ISSUE: 598 2024 05 August 2024

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Unemployment rate fell 1.3 percentage

points in July amid uptick in hiring: India’s
unemployment rate (UR) dropped by 1.3 percentage
points in July from an eight-month high of over
nine per cent in the previous month. The UR fell to
7.9 per cent in July from 9.2 per cent in June,
according to the Consumer Pyramids Household
Survey. The survey, conducted periodically by the
Centre for Monitoring Indian Economy (CMIE), covers 1,78,000 sample
households. Experts attribute the decline in UR to the sowing season and
the progress in hiring of workers. In absolute terms, the number of
unemployed declined to 35.4 million in July from 41.4 million in the
month before, according to an estimation made by the survey based on its
sample. Unlike in June, the UR stood higher at 8.5 per cent in urban
areas in July against 7.5 per cent in the rural parts. In June, the urban
parts saw this rate at 8.8 per cent, while the rural areas had it at 9.3 per
cent. As such, the decline in UR was higher in rural areas at 1.8
percentage points compared to 0.3 in urban areas over this period.
(Business Standard)
RBI likely to keep key interest rate unchanged at 6.5%, say
experts: RBI is likely to keep the key interest unchanged at 6.5 per cent
on Thursday, and wait for more macroeconomic data before taking a call
on rate cut in line with expectations, experts said. The US Federal Reserve
has decided to maintain a status quo on its interest rate for now and
indicated there could be monetary policy easing in the coming months.
Amid persisting inflationary pressures, RBI will be closely tracking the
US monetary policy trajectory before changing its stance on interest rate,
which has remained unchanged since February 2023, experts opined. The
Monetary Policy Committee (MPC) may also refrain from rate cut as
economic growth is picking up, notwithstanding the elevated interest rate
of 6.5 per cent (repo rate). The meeting of the Reserve Bank Governor
Shaktikanta Das headed MPC is scheduled for August 6 to 8. Das will
announce the decision of the rate-setting panel on August 8 (Thursday).
(Business Standard)

SBI Q1 Results: Net profit rises marginally to

₹17,035.16 crore, NII up 5.7% YoY: State Bank
of India (SBI) announced a 0.89 per cent rise in the
net profits at ₹17,035.16 crore for the April to June
quarter of the financial year 2024-25, as compared
to ₹16,884.29 crore in the same quarter the previous
year as per the bank's standalone statements. The
public sector lender's net interest income (NII) rose
5.7 per cent year-on-year and fell 1.3 per cent quarter-on-quarter to
₹41,125 crore. The net interest margin (NIM) dropped 12 basis points
(bps) at 3.35 per cent for the first quarter, compared to 3.47 per cent at
the end of the June quarter of the financial year 2024. The bank aims to
raise upto ₹25,000 crore from Indian and foreign investors in the
financial year 2024-25, according to the company statement. SBI's gross
NPAs have gone down 55 basis points (bps) to 2.21 per cent in the first
quarter of FY2025 from 2.76 per cent in the same period last financial
year. The net NPAs also fell to 0.57 per cent at the end of the April to June
quarter from 0.71 per cent in the same period a year ago.
(Mint)
SBI chief Dinesh Khara sees a 'ghar wapsi' for deposits amid
regulatory action on F&O: Regulatory efforts to steer retail investors
away from derivative market bets could significantly boost the banking
system's deposits, says SBI Chairman Dinesh Kumar Khara. He noted
that recent budget changes to short-term and long-term capital gains
taxes are unlikely to drive substantial deposit growth.Khara pointed out
that regulatory bodies, especially SEBI, are discouraging retail investors
from futures and options (F&O) trading. "Those who are resorting to such
kind of an instrument, they might come back to the banking system,"
Khara told a news agency.
(Business Today)
Bank of India's Q1 net profit rises 10% to Rs 1,703 cr, NII up
6%: Bank of India (BoI) reported a 10 per cent year-on-year (YoY) growth
in net profit for the quarter ending June 2024 (Q1FY25), aided by lower
tax outgo. Its net profit for the quarter stood at Rs 1,703 crore, as against
Rs 1,551 crore in the corresponding period a year ago. Net interest income
(NII) was up 6 per cent YoY to Rs 6,275 crore in Q1FY25, compared to Rs
5,915 crore in Q1FY24, aided by robust growth in advances. However, its
non-interest income was down 12 per cent YoY to Rs 1,302 crore. Asset
quality of the lender improved, with gross NPA ratio at 4.62 per cent in
Q1FY25, down 36 bps from the preceding quarter. Net NPAs were also
down 23 bps at 0.99 per cent in Q1FY25. Provision coverage ratio (PCR)
of the lender improved to 92.11 per cent in Q1FY25, as against 90.59 per
cent in Q4FY24.
(Business Standard)

