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Bank brokerages to continue reporting strong performance: Report

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The domestic capital markets continue to remain on an upward trajectory after a strong performance in FY2021.

The average daily turnover (ADTO) increased to Rs 27.92 lakh crore in FY2021 from Rs 14.39 lakh crore in FY2020, registering an annual growth of 94 per cent. Transaction volumes remain strong in the current fiscal, with the markets clocking an ADTO of Rs 56.36 lakh crore in H1 FY2022.

As per ICRA, the market performance has been supported by favourable liquidity in both domestic and international markets, optimism related to a recovery after the graded reopening of the economy, progress on vaccination rollout and steady retail investor momentum.

Throwing more light, Samriddhi Chowdhary, Vice President & Sector Head – Financial Sector Ratings, ICRA says, “The pool of ICRA-rated bank brokerages reported a strong performance in FY2021 with the estimated average daily turnover (ADTO) increasing 28 per cent Y-o-Y to Rs 1.51 lakh crore from Rs 1.18 lakh crore in FY2020, led by the healthy growth in the retail segment.

Despite the changes in the margin requirements, the performance remained healthy in Q1 FY2022 with an estimated ADTO of Rs 1.64 lakh crore, driven by favourable retail investor sentiment. However, the market share of the sample pool of ICRA-rated bank brokerages in terms of transaction volumes declined in FY2021 and moderated further in Q1 FY2022 as they continue to lose share to discount brokers.”

Bank-brokerages reported a strong uptick in earnings in FY2021 registering a year-on-year (Y-o-Y) growth of 40 per cent in total revenues and 80 per cent in profit after tax. The cost structure and operational efficiency of the bank brokerage companies also improved over the past few years with focus on the rationalisation of branches coupled with cautious efforts towards the transition to a digital business model, thereby improving the operational efficiency across brokerages.

Bank-brokerages have been increasingly looking at other non-broking sources of income, namely capital market lending business, distribution income and investment banking revenue. Bank-brokerages have significantly scaled up the margin funding business over the past fiscal, moving in line with the capital market rally, which has resulted in an increase in their borrowing level.

The retail broking segment has witnessed a significant disruption in the last few years due to the growing prominence of discount brokerages. The competitively priced offerings of discount brokers and the no-frill basic accounts and services have resulted in the realignment of the pricing strategy across the industry.

Adds Chowdhary, “apart from attracting clients from full-service providers, discount brokerage houses have helped expand the market by bringing on board a large number of first-time investors. While the market share for bank brokerages in terms of active clients moderated in FY2021, primarily owing to the faster scaling up of the discount brokerage houses, they reported a strong performance as reflected by the healthy operating metrics and surge in earnings.”

ICRA expects bank brokerages to continue to build their retail franchise and focus more on technology and digital models for customer acquisition. Supported by these factors, bank brokerages are expected to register a healthy growth in client addition as well as transaction volumes, though their share in total active clients would moderate owing to the rapid expansion of the discount broking model. The blended yields are expected to compress going forward, though the focus on fee and fund-based income would support the profitability.

Adds Chowdhary, “Bank brokerages are expected to continue to enjoy better brand recall, trust, higher credibility and financial flexibility by virtue of being a part of banking groups and would, therefore, remain a prominent part of the industry value chain. Bank brokerages are also increasingly looking at the emerging demographic opportunities and new geographical base, which is facilitated through online channels. Going forward, the ability of the bank brokers to effectively ramp up their digital initiatives, attract millennial clients and expand to a newer geographical base such as Tier II and Tier III cities would be critical.”

ICRA expects the net operating income (NOI) of bank brokerages to grow 20-25 per cent year-on-year (Y-o-Y) in FY2022 supported by steady broking income along with an uptick in the margin funding and distribution businesses; the ramp-up of other capital markets related businesses could further support the earnings profile. The net profit for bank brokerages is expected to grow 17-20 per cent during the same period.

The borrowings levels of bank brokerages are expected to increase in the current fiscal to support their margin funding business. The gearing levels of bank brokerages are expected to be in the range of 1.5-2 times in FY2022 at an industry level while the gearing across entities would vary between 1 to 3 times based on the scale of margin funding operations.

Business

Bharti Airtel Receives ₹1,74,000 Penalty Notice From DoT For Subscriber Verification Lapses

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New Delhi: Bharti Airtel has disclosed a regulatory development involving a minor financial penalty tied to compliance checks on customer onboarding processes.

