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Category: Financial News

  • How Indians invested in crypto in 2021?

    The year 2021 will be remembered as the time when the crypto market came of age. From being a retail investor-heavy segment, the industry saw widespread adoption from major corporates such as Tesla, PayPal and MicroStrategy.

    As per experts, meme coins, central bank digital currency, metaverse, and non-fungible tokens (NFTs) were the four major trends of 2021.

    Hitesh Malviya, founder, itsblockchain.com, a blockchain and cryptocurrency publication believes, 2021 will be remembered as a year of mainstream cryptocurrency adoption. “In this year, India added more than 90% of its current retail investor size. Meme coins dominated the first half of the year when dogecoin pulled off a massive price rally. Shiba Inu and some other meme coins also followed the lead of dogecoin in the latter half of the year,” said Malviya.

    As per Indian crypto exchanges such as CoinDCX, BuyUcoin and WazirX, Bitcoin, Ethereum, Tether, Shiba Inu, Dogecoin, WazirX Token, Matic, Ripple, Cardano and Solana were among the most-traded crypto coins during the year.

    However, the majority of the trading volume was dominated by top coins. As per WazirX’s analysis of its database, Bitcoin was the most traded crypto on its platform in 2021. Interestingly, on WazirX, women traded more in Bitcoin, whereas men traded more in Shiba Inu.

    Further, an analysis of investment patterns by BuyUcoin revealed that of every ₹100 invested on its platform, ₹50 went into Bitcoin, ₹35 in Ethereum, ₹10 going to Shiba Inu or Dogecoin, and rest among other coins. Interestingly, the most held crypto coin on BuyUcoin was Ethereum with an average investment above ₹40,000.

    Sumit Gupta, chief executive officer and co-founder of CoinDCX believes that Indian users have always believed in less risky investment options. “The same is reflected in their crypto investments. Domestic investors mostly invest in major tokens such as Bitcoin and Ethereum, which have the largest share in the market cap. Some other altcoins such as Dogecoin and Shiba Inu also attracted Indian investors on different occasions,” said Gupta.

    Cryptocurrencies have seen an exponential increase in interest ever since a Reserve Bank of India (RBI) ban was lifted in March 2020, with Indian exchanges clocking impressive user additions and a sustained surge in daily trading volumes.

    As per a survey conducted by the exchange, 51% of the respondents admitted to entering crypto basis recommendations from friends and family first. The platform had sent out the survey to 8.5 million of WazirX users, out of which 1% users responded.

    The survey also revealed that 44% of the respondents had up to 10% of their overall investment portfolio in crypto.

    Apart from the word of mouth, the pull of astronomical returns couldn’t be ruled out as a possible factor behind the widespread adoption of crypto assets.

    As per data available with CoinGecko, a digital currency price and information data platform, on a year-to-date basis, Bitcoin is up 68% and Ethereum is 441%, while on the other hand Dogecoin has surged 3,596% and Shiba Inu 4,39,49,900%.

    On BuyUcoin, long-term investors who started buying crypto between 2020 and 2021 are sitting on massive gains. “However, the average gain on liquidated portfolio remains to be in the range of 45-55% for investors with quarterly holding periods and 15-25% for monthly holders and recent investors,” said Shivam Thakral, CEO, BuyUcoin.

    In terms of demographics, as per CoinDCX, the younger age group (between 18-30 years of age) tends to mostly look for short-term trading/investing opportunities ranging between a week to a month max. However, that trend is restricted to some meme coins only.

  • Explained: What to look at before investing in ESG funds

    Environment, social responsibility, and corporate governance have of late emerged as key themes for investors in India. The asset size of ESG funds has ballooned nearly five times to Rs 12,300 crore over the last couple of years. Earlier this week, the National Stock Exchange (NSE) launched NSE Prime, a framework that allows companies to submit to standards of corporate governance that are higher than those required by existing regulations.

    Market experts say investors in funds and companies would do well to keep the factors of environmental sustainability, social responsibility, and corporate governance in mind for long-term sustainability of investment returns. However, some are sceptical of the possibility of “greenwashing”, and of fund managers over-weighing certain stocks once other options are deemed non-compliant with ESG investment parameters.

