Telugu Super News,Mumbai,Febraury 13th,2023: HDFC Bank has launched a pilot in partnership with Crunchfish, to test offline digital payments for merchants and customers under the RBI’s Regulatory Sandbox Program, known as ‘OfflinePay’.
HDFC Bank’s ‘OfflinePay’ will enable customers and merchants to make and receive payments even when there is no mobile network. HDFC Bank is the first bank in the industry to launch a digital payment solution in a completely offline mode. This can boost adoption of digital payments in smaller towns and rural areas with poor network connectivity.
Even in urban centres, it can enable cashless payments during large public events, fairs & exhibitions despite network congestion; underground metro stations, parking lots, & retail stores with network blind spots; and even in airplanes, sea-ferries, and trains with no network.
HDFC Bank has been working with the regulator to pilot offline digital payments under the Payments cohort of RBI’s Regulatory Sandbox program. In September 2022, RBI approved HDFC Bank’s application, in partnership with Crunchfish, to access the Regulatory Sandbox. Crunchfish Digital Cash AB is a subsidiary of Crunchfish AB, a publicly listed company on Nasdaq First North Growth Market in Stockholm, Sweden. The pilot, if successful, will provide the basis for RBI’s guidance and regulatory support in providing offline digital payments based on ‘Crunchfish Digital Cash’ platform to the payment ecosystem of India.
Digital Payment typically requires one party (either the customer or the merchant) to be online. This limits the usage of such payments to areas with good data connectivity. HDFC Bank’s ‘OfflinePay’ brings in the unique capability where both customer and merchant can be fully offline and yet do the transaction. Merchants can receive an instant payment confirmation even in an offline mode. As soon as either the merchant or the customer goes online, the transaction gets settled.
“HDFC Bank is pleased to work under regulator’s guidance and partner with Crunchfish Digital Cash to launch ‘OfflinePay’, an industry-first digital solution. This innovation will accelerate financial inclusion in remote areas by enabling adoption of digital payments as both merchants and customers can do transactions without any network. HDFC Bank is committed to bring more digital innovations and payment solutions to its customers and merchants,” said Parag Rao, Country Head for Payments Business, Consumer Finance, Digital Banking, and Marketing at HDFC Bank.
As of now, HDFC Bank would roll-out this service as part of a limited pilot for 4 months in 16+ cities & towns across India. Bank would be enabling merchants and users of even other banks to experience ‘OfflinePay’ via an invitation link. During the pilot, the offline transaction amount would be limited to up to Rs. 200 per txn. To showcase off-us transactions with other bank’s customers and merchants, HDFC Bank has partnered with IDFC First Bank. For building customer & merchant apps for pilot, HDFC Bank had enrolled M2P Fintech Pvt Ltd.
Telugu Super News,Bengaluru, February 7,2023: PhonePe, India’s largest digital payment company, today announced that it has launched support for ‘UPI international’ payments. This feature allows PhonePe’s Indian users traveling abroad to instantly pay foreign merchants using UPI. The current launch supports all international merchant outlets in UAE, Singapore, Mauritius, Nepal and Bhutan that have a local QR code. Users will be able to make payments in the foreign currency directly from their Indian bank- just like they do with international debit cards. PhonePe is the first fintech app to launch this feature in India.
UPI international is designed to facilitate safe and easy transactions for millions of Indians traveling overseas. Historically, Indian customers needed to use a foreign currency, or their credit or forex cards to pay at international merchant outlets. With this feature, they can now use their Indian Bank account to pay using UPI. Over the course of this year, NPCI in collaboration with NIPL (NPCI International Payments Limited) plans to roll out UPI International to more countries, while also enabling greater merchant acceptance in the regions where this feature is currently live.
Speaking on the development, Rahul Chari, CTO and Co-Founder of PhonePe said, “Over the past six years, all over India we have been lucky to experience the UPI payments revolution transforming our daily lives. UPI international is the first major step in letting the rest of the world experience UPI too. I am sure this launch will prove to be a gamechanger and will completely transform the way Indians traveling overseas pay at merchant outlets abroad. PhonePe has always prided itself in being the first TPAP to take new UPI features to the market, and this time is no different. We are glad that PhonePe is leading this change. The entire world needs to experience UPI!”
