The benchmark stock indices opened the day on a negative note, witnessing a correction after yesterday's strong rally.
Join us as we follow the top business news through the day.
‘Deference to those with influence fuels money laundering’
Banks’ deferential treatment towards powerful and influential people is one of the reasons money laundering has risen in the country in recent years, India’s largest bank’s compliance chief said on Tuesday.
State Bank of India’s Group Compliance Officer Soma Sankar Prasad also stressed that India ‘unfortunately’ had no distinct norms in place for ‘politically exposed persons’ opening bank accounts.
“There are certain powerful and influential customers… In India, we still have this hierarchy in terms of power and influence with the result that you treat different people differently.
“That also happens in banks... so when certain important people come into the bank for opening an account, you don’t ask for all the details and you open the account. So that is again one of the reasons that things can go wrong,” he said.
India's financial sector faces challenging times ahead - RBI
Cautious words from the RBI.
Reuters reports: "India's financial sector should brace for challenging times ahead with an increased risk of deterioration in asset quality and lower demand for loans, the Reserve Bank of India (RBI) said in a report on Tuesday.
The central bank has introduced various measures to support the banking sector including a relaxation in recognition and provisions for bad loans to protect lenders and creditors during the coronavirus pandemic.
The roll back of these measures could now hit the books of banks.
"The challenge is to rewind various relaxations in a timely manner, reining in loan impairment and adequate capital infusion for a healthy banking sector," the central bank said it in its annual report on Trends and Progress of Banking in India.
Non-banking financial companies (NBFCs) or shadow banks may see a hit on their profitability going forward due to asset quality concerns, lower credit demand and the tendency to preserve cash, the report said.
Toxic loans on the books of Indian banks have eased with gross bad loan ratios falling to 7.5% at the end of September 2020 from 9.1% in March, but it said that going forward such loans could rise again following relaxations being lifted.
The six-month loan moratorium on repayments provided by central banks and the supreme court judgment prohibiting recognition of bad loans since September may have also provided some respite to the banks on asset quality.
Concerns still remain on non-performing assets, particularly on credit card loans which does not augur well for the risk-profile of Indian banks.
"Given the uncertainty induced by COVID-19 and its real economic impact, the asset quality of the banking system may deteriorate sharply going forward," the RBI said.
The report also said Indian banks had written-off loans worth 2.38 trillion rupees ($32.46 billion) in the financial year 2020 that ended on March 31.
The overall outlook for the Indian economy in 2021 continues to remain uncertain, the report said.
"The high debt overhang of households, non-financial corporates and the (national and sub-national) governments remains a serious concern," the central bank said."
Sensex, Nifty retreat on profit booking after record rally
A modest correction in stocks this morning.
PTI reports: "Key benchmark indices Sensex and Nifty declined in early trade on Wednesday as profit booking emerged in banking and financial stocks after a stellar five-day rally.
The 30-share BSE Sensex had opened higher by 0.10 per cent but failed to hold onto gains in early trade and declined by 102.99 points or 0.22 per cent to 47,510.09.
The broad based Nifty was down by 27.45 points or 0.2 per cent at 13,905.15 with 31 of its constituents trading in the red. The 50-share index had opened higher by 10.75 points at 13,943.35.
Banking stocks like State Bank of India, IndusInd Bank, Axis Bank and ICICI Bank were among major losers among Sensex stocks. Besides, HDFC, Reliance, Bharti Airtel, Larsen & Toubro and Sun Pharma also dropped due to profit booking.
Sensex and Nifty had scaled fresh record highs on Tuesday, extending their bull run for the fifth straight session on the back of gains in banking and IT stocks.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 2,349.53 crore on a net basis on Tuesday, according to provisional exchange data.
Asian shares were mixed after a lacklustre day on Wall Street. The S&P 500 lost 0.2 per cent on Tuesday, a day after President Donald Trump signed the USD 900 billion economic relief package.
Japan''s Nikkei 225 fell 0.6 per cent a day after it surged more than 2 per cent to its highest level in more than 30 years. Hong Kong rose by 1.2 per cent while the Shanghai Composite index advanced 0.7 per cent and South Korea''s Kospi added 0.6 per cent."
Sebi fines NDTV ₹5 crore over disclosure lapses; company to appeal against order
Markets regulator Sebi on Tuesday imposed a penalty of ₹5 crore on NDTV for its failure to disclose price-sensitive information about VCPL loan agreements but the company denied the charges and said it will appeal against the ruling.
The loan agreements had clauses and conditions that substantially affected the functioning of the media company, Sebi said in its order.
The regulator said its probe began after receipt of complaints in 2017 from Quantum Securities Pvt Ltd about an alleged violation of rules by non-disclosure of material information to the shareholders about loan agreements with Vishvapradhan Commercial Private Ltd (VCPL).
As per Sebi, a loan amount of ₹350 crore was borrowed by the promoters of NDTV under the VCPL loan agreement in 2009 to repay earlier loan availed from ICICI Bank and a second loan agreement with VCPL was signed for ₹53.85 crore a year later.