RBI’s dollar-rupee swap debut sees better-than-expected market response, ICICI Bank offering its salaried customers instant online access to home loans
The last week of financial year 2018-19 saw lenders racing against time to finalise some major debt resolutions including that of the beleaguered Jet Airways. Banks battled hard against the promoters and won majority stake in the airline. However, the challenging journey of reviving the debt-ridden airline has just begun.
Meanwhile, the central bank conducted its first dollar-rupee swap auction worth $5 billion to ease some pain for banks facing year-end liquidity crunch. It is expected to continue with more such auctions going forward.
The Jet Airways debt resolution saga continues
Earlier this week, Jet Airways founder and promoter Naresh Goyal and his wife Anita stepped down from the board to make way for new owners, a consortium of lenders led by the State Bank of India (SBI). The move would allow Jet Airways access to Rs 1,500 crore in emergency funding from banks and get some of its fleet off the ground.
However, there doesn’t seem to be an end to the airline’s problems. Its pilots have now threatened to go on strike from April 1, if their salaries are not paid. Saddled with a debt of over $1 billion of debt, Jet Airways has been struggling to stay afloat. It has delayed payments to banks, suppliers, pilots and lessors - some of which have forced the airline to ground most of its fleet. Of total 119, only about 35 are flying currently.
RBI’s maiden dollar-rupee swap auction
The Reserve Bank of India (RBI) on March 26 injected Rs 34,561 crore through its maiden long-term dollar-rupee swap auction. A better-than-expected market response signalled more such auctions in future.
“The response was higher-than-anticipated. This clears the deck for more such money market operations going forward,” said Ashish Vaidya, Head of Trading at DBS Bank.
The RBI received 240 bids worth $16.31 billion at an average premium of Rs 7.92. The central bank accepted 89 offers totalling $5.02 billion at a cut-off premium of Rs 7.76. These premiums represent what banks are willing to pay to the central bank at the end of the swap tenor, which is fixed at three years.
Going forward, traders expect the RBI to use the swaps along with its regular open market purchase of government bonds to provide liquidity in the system. However, swap issuances only provide temporary relief as they need to be reversed at the end of the tenor.
ICICI Bank’s instant home loans
India's second largest private sector lender, ICICI Bank is turning aggressive in the home loan market by offering its salaried customers instant online access to sanctions and disbursals, provided they meet the following criteria.
The lender, on March 28, said it has pre-approved home loans of up to Rs 1 crore for 'lakhs' of its existing customers on the basis of their credit score by using data algorithms. These are based on "a combination of financial parameters such as credit bureau checks, salary credits, average balances, repayment track, among others."
The bank is also providing instant top-up loans of up to Rs 20 lakh for a tenure of up to 10 years to existing home loan customers. However, there are no differential interest rates for loans availed digitally.
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