PhonePe users can activate their UPI linked bank account for UPI international at the merchant location, or prior to their international trip, via the PhonePe App. The flow is secure and will require the customer to enter their UPI pin in order to activate the service.
Telugu Super News,New Delhi, February 6, 2023: Airtel Payments Bank today announced the launch of its current account – BizKhata, which comes with unlimited transactions* and instant activation for small merchants and business partners across the country.
A large number of small business owners continue to use savings accounts for business purposes as they cannot meet the minimum balance requirement of the business accounts. This makes the process of differentiating personal and business transactions cumbersome.
Airtel Payments Bank’s BizKhata has been designed specifically for these small merchants and business owners. It brings all business transactions to one platform and allows them to maintain clear records while enjoying multiple banking benefits.
Unlimited transactions* – Do Unlimited credit and debit transactions.
Instant Activation – Customer can start using the account within 5 minutes of opening it.
Zero Minimum Balance – The account has no minimum balance condition.
Safe and Seamless Payment digitization– Business owners can receive and make online payment transfers to any bank across India through IMPS, UPI, NEFT and IFT. In addition, the account comes linked to a QR code to receive payments from any UPI app.
Auto Sweep-out – Day-end balance above INR 200,000 will be auto sweep-out to a current account with the partner bank. With a single click, the user can transfer the sweep amount back to the business account.
One-click transaction history – Business owners can download the transaction history with a single click and reconcile transactions.
The current account solution will be available to existing and new merchants and business partners of Airtel Payments Bank. A business owner can easily open this account within 5 minutes with biometric authentication and minimal paperwork.
Ganesh Ananthanarayanan, Chief Operating Officer of Airtel Payments Bank, said, “At Airtel Payments Bank, we aim to make banking accessible and simple. Our research reflected that fear of high charges levied on not meeting the minimum balance requirement and going beyond the defined number of transactions is a setback for small business owners to start a business account. With this insight, we created BizKhata account to enable and offer the benefits of business banking to small business owners. This account is an important addition to our existing portfolio of business products.”
Telugu Super News,Bengaluru, February 3, 2023: Ujjivan Small Finance Bank ltd. [BSE: 542904; NSE: UJJIVANSFB], today announced its financial performance for the nine month and quarter ended December 31, 2022
Summary of Ujjivan Small Finance Bank Business Performance – Q3 FY 2022-23
v Gross loan book at ₹21,895* crore up 33% Y-o-Y and 5% Q-o-Q
v Disbursements sustaining ₹4,000+ crore mark – ₹4,838 crore in line with Q3FY22; Dec’22 witnessed highest ever disbursement
v Deposits at ₹23,203 crore as of Dec’22 up by 49% Y-o-Y; Retail deposits at 62% of total deposits against 53% as of Dec’21; CASA ratio at 26.2% in Dec’22 vs 26.5% in Dec’21. Healthy retail liability customer acquisition
v Continued traction on Collections with ~100% efficiency in Dec’22; NDA collection consistently at ~100%
v Portfolio at risk at 4.9% as of Dec’22* vs 6.1% as on Sep’22
v GNPA/ NNPA declined to 3.4% / 0.05%#* as of Dec’22 against 4.4% / 0.04%#* respectively as of Sep’22; total of ₹ 179 crore written-off in Q3FY23; Provision coverage ratio as on Dec’22 is 99%#
v Substantial reduction in restructured book; constitutes 1.4% of gross loan book* with provision cover of 64% and collection efficiency of 98% in Dec’22
v Net Interest Income of ₹697 crore up 54% Y-o-Y; Net interest margin at 9.4%* in Q3FY23 against 9.1% in Q3FY22
v Operating expenses to average assets at 6.2%; Cost to Income ratio at 53.5% in Q3FY23 vs 72% in Q3FY22
v PPoP at ₹389 crore vs ₹ 154 crore in Q3FY22; PAT of ₹293 crore vs ₹(34) crore Y-o-Y
v Capital adequacy ratio at 26.02% with Tier-1 capital at 22.84%; Provisional LCR at 198% as of Dec’22
Mr. Ittira Davis, MD & CEO, Ujjivan Small Finance Bank said, “Q3FY23 was another successful quarter in a row with our balance sheet size crossing the 30K mark this quarter. Overall disbursements for the quarter remained strong driving 5% Q-o-Q growth in gross loan book*. Deposit growth outpaced assets growth taking out CD ratio toward more comfortable levels. We continued to expand our physical presence; this quarter we added 8 branches and also entered into a new state – Telangana. We will look to add few more branches in Q4 and 50-70 in FY24. We would continue to leverage our digital capabilities in addition to brick and mortar. Our mobile application “Hello Ujjivan” will help us bring more of our customers into digital ecosystem. Also, we continue to expand our product suite to be more relevant to our target customers and have larger share of their wallet. Through our wider presence, product suite and services, we not only look to strengthen relationship with our existing base of 73 lakh customers, but also be acquiring new relationships.
