseo="kotak-mahindra-bank" source="Orion">Kotak Mahindra Bank</keyword>, ICICI Bank, among others have increased their FD raised 5-20 basis points across maturities to attract more investors. "As liquidity is draining out in a calibrated manner from the system, banks are compelled to raise funds through CDs and even through fixed deposits. Some banks are offering special rates for higher FD amounts. With growth picking up, we can expect banks to aggressively raise funds from the market," said <keyword id="14789739" type="General" weightage="80" keywordseo="venkatakrishnan-srinivasan" source="Orion">Venkatakrishnan Srinivasan</keyword>, founder and managing partner at <keyword id="14790820" type="General" weightage="80" keywordseo="rockfort-fincorp" source="Orion">Rockfort Fincorp</keyword>, a Mumbai-based debt advisory firm. Banks credit growth has remained in double digits handily outpacing the deposit growth. The credit growth has increased in couple of weeks due to low base effect, small ticket size loans, higher working capital requirements due to elevated inflation and a shift to bank borrowings on account of high yields in the capital market. The bank credit has grown over 14 per cent on-year, as per data on the <keyword id="6354335" type="General" weightage="80" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> showed. Meanwhile, liquidity in the banking system has cropped sharply in last couple of months. Currently, it around Rs 45,000 crore, as compared to Rs 1.30 lakh crore last week. The sharp drop has been witnessed due to payments for government bonds and outflows on account of goods and service tax payments. Going forward, market participants expect banks to raise more funds because credit demand is likely to rise amid festive season. While, rates on the instruments will also rise due to narrowing of surplus liquidity. "This pace may continue with back of credit off take and <keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword> attempts to normalise liquidity, banks need to meet the demand and get the cheaper sources of funds be available so raising via CD and capital instruments to meet the credit demand and preparing oneself for this ahead of festivals and busy seasons," said <keyword id="261562" type="General" weightage="80" keywordseo="ajay-manglunia" source="Orion">Ajay Manglunia</keyword>, MD and Head Institutional Fixed Income at JM Financial. SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/what-should-investors-ask-mukesh-ambani-at-his-companys-agm/articleshow/93727113.cms">What should investors ask Mukesh Ambani at his company’s AGM?</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/apps/news/instagram-is-reportedly-testing-a-new-feature-that-looks-like-an-imitation-of-fast-growing-app-bereal/articleshow/93727321.cms">Instagram is reportedly testing a new feature that looks like an imitation of fast-growing app BeReal</a>

Banks aggressively garnering funds via CDs, FDs amid firm credit off take

The <keyword id="6354731" type="General" weightage="50" keywordseo="state-bank-of-india" source="Orion">State Bank of India</keyword> (<keyword id="13222" type="General" weightage="100" keywordseo="sbi" source="Orion">SBI</keyword>) on Thursday said the <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (<keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword>) should internationalise the Indian rupee. In a research report, the SBI said that the central bank should make a conscious effort to internationalise the rupee. "The Russia-Ukraine war and the disruptions to payments caused by it, is a good opportunity to insist on export settlement in rupee, beginning with some of the smaller export partners," the SBI said. The banking major also welcomed the RBI's measures relaxing the external commercial borrowing (ECB) and foreign portfolio investors (FPI) norms in the debt segment. According to the SBI, the global economy is volatile and on an average, energy, base metals, precious metals, and agricultural prices are now down 25 per cent from 52 week highs with markets anticipating a global slowdown morphing into a full-blown global recession. However, it is not clear whether such decline is the result of synchronised global rate actions or genuine fears of a recession looming large, the SBI report noted. In <keyword id="3658" type="General" weightage="50" keywordseo="india" source="Orion">India</keyword>, such global developments could have a direct bearing on the inflation trajectory in the second half of the current fiscal. "The RBI has been on course in normalising liquidity and net LAF (liquidity adjustment facility) is now close to the 1.5 per cent threshold non-inflationary level of liquidity. However, the problem is unspent Government cash balances that has now jumped to Rs 3.1 trillion," the report said. This effectively implies that core liquidity is still at Rs. 6.2 trillion as against Rs 8.3 trillion in the beginning of April. Additionally, the RBI has also announced a slew of measures to augment capital inflows by making <keyword id="11904949" type="General" weightage="50" keywordseo="nri" source="Orion">NRI</keyword> deposits more attractive. The SBI said the cumulative impact of all these measures will be beneficial for the external sector given the fact that total Non-Resident Indian (NRI) deposits exhibited an inflow of $3.2 billion in FY22 as against the inflows of $7.4 billion in FY21. On credit growth, the SBI said it expanded at Rs 2.6 lakh crores far outstripping bank deposit growth at Rs 1.04 lakh crore in the current year. The continued growth in bank credit is a matter of comfort and indicates that the Indian economy is still navigating through the turmoil rather well. SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/cryptocurrency/news/taiwanese-crypto-exchange-suspends-trading-in-rupees-after-tds-laws-kick-in/articleshow/92727555.cms">Taiwanese crypto exchange suspends trading in Rupees after TDS laws kick in</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/indian-metal-shares-surge-as-demand-hopes-build-after-chinas-220-billion-stimulus-plan/articleshow/92726640.cms">Indian metal shares surge as demand hopes build after China’s $220 billion stimulus plan</a>

