Suzlon Energy Faces Bankruptcy, Dilip Sanghvi Stares At Huge Loss, RBI Says Gross NPAs Could Rise Again

Gross NPAs likely to rise again, says RBI in its Financial Stability Report. Bank jobs lost worldwide reach highest point in four years. Renewable energy major Suzlon Energy heads to bankruptcy courts. Sun Pharma promoter Dilip Sanghvi stares at huge loss. As online-based discount brokers gain, traditional stockbrokers are left behind. EPFO's decision on pension commutation to be enforced from January 1st.

 

 

BANKS

Gross NPAs likely to rise again, says RBI in its Financial Stability Report.

A Long Road Ahead: Indian banks' Gross Non-Performing Assets (GNPA) ratio is likely to rise despite falling for the first time in seven years in March 2019, the RBI said in its half-yearly Financial Stability Report (FSR), released on Friday.

 

At the same time, the system has become more resilient thanks to recapitalisation programmes and measures taken by the Central Bank, the report argued.

 

But gross NPA ratio of banks may still increase - from 9.3% in September 2019 to 9.9% by September 2020 - “primarily due to changes in the macroeconomic scenario, a marginal increase in slippages, and the denominator effect of declining credit growth”, the FSR said. BS

 

You can read the RBI's Financial Stability Report here.

Bank jobs lost worldwide highest in four years.

Losing It: 2019 has not been kind to bank employees around the world. As institutions fight slowing economies and adapt digital technologies, banking jobs have become the victims.

 

The number of job cuts announced this year was the highest in four years. More than 50 lenders have announced plans to cut a combined 77,780 jobs, the majority of them in Europe. This number is the highest since 2015, when 91,448 lost their jobs. The actual number may be even higher since banks eliminate staff without disclosing their plans. ET Business

 

SEBI

Government to push ahead with plan to transfer SEBI's surplus to its accounts.

Money Switch: The government is reportedly looking to complete the transfer of 75% of market regulator SEBI's surplus to the Consolidated Fund of India before the unveiling of the upcoming Budget. Other financial sector regulators such as the Insurance Regulatory and Development Authority and the Pension Funds Regulatory and Development Authority could also be required to do so.

 

This surplus transfer plan was first revealed in the 2019 Budget, and it received some opposition from regulators on the grounds that it would hamper these institutions' independence. HT

Don't provide free trials of services, SEBI tells investment advisors.

Nothing in Life is Free: In a circular issued by SEBI, the regulator has barred Registered Investment Advisors (RIAs) from giving free trials of their services to customers or accepting part-payments for their services. It also directed RIAs to give advice after conducting risk profiling of clients. Livemint

 

SUZLON BANKRUPTCY

As Suzlon Energy faces bankruptcy, Dilip Sanghvi stares at huge loss.

In Dire Straits: Renewable power firm Suzlon Energy is reportedly heading for bankruptcy courts and Dilip Sanghvi, the billionaire promoter of Sun Pharmaceutical Industries, is staring at a huge loss.

 

Suzlon had failed to come up with a debt recast plan by the December-end deadline, bankers said.

 

Shanghvi, who had invested ?1,400cr ($196m) in picking up a 23% stake in the wind turbine maker in 2014 in his personal capacity, will be one of the top losers along with the Suzlon promoter, the Tanti family.

 

In the 2019 calendar year, the Suzlon Energy stock has lost 64% of its value. As of Friday, it was worth ?1,053cr ($147m). BS

 

Highway to Hell: Defaults, high debt, buyers backing out - how and why did Suzlon Energy reach this situation? Here's some background reading.

 

CHANGED DYNAMICS OF BROKING

As online-based discount brokers gain users, traditional stockbrokers are left in the dust.

Facing Extinction: Traditional stockbroking is a dying profession in India, having shrunk by almost three-quarters in the past few years as cheaper online competitors have grabbed market share. Besides online rivals, these brokerages have been hurt by the costs and efforts needed to meet stricter compliance and reporting obligations.

 

India had about 2,400 brokerages as of December 24. In March 2014, this number was more than 9,000. The decline has been intensified by the shuttering of 13 regional bourses, which forced about 3,000 brokers out of business between 2014 and 2017.

 

As Livemint notes, the emergence of discount online brokers has turned the industry into a business of high volumes and wafer-thin margins, prompting several large publicly traded broking firms to expand into lending, wealth management and even insurance.

 

This is epitomised by Zerodha, which boasts more than 1.5m clients and, in the year ended March, handled about 10% of India's stock trades.

 

FYI: Who exactly is a broker, how are they different from discount brokers, and how has the internet disrupted the brokerage business? Here's a refresher.

 

PERSONAL FINANCE

EPFO's decision to enforce pension commutation to be enforced from January 1st.

Pension Tension: In a move that could benefit 6.3L pensioners, the Labour Ministry will enforce the Employment Provident Fund Organisation's (EPFO) move to restore pension commutation or pre-withdrawal from January 1st.

 

Under the commutation, those who availed it (before it was withdrawn by the EPFO in 2009) cut their monthly pension by one-third for the next 15 years and the reduced amount was given in lump sum. After 15 years, pensioners would be entitled to get the full pension. Business Insider

How can you spot multibagger stocks?

Pension Tension: In a move that could benefit 6.3L pensioners, the Labour Ministry will enforce the Employment Provident Fund Organisation's (EPFO) move to restore pension commutation or pre-withdrawal from January 1st.

 

Under the commutation, those who availed it (before it was withdrawn by the EPFO in 2009) cut their monthly pension by one-third for the next 15 years and the reduced amount was given in lump sum. After 15 years, pensioners would be entitled to get the full pension. Business Insider

Why gold may be heading for a $250 rally.

Diamond in the Rough: Those who invest in stocks always have an eye out for multibagger stocks - those that give returns multiple times higher than the price they were bought for. Here are some factors to keep in mind when trying to judge if a certain stock will become a multibagger.

 

Golden Times: "History may not repeat itself but it definitely rhymes." If trends are any indication, gold may be heading for a trailblazing rally of at least $250, leading to $1,700-1,750 level. To know why, read this article.

FIN.

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