    The expression is used synonymously with sustainable and socially responsible investing. While selecting a stock for investment, an ESG fund shortlists companies that score high on environment, social responsibility, and corporate governance, and then looks at financial factors. With the overall increase in awareness, and with regulations moving in this direction, investors are re-evaluating traditional approaches and considering the impact of their decisions on the planet.

    As ESG funds gain momentum in India, companies will be forced to improve governance and ethical practices, and act with greater social and environmental responsibility, fund managers say. As the policy framework changes, companies that do not alter business models or become more environmentally sustainable, could have their revenue and profits impacted in the long term, they say. Globally, many pension funds and sovereign wealth funds do not invest in companies that are seen as polluting or socially not responsible.

    One of these is the possibility of “greenwashing”, understood as an act of conveying a “false impression or providing misleading information about how a company’s products are more environmentally sound”.

    In an agenda note published on December 21 on ‘How to address sustainable investment backlash and improve ESG reporting’, the World Economic Forum noted that greenwashing is a top concern among global institutional investors, “cited by six in 10 respondents as an issue when selecting sustainable investments, according to a Schroders Institutional Investor study. It’s also been known to be a problem for retail investors, who especially struggle to decipher complex ESG investments”.

    Investment experts have also pointed to the tendency of fund managers to over-weigh certain stocks and companies in a situation where most large investment-friendly companies have fallen short of the qualitative and quantitative parameters used for ESG investing.

  • RBI rejects Religare Finvest’s proposal to rename itself

    The Reserve Bank of India rejected Religare Finvest Ltd’s proposal to rename itself Care Financial Services and declined to new management status to the existing management – a move that would derail debt restructuring of the finance company, said people aware of the matter.

    As per the RBI’s regulations, lenders cannot restructure loans of borrowers tagged as fraud, unless there is a change in management. Lenders have tagged its parent company Religare Enterprises Ltd (REL) as fraud.

    Religare Finvest itself filed a case of financial irregularities against REL and have also proposed a debt recast plan with REL as its promoter company. “There is a dichotomy here and this may be a reason for the banking regulator to reject the change in management status,” one of the persons quoted above said.

    Religare Finvest is under a corrective action plan (CAP) since January 2018, which restricts it from expanding business, including giving new loans. The existing board is seeking new management status since the old promoters, the Singh brothers, are no longer in control of the existing board. Also, a new management status would encourage its lenders to restructure its debt, the people said.

    Separately, to clean its books Religare Finvest on Wednesday declared Asset Reconstruction Company of India as the winning bidder for its ₹480-500 crore distressed loan auction. Arcil had offered ₹180-190 crore for the SME portfolio, said a third person aware of the deal.

    Religare did not respond to requests for comments.

    Meanwhile, some existing lenders are of the view that recast of the loan is possible only after the regulator removes the company from CAP, the people quoted above said.

    Last year, the insurance regulator permitted Religare Health Insurance to rename it as Care Health Insurance. However, the banking regulator was against a name change of a loss-making finance company, said the first person.

    In March 2020, Religare Finvest itself filed a case alleging financial irregularities against its former management following which a first information report against Religare Enterprises and its promoters, siblings Malvinder and Shivinder Mohan Singh, was filed.

    Subsequently, it submitted a debt recast plan with REL continuing to be its promoter company, according to the annual report of REL for FY21. “A proposed debt recast with the same management as a promoter that is tagged as fraud is not acceptable to RBI,” said one of the lenders aware of the matter.

    In March 2020, RBI rejected TCG Advisory’s proposal to acquire a stake in Religare Finvest and its housing finance subsidiary on grounds that the acquirer is not fit and proper.

    Subsequently, it submitted a debt recast plan with FEL continuing to be its promoter company, according to the annual report of REL for FY21. “A proposed debt recast with the same management as a promoter that is tagged as fraud is not acceptable to RBI,” said one of the lenders aware of the matter.

    Religare Finvest, which focuses on funding small and medium enterprises (SME), has ₹2,787 crore outstanding rated loans. State Bank of India has the highest exposure of ₹500 crore followed by Canara Bank at ₹485 crore