Update on Reverse Merger: On February 01, 2023, we have received the NOC from RBI; the process is on track and we believe to complete the reverse merger by Sep’23
FY23, continue to be a good quarter in multiple ways as we pulled back from a rough patch; lower credit cost and higher bad-debt recoveries added to the tailwind. Going ahead while credit cost would normalise, our underlying business remains strong and poised to grow at a healthy rate. Overall, we remain confident of the business growth and our journey towards becoming a leading mass-market bank.”
Telugu super News, Hyderabad,January 17, 2023:The Board of Directors of HDFC Bank Limited approved the Bank’s (Indian GAAP) results for the quarter and nine months ended December 31, 2022, at its meeting held in Mumbai on Saturday, January 14, 2023. The accounts have been subjected to a ‘Limited Review’ by the statutory auditors of the Bank.
STANDALONE FINANCIAL RESULTS:
Profit & Loss Account: Quarter ended December 31, 2022
The Bank’s net revenue, grew by 18.3% to ₹ 31,487.7 crore for the quarter ended December 31, 2022 from ₹ 26,627.0 crore for the quarter ended December 31, 2021. Excluding net trading and mark to market income, the net revenue grew by 22.1% over the quarter ended December 31, 2021.
Net interest income (interest earned less interest expended) for the quarter ended December 31, 2022 grew by 24.6% to ₹ 22,987.8 crore from ₹ 18,443.5 crore for the quarter ended December 31, 2021. Core net interest margin was at 4.1% on total assets, and 4.3% based on interest earning assets.
The four components of other income for the quarter ended December 31, 2022 were fees & commissions of ₹ 6,052.6 crore (₹ 5,075.1 crore in the corresponding quarter of the previous year), foreign exchange & derivatives revenue of ₹ 1,074.1 crore (₹ 949.5 crore in the corresponding quarter of the previous year), net trading and mark to market income of ₹ 261.4 crore (₹ 1,046.5 crore in the corresponding quarter of the previous year) and miscellaneous income, including recoveries and dividend, of ₹ 1,111.8 crore (₹ 1,112.5 crore in the corresponding quarter of the previous year). Other income, excluding net trading and mark to market income, grew by 15.4% over the quarter ended December 31, 2021.
Operating expenses for the quarter ended December 31, 2022 were ₹ 12,463.6 crore, an increase of 26.5% over ₹ 9,851.1 crore during the corresponding quarter of the previous year. The cost-to-income ratio for the quarter was at 39.6%.
Pre-provision Operating Profit (PPOP) was at ₹ 19,024.1 crore. PPOP, excluding net trading and mark to market income, grew by 19.3% over the quarter ended December 31, 2021.
Provisions and contingencies for the quarter ended December 31, 2022 were ₹ 2,806.4 crore as against ₹ 2,994.0 crore for the quarter ended December 31, 2021.
The total credit cost ratio was at 0.74%, as compared to 0.94% for the quarter ending December 31, 2021.
Profit before tax (PBT) for the quarter ended December 31, 2022 was at ₹ 16,217.6 crore. After providing ₹ 3,958.1 crore for taxation, the Bank earned a net profit of ₹ 12,259.5 crore, an increase of 18.5% over the quarter ended December 31, 2021.
Balance Sheet: As of December 31, 2022
Total balance sheet size as of December 31, 2022 was ₹ 2,295,305 crore as against ₹1,938,286 crore as of December 31, 2021, a growth of 18.4%.