The Department of Telecommunications, Madhya Pradesh Licensed Service Area, has issued a notice imposing a penalty of Rs 1,74,000 on the company. The action relates to alleged non-compliance with subscriber verification requirements under telecom licensing conditions, as detailed in Annexure A on page 2.

The issue stems from a Customer Application Form audit conducted by the DoT for January 2026. These audits are carried out periodically to ensure telecom operators adhere to rules governing customer identity verification before activating services.

Under the license agreement, telecom operators are required to maintain strict verification processes when enrolling subscribers. The audit identified alleged gaps in meeting these standards, prompting regulatory action from the authority.

Bharti Airtel has decided not to contest the notice and will pay the penalty. The company clarified that the financial impact is limited to the amount levied, with no broader operational implications highlighted in the filing. The disclosure reflects routine regulatory oversight in the telecom sector, where periodic audits ensure adherence to compliance norms.

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Maharashtra Minister Nitesh Rane Announces AI Project For Mango, Cashew Farming In Sindhudurg With 400 Farmers In Pilot Phase

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Mumbai, March 27: Maharashtra Fisheries and Ports Minister Nitesh Rane on Friday announced that an Artificial Intelligence (AI)-based project will be implemented to enhance mango and cashew cultivation in Sindhudurg district.

Initially, 400 farmers—200 each cultivating mango and cashew—will be selected for the pilot phase. The project aims to digitise farms by collecting basic data such as farmers’ names, contact details and village information. Based on the success of the initial phase, the initiative will be expanded to include more farmers.

The proposal was presented by experts from ADT Krishi Vigyan Kendra Baramati in the presence of agricultural scientists and officials, including representatives from Dr Balasaheb Sawant Konkan Krishi Vidyapeeth.

Under the project, sensors will be installed to monitor soil health, crop conditions and yield patterns. Farmers will receive training and awareness about AI technology through group-based sessions conducted over a 150-day initial phase.

The use of drones for pesticide spraying is expected to significantly reduce time from several days to just a few hours, ensuring quicker and more effective disease control. Additionally, AI-based predictive models will help detect crop diseases in advance, reducing excessive pesticide use and curbing black marketing.

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Business

Retail petrol and diesel prices won’t change, excise cut to offset oil firms’ losses: Govt

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New Delhi, March 27: The government on Friday said retail pump prices of petrol and diesel will not change, and the excise reduction is not being passed on as a price cut at the pump.

Instead, it directly reduces the under-recoveries being absorbed by public sector oil marketing companies (OMCs) — Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation — who have continued to supply fuel to Indian consumers at prices well below their cost of supply, the Petroleum Ministry said.

At current international crude prices, under-recoveries stand at approximately Rs 26 per litre on petrol and Rs 81.90 per litre on diesel.

The combined daily under-recovery being absorbed by OMCs is approximately Rs 2,400 crore.

The excise reduction offsets Rs 10 per litre of these losses, ensuring OMCs can continue to supply fuel without disruption while keeping retail prices unchanged, said the ministry.

The government has reduced excise duty by Rs 10 per litre on both petrol and diesel with immediate effect.

“This decision has been taken in response to the steep and rapid rise in international crude oil prices, which have surged from approximately $70 per barrel to around $122 per barrel over the past month — an increase of nearly 75 per cent in under four weeks, driven by the ongoing conflict in West Asia and associated disruptions to global energy supply chains,” the ministry said.

The contrast with global fuel markets is instructive. Fuel prices have risen by 30 to 50 per cent across South and South-East Asian countries, 30 per cent in North America, and 20 per cent in Europe since the onset of the current crisis. India has held the line. That stability carries a fiscal cost, and the government has chosen to bear it.

Earlier in the day, Minister for Petroleum and Natural Gas, Hardeep Singh Puri, said that Prime Minister Narendra Modi decided to take a hit on government finances to safeguard the Indian citizen.

“The government has taken a substantial impact on its taxation revenues to reduce the high losses being faced by oil marketing companies at this time of sky-high international prices,” he mentioned.

Alongside the excise reduction, the government has simultaneously introduced an export levy on diesel. At a time when international diesel prices have surged sharply, the levy is designed to disincentivise exports and ensure that refinery output is directed first towards meeting domestic demand.

Keeping Indian pumps fully supplied takes precedence over export opportunities, however commercially attractive those may be at current global prices. The government will continue to monitor the evolving global energy situation and take all measures necessary to maintain supply stability and price protection for Indian consumers.

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