The Reserve Bank of India (RBI) came out with a slew of directions related to maintenance of liquidity coverage ratio, risk management, asset classification and loan-to-value ratio, among others, for housing finance companies (HFCs).The central bank said these directions, which shall come into force with an immediate effect, are aimed at preventing the affairs of any HFCs from being conducted in a manner detrimental to the interest of investors and depositors.

"All non-deposit taking HFCs with asset size of Rs 100 crore and above and all deposit taking HFCs (irrespective of asset size) shall pursue liquidity risk management, which inter alia should cover adherence to gap limits, making use of liquidity risk monitoring tools and adoption of stock approach to liquidity risk," the RBI said.The board of each HFC would ensure that the guidelines are adhered to.

The RBI issued a Master Direction-Non-Banking Financial Company-Housing Finance Company (Reserve Bank) Directions, 2021, on Wednesday.As per the definition, an HFC is an NBFC whose financial assets, in the business of providing finance for housing, constitute at least 60 per cent of its total assets.

The RBI said HFCs shall maintain a liquidity buffer in terms of liquidity coverage ratio (LCR), which will promote their resilience to potential liquidity disruptions by ensuring that they have sufficient high-quality liquid asset (HQLA) to survive any acute liquidity stress scenario lasting for 30 days.

All non-deposit taking HFCs with an asset size of Rs 10,000 crore and above, and all deposit taking HFCs irrespective of their asset size will have to achieve a minimum LCR of 50 per cent By December 1, 2021 and gradually to 100 per cent by December 1, 2025.

Non-deposit-taking HFCs with an asset size of Rs 5,000 crore and above, but less than Rs 10,000 crore will have to reach a minimum LCR of 30 per cent by December 1, 2021 and to 100 per cent by December 1, 2025.As per the new directions, HFCs lending against the collateral of listed shares shall maintain a loan-to-value (LTV) ratio of 50 per cent.

"Any shortfall in the maintenance of the 50 per cent LTV occurring on account of movement in the share price shall be made good within seven working days," the central bank said.For loans granted against the collateral of gold jewellery, HFCs shall maintain an LTV ratio not exceeding 75 per cent.

The central bank also prevented HFC to accept or renew public deposit unless it has obtained a minimum investment grade rating for fixed deposits from any one of the approved credit rating agencies, at least once a year.

"No HFC shall invite or accept or renew public deposit at a rate of interest exceeding twelve and half per cent per annum or as revised by the Reserve Bank," the RBI said.

The RBI asked HFCs to ensure that at all times, there is full cover available for public deposits accepted by them.

In case an HFC fails to repay any public deposit or part thereof as per the terms, it shall not grant any loan or other credit facility or make any investment or create any other asset as long as the default exists, as per the directions.The central bank also barred HFCs to lend against their own shares.

"No housing finance company shall grant housing loans to individuals up to Rs 30 lakh with LTV ratio exceeding 90 per cent and above Rs 30 lakh and up to Rs 75 lakh with LTV ratio exceeding 80 per cent," the directions said.These entities also cannot offer housing loans to individuals above Rs 75 lakh with LTV ratio exceeding 75 per cent.

Every housing finance company shall maintain a minimum capital ratio on an ongoing basis consisting of tier-I and tier-II capital, which shall not be less than 13 per cent as on March 31, 2020, 14 per cent on or before March 31, 2021, and 15 per cent on or before March 31, 2022, and thereafter, the RBI said.An HFC also cannot lend to any single borrower exceeding 15 per cent of its owned fund, and any single group of borrowers exceeding twenty-five per cent of its owned fund.

It also cannot invest in the shares of another company exceeding 15 per cent of its owned fund and in shares of a single group of companies exceeding 25 per cent of its owned funds.

"In case of companies in a group engaged in real estate business, HFCs may undertake exposure either to the group company engaged in real estate business or lend to retail individual home buyers in the projects of such group companies," the new directions said.In case HFC prefers to undertake exposure in group companies, such exposure by way of lending and investing, directly or indirectly, cannot be more than 15 per cent of owned fund for a single entity in the group and 25 per cent of owned fund for all such group entities.

The RBI said the aggregate exposure of an HFC to the capital market in all forms (both fund based, and non-fund based) should not exceed 40 per cent of its net worth as on March 31 of the previous year.

