Excellence by Saikat Sir: 04/29/24

SBI Card’s Q4 Profit Surges Unexpectedly Due to Consistent Retail Spending in India

India’s SBI Cards and Payment Services reported an unexpected 11% rise in fourth-quarter profit, driven by steady retail spending that offset an increase in bad loans.
The company’s profit after tax reached 62 billion rupees ($79.4 million) for the January-March period, up from 5.96 billion rupees a year earlier.
This exceeded analysts’ expectations, which were around 61 billion rupees, as per LSEG data.

Key Highlights :

Credit Demand and Retail Spending:Credit demand, especially in unsecured categories like credit cards, remained robust, fueled by retail consumer spending.
This growth in spending contributed to the rise in the company’s profit.
Cardholder Spending and Interest Income: Total cardholder spending, or the aggregate transacted amount, grew by 11% year-on-year to 796.53 billion rupees during the quarter.
This led to a 28% increase in interest income, which rose to 21.39 billion rupees.
Gross Write-offs and Bad Loans:The company’s gross write-offs rose by 60% to 8.64 billion rupees, reflecting a higher level of bad loans and credit losses.
Gross bad loans as a percentage of gross advances increased to76% at the end of March, compared to 2.64% at the end of December, indicating a deterioration in asset quality.
Net Interest Margin (NIM): The net interest margin, a key measure of profitability, fell by 60 basis points year-on-year to 10.9%, suggesting increased pressure on margins due to a combination of higher write-offs and bad loans.
Stock Performance : Shares of the company ended 1% lower ahead of the results.

Edelweiss Mutual Fund Introduces Nifty Alpha Low Volatility 30 Index Fund

Edelweiss Mutual Fund has launched the Nifty Alpha Low Volatility 30 Index Fund, a multi-factor index fund.
It will consist of 30 stocks selected from a pool of the top 150 listed stocks.
These stocks have recently outperformed the broader market yet are relatively less volatile.
The New Fund Offer (NFO) of the scheme will be from April 26 to May 10, 2024.

Key highlights of the fund ;

Investment Strategy and Benchmark : The scheme will invest 95-100% in equity and equity-related securities representing the Nifty Alpha Low Volatility 30 Index.
Its scheme will be benchmarked against Nifty Alpha Low Volatility 30-TRI and will be managed by Bhavesh Jain.
Scheme Variants and Options : The scheme will offer regular and direct plans with growth and Income Distribution cum Capital Withdrawal (IDCW) options.
Systematic Investment Plan (SIP) Details : The minimum investment amount for daily, weekly, fortnightly, monthly, and quarterly SIP will be Rs 100 and in multiples of Rs 1 thereafter.
Index Methodology and Rebalancing : The index methodology will be factor-weighted and rebalanced semi-annually in June and December, respectively.
Additional Allocation : The fund will allocate 0-5% to debt and money market instruments, in a bid to ensure a balanced approach to wealth accumulation.

Who should choose the fund?

Investors looking for long-term capital appreciation and want passive investment in equity and equity-related securities replicating the composition of the Nifty Alpha Low Volatility 30 Index can go for this fund.
The principal invested in the scheme will be at “very high” risk according to the riskometer of the scheme.

What Is a New Fund Offer (NFO)?

NFO refers to a new mutual fund scheme for the public in the financial markets with an aim of first-time subscription.
In other words, a new mutual fund scheme based on a new investment strategy is offered to investors for a limited period.
Asset management companies (AMCs) offer NFOs as new mutual fund products which are not previously present as part of the product basket.
NFOs are offered for both close-ended and open-ended mutual fund schemes.

About Edelweiss Mutual Fund :

MD & CEO : Radhika Gupta
Edelweiss Mutual Funds, managed by Edelweiss Asset Management Limited, is one of the country’s youngest and most dynamic mutual fund houses.

Reserve Bank of India Maintains Foreign Portfolio Investors Investment Limit in Government Securities at 6% of Outstanding Stocks for FY25

The Reserve Bank of India (RBI) announced that the investment limits for Foreign Portfolio Investors (FPIs) in government securities, state development loans (SDLs), and corporate bonds will remain unchanged for FY25.

Key Highlights :

Investment Limits for Various Securities:
The limit for FPI investment in government securities (G-secs) is 6% of the outstanding stocks of securities.
The limit for state development loans is 2%.
The limit for corporate bonds is 15%.
Fully Accessible Route (FAR):As of now, all investments by eligible investors in the ‘specified securities’ will be reckoned under the fully accessible route (FAR).
Allocation between General and Long-term Sub-categories:The distribution of incremental changes in the G-secs limit, in absolute terms, will remain at 50:50 between the two sub-categories ‘General’ and ‘Long-term’ for 2024-25.
State Development Loans (SDLs) Allocation:The entire increase in limits for SDLs, in absolute terms, has been allocated to the general sub-category of state development loans.
Credit Default Swaps (CDS) Limit:The aggregate limit of the notional amount of CDS sold by FPIs will be 5% of the outstanding stock of corporate bonds.
An additional limit of Rs 2,54,500 crore has been set for CDS in 2024-25, reflecting the increasing scope for FPIs to engage in credit risk management through swaps.

About RBI :

Government Partners with SBI Cards and Telcos to Tackle One-Time Password Frauds

India’s Ministry of Home Affairs, SBI Cards and Payment Services Limited (SBI Card), and telecom operators have joined forces to develop an innovative solution to combat OTP (One-Time Password) frauds, cybercrime, and phishing attacks targeting the banking ecosystem.
The government is testing a solution that allows banks to track the registered address and geolocation of a customer to monitor where an OTP is delivered, providing a way to detect potential fraud.

Key Highlights :

RBI’s Additional Factor of Authentication: The Reserve Bank of India (RBI) has mandated an additional factor of authentication for digital payment transactions to combat fraud, with the two-factor authentication system being a key security measure.
Cybercrime’s Impact:According to the Indian Cyber Crime Coordination Centre (i4C), cybercriminals siphoned off Rs 10,319 crore between April 2021 and December 2023.
Most crimes originated from China, Cambodia, and Myanmar, involving non-state actors.
Citizen Financial Cyber Fraud Reporting and Management System:Under the i4C framework, the government established the ‘Citizen Financial Cyber Fraud Reporting and Management System,‘ which successfully prevented around Rs 1,200 crore in fraudulent transfers from over 470,000 citizen complaints received by February 2024.
Statistics on Cyber Fraud in 2023:In the calendar year 2023, the registry received12 million complaints, with fraudulent transfers totaling Rs 7,488 crore, indicating the scale of the issue.

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