Teji Mandi: Three things investors should know on February 10, 2021
Teji Mandi

Health of PSBs improving says MoS :

Minister of State Finance Anurag Singh Thakur talked about the improving health of PSU Banks in Rajya Sabha. He informed that the GNPAs in public sector banks (PSBs) have declined in the last two years. Due to various measures taken by the government, the GNPAs have declined from Rs 8.96 lakh crore in 2018 to Rs 6.09 lakh crore in September 2020.

There was a record recovery of Rs 2.54 lakh crore during this period. Moreover, 11 out of 12 PSBs reported a profit in the first half of 2020-21. The provision coverage ratio of PSBs was at over 8 years high at 85.06% at the end of September 2020.

Thakur further added that PSBs have raised Rs 50,982 crore in the form of both equity and bonds during 2020-21. And, the government has made a provision of Rs 20,000 crore for the next financial year to recapitalize the PSBs.

The government has put up a huge effort to clean up the banking system in the last few years. Hence, the MoS's announcement has come as a relief. Stressed assets are likely to see further resolution once a bad bank starts functioning.

PSU Banks offer great value but they are not able to live up to their potential. Improving stress assets will go a long way to unlock value in these names. It will also help to attract bidders when the government opens them up for privatization.

Ambani-Bezos tussle and its India impact :

Global investor community is keenly watching the battle between Mukesh Ambani and Jeff Bezos to gain control over India's retail market.

The battle has reached a tipping point as Delhi high court has cleared the RIL-Future deal. The court had previously upheld the decision of the Singapore Arbitration Court in support of Amazon.com. But now, a two-member bench has overruled it

With this case, global investors would want to measure India's ability to implement International orders. It will help them to evaluate the safety of their investments and the Indian government’s position in the matter of disputes.

Cryptocurrency bill in the making :

The government is mulling to bring a bill on cryptocurrencies soon. Currently, cryptocurrencies do not fall under any asset category. Hence, regulatory bodies do not have any legal framework to directly regulate it.

The government informed Rajyasabha that a bill is being finalised currently. And, soon, it will be sent to the Cabinet for its approval soon.

Crypto-currencies largely undermine the government's sovereign power to issue currency. And, we believe the governments across the globe will eventually retaliate against it. Many countries are already contemplating the idea of issuing their respective virtual currencies. On similar lines, we believe, RBI should also create a Central Bank-backed Digital Currency.

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