Category: Economy

Lakshmi Vilas Bank (LVB) is now amalgamated with DBS Bank India Limited (DBIL), the wholly owned subsidiary of Singapore-based DBS Group Holdings Ltd.

In a statement on Monday, DBS Bank said that the scheme of amalgamation is under the special powers of the Government of India and Reserve Bank of India under Section 45 of the Banking Regulation Act, 1949, India, and has come into effect on 27 November, 2020.

It added that the amalgamation provides stability and better prospects to LVB’s depositors, customers and employees following a period of uncertainty. The moratorium imposed on LVB was lifted from November 27, 2020 and banking services were restored immediately with all branches, digital channels and ATMs functioning as usual.

LVB customers can continue to access all banking services. The interest rates on savings bank accounts and fixed deposits are governed by the rates offered by the erstwhile LVB till further notice. All LVB employees will continue in service and are now employees of DBIL on the same terms and conditions of service as under LVB.

The DBS team is working closely with LVB colleagues to integrate LVB’s systems and network into DBS over the coming months, the statement said.

Once the integration is complete, customers will be able to access a wider range of products and services, including access to the full suite of DBS digital banking services which have won multiple global accolades, it added.

Moreover, the bank asserted that it is well-capitalised and its capital adequacy ratios (CAR) will remain above regulatory requirements even after the amalgamation.

Additionally, the DBS Group will inject Rs 2,500 crore into DBIL to support the amalgamation and for future growth. This will be fully funded from DBS Group’s existing resources.

DBS has been in India since 1994 and converted its India operations to a wholly owned subsidiary (DBIL) in March 2019.

Surojit Shome, CEO of DBS Bank India Limited, said, “The amalgamation of LVB has enabled us to provide stability to LVB’s depositors and employees. It also gives us access to a larger set of customers and cities where we do not currently have a presence. We look forward to working with our new colleagues towards being a strong banking partner to LVB’s clients.”

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Faster-than-anticipated economic recovery along with likely continuation of accommodative monetary stance will support the domestic indices’ expected northward trajectory during the week ahead.

However, spurts of likely profit bookings coupled with expensive propositions as well as any delay in anti-Covid vaccine rollout might arrest the potential up move.

“Equity markets could open higher on Tuesday, reflecting the positivity of the Q2 GDP numbers. Nifty continues to consolidate after reaching a high on Novmeber 25,” said Deepak Jasani- Head of Retail Research at HDFC Securities.

“An upward breach of 13,146 is necessary to expect more upsides while a downward breach of 12,833 could bring in more downsides and mean that a temporary top has been made on November 25.”

Last Friday, official data showed that India’s gross domestic product (GDP) contracted 7.5 per cent in the July-September period, as the economy rebounded from a record slump of 23.9 per cent in the previous quarter due to slowdown caused by the coronavirus pandemic.

This figure was higher than anticipated by the market.

Among sectors, automobile industry will be in focus during the holiday-shortened week, as the industry will divulge its sales performance during November.

The main festive season of 2020 ended last month and investors expect healthy sales performance from the sector.

“Going ahead, the overall structure of the market remains positive, but intermittent profit booking cannot be ruled out, given the sharp rally in the past few weeks,” said Siddhartha Khemka, Head of Retail Research, Motilal Oswal Financial Services.

“Auto companies will be in focus as November sales data will start coming from Tuesday, while banks or financials will be in focus as the RBI’s Monetary Policy is scheduled for Friday.”

The Reserve Bank’s MPC is scheduled to announce the last review for the calendar year 2020.

“The present liquidity glut, and the low-interest rates, will lead to improvements in the cost of funds for corporates and thereby their performance to a significant extent,” said Joseph Thomas, Head of Research – Emkay Wealth Management.

Market watchers opined that the RBI will maintain both repo rate and accommodative stance.

According to Vinod Nair, Head of Research at Geojit Financial Services: “Markets are awaiting outcome major events like RBI policy meeting, release of Manufacturing and Service PMI and banking business data which will be decisive factors driving the market in the upcoming week.”

The India’s benchmark equity indices, will be closed on Monday to mark Guru Nanak Dev’s birth anniversary.

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The total foreign direct investment (FDI) during the second quarter of financial year 2020-21 stood at $28.10 billion, out of which FDI equity inflows were $23.44 billion.

“This takes the FDI equity inflows during the financial year 2020-21 up to September 2020 to $30,004 million, which is 15 per cent more than the corresponding period of 2019-20,” said an official statement.

In rupee terms, the FDI equity inflows of Rs 2,24,613 crore are 23 per cent more than the last year.

August 2020 was a significant month when FDI equity inflow of $17.48 billion was reported in the country.

According to data from the Department for Promotion of Industry and Internal Trade (DPIIT), Mauritius and Singapore were the biggest sources of FDI in India with 29 per cent and 21 per cent contribution respectively.

The US, Netherlands and Japan followed with 7 per cent contribution each.

Among the sectors, services sector continued to lead with the highest share in FDI inflow. The sector, which includes financial, banking, insurance, outsourcing, R&D among others, received 17 per cent of the FDI equity inflow during the period under review.

Computer software and hardware segment got 12 per cent FDI share while the telecom sector received 7 per cent.

