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Bankers welcomed Finance Minister <keyword id="129243" type="General" weightage="80" keywordseo="nirmala-sitharaman" source="Orion">Nirmala Sitharaman</keyword>'s budget proposals as being growth accretive, and hailed the focus on capital expenditure while continuing with fiscal consolidation. On the critical question of revival in private capital expenditure, which has been lagging for several years now, private sector lender <keyword id="13918428" type="DOMAIN" weightage="20" keywordseo="kotak-mahindra-bank" botkeyword="" source="ET" sourcekeytype="COMPANY" meta.keywordsubtype="EQ" meta.aliasname="kotak mahindra bank" meta.entityname="Kotak Mahindra Bank Ltd." meta.entityid="12161" meta.seoname="kotak-mahindra-bank-ltd">Kotak Mahindra Bank</keyword>'s whole time director <keyword id="818755" type="General" weightage="80" keywordseo="kvs-manian" source="Orion">KVS Manian</keyword> opined that it will take another 12 months to revive even though corporates have been investing off and on lately. “No bad news is good news. It is a fairly decent budget. The FM has maintained a fair balance on fiscal prudence, sustainability and ease of doing business,” Manian told PTI after the presentation of the budget. <keyword id="13222" type="DOMAIN" weightage="20" keywordseo="sbi" botkeyword="" source="ET" sourcekeytype="COMPANY" meta.keywordsubtype="EQ" meta.aliasname="sbi" meta.entityname="State Bank of India" meta.entityid="11984" meta.seoname="state-bank-of-india">SBI</keyword> chairman <keyword id="2003868" type="General" weightage="80" keywordseo="dinesh-khara" source="Orion">Dinesh Khara</keyword> said the budget is growth accretive, fiscally prudent and consumption supportive. “The huge emphasis on capital expenditure could be the perfect recipe for a private investment cycle that is already visible. Support for MSME and Agriculture will broad base credit growth,” Khara added. He also said that the “reasonable Government borrowing numbers” will support lower interest rates and the move towards a clutter free new tax regime will significantly spur consumption. Banking industry's lobby grouping Indian Banks Association's chairman A K Goel said the increased capital expenditure could help in further increasing the demand for bank funds and the Agriculture Accelerator Fund woill also be helpful. <keyword id="686923" type="General" weightage="80" keywordseo="umesh-revankar" source="Orion">Umesh Revankar</keyword>, the executive vice chairman of <keyword id="12730794" type="DOMAIN" weightage="20" keywordseo="shriram-finance" botkeyword="" source="ET" sourcekeytype="COMPANY" meta.keywordsubtype="EQ" meta.aliasname="shriram finance" meta.entityname="Shriram Finance Ltd." meta.entityid="13106" meta.seoname="shriram-finance-ltd">Shriram Finance</keyword> said the income tax benefits announced will boost purchasing power for middle-class consumers. "I believe the announcements made will trigger a pick-up in credit off take for small enterprises, the consumption-driven two-wheeler business and lending to transportation," he added. Non-bank lender Tata Capital's managing director and chief executive <keyword id="128186" type="General" weightage="80" keywordseo="rajiv-sabharwal" source="Orion">Rajiv Sabharwal</keyword> said the strong agricultural credit outlay, support measures, ease of doing business, and digitization drive across various sectors will improve multiple clusters within the economy. American lender Bank of America's country head Kaku Nakhate said allowing foreign banks to conduct acquisition financing from GIFT City is a welcome step and also hailed the dual budget proposal for a single window clearance for IFSCA, SEZ, <keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword>, SEBI and GSTN at GIFT City. KPMG's national head of tax, <keyword id="309284" type="General" weightage="80" keywordseo="rajeev-dimri" source="Orion">Rajeev Dimri</keyword>, also welcomed Finance Minister Nirmala Sitharaman's measures for ensuring that the relaxations given to common taxpayers have not derailed fiscal math, and the government has stayed on the path of fiscal consolidation. Pointing out to the Goods and Services Tax revenue accretion over the last few months, he said the taxpayers should be credited for the performance. The budget rightly “rewards” the taxpayers for their commitment, Dimri said. LuLu Financial Holdings Managing Director Adeeb Ahamed said the budget is focussed with equal focus on traditional and emerging sectors. Adeeb, who has significant investments in India's financial services sector through LuLu Forex and LuLu Finserv, said the move to ramp up the credit guarantee scheme for MSMEs will give a fillip to enabling faster access to financial services. SEE ALSO: <a href="https://www.businessinsider.in/tech/news/first-impressions-samsung-galaxy-s23-s23-plus-and-s23-ultra-go-heavy-on-photography-and-gaming/articleshow/97532856.cms?utm_source=social_sticky_amp&amp;utm_medium=social_sharing&amp;utm_campaign=Click_through_social_share">First Impressions: Samsung Galaxy S23, S23 Plus, and S23 Ultra bet big on photography and gaming</a> <a href="https://www.businessinsider.in/tech/mobile/news/new-patent-suggests-that-apple-could-bring-a-foldable-iphone-with-a-self-healing-display-in-the-future/articleshow/97302738.cms">New patent suggests that Apple could bring a foldable iPhone with a self-healing display in the future</a>

Bankers say private capex will take one more year to revive

SBI, Tata Power, L&T Infotech and other top stocks to watch out for as Nifty looks to extend its bull run