It's the right time on export settlements in Rupee, SBI tells RBI

<ul><li>On 27 September, India’s central bank eased a liquidity coverage requirement imposed on banks and said it would provide all necessary funding support to the banking sector. </li><li>The <keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword> has raised the facility to avail funds for liquidity coverage ratio (LCR), which measures the amount of liquid assets held by banks against short-term <keyword id="44647" type="ORGANIZATION" weightage="20" keywordseo="debt">debt</keyword>, from 11% to 13%. </li><li>This will allow banks to increase the weightage given to government securities when calculating their <keyword id="6493444" type="DEFINITION" weightage="20" keywordseo="Statutory-Liquidity-Ratio">statutory liquidity ratio</keyword> and free up deposits for their short-term funding needs. </li></ul>Following <a href="https://www.businessinsider.in/indias-main-financial-regulators-and-its-largest-bank-are-trying-to-calm-investors-amid-fears-of-a-liquidity-crisis/articleshow/65929921.cms">a promise </a>to investors that it would step in to prevent a liquidity crisis amongst Indian lenders as well as a subsequent <a href="https://in.reuters.com/article/india-shadowlenders/finance-ministry-urges-rbi-to-take-steps-to-ease-liquidity-tackle-credit-crunch-idINKCN1M609Y">push</a> from India’s finance ministry, the Reserve Bank of India (RBI) looks like its making good on its word, albeit at the cost of its mandate to manage risk. On 27 September, India’s central bank eased a requirement imposed on banks related to liquidity coverage and said it would provide all necessary funding support to the banking sector. The RBI raised the facility to avail funds for liquidity coverage ratio (LCR), which measures the amount of liquid assets held by banks against short-term debt, from 11% to 13%. This will allow banks to increase the weightage given to government securities, which is a liquid asset, when calculating their statutory liquidity ratio, which measures the amount of deposits invested in liquid assets. Hence, this will free up banks’ deposits so they can meet their funding needs in the short-term. And their funding needs are dire. Earlier this week, the liquidity deficit was estimated to be ₹1.4 trillion. However, In doing so, the RBI is effectively trading short-term benefits for longer-term pain. The current liquidity crisis stems from the aversion of institutional investors to buy the debt instruments of non-banking financial companies like IL&amp;FS, which is on the brink of default. By relaxing liquidity coverage requirements for banks, the RBI is allowing banks greater freedom in how they use their deposits and also letting them take on riskier short-term debt so a lot more money will enter the system, which will have an inflationary effect. In essence, domestic lenders are being allowed to use a greater percentage of their deposit-holders’ money to pay down their short-term debt obligations and extend credit to borrowers. In the event of a market downturn or a loss of faith in these banks, they could face a run on their deposits, which will be fatal given their lower risk buffer. The finance ministry has insisted that the RBI also relax reserve requirements for banks, under which banks set aside a certain portion of funds with the central bank. Earlier this week, the RBI took a page out of the European Central Bank’s playbook on <a href="https://www.ecb.europa.eu/explainers/show-me/html/app_infographic.en.html">“quantitative easing”</a> and said it would buy around <a href="https://www.thehindubusinessline.com/money-and-banking/rbi-to-conduct-omo-to-infuse-liquidity/article25029705.ece">₹100 billion</a> worth of <keyword id="6370709" type="UNKNOWN" weightage="20" keywordseo="Government-bonds">government bonds</keyword> from the open market to inject funds into the economy.

