Latest news with #KarthikSrinivasan
Time of India
3 hours ago
- Business
- Time of India
RBI guidelines for project finance, CRE: A smaller provisions hike's no big worry for banks, NBFCs
MUMBAI: Central bank guidelines on provisions for project finance and commercial real estate (CRE) might have only a small and negligible profitability impact on both banks and NBFCs , as the increase in immediate liabilities is less than a percentage point from those existing rules - even in the worst-case scenario. Financial and banking stocks surged on Friday. Bankers and analysts, who had pencilled in up to a 150-basis point impact on return on assets (RoAs) for lenders, now expect no new provisioning requirements as NBFCs are already on the more stringent Ind-AS accounting norms while for banks the impact is small. One basis point is 0.01 percentage point. Karthik Srinivasan , group head, financial sector ratings at ICRA said with no retrospective provisions and peak provisions much below the 5% proposed in the draft guidelines, there will be a minimal impact on lenders. "Although we are yet to create a hypothesis and do a study on the impact, it is nothing like the 150 basis points on RoA basis we had predicted earlier. We do not expect any real impact on banks or NBFCs," Srinivasan said. ICRA had earlier expected the annual impact on RoA at 100-150 bps for lenders, with funding costs going up by 20-40 bps. Both these issues will not arise as in the final guidelines general provisions required for CRE, CRE-RH (CRE-Residential Housing) and other infrastructure projects have been reduced to between 1% and 1.25% in the construction phase from a peak of 5% in the draft guidelines. Live Events Financials Surge The Nifty financial index surged 1.3%, and financial stocks were at the forefront of the stellar Nifty 50 rebound Friday from a sharp sell-off Thursday. HDFC Bank , the biggest lender by market value, climbed 1.44%, while Bajaj Housing Finance too climbed 1.4%. Provisions for projects in the operational phase have also been reduced to between 0.40% and 1%, with operational infrastructure project provisions kept at 0.40%, the same as it is currently. The new guidelines will come into force from October 1. Rajkiran Rai , managing director at infrastructure financier NaBFID, said the final guidelines limit his firm's provision increase to just 5 basis points. "If we were pricing a loan at 8%, now we will price it at 8.05%. This would have increased to 9.50% if the original guidelines had remained, so this is a big relief. The new norms also have clauses saying at least 50% to 75% of the land must be acquired for the loan to be sanctioned. This could delay loan sanctions but it will bring uniformity in application since different projects were so far treated differently on land acquisition," Rai said. For loans on infrastructure projects which have been delayed beyond three years from the date of commencement of commercial operations (DCCO), lenders have to make an additional provision of 0.375% and a 0.5625% provision on non-infrastructure project loans (including CRE and CRE-RH), for each quarter of deferment, over and above the applicable standard asset provision. "Provisioning requirement for projects beyond DCCO up to two years will go up to 4% vis-a-vis original guidelines where provision was only 0.4%," said an analyst. "Now, within DCCO, the first quarter itself will attract higher provision."
Hindustan Times
20 hours ago
- Business
- Hindustan Times
Men in ads need more nuanced portrayal
Brands riding on Father's Day celebrations last Sunday launched their print and digital campaigns to capitalize on emotions linked to the occasion to influence customers. Companies, across categories, that released special communication marking Father's Day included SBI Life, Instamart, Niva Bupa Health Insurance, Myntra, De Beers and Zomato among others. The Zomato campaign stood out for its storytelling and collaboration with other leading digital brands, said communications strategy consultant Karthik Srinivasan. While Zomato, Blinkit and District are part of the same company, other apps which collaborated on the ad included Urban Company, Uber and Spotify. Its quintessential message was that 'Appa' (dad) works harder than all these apps put together as he repairs home appliances, sings lullabies and transports his child on his two-wheeler. 'The caring father evokes the sentiment that before you used apps to do things, there was only 'Appa,' Srinivasan said. Diamond company De Beers' print ad was a hand-written note of appreciation from a GenZ daughter to her dad thanking him for starting to understand her lingo, binge-watching K-dramas with her and accepting her fashion sense. 'Not just in Father's Day campaigns, but usually brands showcase only the ideal version of men in ads. Unlike in films, there is no place for a hero or a villain in advertising,' Srinivasan said. Toxic masculinity may be on display in films like 'Kabir Singh' or 'Animal' since movies reflect at least some reality while ads are aspirational, he added. Lately though, the depiction of men in advertising and films has become a subject of great debate. Based on research by Kantar, the Advertising Standards Council of India (ASCI) Academy released a report in March titled 'Manifest: Masculinities Beyond the Mask, in collaboration with the Unstereotype Alliance and Religious Brands. 'Today, masculinity -- and the patriarchal structures that organise society -- are facing a crisis… Simultaneously, women are rising as equals and competitors,' the report said. In certain categories like e-commerce, tech, and menswear, there's a more evolved depiction of men -- softer, more caring, and less driven by ego. 