The petrol price in Delhi was hiked by 25 paise reaching Rs. 89.54 per litre as compared to Rs 89.29 per litre on February 16, according to state-owned fuel retailers. Diesel price in the national capital also touched a new high at Rs 79.95, increasing 25 paise from the previous day.

In Mumbai, the prices rose to Rs 96 per litre and Rs 86.98 per litre for petrol and diesel respectively.Meanwhile, automobile owners in Chennai shell out Rs 91.68 per litre and Rs 85.01 per litre of petrol and diesel. The prices in Kolkata reach Rs 90.78 per litre for petrol and Rs 83.54 per litre for diesel.

The difference in prices in states stems from local and VAT taxes imposed in states. Oil Minister Dharmendra Pradhan had ruled out the possibility of a reduction in taxes on petrol and diesel in order to reduce prices.Meghalaya Chief Minister Conrad Sangma said that the state will cut down the fuel prices by approximately Rs. 7 per l "There is no such proposal at present," he said in Rajya Sabha. He added that taxes are increasedor decreased depending on several factors like the requirement of the government and market situation.

"Both prices of petrol and diesel will be reduced by approximately ₹7. It is being done primarily to ensure that the consumers are not affected by the high prices in order to give some relief to them," said the Chief Minister while speaking to media persons.

The Chief Minister added that the step was taken as the consumers are affected. He further noted that despite the fact that the state is facing financial issues and the VAT collected "from petrol and diesel has helped the state in difficult times of COVID-19, the government has decided that we will be reducing the VAT for petrol and diesel."

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The Reserve Bank on Tuesday permitted resident individuals to make remittances under the Liberalised Remittance Scheme (LRS) to International Financial Services Centres (IFSCs) in the country.

The decision of the RBI is aimed at deepening the financial markets in the IFSCs and providing an opportunity to resident individuals to diversify their portfolios.

The RBI, in a notification, said it has reviewed the extant guidelines on LRS and decided to permit resident individuals to make remittances under LRS to IFSCs set up in India under the Special Economic Zone Act, 2005. "The remittance shall be made only for making investments in IFSCs in securities, other than those issued by entities/companies resident (outside IFSC) in India," the central bank said.

Further, resident individuals may also open a non-interest bearing Foreign Currency Account (FCA) in IFSCs, for making the above permissible investments under LRS. "Any funds lying idle in the account for a period upto 15 days from the date of its receipt into the account shall be immediately repatriated to domestic INR account of the investor in India," RBI said.

The Reserve Bank on Tuesday permitted resident individuals to make remittances under the Liberalised Remittance Scheme (LRS) to International Financial Services Centres (IFSCs) in the country.

The decision of the RBI is aimed at deepening the financial markets in the IFSCs and providing an opportunity to resident individuals to diversify their portfolios.

The RBI, in a notification, said it has reviewed the extant guidelines on LRS and decided to permit resident individuals to make remittances under LRS to IFSCs set up in India under the Special Economic Zone Act, 2005. "The remittance shall be made only for making investments in IFSCs in securities, other than those issued by entities/companies resident (outside IFSC) in India," the central bank said.

Further, resident individuals may also open a non-interest bearing Foreign Currency Account (FCA) in IFSCs, for making the above permissible investments under LRS. "Any funds lying idle in the account for a period upto 15 days from the date of its receipt into the account shall be immediately repatriated to domestic INR account of the investor in India," RBI said.

India is set to see investments to the tune of around $500 billion in the renewables sector if the country has to achieve the target of 450 gigawatts (GW) of capacity by 2030, said a report by the Institute for Energy Economics and Financial Analysis (IEEFA).

The report highlighted that a huge global capital pool is mobilising to invest in renewable energy and grid projects in India, with pull factors including solar power tariffs hitting record lows, plunging solar module costs, record low-interest rates, and the security of government-backed, 25-year power purchase agreements (PPAs). The renewable energy sector in India has received more than $42 billion in investment since 2014.

“We estimate that striving for 450 gigawatts of renewable energy by 2030 would require deploying $500 billion of investment over the coming decade – $300 billion for wind and solar infrastructure, $50 billion on grid firming investments such as gas-peakers, hydro and batteries, and $150 billion on expanding and modernising transmission and distribution,” said Tim Buckley, Director Energy Finance Studies, South Asia, at the IEEFA.The country’s untapped renewable potential at 900 gigawatt (GW) is the most in the world. It is estimated that India’s peak power demand will rise to 295GW by 2021-22 and 690GW by 2035.