Total Deposits showed a healthy growth and were at ₹ 1,733,204 crore as of December 31, 2022, an increase of 19.9% over December 31, 2021. CASA deposits grew by 12.0% with savings account deposits at ₹ 535,206 crore and current account deposits at ₹ 227,745 crore. Time deposits were at ₹ 970,253 crore, an increase of 26.9% over the corresponding quarter of the previous year, resulting in CASA deposits comprising 44.0% of total deposits as of December 31, 2022.
Total advances as of December 31, 2022 were ₹ 1,506,809 crore, an increase of 19.5% over December 31, 2021. Gross of transfers through inter-bank participation certificates and bills rediscounted, total advances grew by 23.6% over December 31, 2021. Domestic retail loans grew by 21.4%, commercial and rural banking loans grew by 30.2% and corporate and other wholesale loans grew by 20.3%. Overseas advances constituted 2.8% of total advances.
Nine months ended December 31, 2022
For the nine months ended December 31, 2022, the Bank earned a total income of ₹ 138,949.8 crore as against ₹ 116,177.2 crore in the corresponding period of the previous year. Net revenues (net interest income plus other income) for the nine months ended December 31, 2022 were ₹ 85,974.1 crore, as against ₹ 75,009.7 crore for the nine months ended December 31, 2021. Net profit for the nine months ended December 31, 2022 was ₹ 32,061.3 crore, up by 19.2% over the corresponding nine months ended December 31, 2021.
Capital Adequacy:
The Bank’s total Capital Adequacy Ratio (CAR) as per Basel III guidelines (including profits for the nine months ended December 31, 2022) was at 19.4% as on December 31, 2022 (19.5% as on December 31, 2021) as against a regulatory requirement of 11.7% which includes Capital Conservation Buffer of 2.5%, and an additional requirement of 0.2% on account of the Bank being identified as a Domestic Systemically Important Bank (D-SIB). Tier 1 CAR was at 17.2% as of December 31, 2022 compared to 18.4% as of December 31, 2021. Common Equity Tier 1 Capital ratio was at 16.4% as of December 31, 2022. Risk-weighted Assets were at ₹ 1,536,272 crore (as against ₹ 1,267,426 crore as at December 31, 2021).
NETWORK
As of December 31, 2022, the Bank’s distribution network was at 7,183 branches and 19,007 ATMs / Cash Deposit & Withdrawal Machines (CDMs) across 3,552 cities / towns as against 5,779 branches and 17,238 ATMs / CDMs across 2,956 cities / towns as of December 31, 2021. 51% of our branches are in semi-urban and rural areas. In addition, we have 15,815 business correspondents, which are primarily manned by Common Service Centres (CSC). Number of employees were at 166,890 as of December 31, 2022 (as against 134,412 as of December 31, 2021).
ASSET QUALITY
Gross non-performing assets were at 1.23% of gross advances as on December 31, 2022 (1.00% excluding NPAs in the agricultural segment), as against 1.23% as on September 30, 2022 (1.03% excluding NPAs in the agricultural segment), and 1.26% as on December 31, 2021 (1.04% excluding NPAs in the agricultural segment). Net non-performing assets were at 0.33% of net advances as on December 31, 2022.
SUBSIDIARIES
The Bank’s subsidiary companies prepare their financial results in accordance with the notified Indian Accounting Standards (‘Ind-AS’). The Bank for the purposes of its statutory compliance prepares and presents its financial results under Indian GAAP. Hence the Bank’s subsidiary companies, for the purposes of the consolidated financial results of the Bank, prepare ‘fit-for-consolidation information’ based on the recognition and measurement principles as per Indian GAAP. The financial numbers of the Bank’s subsidiary companies mentioned herein below are in accordance with Ind-AS.
HDFC Securities Limited (HSL) is amongst the leading retail broking firms in India. As on December 31, 2022, the Bank held 95.6% stake in HSL. For the quarter ended December 31, 2022, HSL’s total revenue was at ₹ 504.9 crore, as against ₹ 535.6 crore for the quarter ended December 31, 2021. Profit after tax for the quarter was at ₹ 203.2 crore, as against ₹ 258.0 crore for the quarter ended December 31, 2021.