The Reserve Bank of India is trying to prevent a liquidity crisis at banks by relaxing an important risk requirement

<ul><li>The Indian government will release as much as ₹70,000 crore upfront to ease the ongoing credit crisis in the country. </li><li>Finance Minister <keyword id="129243" type="PERSON" weightage="20" keywordseo="Nirmala-Sitharaman">Nirmala Sitharaman</keyword> said that banks will be able to raise an additional ₹5 lakh crore to re-captalise banks. </li><li>She hopes that as public sector banks are provided with liquidity they will be able to capitalize non-banking financial companies (NBFCs). </li></ul> The Indian government will release as much as ₹70,000 crore upfront to public sector banks to ease the ongoing credit crisis in the country. In a press conference today, Finance Minister Nirmala Sitharaman said that banks will also be able to raise an additional ₹5 lakh crore which will help re-captalise banks which are stressed with non-performing assets. Banks have agreed to ease the high interest rates of the country. They have agreed to pass on the advantage of the four base rate cuts by the Reserve Bank of India (RBI); to customers. “I am grateful that banks have agreed to pass on rate cut benefits. It will help reduce EMIs for housing, retail and other loans. They will also come with external benchmark linked products which will also ease working capital loans for companies,” Sitharaman said. She hopes that as public sector banks are provided with liquidity they will be able to capitalize non-banking financial companies (NBFCs). That will trickle down to help loan seekers as NBFCs have extensive reach which can increase credit growth in the country. SEE ALSO <a href="https://www.businessinsider.in/business/value-of-government-investment-in-psu-bank-stocks-is-less-than-the-market-value/articleshow/70731040.cms">Indian government’s ₹3 trillion gift to banks ended in a money pit</a>

Indian government to make loans easier and cheaper with a ₹70,000 crore gift to banks

Mumbai: The rupee fell sharply by 15 paise against the US dollar to 83.44 in early trade on Wednesday amid muted trends in the domestic equity markets. However, a decline in the dollar index and a marginal fall in the Brent crude index prevented further losses in the domestic unit, according to experts. At the interbank foreign exchange, the local unit opened at 84.38 -- down 9 paise from its previous close -- and then slid further to 84.44, registering a decline of 15 paise from its previous close. On Tuesday, the rupee pared its intra-day losses to settle flat at 84.29 against the US dollar. "The <keyword id="24182640" type="General" weightage="20" keywordseo="Indian-banking-liquidity" source="keywords">Indian banking liquidity</keyword> fell into deficit as industry players paid Rs 1.6-1.8 lakh crore as GST payment. This was after two months that liquidity has fallen into a deficit as the RBI also intervened into forex markets to defend the rupee weighing on liquidity conditions," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said. "The rupee may be in the broad range of 84.00 to 84.50 in the near term as markets await a slew of data from the US this evening," Bhansali added. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was down 0.15 per cent to 106.84. Brent crude, the global oil benchmark, was marginally down 0.10 per cent to USD 72.74 per barrel in futures trade. In the domestic equity market, the 30-share equity benchmark Sensex was trading 46.69 points lower, or 0.06 per cent, at 79,957.57 points. <keyword id="19932515" type="General" weightage="20" keywordseo="Foreign-Institutional-Investors" source="keywords">Foreign Institutional Investors</keyword> (FIIs) were net buyers in the capital markets on Tuesday, purchasing shares worth Rs 1,157.70 crore, according to exchange data.

