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Daily Bytes: 1st August

India

  1. RBI expected to cut rates by 25 bps in its monetary policy declaration today
  2. SBI reduces savings rate. Banks flush with money post demonetization may not mind losing part of their deposits and at the same time see rise in NIM income
  3. Ratings agency ICRA expects 15-18% growth in new business APE for life insurance in FY18
  4. Mandatory rest period for auditors have been raised to 6 years for banks by RBI. This would now push banks to go beyond the fab 4
  5. Freshly designed, blue color 50 Re note is expected to get into circulation soon
  6. Indian Overseas Bank (IOB) will focus on low-risk mid-corporate and jewelry loan segments to drive income growth.
  7. Ministry of Electronics & Information Technology has formed a committee under former Justine BN Srikrishna to suggest a draft data protection bill. This is in line with an earlier survey which pointed out increasing risk of data theft & cyber frauds in today’s era of digital
  8. A S&P report estimates that 1.9 lakh crore of capital infusion will be required for PSU banks by Mar 2019 primarily to address the dual implications of large NPAs and Basel III requirements
  9. PNB bank board approves plan to raise capital by 3000 Cr INR equity
  10. Airtel payment bank enters into an agreement with HPCL, which will allow the earlier to leverage the 14K fuel outlets of the later to be used as banking points for opening of account, cash deposit & withdrawal etc
  11. RBI is planning to conduct a cyber audit of all banks and not just a limited few. This probably signifies the increasing risk of cyber fraud in digital space.

 

International

  1. US banks stocks have suddenly turned favorite with many with stock prices on the high. There are now lot of market hopes that some amount of deregulation will come in especially around loosening on the Volcker rule (which bars banks from with their own capital)
  2. Bitcoin mining has slowly shifted to giant enterprises as per a report of CNBC Markets
  3. ‘Safety and high returns’; the two seemingly opposite virtues of investments seems to be back again together through the new class of investments called ‘CLO’. CLO are Collateralized Loan Obligations where risky low grade loans are packaged into attractive investments which are then rated high by credit rating agencies. These are then being lapped up by investors. Sounding similar & also similar in many other ways to CDO, CLO poses similar risks of contagion failure of market which happened I early 2000’s. Hear Rober Shiller on the biggest risk to the market here.

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