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Deepak Shenoy Profile picture
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9 Dec, 7 tweets, 2 min read
Folks - if you can't pay back your EMI, please create a new bank account at a different bank (Kotak, IDFC and a few others allow it to created online) - idfcfirstbank.com/content/idfcse…

Also notify your lender that you are unable to pay your EMI and to not auto-debit.
Context: livemint.com/industry/banki…
Also notify your current bank to not honour any auto-debit from the lender as the loan is under negotiation, and thus to not charge you auto-debit fees.

Then keep zero balance in that account. Get your lender to negotiate, reduce rates, and give you more time.
Note: only do this if you cannot pay. The RBI has given banks and financial institutions a mechanism to renegotiate such loans without calling it an NPA. As a stressed borrower, you must force them to take this route (they won't do it willingly; they don't care about you)
The RBI notification: rbi.org.in/Scripts/Notifi…
Specifically note that you can do the following. And also, you MUST apply by December 31.
Your CIBIL score will obviously be affected but please note that if you are getting hit with auto-debit fees because you don't have enough money, your CIBIL score is shit anyways.

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More from @deepakshenoy

Deepak Shenoy Profile picture
17 Nov
Laxmi Vilas Bank placed under moratorium. This means they're going to mount a rescue of some sort. It's a small bank but we expect
a) Tier 1/2 bond writedowns
b) Equity capital will need to be infused for a rescue
They have Tier 1 + 2 capital of 148 cr. (march 2020) which would have dwindled further. Even a full write down of Tier 2 bonds - roughly 270 cr. - will not be enough. The bank needs 1300 cr. of capital, at the very least.
Ok, update: RBI does a full merger with DBS Bank India. rbidocs.rbi.org.in/rdocs/content/…

Shareholders wiped out (Shares go to 0)
All depositors will be paid in full, after the moratorium.
Read 11 tweets
Deepak Shenoy Profile picture
31 Oct
The Loan compound interest waiver is interesting. Banks and NBFCs have to pay you money, into your account, the interest on interest calculated for the moratorium period. Even if you didn't take the moratorium or paid back in time. financialservices.gov.in/sites/default/…
And the money has to be paid before 5 November. And you don't need to apply or anything - the bank needs to calculate and pay on its own.

And then it can claim the money back from the government.
Interestingly, even a 0% interest loan will pay you money back!

(A Zero percent EMI is actually at a higher interest rate - check: capitalmind.in/2020/01/how-ze…)
Read 4 tweets
Deepak Shenoy Profile picture
6 Oct
The Shapoorji default of 100 cr. does not really mean that the SP group doesn't have 100 cr., IMHO.

It's a signal that they want to negotiate. It's basically saying, I'm in default, now let's restructure the loans.
The important point is that they defaulted on Commercial Paper in the money market, not on a loan. A loan default could have been "hidden" within the banking system, because banks get 3 months to negotiate before a loan turns NPA.

They chose to tell the world instead.
Also, there's a little bit that Franklin funds own a good portion of the group bonds, and renegotiating now might be an interesting proposition since holders of those funds might be expecting a haircut anyhow.
Read 5 tweets
Deepak Shenoy Profile picture
11 Sep
SEBI decides that Multicap funds must truly be multicap - so min 25% in large caps, min 25% in midcaps and min 25% in smallcaps.

Smallcaps are companies below roughly 7,000 cr. market cap. Cannot absorb the buying.

We're going to see money flow out of multicap funds..
This could fuel a smallcap rally, even in anticipation. However,
...the SEBI rule indicates that at 75% equity, a multicap fund can't have foreign exposure beyond 25%, which will hurt some.
Read 5 tweets
Deepak Shenoy Profile picture
2 Sep
I have an LIC insurance plan invested 20 years ago. Premium was Rs. 2216 per year. This was a money back policy.

It matures this month. I have to go PERSONALLY visit the LIC office and give documents. Nothing online works.

I will get back Rs. 97,000. That's 6.3% post tax.
Why did I stick with this so long? Insane surrender charges. All past premiums are sunk cost, so ignore that. At any point since 2004 (when I realized how crappy this was), and now, surrendering was a worse choice than just paying up and waiting. Because of high surrender fees.
I thank my stars I didn't take a policy bigger than that. The agent was known to the family, and I was charmed by some calculation at a time when Rs. 97,000 was perhaps a big amount.

Engineer who didn't know the excel RATE function.
Read 4 tweets
Deepak Shenoy Profile picture
18 Aug
Reliance buys Netmeds (60%) for 620 cr. This is interesting - remember, Reliance is Indian and can have inventory. I really like this - the game is really one of scale. Disclosure: Invested in Reliance
Netmeds is online and a marketplace and has delivery capabilities, apparently 57 lakh customers in 20K pin codes - The valuation seems to be Rs. 2000 a customer which is steep, but will probably 1/100th that at the Reliance ability to scale.
Netmeds valuation - It raised three rounds - $50M, $14M, $35M - a total of $99M. Assuming reliance ONLY paid 620 cr for Netmeds (it got 60% of the parent), the group was valued at 1000 cr.

That's about $150M. Looks like the investors will just about recover their investment.
Read 6 tweets

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