SEBI has indicated that it could seek a forensic audit in the ICICI Bank conflict of interest case, with respect to the loans given to Videocon. This will also cover the disclosures made by Chanda Kocchar at the time of taking over as the CEO of the company and whether the conflict of interest was actually disclosed by her or not. The Videocon case has come back into public attention after a whistleblower had alleged that the loan write-off to the Videocon group was part of a Sweetheart deal between the bank and the CEO’s family. ICICI Bank shares have correctly sharply in the recent past!
FPIs have withdrawn nearly Rs.8000 crore from the Indian markets in the first 7 trading session of April. The full month figure could be substantially higher. In fact, there was almost equal withdrawal from equities and debt. There could be two reasons for this withdrawal. Firstly, the trade war between the US and China could be causing the jitters for the foreign investors. Secondly, post the rate hike by the Fed in March, most traders are betting on four rate hikes in the year 2018. That could be one of the reasons why risk-off money is beginning to exit Indian government debt.
With respect to the Nirav Modi default case, PNB has now moved a recovery writ in a Hong Kong court. Additionally, PNB has also moved the Insolvency Authority in the US where Nirav Modi had filed for bankruptcy without naming PNB as one of its creditors. Nirav Modi had cheated PNB of Rs.13,000 crore and absconded to a foreign country. Repeated summons by the CBI to bring him back were to no avail. China has already stated that Hong Kong was free to arrest Nirav Modi under their extant laws, since it was an autonomous Specially Administered Region (SAR) anyways.
After the embarrassment at Doklam for both the countries, China appears to be veering towards smoking the peace pipe with India. The reasons are not far to seek. China expects a prolonged trade war with the US and will surely counting on countries like India to mitigate that impact. While Modi will meeting Xi Jinping in Beijing this summer, it is likely to be preceded by a series of high level meetings by Sushma Swaraj and Nirmala Sitharaman with their counterparts in China. From Modi’s standpoint, the last thing he will want is an uncalled skirmish at the LAC ahead of crucial general elections.
HDFC Bank continued to maintain its 20% growth in net profits for the fourth quarter ended March even as it’s managed to keep its asset quality under a tight leash. However, the only disappointment was that the loan growth had fallen to a 5-quarter low. Both the revenues and the net profit for the quarter were slightly below the street consensus but that is understandable at a time when the entire sector is under tremendous stress. Gross NPAs at 1.32% was still at an extremely comfortable level thanks to its predominantly retail loans portfolio. The net interest margins of the bank stayed unchanged at 4.3%. The deposit growth at 22.5% was higher than the loan growth rate of 18.7%. During the quarter, HDFC Bank became the first private bank to cross Rs.10 trillion of assets.
The pressure of growth appears to be telling on LIC as private insurers have grown at nearly twice the rate of LIC in the financial year 2018. During the year, LIC did come under a lot of flak as it was forced to bail out a variety of PSU IPOs at aggressive prices and also finance the aggressive expansion plans of the Indian Railways. While LIC’s premium income grew by 8%, the private insurers saw premium income grow by 17% during the year. LIC’s market share fell by nearly 167 basis points to an all time low of 69.4%. LIC has maintained its lead due to its large renewal base compared to private players.