'However, this seems to be a re-working of the traditional gentleman role, rather than a substantial challenge to the predictable man script. Some of these narratives that, at first glance, seem progressive, may also create more pressure by asking men to live up to both the protector and the caregiver, instead of un-stereotyping masculinity,' it said. Srinivas noted that the nearly 30 Father's Day ads he saw, pitched dad as the caregiver and provider, with no new thought. Ekta Relan, chief strategy officer, Saatchi & Saatchi India, agreed that the archetypical father ads, except Zomato, were underwhelming. The ASCI Academy report focused on the 'crisis' in traditional masculinity, with men feeling increasingly alienated, insecure and confused owing to societal changes and rise in gender equality. It sought a nuanced approach to depicting men in ads given the pressures they are facing. At a webinar organised by the Market Research Society of India (MRSI) on the same theme, Ekta Relan said that the reasons for men's identity crisis are rooted in women's empowerment journey over decades. 'In redefining the role of a woman, a man's role at home, in the family and society also got redefined. And they aren't conditioned for it,' she said. One response to this identity crisis was the resurgence of the alpha male seen in films like 'Animal'. 'The other was masculinity taking pride in sharing the load,' Relan said. For decades, there was a hero who never died, a father who never changed diapers and a professional who never failed. 'But now we see a father tearing up at his daughter's graduation ceremony and a CEO posting about his anxiety on social media,' she said. When 'Animal' succeeds, it raises questions about their real identity. But Relan said the future of masculinity isn't singular. 'Variations will co-exist which is an opportunity for brands. They must choose and sharply project the core of masculinity they want to represent because a male consumer today is not choosing a product, but an identity,' she said.
Mint
a day ago
- Business
- Mint
In relief to lenders, RBI eases provisioning norms for infrastructure financing
Mumbai: The Reserve Bank of India (RBI) on Thursday relaxed the provisioning norms for project finance loans, following appeals by lenders. The RBI, in its final guidelines, has mandated that banks set aside only 1% of standard asset provisioning for projects under construction. It has, however, retained the provisioning requirement for operational projects at 0.4%. The provisioning requirement for loans for under-construction commercial real estate will be slightly higher at 1.25%. The new norms come into effect from October. Also read: Retail investors want a piece of NSE. But no one is selling This is a major relaxation from the draft guidelines released in May last year that had proposed that lenders must set aside 5% of the loan amount—for potential losses—for an under-construction project, 2.5% for those already operational and 1% once the project has adequate cash flow to repay obligations. 'Rationalization of standard asset provisioning requirement to 1% for projects under construction, which shall gradually increase for each quarter of DCCO (date of commencement of commercial operations) deferment," said RBI. Separately, RBI has permitted deferment of date of commencement of commercial operations to up to three years for infrastructure projects and up to two years for non-infra projects. This is a bit tougher from the draft norms, which allowed up to four years of extension of DCCO due to all types of risks including legal. Also read: Affordable housing financiers become market darlings after RBI rate cut 'Final guidelines on project finance comes as a relief to the lenders, as for operational projects the extant requirement continues at 0.4%, which is lower than 1%/2.5% indicated in the earlier draft. For under-construction project finance, provisions are kept at 1% vis-a-vis 5% suggested in the draft. This is however higher than 0.4% applicable at present for banks," Karthik Srinivasan, group head, financial sector ratings, ICRA, said. He sees limited impact on NBFCs as sufficient provisions are provided as per the expected credit loss assessment and provisioning at present is closer to the requirement as per the guidelines. 'Also, the provisions are applicable prospectively, from October 2025 and, thus overall impact for lenders shall be limited," he added. The RBI, under governor Sanjay Malhotra, has been taking steps to stimulate credit demand. Since January, the central bank has reduced risk weights on bank loans to small borrowers and non-bank lenders, eased rules for small-ticket gold loans and relaxed rules around strict liquidity requirements for banks. In its final guidelines, the RBI has retained the individual lender exposure at not less than 10% of the aggregate exposure for under-construction projects where the aggregate exposure of the lenders is up to ₹1,500 crore. For projects where aggregate exposure of all lenders is more than ₹1,500 crore, the exposure floor for an individual lender shall be 5% or ₹150 crore, whichever is higher. Also read: Alcohol's become much more expensive in Maharashtra—but will still find takers The RBI has relaxed the conditions for disbursement of funds. As per the new norms, infrastructure projects under public-private partnership (PPP) model need to ensure only 50% of the land available before disbursement. For non-PPP and commercial real estate projects, this requirement has been pegged at 75%. Currently, National Highways Authority of India projects under the annuity model need to ensure 90% of the land is made available before disbursement.
