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Deepak Shenoy Profile picture
@deepakshenoy
Jun 7, 2021 • 7 tweets • 2 min read • Read on X
Be careful if you hear tips asking you to buy DHFL. The nclt has approved the resolution plan, where I believe the plan is for the shares to be written off to zero. Piramal will then get new shares. Today's shares will have zero value, beware.
Please read: capitalmind.in/2020/12/a-dire…
Meanwhile, today, 21 lakh shares traded at upper circuit. This will do good as a coin - DHFLCOIN - and go to the moon. Image
Adding to this again: DHFL SHARE WILL GO TO ZERO.

Please do not buy this. The resolution plan states that the company's entire share capital (all current shares) will be cancelled. This will happen soon. Means the shares being traded now are a ticking time bomb.
Official confirmation from DHFL: Shares will be delisted. Image
Full letter: Image
It's official once more. bseindia.com/xml-data/corpf… Image

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More from @deepakshenoy

Deepak Shenoy Profile picture
Jan 27
If you wonder why RBI's all antsy about growth of the credit ecosystem, it's because things are looking really hot here:

The credit/deposit ratio is at the highest it's ever been. Banks have to put about 18% of Deposits in GSecs and 4.5% in CRR.

This means of every 100 rs. Deposit they can only lend out Rs. 77.5. Banks will have their own capital - between Rs. 10 and Rs. 15 for every Rs. 100 in lending so they can lend out as much as 88 also. It appears that banks are lending as much as they can and some more.

This is a little bit of a problem because the areas you see where the C/D ratio is above SLR/CRR limits? Those periods correspond to high inflation; and it appears we are back.

I should write a more detailed piece on this, but I'll start this way: it should not surprise us that banks aren't doing that well. And given that Indian government bonds will have more demand from foreigners, expect this ratio to stay high at least this year.Image
Oh, and deposit growth is only around 13%, versus credit growth of 19%.

Deposit rates - for relatively shorter terms like a month or two - are better with money market/liquid funds. Corporates have slowly figured this out, at least the large ones. Individuals will. Image
But, to be fair, banks raise money using bonds and CDs, and thus the C/D ratio should include such liabilities separately. RBI will hopefully give us those aggregate pieces of data too.

Currently HDFC's large bond issuances - probably 2-3 lakh crore - skews it a bit.
Read 4 tweets
Deepak Shenoy Profile picture
Dec 12, 2023
Inflation goes up mildly to 5.55% as food inflation shows its ugly head again. Last year though, there was a dip at this time, so that's a bit of a base effect also. Image
As you can see, closer, here: Image
Everything else moderated, inflation wise. Only food went up. and that's a problem, since elections are on their way. No wonder the govt wants to cut fuel prices, to compensate. Image
Read 6 tweets
Deepak Shenoy Profile picture
Nov 16, 2023
RBI increases risk weights for banks and NBFCs. This is pretty big!

1) All consumer credit (other than housing, vehicle, gold, edu and MFI loans) see an increase in risk weight to 125% from 100%

What this means is:
In effect, if a bank has 20% CAR for personal loans (unsecured) or loan against fd/stocks, then it's lent Rs. 100 for Rs. 20 in capital. Now that Rs. 100 will be counted as Rs. 125 (125% risk weight) so the CAR falls to 16%.

Banks and NBFCs will now see much lower CARs.
2) NBFC loans will also see an increase of risk weight to 125%. This affects most consumer lending NBFCs and nearly all fintech players.

3) Credit card receivables for banks RW up to 150% (from 125%) and for the two nbfcs that can issue credit cards it's up to 125% from 100%
Read 15 tweets
Deepak Shenoy Profile picture
Sep 30, 2023
India's Current Account Deficit fell by half, to $9bn from $18bn in Q1 last year. More charts follow. Image
Net of gold, India's current account is actually positive! Gold is more a financial account item, since it's more used as a financial instrument. Think of it as reverse FPI or such. If we did that, our current account would be marginally positive: Image
Service exports were down , merchandise imports were up. The trade deficit expanded to about $21.4 bn for the quarter. Image
Read 10 tweets
Deepak Shenoy Profile picture
Sep 13, 2023
This is HUGE! RBI says banks and NBFCs have to release documents of properties and collateral mandatorily within 30 days!
* Have to remove encumberance within 30 days, and return docs
* Docs can be returned from any branch, not just home branch of customer
* Loan docs must mention where the borrower can get them back once he repays
* If the bank/NBFC doesn't return docs or release the encumberance charge within 30 days - they pay 5000 rs. per day of delay
* If bank/NBFC loses the docs - they will pay and assist owner in getting docs back or attested copies (but they get another 30 days i.e 60 days before the 5K per day penalty, only if they lose the docs)
* If the loan taker dies, Banks/NBFCs need to have a detailed procedure on how heirs can get original docs.

Applies for even past loans where full repayment happens after December 1, 2023.

This is awesome for homeowners who borrow, but also for collateral based lending like for cars, securities and all the other stuff. And applies to NBFCs also, so housing finance companies can't escape.
Image
Link: rbi.org.in/Scripts/Notifi…
Funda is that banks and NBFCs would string homeowners for a long time saying oh we can't find the docs, or we'll give it to you after 6 months etc especially when you transfer home loans (you need to repay the last lender to transfer a loan) Made it difficult to shift.
Read 6 tweets
Deepak Shenoy Profile picture
Aug 15, 2023
My goodness. The CRR requirement for banks has jumped up by over 100,000 crores! From 890,000 cr to more than 10 lakh crore, on Monday.

I know half of this won't make sense to anyone. Damn, I should write about this. Or tweet thread it out
RBI recently raised the CRR (cash reserve ratio) requirement for banks - 10% of all incremental demand and time liabilities after May 19 to July 28. That means all new deposits in the banking system would have 10% given to the RBI for no interest.

The reason people understood was: oh, the RBI has told people to deposit their Rs.2000 notes as they will not be legal tender after September.

This is not a useful reason. Because the notes, even when they were "demonetized" were only 3.62 lakh crores in value on May 19, 2023. And that's fallen to 0.42 lakh crore on Aug 1, which means only 3.4 lakh crore was deposited.

Total cash in circulation was around 3.45 lakh crore on May 19

On July 28, it was 3.29 lakh crore. That's only 16,000 cr. that's net out of cash - that means people deposited and took out cash again. No, this incremental CRR can't be because of Rs. 2000 notes. So why?
Now see these two screenshots:
* On Aug 11, the CRR requirement was 8.89 lakh crore
* on Aug 13, it's gone up to 10.01 lakh crore.

That's an incremental 1.12 lakh crore in CRR. Since that was about 10% of incremental deposits, deposits went up by 11.2 lakh crore in two months?

There's only one explanation: HDFC Bank's merger with HDFC.

HDFC Bank merged in July with HDFC. HDFC Is also huge. It also has massive "deposits". These deposits, before the merger, required no "CRR". They required no SLR and all that stuff.

From July 1 onwards, the bank would assume all deposits but they needed to post CRR only after around July 28 or so, because CRR has some crazy ass lag.

(Contd)
Read 7 tweets

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