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Nov 20 – Nov 26

Top news of the week

NBFCs Asset base scaled up to INR 54 lakh crores in March 2022

Addressing a CII-organised NBFC summit, the Union Minister of State for Finance, Bhagwat Krishanrao Karad said NBFCs have become the major growth driver of the economy by playing a vital role in providing credit to small and medium enterprises.The asset base of non-banking financial companies has scaled past Rs 54 lakh crore as of March 2022, constituting almost a quarter of the balance sheet of the commercial banking sector.

NBFCS have helped the MSME sector scale up its operations and create more jobs. They have helped create higher credit growth than the commercial banking sector. Around 11.3 million MSMEs have taken collateral-free loans worth Rs 2.32 lakh crore from NBFCs till June 2022. The credit demand in the NBFC sector is expected to grow to almost Rs 30 lakh crore in the next couple of years.NBFCs loans grew over 10% last fiscal while for banks, it was just half of that. The main reason for their success is that they have customised products.

Digitisation and better customer service has helped the NBFCs balance-sheet size more than double to 25%of the balance sheet size of the banking sector as of March 2022 from just 12 % in fiscal 2010.NBFCs are investing in digital technology like artificial intelligence and big data. It will also bridge the financial gap in the coming years due to its low cost of operations, the minister said, adding NBFCs have become a strong alternative to the banking sector.

Other Highlights of the Week

IRDAI approved change in capital, ownership, solvency of insurance company

The Insurance Regulatory and Development Authority of India (IRDAI) has approved multiple proposals, allowing private equity funds to invest directly into insurance companies, permitting banks to tie up with nine insurance companies, allowing insurance companies to raise alternative investments like subordinated debt and preference shares without seeking prior approval of the regulator.

IRDAI also gave the final approval to Go-digit General Insurance Company for listing and also in-principle approval to IndiaFirst Life Insurance Company. It has also approved the merger of Exide Life with HDFC Life.IRDAI allowed private companies to directly invest in insurance companies, making investment through a special purpose vehicle (SPV) optional. Investors can now take a 25% stake in insurance companies without being designated as promoters.

The objective of these changes was to strengthen policyholders, insurance companies and distributors to facilitate insurance for all by 2047.

SEBI brings mutual fund managers, directors, trustees under insider trade rule

With several cases of insider trading in mutual funds coming to light recently, the Securities and Exchange Board of India (SEBI) has finally brought fund managers, directors of fund houses, trustees and other connected entities under the ambit of insider trading rules.

According to the new rule of regulator connected entities will include board of directors and key management personnel of sponsor of the mutual fund, directors or employees of registrar and share transfer agents and custodians or valuation agencies of the mutual fund who have access or are reasonably expected to have access to unpublished price sensitive information relating to a mutual fund scheme or its units in the course of business operations.