Maruti Suzuki to spend ₹165 crore on CSR this year, launch

electric cars by year-end: Bhargava: Maruti
Suzuki India (MSIL) has said that it will spend ₹165
crore this fiscal towards the corporate social
responsibility (CSR) activities and also it was track to
launch its first electric car by end of this year. The
company also said that while electric cars use
increases, customers should be encouraged to buy
cars using strong hybrid technology or CNG or
ethanol and biogas. “CSR activities continue to receive the attention of the
Board...the amount of ₹91.68 crore that was required to be spent in 2023-
24 was exceeded by ₹24.07 crore and has been carried over to 2024-25.
In this year the required expenditure is about ₹165 crore, the increase
reflecting the higher profitability last year,” RC Bhargava, Chairman,
MSIL said in the company’s annual report. On electric cars and alternate
fuels powered vehicles, Bhargava said that the best strategy would be to
offer to customers cars with different technologies and at different price
levels. “We will be introducing electric cars in the next few months”.
(Business Line)
Cheap Chinese imports hurting domestic mkt sentiment: Tata
Steel MD & CEO: Low-cost imports from China into India are
impacting steel prices and may hurt the investment plans of steelmakers,
Tata Steel managing director and chief executive officer T V Narendran
cautioned. The Tata Steel chief told Business Standard that exports were
coming in from China and countries like Vietnam, which sometimes is a
conduit for materials flowing from China.
(Business Standard)

Finmin asks state-owned general insurance

companies to focus on profitable
businesses: The finance ministry has asked state-
owned general insurance companies to focus on
profitable businesses and not to chase top-line but
aim for improving profitability. The government
has recently infused Rs 7,250 crore in installments
in three public sector general insurance companies
-- National Insurance Company Limited, Oriental Insurance Company
Limited, and United India Insurance Company. "We have been
monitoring performance of state-owned general insurance companies
and as a result they have started looking up. So, we will watch their
performance this year," Financial Services Secretary Vivek Joshi told PTI.
Hopefully, he said, these companies may not require any further capital
infusion, which is why the Budget has not made any provision.
(Economic Times)
Govt to allow up to 4 nominees per deposit account: The Union
Cabinet on Friday approved several changes to banking laws, including
allowing up to four nominees per deposit account and introducing
"successive and simultaneous" nominations. The changes aim to address
the growing issue of unclaimed deposits and alleviate customer
difficulties. Currently, banks allow one nominee for savings bank and
fixed deposits, which is proposed to be raised. At the same time, drawing
from insurance and HUF accounts, successive and simultaneous
nominations will allow joint account holders and the heirs to get the
funds even after the death of an account holder. Govt has also proposed to
give banks greater freedom in deciding the remuneration to be paid to
auditors, a decision that was hitherto left to RBI. Besides, shareholders
with holdings up to Rs 2 crore will be considered those with substantial
interest, instead of the current limit of Rs 5 lakh, which was fixed almost
six decades ago. The bill will also seek to redefine the reporting dates for
banks for regulatory compliance to 15th and last day of every month
instead of the second and fourth Fridays. Also, if passed, cooperative
banks will be able to appoint directors, other than chairman and whole-
time directors, for up to 10 years.
(Economic Times)

RBI KEY RATES FOREX EQUITY

(RBI REF. ) /COMM. MARKET
Repo Rate: 6.50% INR / 1 USD : 83.7375 Sensex: 80981.95 (-885.60)
SDF: 6.25% INR / 1 GBP : 106.6486 NIFTY: 24717.70 (-293.20)
MSF /Bank Rate: 6.75% INR / 1 EUR : 90.4666 Bnk NIFTY: 51350.15 (-213.85)
CRR: 4.50% INR /100 JPY: 56.1500
SLR: 18.00%
BUSINESS/FINANCIAL CONCEPTS
OPEN BANKING
 In financial services, open banking allows for financial data to be
shared between banks and third-party service providers through the
use of application programming interfaces (APIs).
 Traditionally, banks have kept customer financial data within their own
closed systems. Open banking allows customers to share their financial
information securely and electronically with other authorized
organizations, such as fintech companies, payment providers, and other
banks.
 Proponents argue open banking provides greater transparency and data
control for account holders, and could allow for new financial services
to be provided. Proponents also say that it aims to promote
competition, innovation, and customer empowerment in the banking
and financial sectors.Opponents argue that open banking can lead to
greater security risk and exploitation of consumers.

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