Page 6 - Banking Finance December 2022

BANK UPDATE

"The residency requirement of the pro- ICICI Bank raises Rs. 5000 fold jump in the cost of living across
moter, under the Reserve Bank of countries, with food and energy prices
crore through infra bonds
India's (RBI's) guidelines, is in the con- going through the roof as the Interna-
text of new/prospective banks. How- ICICI Bank has raised Rs 5,000 crore tional Monetary Fund pointed out re-
ever, as IDBI Bank is an existing com- through infrastructure bonds for fund- cently.
pany, for the purposes of the transac- ing projects in segments like power
With the central banks across coun-
tion, the said residency criteria will not and roads, etc.
tries in the midst of a rate hike cycle,
apply to a consortium consisting of
The coupon for seven-year paper was the cost of owning a house in respec-
funds/investment vehicle incorporated
fixed at 7.63 per cent, about 25 basis tive countries has also jumped mani-
outside India," the Department of In-
points above yield on government fold, it said. However, the good thing
vestment and Public Asset Manage-
benchmark bonds with similar matu- is that India still stands like an oasis in
ment (Dipam) said in response to a
rity. This fundraise came a day after the this era of uncertainty.
potential bidder's queries.
Monetary Policy Com-mittee of Re-
According to the latest IMF report,
serve Bank of India decided to raise
Banks raise lending rates "Food and energy prices have been in
policy repo rate by 35 basis points to
the same phase (boom or bust) about
After RBI's move to increase repo rate 6.25 per cent.
75 per cent for the period since 2004."
by 35bps, a number of lenders hiked
The base issue size for ICICI Bank's in-
their benchmark lending rates, a move The report released said such inflation
fra bonds was Rs 1,000 crore with
that would result in higher EMIs. affects most economies across the
green shoe option of Rs 4,000 crore.
The effective repo-based lending rate world with a severe impact on lower-
The issue received bids for close to Rs
(RBLR) with effect from December 7 is income groups in developing econo-
20,000 crore from investors, debt mar-
9. 1%, Bank of India posted on its mies as in these countries, food con-
ket sources said.
website. Private sector HDFC Bank has sumes a significant household con-
The sources said besides ICICI, banks
hiked its marginal cost of funds-based sumption expenditure. It said this has
who raised money through infrastruc-
lending rate (MCLR) effective. a direct impact on the cost of living in
ture include Bank of Baroda and
The one-year MCLR, which acts as these countries and since the begin-
country's largest lender State Bank of
benchmark for many loans, was in- ning of the Ukraine-Russia conflict,
India. Last week, SBI had raised Rs
creased by 50bps to 8. 6%, HDFC Bank there has been a significant surge in
10,000 crore through maiden issue of
website said. ICICI Bank raised its prices across developed as well as
10 year infrastructure bonds carrying
MCLR rate effective December 1. Fol- emerging economies.
the coupon 7.51 per cent.
lowing the revision, the one-year
benchmark rate was raised by 10bps to Lenders have collectively raised Rs
Foreign Banks, regulator
8.4% from 8. 3% earlier. 19,600 crore via infra bonds till date in
the current financial year (Fy23). In discuss alternatives to CCIL
Axis MD: Citi deal to be FY22, Indian lenders including Axis
Following the decision of European
Bank and HDFC bank had raised over
completed soon regulators to de-recognise the Clearing
Rs 27,000 crore through infra bonds.
Axis Bank is trying to ensure the Corporation of India, Reserve Bank of
completion of its purchase of Citibank's India officials and executives of some
It's cheapest to live in In-
retail business by March 1 next year, foreign banks are said to have discussed
but there is a possibility that the pro- dia than US, UK, Germany: the prospects of lenders seeking to
cess could spill over to May, the domes- establish alternative clearing mecha-
SBI
tic private lender's MD, CEO Amitabh nisms, according to sources. The ESMA
Chaudhry said. The rise in the cost of living in India is in late October de-recognised six In-
lower when compared with the likes of
"We're still trying (for) March 1 very, dian clearing houses including the CCIL,
UK and Germany, according to SBI
very hard. There are some IT issues we which hosts the trading platform for
Research Ecowrap.
need to sort out, we are keeping the government bonds and overnight in-
RBI updated; all the work is going on. The report said there has been a mani- dexed swaps.
6 | 2023 | JANUARY | BANKING FINANCE