RBI's FSR, India's exports, and Vi’s selling spree: Three things Teji Mandi investors should know on July 5, 2021
RBI's FSR, India's exports, and Vi’s selling spree: Three things Teji Mandi investors should know on July 5, 2021

A Rosy Picture

RBI's Financial Stability Report of July 2021 has painted a much optimistic picture for India's banking system.

Overall GNPA ratio of banks stood at 7.5%. It is much better than the baseline projection of 12.5% made by RBI during the initial months of the pandemic. Restructured loans were less than 1% of loans for the banking system as a whole. Not just reduced NPAs, banks have also improved deposits and profitability.

RBI also suggested that after fresh fundraising, banks are well-capitalised, and they would be able to maintain their capital adequacy ratios even under the severe stress scenario. All is not picture perfect for the banking system, as the central bank sees retail loans and MSMEs to be the next source of stress. RBI has suggested banks boost their capital position further to meet any unforeseen challenges.

A Happy Space To Be In

India's merchandise exports have jumped to USD 95 billion in the June quarter of the current financial year. Engineering, rice, oil meals, and marine products reported healthy gains in exports.

It is a gain of 85% YoY. Exports were USD 51 billion in June quarter 2020-21. Importantly, exports for the June quarter were above the pre-COVID levels. India's merchandise exports were at USD 82 billion during April-June 2018-19 and USD 90 billion during the last quarter of 2020-21.

Buoyant by the rising exports of the country, the Ministry of Commerce has set a target of $400 billion for FY22. If achieved, it would be the highest ever annual export the country has achieved. India’s highest exports in any year were $330 billion in FY19. The country is also looking at a merchandise exports target of $500 billion for FY23.

The Selling Spree

Vodafone Idea is looking to generate Rs 7,400 crore to meet its upcoming liabilities. The company has put its fixed-line broadband subsidiary, optic fibre unit, and data centres businesses on the block to generate the necessary funds.

Vi has to pay Rs 22,500 crore by April 2022 toward a mix of regular debt, adjusted gross revenue, and spectrum dues. The company has insufficient cash on its hands to meet those obligations, while the loss is piling up every quarter.

Vi's efforts to bring in fresh investors have also been received by little or no interest from the investor community. The company has further put its land parcels off for sale, and with tax refunds, the company is expecting to generate an additional Rs 3,000 crore during FY22.

However, that's too little and too late for the financial woes of that magnanimity. Top management of the company has already indicated that it could be forced to shut the shop if the situation persists.

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