As on December 31, 2022, HSL had 210 branches across 147 cities / towns in the country.
HDB Financial Services Limited (HDBFSL) is a non-deposit taking non-banking finance company (‘NBFC’) offering wide range of loans and asset finance products to individuals, emerging businesses and micro enterprises. As on December 31, 2022, the Bank held 94.9% stake in HDBFSL.
For the quarter ended December 31, 2022, HDBFSL’s net revenue was at ₹ 2,233.4 crore as against ₹ 1,981.6 crore for the quarter ended December 31, 2021, a growth of 12.7%. Profit after tax for the quarter ended December 31, 2022 was ₹ 501.2 crore compared to ₹ 304.0 crore for the quarter ended December 31, 2021.
The total loan book was ₹ 65,103 crore as on December 31, 2022. Stage 3 loans were at 3.73% of gross loans. As on December 31, 2022, total CAR was at 20.5% with Tier-I CAR at 16.0%.
As on December 31, 2022, HDBFSL had 1,421 branches across 1,020 cities / towns.
CONSOLIDATED FINANCIAL RESULTS
The consolidated net profit for the quarter ended December 31, 2022 was ₹ 12,698 crore, up 19.9%, over the quarter ended December 31, 2021. Consolidated advances grew by 19.2% from ₹ 1,312,142 crore as on December 31, 2021 to ₹ 1,563,799 crore as on December 31, 2022.
The consolidated net profit for the nine months ended December 31, 2022 was ₹ 33,403 crore, up 21.0%, over the nine months ended December 31, 2021.
Note:
₹ = Indian Rupees
1 crore = 10 million
All figures and ratios are in accordance with Indian GAAP unless otherwise specified.
Telugu Super News,India, January 9,2023: HDFC ERGO General Insurance Company, a leading general insurance company of India, recently conducted various IEC (Information, Education & Communication) activities and celebrated Crop Insurance Week to spread awareness on Pradhan Mantri Fasal Bima Yojana (PMFBY) Scheme.
India is one of the major players in the agriculture sector worldwide and as per IBEF’s (India Brand Equity Foundation) report, agriculture is the primary source of livelihood for about 58% of the country’s population. Owing to such large dependency on the agriculture sector, crop insurance becomes a vital aspect to secure the livelihoods of the dependent farmers and maintain healthy GDP growth of the country.
HDFC ERGO’s crop insurance week covered various facets of the scheme such as the enrollment process, claim procedure, grievance redressal, etc; across 66 locations of 9 states including – Assam, Himachal Pradesh, Karnataka, Maharashtra, Odisha, Rajasthan, Tamil Nadu, Tripura, and Uttar Pradesh. 2+ lakhs farmers participated in various activities, spanning across 7 days.
Mr. Anuj Tyagi, Deputy Managing Director, HDFC ERGO General Insurance, said, “While India is a global powerhouse of agriculture, the sector is highly vulnerable to risks like unpredictable climate, pests, etc. PMFBY helps in mitigating the financial risks faced by farmers and aids in stabilizing their income. In our endeavour to reach the last-mile customers, we at HDFC ERGO are proud to partner with the government’s mission of empowering the feeding hands of the country through awareness drives around PMFBY.”
The awareness program was driven through various modes including –
Cultural touch points like dance, nukkad natak, etc.
Vans, Tractors and Auto Rickshaw rallies
Fasal Bima Pathshaala, including exclusive Pathshalas for women
Collateral distribution in seven regional languages
Telugu Super News,India, 2023: HDFC Bank, India’s largest private sector bank, is partnering with Microsoft in the next phase of its digital transformationjourney and unlocking business value by transforming the application portfolio, modernizing the data landscape and securing the enterprise with Microsoft Cloud.
HDFC Bank as a part of its Future Ready strategy is developing in house IPs as well as partnering with several companies including FinTechs’ to co -create technology IPs.
Thebank will leverage Microsoft Azure to consolidate and modernize its enterprise data landscape through a Federated Data Lake to scale its information management capabilities across enterprise reporting, and advanced analytics using artificial intelligence.