Rupee falls 15 paise to 83.44 against US dollar in early trade

(Eds: Incorporating related stories) New Delhi, Mar 25 () In a bid to help people and businesses affected in the wake of coronavirus outbreak, state-owned lenders including Indian Bank, Union Bank of India and Bank of Baroda on Wednesday announced special emergency loan products. Besides, other public sector lenders -- Canara Bank, UCO Bank and Indian Overseas Bank -- too announced emergency credit line for customers. Public sector banks with about 80 per cent of banking operation have taken steps to ensure the safety of its staff and uninterrupted banking services to customers. "In these challenging times, the bank is committed to stand by its customers. Keeping in view the hardships faced by various sectors of the economy, we have launched products to take care of immediate liquidity requirement of businesses and retail customers," Indian Bank managing director Padmaja Chunduru told . "In wake of #coronavirus outbreak, #UnionBankofIndia unstintingly supports all its existing customers with the launch of Covid Emergency Line of Credit (CELC) which provides additional credit facilities to tide over liquidity issues," Union Bank of India said in a tweet. Another state-run lender Bank of India too announced emergency line of credit for borrowers. Bank of Baroda said it has set up an emergency credit line to provide funds to its existing MSME and corporate borrowers impacted by the outbreak of coronavirus. This follows a similar additional funding facility announced by the country's largest lender State Bank of India for its borrowers, last week. "Canara Bank announces special Loan schemes for our MSME/Corporate/Business/ Agri &amp; Retail Customers, to tide over the liquidity / Cash flow mismatches in the wake of outbreak of COVID -19," the bank tweeted. Indian Overseas Bank launched MSME Product "COVID 19 Line of Support Scheme" for all MSME customers. More banks to follow suit and announce special emergency credit line in days to come. Last week, the country's largest lender State Bank of India also announced an emergency credit line to meet any liquidity mismatch for its borrowers. Sharing details, she said, IND- COVID Emergency Credit Line (IBCECL) for large corporates will provide additional funding of up to 10 per cent of the Working Capital Limits (both Fund Based and Non Fund Based limits) with a maximum limit of Rs 100 crore. Large Corporates and Medium Enterprises that are in the Standard Category would be eligible for this loan, she said, adding the loan tenor will be for 36 months with an initial moratorium of up to 6 months and would carry fixed interest rate of 1 year MCLR. For MSME sector, she said, IND- MSE COVID Emergency Loan is aimed at providing additional funding of 10 per cent of fund based working capital limits with max Rs 50 lakhs. The will have tenure of up to 60 months and there will not be any processing fee. To support the women workforce, the bank has launched the SHG-COVID - SAHAYA LOAN. Under this each member can avail a soft loan of Rs 5000 up to maximum of Rs 1 lakh per SHG. The loan is for 36 months with 6 months moratorium. Indian Bank is servicing 1.68 lakh SHGs with more than 22 lakh women beneficiaries and the product will help them tide over the crisis, she said. For salaried class, the bank has designed IND-COVID Emergency Salary Loan under which one can avail loan up to an amount equivalent to 20 times latest monthly gross salary subject to max of Rs 2 lakhs. Available at concessional rate, this will help meet urgent medical and other expenditure, she said. "We expect that these credit lines will meet the immediate liquidity requirements of businesses. SHGs has always been an important part of our business and with our initiatives we ensure that the group gets all the desired support for financial independence. We have made these loans repayable over a longer period of time to give them the flexibility in operations until business is back on track again. With salaried class and the pensioners, it is more a line to meet their immediate requirements," she said. Talking about efforts made by the bank to keep its staff safe, Chunduru said, the bank is deploying 50 per cent staff on alternate basis. Besides, she said, masks, sanitizers are being ensured and a helpline number manned by a team of doctors has been started for staff and their families to address the query related with the disease. She said, the bank is also identifying non-critical roles would be identified to enable implementation of the work-from-home policy. The bank is also dissuading its customers not to visit bank branches and do transaction through Digital Banking Services (DBS) in order to protect themselves from the coronavirus. The bank is promoting digital payments such as mobile banking, internet banking, debit and credit cards instead of using cash which may require them to go to crowded places for paying bills. To familiarise people about digital payment methods, she said, the bank has designed videos which inform customers about step by step use. For pensioners, she said, the bank is taking extra effort to provide cash at their doorstep as these people are more prone to virus attack. DP MKJ