“Domestic and global institutions across the financial, corporate, energy, utility and government sectors are primed to deploy a wall of capital that India needs to fund its ambitious renewable energy targets,” he added.This includes the capital cost of adding more than 300GW of new renewables infrastructure, firming low-cost but intermittent renewable power generation, and expanding and modernising grid transmission and distribution.

The sources of capital range from private equity, global pensions funds and sovereign wealth funds, to oil and gas majors, multinational development banks and Indian state-owned enterprises and power billionaires, the report added.The report stated that the Indian renewables sector is increasingly dominated by the major independent power producers (IPPs):ReNew Power, Greenko, Adani Green, Tata Power, ACME, SB Energy, Azure Power, Sembcorp Green Infra and Hero Future Energies, and that each has invested strongly in building capacity in international debt and equity markets.

But, these renewable energy giants face growing competition from the likes of Vena Energy/Vector Green, O2 Power, Ayana Renewable Power, Torrent Power and Sprng Energy, as well as Government of India fossil fuel majors starting to rise to the decarbonisation challenge such as NTPC and NLC, with Coal India Limited and Indian Railways increasingly looking to pivot aggressively as well, it said.

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The report said due to the economic downturn, even the union government finances are under pressure, leading to a lower-than-budgeted devolution of Rs 5.50 lakh crore to states in FY21 (revised estimate: RE) as against the budget estimate (BE) of Rs 8.03 lakh crore.

This is Rs 2.53 lakh crore lower-than-budgeted states’ share in central taxes and accounts for nearly 92 percent increase in fiscal deficit in FY21(forecast) over FY21 (BE).

The agency now estimates the aggregate revenue deficit to come in at 3.2 percent, higher than the earlier forecast of 2.8 percent of GDP in FY21.

The union government in its FY22 budget has committed to retaining the vertical share of states in central taxes at 41 percent, as per the recommendations of 15th Finance Commission (FC).

The Union Budget for FY22 has budgeted Rs 6.66 lakh crore for distribution out of the net proceeds of central taxes (FY21RE: Rs 5.50 lakh crore).

The agency said although it estimates the aggregate revenue receipt of the states to grow 8.4 percent y-o-y in FY22 from a decline of 0.6 percent in FY21 (f), the revenue deficit would persist in FY22.

It expects the aggregate revenue deficit of states to come in at 1.5 percent of GDP in FY22 as against FY21 (f) of 3.2 percent.

The pressure on the debt burden is likely to persist in FY22 due to a combination of revenue deficit, some pick-up in capex and repayment of past market borrowings, the agency said.

It estimates the states’ aggregate debt/GDP to rise to 33.9 percent in FY22 from 32.8 percent in FY21 (f).States’ fiscal deficit is now financed mainly through market borrowings and the report estimates the gross market borrowings of states will increase to Rs 8.38 lakh crore in FY22 from Rs 8.2 lakh crore in FY21 (f).

This special FD scheme was launched in May to safeguard the interests of senior citizens as the interest rates were falling rapidly amid the coronavirus pandemic. This special FD scheme is available for senior citizens till March 31.

Bank of Baroda special FD scheme for senior citizens

BoB offers 100 bps higher on deposits by senior citizens. If a senior citizen puts a fixed deposit, the interest rate applicable to the FD will be 6.25 percent under the special FD scheme.

ICICI Bank offers 80 bps higher interest rates on deposits. Senior citizens get an interest rate of 6.30 percent per annum under ICICI Bank Golden Years FD scheme.

HDFC Bank special FD scheme for senior citizens

HDFC Bank offers 75 bps higher interest rates on these deposits. The interest rate applicable to the FD will be 6.25 percent.

SBI special FD scheme for senior citizens

SBI special FD scheme for senior citizens will fetch 80 basis points (bps) interest rate above the rate applicable to the general public. Currently, SBI gives 5.4 percent interest rate on five years FD for the general public. If a senior citizen puts a fixed deposit under the special FD scheme, then the interest rate applicable to the FD will be 6.20 percent.

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