Built on Microsoft Azure stack, the solution will enable the bank to democratize and monetize its data landscape catering to several business units,spanning multiple systems, reports and processes. The solution powered by its unified architecture, collaborative engineering environment, industry-leading security andecosystem of AI/ML based deep learning capabilities.
In addition, the Bank will also leverage Microsoft Power Platform’s industry-leading low code, no code capabilities to set up an App Innovation and Automation Factory. The App Factory will enable the Bank to migrate, modernize and transform its application portfolio.
“Our partnership with Microsoft is a part of our technology transformation agenda by investing in running the bank as well as building the bank of the future. At the heart of this is the ability to offer a neo banking experience to our customers that is second to none. We are doing this by investing in proprietary IP as well through tie ups like these,” said Ramesh Lakshminarayanan, Group Head – Information Technology and Chief Information Officer, HDFC Bank.
Sashi Sreedharan, Managing Director Microsoft India said,“We are delighted to be part of HDFC Bank’s digital transformation journey and to partner with them to create best-in-class products and services. These products and services will adhere to strict security and compliance standards for customers by leveraging Microsoft Cloud Platform and technologies. The partnership will also advance the bank’s digital workplace transformation with Microsoft 365 and will significantly enhance customer and employee experience”.
HDFC Bank will also leverage Microsoft 365, to adopt a modern, integrated and secure Digital Workplacecovering three critical areas of transformation – employee collaboration, app modernization and secureremote work. Further, HDFC Bank has embedded Microsoft Security solutions to seamlessly enable secure hybrid work for its employees.
Telugu super news,India, December 20,2022: HDFC Bank announced that it has opened 100 new branches across India. The new branches were opened in 83 cities/towns spread across 15 states and Union Territories. Nearly 50% of these branches are in semi-urban and rural geographies.
The new branches were digitally launched by the bank’s MD and CEO, Mr. SashidharJagdishan. Senior bank officials from Madhya Pradesh were also present.
Commenting on the new branches, Mr. Arvind Vohra, Group Head – Retail Branch Banking, HDFC Bank, said: “We are committed to serve our customers through a combination of physical branch units and digital banking services. We will continue to open more branches in coming months, making quality banking products and services available across the country.”
The bank has opened 425 retail branches and four digital banking units in the current financial year. At the end of December 15, 2022, the bank’s distribution network comprised of 6,762 retail branches, four digital banking units, and 17,076 ATMs across 3,279 cities/towns.
HDFC Bank’s expanded distribution network is expected to support the growth across its businesses and will help the bank in serving its customers across the country.
In 2021, HDFC Bank had unveiled organizational changes under ‘Project Future Ready’ to power the next wave of growth. The bank continues to strengthen its execution muscle across three key areas: (a) Business Verticals, (b) Delivery Channels, and (c) Technology/Digital. The continued expansion of its branch network will enable the bank to capitalize on the opportunities across customer segments.
Telugu super news,India 2022: HDFC Bank today announced the signing of a Memorandum of Understanding with Lawrencedale Agro Processing India (LEAF), an integrated full-stack ag-tech solutions provider, to support and engage more deeply with the farming community. The Bank will extend its specialised services and facilities to farmers, agri-producers, agri-preneurs and other rural communities.
With the MoU, HDFC Bank will work together with LEAF Farmers Network (LFN) in the operational areas under LEAF; primarily Andhra Pradesh, Karnataka, and Tamil Nadu. This agreement is signed to expand the financial accessibility and inclusivity of farmers and the scope of the Farmer Producer Organization (FPO) ecosystem. Over 4 Lakh farmers across the three states are expected to benefit from this association.
The MoU was signed by Mr. Anil Bhavnani, Sr Executive Vice President, and Head Rural Banking, RBB, HDFC Bank and, Mr. Palat Vijayaraghavan, Founder & CEO, Lawrencedale Agro Processing India (LEAF), in the presence of Ms. Vandita Shively, Go-To-Market Strategy, Lead, HDFC Bank.
LEAF has also partnered with Mastercard to launch LFN (LEAF Farmers Network). This partnership will transform the lives of Indian farmers by leveraging technology aided by human intervention to solve multiple challenges of transparency in India’s rural ecosystem. HDFC Bank will also leverage on this relationship by getting into an agreement with LEAF.