Banks launch special emergency loans for customers amid COVID-19 crisis

Mumbai, Apr 27 () Indian equities on Monday closed significantly higher despite paring notable intra-day gains, as financial stocks came to life on the Reserve Bank's move to offer Rs 50,000 crore liquidity support to mutual funds. At close, the BSE gauge Sensex was up 415.86 points or 1.33 per cent at 31,743.08. The index tumbled 360 points from its day's high of 32,103. Similarly, the NSE barometer Nifty settled higher by 127.90 points or 1.40 per cent at 9,282.30. On the Sensex chart, 25 scrips closed in the green. IndusInd Bank was the top gainer in the Sensex pack, rallying over 6 per cent, ahead of its earnings announcement. Axis Bank, Kotak Bank, ICICI Bank and Bajaj Finance too surged up to 5 per cent. On the other hand, NTPC, M&amp;M, HDFC Bank, Bharti Airtel and ITC were the laggards. Sectorally, bank, finance, basic materials, realty, healthcare and IT indices rallied up to 3.54 per cent. While BSE power index was the only loser among the 19 indicies. In the broader market, midcap and smallcap indices outperformed the Sensex, rising up to 1.44 per cent. The Indian market was also lifted by positive sentiment on Asian bourses as hope for more monetary policy easing by global central banks gained further traction after Bank of Japan stepped up its stimulus to contain virus shock to its economy. Broadly, the domestic market was driven by the Reserve Bank's announcement of a special liquidity facility of Rs 50,000 crore for mutual funds, with an aim to ease liquidity pressures on mutual funds. Some profit-booking at the fag-end of the session, however, pulled key indices from the day's highs. "Markets closed positive in sync with the global markets. News regarding the RBI liquidity facility for mutual funds and stimulus packages from central banks around the world provided some positivity to the markets," Vinod Nair, Head of Research at Geojit Financial Services, said. Investors are looking towards earnings results coming out later and during the week for more clarity on the specific sectors, he said. Meanwhile, besides special liquidity facility for mutual funds, the central bank stressed that it is vigilant and will take whatever steps are necessary to mitigate the economic impact of COVID-19 and preserve the financial stability. On the currency front, the rupee rose 21 paise to close at 76.25 against the US dollar. Globally, bourses in Shanghai, Hong Kong, Tokyo and Seoul ended with significant gains, while those in Europe were trading on a positive note. Global oil benchmark Brent crude futures slump 4.03 per cent to USD 23.81 per barrel. Global tally of coronavirus infections has crossed 29.7 lakh, with over 2 lakh deaths. Death toll in India rose to 872, while COVID-19 cases climbed to 27,892, as per health ministry data. ANS MKJ

Sensex, Nifty spurt as RBI steps in to ease MF's liquidity woes

New Delhi, Mar 26 () More than a dozen public sector banks out have announced COVID-19 Emergency Credit Line to deal with the hardship faced by various sectors of the economy. Though public sectors banks (PSBs) were quick to respond with steps to deal with the hardship faced by various sectors of the economy, private sector banks such as ICICI Bank, HDFC Bank and Axis Bank are yet to come out with any relief measures for their customers. As many as 15 PSBs out of the total 18 government-owned banks till Thursday evening announced schemes to mitigate hardship faced by various segments. Taking the lead, the country's largest lender SBI last week announced an emergency credit line to meet any liquidity mismatch for its borrowers. The additional liquidity facility COVID-19 Emergency Credit Line (CECL) will provide funds up to Rs 200 crore and will be available till June 30, SBI said in a circular issued on Friday. Following the suit, Punjab National Bank, Bank of Baroda, Canara Bank, Union Bank of India and Bank of India. Besides, Indian Bank, Bank of Maharashtra, Syndicate Bank, Indian Overseas Bank, UCO Bank and Andhra Bank have also introduced relief schemes till date for meeting liquidity requirements under COVID-19 emergency. "In wake of #CORONA virus Out break, #OBC supports all its existing borrowers by launching COVID19 Emergency Credit Facility which would help them meet temporary liquidity mismatch in operating cycle," Oriental Bank of Commerce said in a tweet on Thursday. Another public sector lender United Bank of India also launched a special scheme "UBI COVID-19 Emergency Credit Facility" for its existing MSME, agriculture and other business segment borrowers. PSBs have announced schemes for existing MSME borrowers with some banks additionally extending schemes to other segments including agriculture, self-help groups, organised sector employees, a senior public sector bank official said. The quantum of loan is in the form of additional line of credit ranging from 10 per cent or higher of existing working capital limits, the official said adding that the banks have kept provision for creation of charge on existing securities for this additional facility without seeking any fresh requirement of prime or collateral security. The loan schemes have a moratorium period of up to 6 months. The official further said the public sector banks are gearing up to do heavy lifting with regards to various direct benefit transfer scheme announced by Finance Minister Nirmala Sitharaman on Thursday. Even state-owned financial institution SIDBI announced a concessional interest rate of 5 per cent for MSME under the SIDBI Assistance to Facilitate Emergency Response against coronavirus. The micro, small and medium enterprises that are into manufacturing of any products or providing any services related to fighting pandemic such as senitisers, masks, gloves and body suit ventilators will get loan at a concessional rate of 5 per cent, SDBI said in a statement. DP HRS

