From the look of things, mutual fund investors are in for a raw deal if a plan for conversion of part of DHFL's debt into equity goes through. Non-bank entities will only get a share of the liquidation value, as they are not part of the inter-creditor agreement, and thus, face losses of 40% or more. Other investors and lenders get paid in full over time without any haircut. Sebi will surely look into the issue closely. SBI is said to have sought a one-time exception to the rule on segregation of assets from the markets regulator so that mutual funds can be made part of the plan
STREET PULSE: Where we stand Asian shares and the Chinese yuan were off to a cautious start on Monday as investors waited to see how Chinese markets react to the news that the US administration was considering delisting Chinese companies from US stock exchanges.
Read More  | SGX Nifty traded nearly 12points down at 7 am (IST), signalling indecisiveness on Dalal Street. MSCI index for Asia-Pacific shares outside Japan slipped 0.11% while Japan's Nikkei shed 0.61%. |
| On Wall Street, US stock futures gained 0.24% in early trade, after Friday's fall, when Dow slipped 70.87 points, S&P500 dropped 15.83 points and the 91.03 points |
Crude oil prices edged higher on Monday, rebounding from a two-week low. WTI crude futures rose 14 cents to $56.05 a barrel while Brent futures rose 21 cents to $62.12.
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Return of the Consumer… Consumption picked up in the first weekend of festive season shopping, bringing relief to large retail chains, brands, malls and ecommerce marketplaces. A positive start to the Diwali sales period has assuaged concerns that the economic slowdown would hit consumption in what's traditionally the high point of India's shopping calendar. Several retailers, including Future Group, Spencer's Retail, Arvind Lifestyle, Reliance Digital, Vijay Sales and Great Eastern said their sales have grown by more than double digits in the first weekend of Navratri over same period last year. On an average, sales have jumped 10-14%.
Read More Bonanza for Borrowers… Borrowers could be paying less on their mortgages as banks shift to a new system of linking such loans to benchmarks prescribed by the central bank. That may result in lowering the cost of funding by as much as 30 basis points in some cases. SBI has pegged the spread at 2.65 percentage points above the repo rate, which is at 5.40%, resulting in an external benchmark rate of 8.05%.
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Share Pledge Bar… A key source of funding for promoters could dry up with new restrictions on transfer of shares between demat accounts set to kick in from October 1. NBFCs will no longer be allowed to ask promoters to shift shares to their accounts as collateral for lending. This could crimp promoters, especially of smaller firms, as NBFCs usually insist on them transferring shares rather than simply pledging them.
Read More DHFL Debt Rejig… Lenders may convert part of DHFL's debt into 51% equity even as non-bank entities such as mutual funds face losses of 40% or more, said two people with knowledge of the proposed resolution plan. The latter will only get a share of the liquidation value as they are not part of the creditors' consortium as per the plan. The remaining loans may be hived off and an equity investor could take a stake in the firm.
Read More Onion Curbs: India on Sunday banned exports of onions as prices remain high due to a seasonal shortage which has been worsened by flooding in several states. The government said exports would be prohibited with immediate effect.
Read More Meanwhile...The government may request an interim dividend of Rs 30,000 crore from RBI in order to meet its fiscal deficit target of 3.3% of gross domestic product. The government is likely to seek the dividend payment towards the end of the April-March financial year, government sources told PTI. A final assessment would be made in early January.
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