Yes Bank has been placed under moratorium by the Reserve Bank of India. In fact, the entire top management of Yes Bank has been superseded and former SBI CFO, Prashant Kumar, will take over as the administrator of Yes Bank with immediate effect. SBI will lead a consortium of investors that will take a controlling stake in Yes Bank. It is clear that Yes Bank is emerging as a case of stressed bank and the RBI does not want to take any chances with crores of deposits in the bank. Of course, there will be limits on withdrawal up to Rs.50,000 from Yes Bank accounts till the first week of April.
SBI Cards IPO got a bumper response despite coming out with the issue at a time when markets have been in a state of turmoil. While the retail portion got oversubscribed by 2.50 times, the HNI portion got oversubscribed by 45 times. Even the portion reserved for employees get oversubscribed by 4.75 times. The institutional portion had closed on Wednesday with 57 times oversubscription. Both the shareholders of SBI Cards; SBI and Carlyle Group will be diluting their stake via OFS while the company will also raise around Rs.500 crore as a fresh issue. The total issue size was around Rs.10,354 crore.
A few days ahead of International Women’s day, Morningstar has brought out an interesting study on fund manager performance. According to the Morningstar study, women fund managers account for just about 13% of total AUM but have managed to give better returns than male fund managers. Funds managed by women have seen 78% outperformance over a 1 year period and a 90% outperformance over a 5-year period. However, there are only 28 women fund managers out of 352 fund managers and just Rs.3.59 trillion AUM out of the total AUM of Rs.28 trillion. Size effect could be one reason.
A day after the finance minister announced that bank mergers would be effective from April 01st 2020, 3 of the banks have gone ahead and announced the swap ratio. PNB will merge with OBC in the swap ratio of 1.15:1 and with United Bank of India in the swap ratio of 0.12:1. Union Bank will absorb Andhra Bank in the swap ratio of 0.325:1 and it will amalgamate Corporation Bank in the ratio of 0.33:1. Canara Bank will absorb Syndicate Bank in the ratio of 0.58:1. Only Indian Bank is yet to announce its swap ratio for Allahabad Bank. PSU banks are planning a strike across India on 27th March against this merger.
If you thought that Coronavirus pandemic was largely a Chinese phenomenon, then you will have to think again. According to estimates put out by WHO, nearly 80 countries across the world have been afflicted by the Coronavirus with countries like Italy and Iran being the worst affected. In a desperate bid to prevent the spread of the Coronavirus, Italy has already shut down all schools and universities. In the Middle East, Saudi Arabia has barred its citizens from making the pilgrimage to Mecca while Iran cancelled Friday prayers for the second week in succession. Italy has already reported over 3000 cases and more than 107 people have lost their lives. Nearly, 80% of the cases of Coronavirus outside of China were found in Italy, Iran and South Korea. Iran has reported 92 deaths and even the US had 11 deaths.
In a surprise move, the interest rates on the Employee Provident Fund (EPF) have been cut to 8.50%. This is the lowest level in the last seven years. Over the last few years, many banks have been asking the RBI to reduce the rates of interest on EPF, PPF and small savings as it was distorting the yield curve and making it impossible for banks to cut their deposit rates. This had been largely responsible for the weak transmission of rate cuts by banks. However, the move is expected to save Rs.700 crore for the government of India in the form of interest payouts. EPF yields are still very high on post tax basis.