More than dozen PSBs announce COVID-19 emergency credit line

<ul><li>With the cryptocurrency bill looming large, consumers have been worried about their investments in <keyword id="2420795" type="PERSON" weightage="20" keywordseo="cryptocurrencies">cryptocurrencies</keyword> like <keyword id="6354947" type="UNKNOWN" weightage="20" keywordseo="bitcoin">Bitcoin</keyword>, Ethereum and others.</li><li>We spoke to industry sources and exchanges to answer your questions, and help you understand if you should sell your Bitcoin and Ethereum investments.</li><li>One of the key takeaways is that you should not panic.</li><li>Read on to find out what you should do in case cryptocurrencies are banned.</li></ul>One of the biggest questions in the minds of Indians holding cryptocurrencies is if they should sell their crypto investments before the Indian government bans them. It is not an easy question to answer as there is little information from the government in this regard as of now. If you are panicking about your investments in Bitcoin, Ethereum, dogecoin and other cryptocurrencies, we are here to answer your questions. <cmsannotation type="cmsannotation" annotationid="Should I sell my cryptocurrencies?" comment="subhead" text="Should I sell my cryptocurrencies?">Should I sell my cryptocurrencies?</cmsannotation> Don’t panic. Panic selling could prove to be counterproductive, especially since we don’t have enough information about the bill. “Cryptocurrency holders in India should not panic. They should wait for the government to reveal all the details about what is being banned or not, and then take a decision accordingly,” said Nischal Shetty, co-founder of WazirX. “Consumers need not panic and sell their crypto investments. CoinDCX has put in safeguard measures to ensure investors are protected, and we have the liquidity to help consumers liquidate their investments if they want to,” said Sumit Gupta, co-founder and CEO of CoinDCX. “Consumers who are holding cryptocurrencies should not sell their investments in haste. The information in the public domain is incomplete, the details are still not finalised and ban may not materialize,” said Arjun Vijay, co-founder of Giottus Cryptocurrency Exchange. What happens if the government bans cryptocurrencies? The government will likely give investors some time to liquidate their cryptocurrency holdings, so you should not worry about it right now. “Even if the government bans cryptocurrencies, it will likely give some time to Indian investors to liquidate their assets,” Vijay further added. Will the government ban holding cryptocurrencies in foreign countries? The details are not available right now, so it is suggested that you wait and watch for official information from the government. Can I invest in cryptocurrencies via the Liberalised Remittance Scheme? It might be possible to invest in foreign countries taking advantage of the Liberalised Remittance Scheme that allows resident individuals in India to invest up to $2,50,000. However, in view of absence of details about the crypto ban, you should adopt a wait and watch approach. Will banks freeze my account if I invest in cryptocurrencies? This is unlikely as your bank account and cryptocurrency investments are not related. Will I be able to withdraw money from cryptocurrencies into my bank account? As things stand right now, there is no restriction on selling cryptocurrencies and withdrawing those funds into your bank account. Even if the government bans cryptocurrencies, it is likely to give some time to investors to liquidate their assets. “Consumers need not worry about cashing out their investments and receiving money in their bank accounts,” Gupta added, assuring that your money will not go down the drain. According to Shetty, millions of Indians hold over INR 10,000 crore in total in various forms in cryptocurrency investments. The government will give them a way out even if it bans cryptocurrency trading. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/heres-what-6-crypto-experts-said-about-teslas-1-5-billion-investment-into-bitcoin/articleshow/80754586.cms">Here's what 6 crypto experts said about Tesla's $1.5 billion bitcoin investment</a> <a href="https://www.businessinsider.in/stock-market/news/a-crypto-fear-and-greed-indicator-is-flashing-a-warning-signal-that-shows-investors-are-being-extremely-greedy-as-top-cryptocurrencies-hit-record-highs/articleshow/80771973.cms">A crypto 'fear and greed' indicator is flashing a warning signal that shows investors are being extremely greedy as top cryptocurrencies hit record highs</a> <a href="https://www.businessinsider.in/stock-market/news/bitcoins-spike-drives-rebound-in-hard-hit-crypto-mining-stocks/articleshow/80589491.cms">Bitcoin's spike drives rebound in hard-hit crypto mining stocks</a>