On November 12, the <keyword id="6354335" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (RBI) <a href="https://www.rbiretaildirect.org.in/">opened up a portal</a> through which small investors can directly buy government bonds. Since then, the Nifty Bank, the index of banking stocks, on the National Stock Exchange (NSE) has lost nearly 7% of its value. One could argue that a larger sell-off in Indian stocks is at play but banks have been the worst hit among all sectoral indices. Three straight weekly declines in the stocks of some of the country’s biggest lenders ⁠has led to huge wealth erosion. Private banking giants like ICICI Bank, HDFC Bank and the government-owned State Bank of India (SBI) are some of the most common names in mutual fund portfolios. Aside from the compulsions of the traders who rely on signals on the charts alone, there are some fundamental fears at play too. As it stands today, retail investors can get better long-term returns as well as a wider protection by directly investing in government bonds compared to fixed deposits at banks. Bank deposits are insured by the government up to an amount of ₹5 lakh whereas the entire amount invested in government bonds are guaranteed by the sovereign. And, the returns are relatively exciting too. The returns on some small savings schemes ⁠— some of the long-term ones even offer tax incentives ⁠— offered by the government had already outpaced bank rates. The retail direct platform selling government bonds will only add to the existing pressure. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Investment product </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Interest rates </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Remarks </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Fixed deposits with banks (Returns depend on lender and tenure. Senior citizens get higher rates) </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2.5% to 6.2% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Longer the tenure, better the returns. But, interest is fully taxable. Deposits insured up to ₹5 lakh. </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Small savings schemes from the government </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.6% to 7.4% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">If the investment is unsold for over 3 years, the gains are eligible for indexation as well as a lower tax rate. </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Long-term government savings schemes like public provident fund </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.6% to 8.5% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">These investments can be used to claim tax rebates as well. </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Benchmark bond yield (tenure 10 years) </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6% - 7.1% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Fully taxable. They come with sovereign guarantee. Direct investments, unlike going via debt funds, can reduce expense ratios. </td></tr></tbody></table> No wonder, reports suggest that big ticket investors like <a href="https://economictimes.indiatimes.com/markets/bonds/retail-bond-scheme-draws-strong-interest-from-nris/articleshow/87838650.cms">non-resident Indians</a> are getting wooed by the latest option of directly investing in government securities, which come with higher returns (compared to other fixed income products), a certainty in cash flow and without costs and commissions, and sovereign guarantee for the entire capital. The process may be a bit cumbersome for those without adequate patience for the infamous interfaces of India’s government websites. If the banks have to compete for deposits, the cost of funds will rise and eat into the profit margin. But that’s not the entire story For India’s banks, credit growth has improved but it is still far from the desired pace. Large corporations have still not ramped up investments and, therefore, borrowings have been tepid. This caps the lender’s ability to increase lending rates to cover the cost. Bank loans to industry at the end of September were lesser compared to six months earlier, according to RBI data. Most of India’s large companies and conglomerates are still in the process of repaying old loans and strengthening their balance sheets. Meanwhile, the growth in deposits moderated marginally to 10.1% in the 12 months to September, compared to 11% a year ago. These are a few points to consider for individual investors, including non-resident Indians, who are considering direct investments into India’s government bonds: Not all government securities are liquid. According to market watchers, only about 15 out of the 90 bonds available in the market are traded actively. The market is, currently, dominated by banks and institutional investors. Buying directly will be far easier than selling (before maturity) for smaller lots. After three years of holding, the return on investment in government securities via debt mutual funds is eligible for indexation (adjusting the cost to include impact of inflation) benefit while calculating capital gains. Direct investments are not eligible for the same. However, debt funds come with expenses which direct investments are free of. The money invested in these bonds now may lose its sheen once the interest rates start rising. Analysts at Goldman Sachs expect RBI to hike interest rates by 75 basis points in 2022. However, for now, there is enough headroom before the bank rates come at par with the bond yields. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/banks/news/rbi-changes-ownership-and-corporate-structure-norms-of-private-banks/articleshow/87932161.cms">IndusInd Bank promoter Hinduja Group may raise stake in bank to 26% after RBI’s latest change in private bank norms</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/telecom/news/mukesh-ambani-led-reliance-jio-hikes-prices-of-its-plans-by-21/articleshow/87965329.cms">Mukesh Ambani-led Reliance Jio hikes prices of its plans by 21%</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/investment/news/facebook-microsoft-and-others-look-towards-the-1-trillion-dollar-metaverse-opportunity-but-that-contradicts-the-base-philosophy-behind-web-3-0/articleshow/87959802.cms">Facebook, Microsoft and others look towards the $1 trillion dollar ‘metaverse’ opportunity — but that contradicts the base philosophy behind Web 3.0</a>

Banks in India may have to fight harder for deposits

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Britannia, Tata Motors, Maruti Suzuki and other top stocks to watch out for on August 2

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Bankers say private capex will take one more year to revive

PTI

SBI, Tata Power, L&T Infotech and other top stocks to watch out for as Nifty looks to extend its bull run

Rounak Jain

Banks in India may have to fight harder for deposits

Sriram Iyer

SBI, Airtel, Adani Enterprises, TCS and other top stocks to watch out for on August 4

Rounak Jain

Britannia, Tata Motors, Maruti Suzuki and other top stocks to watch out for on August 2

Rounak Jain

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