“Our partnership with LEAF will create great outcomes. It will improve and provide financial access and inclusion to the entire rural ecosystem, drive impact and create shared success”, said Mr. Anil Bhavnani, Sr Executive Vice President, and Head Rural Banking, RBB, HDFC Bank.
“Our mission at LEAF is to bring about positive impact to millions of marginalized, small land-hold farmers in India. Majority of our LEAF Farmers Network (LFN) are pre-dominantly located in the interior rural belts where there is abundance of fertile farming lands. HDFC Bank is one of the largest banking institutions in the country and their growing presence in the rural and semi urban belts makes them the perfect player to partner with. We are thrilled to partner with HDFC Bank in our joint effort of promoting the upliftment of the rural economy”, said Mr. Palat Vijayaraghavan, Founder & CEO, Lawrencedale Agro Processing India (LEAF).
RBI Policy Review: Not Backing Down The RBI policy announcement today was in line with expectations with the central bank raising rate by 35bps to 6.25% and keeping the policy stance unchanged at “withdrawal of accommodation”. The policy announcement today signalled that more rate hikes are in the offing. We expect the terminal rate to be close to 6.5-6.75% in this cycle.
More hawkish than expected: However, the policy tone was distinctly more hawkish than expected. When a central bank combines its sanguine view on growth with continued concerns on inflation – particularly the persistence in core inflation – it suggests that it is prepared to continue its fight against inflation and has the space and willingness to raise rates further. Although, in the post policy press conference, the Deputy Governor did mention that the step down in the rate hike quantum is a signal towards the fact that “50bps” rate hikes are perhaps behind us.
Inflation battle continues: The central bank emphasized that it is not ready to let up its inflation battle and aims to bring down inflation below 6% in the near term and then closer to 4% over the medium term. The RBI projects inflation to remain above its target even in Q2 FY24 at 5.4% as per its latest forecasts.
Wean-off the liquidity overhang: There were other signs in the governor’s statement that suggested that tightness in financial conditions could intensify going forward. While the RBI continued to re-iterate that it would continue to manage liquidity conditions through fine tuning operations, it cautioned markets to wean themselves off the surplus liquidity overhang and not take it for granted.
Rupee defence? Today’s policy announcement does provide a soft support for the rupee ahead of the Fed meeting next week and can be viewed perhaps as an attempt by the RBI to continue aligning itself with the still hawkish G7 central banks. Furthermore, the RBI’s continued emphasis on the factors that lend support to the rupee, signals its preference for a stable rupee going forward implying intervention on both sides of the market to keep it range bound into 2023.
Stance unchanged: The RBI justified keeping it stance unchanged at “withdrawal of accommodation” as liquidity surplus remains in surplus and the real policy rate remains negative. Despite the expectation that real positive rates are likely to move into the positive zone in the months ahead, perhaps the RBI could look at the absolute gap (aiming for it to be similar to what it was in the previous rate hike cycle) and future risks on inflation and growth before changing their stance. So, a change is stance in the February policy is still perhaps not a done deal. TREASURY RESEARCH 7 Dec 2022 econresearch@hdfcbank.com Classification – Public Classification – Public
Macro forecasts: In terms of forecasts, GDP growth was revised down marginally by 20bps to 6.8% for FY23, although the central bank showed comfort around the current growth momentum. On inflation, the full year figure was kept unchanged at 6.7%.
MPC voting not unanimous: The MPC decision was not unanimous with Prof Jayanth Varma dissenting on the quantum of rate hike while two members – Dr Ashima Goyal and Prof Jayanth Varma – voting against the unchanged stance decision. Market reaction: The 10-year yield rose to 7.30% (post the policy announcement) vs. yesterday’s closing level of 7.249% as the policy tone was more hawkish than expected. We expect the 10-year paper to trade closer to 7.25-7.35% in the near-term. The Fed policy meeting next week could be the next trigger for any level adjustments in the range.
On the FX front, the USD/INR was broadly flattish trading at 82.47 at the time of writing. The rupee has come under pressure this week on account of a dollar index recovery and foreign outflows. We expect the USD/INR pair to continue to trade between 82-83 levels in the near term as global risks continue to remain elevated. The Specifics: Inflation: The RBI retained its CPI inflation forecast at 6.7% for FY23 assuming average crude oil price (Indian basket) at USD 100 pbl, with risks evenly balanced.
