Kotak Mahindra Bank Ltd. plans to raise about $1 billion with a new share issue in a move that will strengthen its capital buffers and reduce the stake held by its wealthy founder, Bloomberg News reported. The Mumbai-based lender didn’t provide pricing details on the 65 million of new shares it said it will issue in a filing on Wednesday. However, under a regulatory formula, they should be priced around the level of the latest two-week average, which works out at about 1,184 rupees ($15).
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In the second week of April, deep into India’s initial 21-day lockdown to curtail the spread of the coronavirus, senior officials at Bajaj Finance Ltd. held a conference call, Bloomberg News reported. The prognosis wasn’t good. In just 10 days the keystone shadow lender had lost 350,000 customers and almost 50 billion rupees ($651 million) in assets under management. Small and medium enterprises were under strain and it was considering setting aside money for losses in case large borrowers went under.
India’s banks are freezing credit lines to shadow lenders as the coronavirus crisis shuts down commerce in Asia’s third-largest economy, but leaving this sector in the lurch risks wider financial contagion, Reuters reported. All major state-owned and private banks have stopped lending to non-banking financial companies (NBFCs) due to concerns about their financial health as businesses they lend to reel from the impact of the pandemic, four industry executives, who asked not to be named due to the sensitivity of the situation, told Reuters.
India’s central bank announced new measures to encourage lending to the country’s cash-starved borrowers by injecting $6.5 billion into the banking system, ordering lenders to freeze dividends and easing rules on bad loans, Bloomberg News reported. In another effort to strengthen the financial system’s response to the coronavirus-fueled slowdown, Reserve Bank of India Governor Shaktikanta Das said the central bank will provide 500 billion rupees ($6.5 billion) in a new round of Targeted Long-Term Repo Operations.
Realtors’ body Naredco on Thursday demanded a stimulus package of at least USD 200 billion to revive the Indian economy from the adverse impact of COVID-19 as well as suspension of insolvency law provisions for six months to prevent companies from becoming bankrput and acquired by foreign entities, The Financial Express reported.
A looming economic crisis triggered by the coronavirus pandemic is a chance for India to enact sweeping reforms to fix ailing sectors and attract more foreign investment to the country, Bloomberg News reported. That’s a call being made by a former central banker and an ex-government official, as well as financial market participants, who say India needs to liberalize and deepen its financial markets, and take policy steps to fix the banking and farm sectors.
The world’s largest lockdown is, as expected, taking a toll on the Indian economy. Fitch Ratings Inc. expects that India will grow only 2% in the current financial year, Bloomberg News reported in a commentary. That would be the lowest rate in decades, a level not seen since this country was closed-off socialist backwater. But everyone knows that fighting a pandemic is costly. What’s even more worrying is how the costs of a slowdown—the sudden pressure on incomes and demand, in particular—will widen pre-existing cracks in the Indian growth story.
India’s banks and shadow lenders face a surge in bad debts from the nationwide economic lockdown aimed at combating the coronavirus outbreak, risking a wave of corporate defaults, the Financial Times reported. Rating agencies and analysts are concerned the strict, 21-day lockdown imposed by Prime Minister Narendra Modi — which has shut down all but the most essential economic activity — has threatened the health of the banking sector, particularly the 10,000 or so less-regulated shadow lenders.
Moody’s Investors Service slashed the outlook for the Indian banking system to negative from stable citing disruptions to economic activity from the coronavirus pandemic that will worsen the ongoing slowdown and impair lenders’ asset quality, Bloomberg News reported. A deterioration in global economic conditions and a 21-day lockdown imposed by India will weigh on domestic demand and private investment, the ratings agency said in a statement Thursday.
India’s checkered history with foreign investors is making one of the biggest emerging markets look particularly vulnerable at a time when its need for overseas funding has never been clearer, Bloomberg News reported. Decades of semi-socialist, self-reliance based policies following independence left a legacy of ambivalence, or even skepticism, towards overseas capital. As recently as last year, plans for an inaugural offshore sovereign bond provoked a wave of controversy. That could all change now that India faces both a sharp economic slowdown and a rapid expansion in borrowing needs.