“Should I sell my cryptocurrencies?” and other questions answered on India’s proposed Crypto Ban bill

New Delhi, Apr 2 () Moody's Investors Service on Thursday changed the outlook for Indian banking system to negative from stable, as it expects deterioration in banks' asset quality due to disruption in economic activity from the coronavirus outbreak. It said Banks' asset quality will deteriorate across the corporate, small and medium enterprises and retail segments, leading to pressure on profitability and capital. "We have changed the outlook for the Indian banking system to negative from stable. Disruptions to economic activity from the coronavirus outbreak will exacerbate a slowdown in India's economic growth," Moody's said. Stating that asset quality will deteriorate, Moody's said a sharp decline in economic activity and a rise in unemployment will lead to a deterioration of household and corporate finances, which in turn will result in increases in delinquencies. "Growing solvency stress among non-bank financial institutions will increase risks to banks' asset quality because banks have large exposures to the sector," it added. It expects deteriorating profitability and loan growth to hurt capitalisation. "Increases in loan loss charges and declines in revenue will hurt banks' profitability, which will lead to a deterioration of capitalization. If the government makes more capital infusions into PSBs, as it has in the past few years, it will mitigate capital pressure for them," it added. It said while funding and liquidity at public sector banks (PSBs) will be stable, growing risk aversion in the system following a default by a private sector bank (Yes Bank) will increase funding and liquidity pressure on small private sector lenders. "Disruptions from the coronavirus outbreak will exacerbate India's economic slowdown. A deterioration of global economic conditions and a 21-day lockdown imposed by the Indian government in an effort to slow the spread of coronavirus will weigh on domestic demand and private investment," Moody's added. Moody's rates 16 commercial banks in India, which together account for around 75 per cent of deposits in the system. JD DRRDRR