On a quarterly basis, inflation was revised up by 20 bps for Q3 FY24 and by 10 bps for Q4 FY23. Our View: We expect CPI inflation to moderate to 6.26% in November 2022 on account of a sequential moderation in food prices and base effect. We expect inflation to remain above the RBI’s upper band of 6% until Jan 2023. For the full year, we expect CPI Inflation to average 6.7% in FY23. Inflation Projections %YoY Q3 FY23 Q4 FY23 FY23 Q1 FY24 Q2 FY 24 RBI (September forecast) 6.4 5.8 6.7 5.0 – RBI (December forecast) 6.6 5.9 6.7 5.0 5.4 HDFC Bank (Forecast) 6.4 5.9 6.7 4.8 5.1 Source: RBI and HDFC Bank Growth Outlook: The RBI lowered its growth forecast by 20 bps to 6.8% for FY23 (from 7.0% earlier).
The RBI expects investment to pick up with support from government capex and strengthening bank credit. On the consumption side, rebound in the contact intensive sector and improvement in business & consumer sentiment is likely to support urban consumption. That said, the RBI continues to see spill econresearch@hdfcbank.com Classification – Public Classification – Public overs from prolonged geo-political tension, tightening global financial conditions and slowing external demand as key risks to the growth.
Our view: We expect GDP growth of 6.8% in FY23 and expect growth in Q3 & Q4 to be between 4-4.5%. For FY24, we expect GDP growth of 6%, with downside risks to our forecasts. There are risks stemming from the slowdown in global growth and impact of inflation and tighter financial conditions on the consumption recovery. Growth forecast Source: RBI and HDFC Bank Additional Measures: SLR Holdings in Held to Maturity (HTM) category: The RBI has extended the dispensation of enhanced HTM limit of 23% up to March 31, 2024, to provide flexibility to banks in managing their investment portfolios.
Extension of Bank’s HTM limits will be restored to 19.5% from 23% in a phased manner starting from the quarter ending June 30, 2024. Hedging of Gold in the International Financial Services Centre (IFSC): Resident entities will now be permitted to hedge their gold price risk on recognized exchanges in the IFSC. The RBI raised the policy rate by 35 bps to 6.25% System liquidity surplus rose from November lows. As of 6th December, system liquidity surplus stood at INR 1.72 lakh Cr Source: RBI, CEIC, HDFC Bank. Note: Latest WACR data as of 6th December. Source: RBI, CEIC, HDFC Bank. %YoY Q3 FY23 Q4 FY23 FY23 Q1 FY24 Q2 FY24 RBI (September forecast) 4.6 4.6 7.0 7.2 – RBI (December Forecast) 4.4 4.2 6.8 7.1 5.9 HDFC Bank (forecast) 4.3 4.4 6.8 7.0 – econresearch@hdfcbank.com Classification – Public Classification – Public Bond Yields: Long end yields moved up as the RBI was more hawkish than expected Source: Reuters, HDFC Bank.
Pre RBI Post RBI Cumulative Change (in bps) G-Secs 3M 6.36 6.39▲ 3 6M 6.70 6.74▲ 4 1Y 6.76 6.87▲ 11 5Y 7.10 7.16▲ 5 10Y 7.25 7.28▲ 3 30Y 7.35 7.39▲ 4 Corporate bonds 3M-CP 6.85 6.87▲ 2 6M-CP 7.36 7.38▲ 2 10Y-AAA 7.93 8.39▲ 47 10Y-AA 8.07 8.18▲ 12 OIS 1M 6.29 6.26▼ -3 3M 6.35 6.39▲ 4 6M 6.54 6.58▲ 4 1Y 6.61 6.68▲ 7 econresearch@hdfcbank.com Classification – Public Classification – Public Treasury Economics Research Team Disclaimer: This document has been prepared for your information only and does not constitute any offer/commitment to transact. Such an offer would be subject to contractual confirmations, satisfactory documentation and prevailing market conditions. Reasonable care has been taken to prepare this document. HDFC