Time of India
24-04-2025
- Business
- Time of India
NBFC's credit growth to moderate to 13-15% in FY25 and FY26 from 17% witnessed in last two fiscals: ICRA
Live Events The credit growth of the non-banking financial companies (NBFCs) is expected to ease to 13-15 per cent in financial year 2025 (FY25) and FY2026 from the 17 per cent in the previous two fiscals, rating agency ICRA said in a NBFC credit stood at about Rs 52 trillion in December 2024, and it is set to exceed Rs 60 trillion by FY2026. The retail assets, which accounted for 58 per cent of the overall NBFC credit in December 2024, have been the key growth drivers, while other wholesale and infrastructure credit expanded at a stable rate of 10-12 per cent during retail assets of NFBCs expanded at a compounded annual growth rate (CAGR) of 23 per cent during FY2023-FY2024, said the rating agency expects retail assets to grow at a relatively slower 16-18 per cent CAGR during FY2025 and FY2026. Given the high base created in the post-COVID expansion of this segment and concerns of borrower overleveraging, it has impacted loan quality in some asset segments within this segments like microfinance, personal loans, credit cards and unsecured business loans are witnessing higher stress in FY2025, leading to elevated delinquencies and write-offs. Unsecured business loans account for nearly 28 per cent of retail NBFC credit in December 2024."While the stress is largely confined to the unsecured loans at present, in a constricted credit flow environment, the refinancing ability of some of the borrower segments shall get adversely impacted. Thus, performance-secured loans availed by these borrowers, namely small-ticket vehicle loans and micro and small-ticket mortgage loans, etc., shall remain a key monitorable," said Karthik Srinivasan, Group Head Financial Sector Ratings, ICRA Limited The rating agency said that while most of the regulatory actions are expected to have some near-term impact on growth, they augur well for the sector in the long term, and most entities have the ability to absorb the near-term impact, if any, considering their strong balance sheets and healthy earnings profiles."Moderate loan growth expectations, along with limited dependence on short-term funding at present, bode well for sectoral liquidity, which is expected to remain adequate, but access to the commensurate funding remains key," said the debt issuances improved in FY2025 are expected to remain healthy in the current fiscal year, supported by a favourable outlook on interest rate competitive pressures shall remain elevated, which will impact margins, notwithstanding the reduction in the cost of growth slows down, ICRA anticipates a rise in credit costs in line with increasing delinquencies, especially in unsecured loan the profitability of NBFCs, barring housing finance companies (HFCs), shall witness some headwinds, with return on average managed assets (RoMA) projected to decline by about 30-50 bps in FY2025-FY2026 vis-a-vis FY2024 the HFCs' performance has remained relatively stable, the impact of portfolio seasoning on credit cost remains to be seen, said the report.
Reuters
26-03-2025
- Business
- Reuters
IndusInd Bank, stung by accounting lapses, raised $2 billion via market deposits in March
MUMBAI, March 26 (Reuters) - India's IndusInd Bank ( opens new tab garnered $2 billion in higher-cost bulk deposits in March, its biggest monthly haul in at least two years, as the lender shored up its funding base after disclosing accounting lapses. The country's fifth-largest private sector bank flagged earlier in the month a $175 million hole in its balance sheet, citing accounting discrepancies in its derivatives portfolio. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. The discrepancies have led to concerns over governance at the bank and the appointment of Grant Thornton to conduct a forensic review into the accounting lapses. The bank's shares are down nearly 27% since the lender disclosed the matter. Publicly available data from India's clearing house showed that IndusInd Bank raised 165.50 billion rupees ($1.93 billion) in March through the sale of certificates of deposits (CDs) maturing in three months to one year, with about 85% of that raised after the lapses were disclosed. It paid 7.90% on its one-year CDs this month, 20 basis points higher than what it had paid for similar deposits in February, the data showed. "By issuing CDs, the bank may want to shore up its overall deposit base and maintain higher liquidity to counter uncertainty on deposit withdrawals," Karthik Srinivasan, senior vice president & group head at rating agency ICRA, said. "It is also a confidence building exercise to ensure that the bank's liquidity remains strong." An IndusInd spokesperson said the bank "evaluates various sources of funds depending on its asset and liability requirements" and that it has a "healthy liquidity position" with a focus on retail deposit mobilisation. The Reserve Bank of India (RBI), the country's central bank, said this month IndusInd Bank was well capitalised and its financial position remained "satisfactory". LESS PREFERRED OPTION For lenders in India, bulk deposits - those that are more than 30 million rupees - are generally less preferable to retail deposits as they cost around 20-150 basis points more. But IndusInd Bank raised through bulk deposits in March nearly 3.5 times what it raised in the preceding month, marking its highest haul since at least April 2023, the clearing house data showed. The on-month jump in such deposits raised by IndusInd Bank is also way above the 40% average increase for the banking industry. RBI asked some state-run and private-sector banks to subscribe to IndusInd Bank's bulk deposit CDs, two sources from banks that have subscribed to these instruments said. The central bank did not immediately reply to a Reuters email seeking comment. The sources requested anonymity as they are not authorised to speak to media. IndusInd Bank had an overall deposit base of 4.09 trillion rupees as of December 2024 of which retail deposits accounted for 46%, according to its latest available data.