COVID-19 impact: Moody's changes outlook on Indian banks to negative

<ul><li>The near collapse of <keyword id="6357293" type="UNKNOWN" weightage="20" keywordseo="ILFS">IL&amp;FS</keyword> precipitated a domestic liquidity crisis as the balance sheets of other housing finance companies and non-banking financial companies (NBFCs) came under the scanner. </li><li>This revealed asset-liability mismatches and the companies were deemed too risky to qualify for loans from normal banks. To make matters worse, a number of NBFCs had invested in IL&amp;FS’s <keyword id="44647" type="ORGANIZATION" weightage="20" keywordseo="debt">debt</keyword> instruments. </li><li>The tough liquidity conditions for NBFCs are expected to persist this year and banks keep their purse-strings tight and funding costs increase as market borrowing declines. </li><li>Moving into 2019, the central <keyword id="26362" type="ORGANIZATION" weightage="20" keywordseo="Government">government</keyword> and RBI are determined to regulate the <keyword id="6355260" type="UNKNOWN" weightage="20" keywordseo="NBFC">NBFC</keyword> sector better by establishing a system to collect lending and borrowing <keyword id="6355729" type="ORGANIZATION" weightage="20" keywordseo="data">data</keyword> from these institutions on a regular basis. </li></ul> One of the big stories emanating from the Indian banking sector last year was the repeated defaults by IL&amp;FS, India’s largest infrastructure lender, and its subsequent downgrades. The near collapse of the lender precipitated a domestic liquidity crisis as the balance sheets of other housing finance companies and <keyword id="2542016" type="PERSON" weightage="20" keywordseo="Shadow-banks">shadow banks</keyword>, or non-banking financial companies (NBFCs), came under the scanner. This revealed asset-liability mismatches and the companies were deemed too risky to qualify for loans from normal banks. To make matters worse, a number of NBFCs had invested in IL&amp;FS’s debt instruments. Not only were commercial banks, insurance firms and mutual funds engulfed in the ensuing crisis engulfed banks, but the liquidity crisis also led to <a href="https://www.businessinsider.in/after-weeks-of-tension-the-reserve-bank-of-india-gives-in-to-some-of-the-central-governments-demands-while-retaining-its-independence/articleshow/66705908.cms">a showdown </a>between the central government and the Reserve Bank of India (RBI), with the former asking the latter to open a special refinancing window for NBFCs. Despite the fact that a compromise was reached and liquidity norms and lending restrictions on NBFCs <a href="https://www.businessinsider.in/the-reserve-bank-of-india-just-made-it-a-lot-easier-for-the-countrys-shadow-banks-to-sell-off-their-loans/articleshow/66879016.cms">were relaxed</a>, the spat <a href="https://www.businessinsider.in/the-resignation-of-the-governor-of-indias-central-bank-sends-a-clear-indication-about-the-erosion-of-institutional-autonomy-under-the-modi-administration/articleshow/67040287.cms">culminated in the resignation</a> of former RBI governor, Urjit Patel, in the second week of December. India’s shadow banks are of systemic importance because they provide a large portion of credit to the small-and-medium-enterprises (SME) sector. Hence, a drying up of funds at NBFCs leads to a lack of financing options for small businesses, which drags GDP growth downwards. The operations of NBFCs, especially that of a lender like IL&amp;FS, are especially vulnerable in a period of rising interest rates because they borrow short-term funds and lend on a long-term basis. Despite <a href="https://www.businessinsider.in/indias-central-bank-chooses-to-keep-interest-rates-on-hold-unveils-a-new-pricing-policy-for-retail-and-small-business-loans/articleshow/66968094.cms">a potential moderation</a> in RBI monetary policy, the tough liquidity conditions for NBFCs are expected to persist this year and banks keep their purse-strings tight and funding costs increase as market borrowing declines. Moving into 2019, the central government and RBI are determined to prevent a repeat of the crisis. Their solution? Regular data monitoring. At a conference this past weekend, Subhash Garg, the Secretary of Economic Affairs in the finance ministry, said that the government and the RBI were in the process of <a href="https://indianexpress.com/article/business/banking-and-finance/centre-reserve-bank-working-on-new-system-to-gather-data-on-nbfcs-5524971/">establishing a data collection system</a> for the NBFC sector. Garg explained that when the IL&amp;FS crisis came to light, there were no comprehensive sources of monthly lending and borrowing data on India’s shadow banks, let alone real-time data. This prevented the government and regulators from implementing remedial measures quickly. Once a data collection system is in place, it will be easier for the central bank to <a href="https://economictimes.indiatimes.com/industry/banking/finance/soon-bank-type-asset-liability-management-norms-for-nbfcs/articleshow/67295625.cms">enforce asset-liability management norms</a> for the sector. In addition, there is no organisation or industry group that represents NBFCs which makes the process of framing policies for the sector difficult since there are no groups to seek consultations with. Hence, establishing an industry organisation that represents the sector is expected to be an important priority in the immediate term. Besides a data collection system, the Indian government, acting through the Securities and Exchange Board of India (SEBI), has also ordered ratings agencies to <a href="https://www.businessinsider.in/indias-securities-regulator-is-forcing-rating-agencies-to-comply-with-stricter-assessment-norms-to-prevent-a-repeat-of-the-ilfs-crisis/articleshow/66616962.cms">follow stricter protocols </a>when it comes to assessing companies. Under the new requirements, credit ratings agencies will have to include a special section devoted to “liquidity” in their ratings actions announcements. They will also have to disclose discrepancies between the assets and liabilities of an issuer, historical ratings information as well as cash flow issues and existing short-term credit lines. SEE ALSO: <a href="https://www.businessinsider.in/indias-securities-regulator-is-forcing-rating-agencies-to-comply-with-stricter-assessment-norms-to-prevent-a-repeat-of-the-ilfs-crisis/articleshow/66616962.cms">India’s securities regulator is forcing rating agencies to comply with stricter assessment norms to prevent a repeat of the IL&amp;FS crisis</a> <a href="https://www.businessinsider.in/ilfs-has-no-option-but-to-sell-its-profitable-financial-services-unit-as-it-tries-to-avoid-bankruptcy/articleshow/65898283.cms">IL&amp;FS has no option but to sell its profitable financial services unit as it tries to avoid bankruptcy</a> <a href="https://www.businessinsider.in/the-reserve-bank-of-india-just-made-it-a-lot-easier-for-the-countrys-shadow-banks-to-sell-off-their-loans/articleshow/66879016.cms">The Reserve Bank of India just made it a lot easier for the country’s shadow banks to sell off their loans</a>

As India’s shadow banks brace for a tough 2019, the central bank and government will try and prevent a repeat of the IL&FS crisis by solving the data problem

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Banks aggressively garnering funds via CDs, FDs amid firm credit off take

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