Among the states, Gujarat attracted the highest FDI equity inflow — 35 per cent of the overall funds coming in during April-September — followed by Maharashtra (20 per cent), Karnataka (15 per cent), and Delhi (12 per cent).

Commerce and Industry Minister Piyush Goyal tweeted: “Despite COVID, Foreign Direct Investment doubles year-on-year. Indicating global investors’ preference for India’s enabling environment under PM Narendra Modi, FDI increased from $14.06 billion to $28.1 billion in the July-September quarter.”

Inflow of foreign investments has been on the rise after the governments around the world, including in India, announced liquidity measures in the wake of the pandemic.

The Centre has also announced liberalising measures for FDI in several sectors, including contract manufacturing, coal mining, and defence that are likely to fetch in more investments.

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In a sudden turn of events, some hours before the amalgamation of the Lakshmi Vilas Bank (LVB) with DBS Bank India Ltd is to take effect, the Reserve Bank of India (RBI) gave a Rs 318.20 crore relief to DBS Bank.

The RBI wrote ti LVB’s Administrator on Thursday to write down Rs 318.20 crore worth of Unsecured Non-convertible Redeemable Fully Paid-up Basel III compliant Tier-2 Bonds before the scheme of amalgamation comes into effect on November 27.

The LVB had raised the money through Basel III Tier 2 bonds in three tranches.

The RBI cited the Information Memorandums of respective Basel III Tier 2 bonds issued by the LVB while communicating its decision to the LVB.

“If the relevant authorities decide to reconstitute the Bank or amalgamate the Bank with any other bank under Section 45 of the BR Act (Banking Regulation Act), such a bank shall be deemed as non-viable or approaching non-viability and both the pre-specified trigger and the trigger at the point of non-viability for write-down of the Bonds shall be activated. Accordingly, the Bonds shall be written-off before amalgamation/reconstitution in accordance with applicable rules,” the RBI told T.N. Manoharan, Administrator of the LVB.

According to the RBI, as Section 45 of the Banking Regulation Act has been invoked and the amalgamation scheme has been notified, the LVB is deemed to be non-viable or approaching non-viability and accordingly, the triggers for a write-down of Basel III Tier 2 bonds issued by the bank has been triggered.

“In light of the above provisions, such Basel III Tier 2 bonds would need to be fully written down before the amalgamation of the bank comes into effect,” RBI said in its letter.

The Central Government, in its notification, had written off the entire amount of the paid-up share capital and reserves and surplus, including the balances in the shares or securities premium account of the transferor bank and the delisting of the shares and debentures.

As a result, the shareholders of the LVB will not get anything for their shares.

Meanwhile, the shareholders of the 94-year-old Lakshmi Vilas Bank (LVB) have started knocking the doors of justice for a fair valuation of their bank, the amalgamation of which takes effect from Friday onwards.

On Thursday, Indiabulls Housing Finance Ltd, Kare Electronics and Development Pvt Ltd and others filed a writ petition in the Bombay High Court praying for a stay of the notification issued by the Central government for amalgamating the LVB with DBS Bank India Ltd, a subsidiary of DBS Bank, Singapore.

The petitioners will also make DBS Bank as a party to the case by amending their petition.

“The petitioners had prayed for a stay of the Central Government notified scheme of amalgamation of LVB with DBS Bank India. The other prayer is to quash the writing off of the entire entire amount of the paid-up share capital and reserves and surplus, including the balances in the shares or securities premium account of the transferor bank and the delisting of the shares and debentures,” Paras Parekh, Partner, Parinam Law Associates representing Indiabulls Housing, told IANS from Mumbai.

The Bombay High Court, admitting the writ petition, refused to stay the Central government’s notification amalgamating LVB with DBS Bank India, and fixed the next hearing for December 14.

The court said: “We are of the opinion, prima facie, that the petitioner’s claims being a monetary claim, can be considered at the time of disposal of the petitions.”

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More than half of the office-goers in India are willing to switch jobs if it meant they could work remotely, said a new survey on Thursday.

There has been a heightened interest in online learning since Covid-19 with 83 per cent of survey participants from India saying they are more interested in online learning/training, according to the research by Cloud software firm Salesforce.

“Amid the global pandemic, companies have been leveraging technology to pivot their businesses at hyperspeed. This new all-digital world poses an opportunity for business leaders to rethink how they not only connect with their customers, but also their employees,” Dulles Krishnan, Area Vice President, Salesforce India, said in a statement.

“By shifting our priorities on our employees, ensuring safety and reskilling for the future, we have the opportunity to use technology to make the future of work a more inclusive and resilient environment.”

This report surveyed 20,000 people across ten countries, including 4,000 people from India, focused on gaining insights about the participants’ perceptions of the future of work from around the world.

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Insights from the study revealed that remote work is a luxury not available for all and that working remotely will look different everywhere.

The pandemic has pushed companies to adapt to new realities that are radically transforming how they operate and serve both their employees and customers.

In fact, 79 per cent of the survey participants from India said technology should play a major role in workplace safety.

The survey showed that trust in business and government is significantly higher in India than the global population.

About 89 per cent of the survey participants from India said they trust businesses to create a better future.