Month: January 2021

IIFL Home Finance, Standard Chartered enter into co-lending partnership, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: Fairfax and CDC-backed IIFL Finance on Tuesday said its wholly-owned subsidiary IIFL Home Finance Ltd and Standard Chartered Bank have entered into a co-lending arrangement for extending MSME loans.

Under this partnership, IIFL Home Finance Ltd and the Standard Chartered Bank will co-originate these loans and the IIFL Home Finance Ltd will service the customers through the entire loan life-cycle including sourcing, documentation, collection and loan servicing, IIFL Finance said in a regulatory filing.

“We believe this is one of the first co-lending partnerships after the RBI’s revised guidelines,” Monu Ratra, the CEO of IIFL Home Finance, said.

IIFL Home Finance in December partnered with ICICI Bank to provide affordable housing and MSME loans as a sourcing partner. In October CSB Bank had also partnered with IIFL Finance for sourcing and managing retail gold loan assets.

IIFL Finance is a retail-oriented non-banking finance companies (NBFC) with about 90 per cent of its Rs 41,000 crore loan book under the retail category.

In November last year, the Reserve Bank had came out with a Co-Lending Model (CLM) scheme under which banks can provide loans along with NBFCs to priority sector borrowers based on a prior agreement.

The CLM, an improvement over the co-origination of loan scheme announced by the RBI in September 2018, seeks to provide greater flexibility to the lending institutions.



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Reserve Bank of India – Press Releases

Press Releases

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April 14, 2015





Dear All




Welcome to the refurbished site of the Reserve Bank of India.





The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.





With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.




The site can be accessed through most browsers and devices; it also meets accessibility standards.



Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.



Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.



Thank you for your continued support.




Department of Communication

Reserve Bank of India


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10 Best 2-Year FDs With Good Returns Up To 7%

Personal Finance

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2 Year FD Rates

Banks ROI in % per annum for general public ROI in % per annum for senior citizens
Utkarsh Small Finance Bank 7.00 7.50
Suryoday Small Finance Bank 6.75 7.25
Yes Bank 6.50 7.00
DCB Bank 6.50 7.00
RBL Bank 6.50 7.00
ESAF Small Finance Bank 6.50 7.00
KTDFC 6.00 6.25
Axis Bank 5.25 5.90
IDFC First Bank 5.20 5.70
ICICI Bank 5.00 5.50

Why you should opt FD on your portfolio?

Why you should opt FD on your portfolio?

When investing in market-linked securities to gain better returns, investors can be exposed to risks. Therefore, investors often need to pursue stable investment alternatives to ensure sustainable profitability. Fixed deposits are stable and, as compared to highly risky instruments, relate to assured returns. Firstly, even though an investor misses capital on other financial strategies, a part of its losses will be recovered from FD deposits.

Pros and cons of fixed deposits

Pros and cons of fixed deposits

Investors looking to invest in FDs, the following advantages can be beneficial for them:

  • FDs provide assured returns on the invested amount, unlike most other investment vehicles.
  • When it applies to the tenure of the scheme, the best FD plans provide flexibility as the tenure varies from 7 days to 10 years of most financial institutions.
  • For non-cumulative fixed deposit plans, the lender can specify the frequency of the interest payout. They will, thus, serve as an additional income source.
  • Though bank fixed deposits are of great value to many, they often suffer from some drawbacks. Fixed interest rates on deposits do not escalate with time or are in step with inflation. Consequently, if a person is attempting to beat inflation, they are not the right option for investment.
  • For a fixed time, a lump sum balance is locked-in. If you wish to maintain reasonable returns from the deposit, you should not use this money in case of an emergency. Premature withdrawals relate to penalties and unwanted charges.
  • When an investor wishes to pursue a premature exit from an FD, a part of their investment income from the scheme will end up being forfeited.
  • Investors are not eligible for any tax deductions or rebates on fixed deposit interest earnings until an investor actively chooses for tax-saving FDs.

Why you must invest in fixed deposits?

Why you must invest in fixed deposits?

For potential investors, fixed deposits are ideal investment vehicles. In addition, such structures can significantly benefit risk-averse people. There is almost no chance of principal failure, as FDs give guaranteed returns. That being said, investors should note that, as opposed to other high-risk alternatives, the rate of return on such an investment is restricted.



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Bank of England adapts bank stress test for pandemic era, BFSI News, ET BFSI

Banking & Finance

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The Bank of England said on Wednesday the aim of its banking stress test this year is to check if banks can continue helping the economy during the pandemic and if a return to more normal levels of dividends is possible.

The British central bank cancelled its annual health check of banks last year so they could focus on keeping credit flowing to an economy hit by its worst downturn in 300 years due to COVID-19 lockdowns.

Stress tests focus on the ability of banks to face major theoretical shocks, but the focus now changes given the economy has entered a real stress with COVID-19, the BoE said.

“At this point stress tests are used to assess whether the buffers of capital that banks have built up are large enough to deal with how the prevailing stress could unfold,” the BoE said in a statement.

The BoE said this year’s test of leading banks will be conducted in a “staggered” way, with banks submitting their initial projections in April on coping with a range of market shocks without going below minimum capital levels.

The BoE will then analyse the data and publish aggregate results in the summer, with the usual bank-by-bank outcomes made public in the fourth quarter.

After the economy went into its first lockdown in March last year, the BoE told banks to suspend dividend payments to preserve capital. In December, the central bank set out “guardrails” for relaxing its curbs on bank dividends.

“As noted in the December 2020 Financial Stability Report, the results of the 2021 test will also be used as an input into the Prudential Regulation Authority’s transition back to its standard approach to capital-setting and shareholder distributions through 2021.”

To help banks with the different timetable this year, the BoE said their “ring fenced” retail banking units would not form part of the test.



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Reserve Bank of India – Tenders

Tenders

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RBI, New Delhi invites e-tenders from Original Equipment Manufacturers (OEMs) or the authorized eligible firms for the work of Replacement of batteries of 2X80 KVA Uninterrupted Power Supply System for the office building. E-Tenders are to be submitted through the e-tendering portal of MSTC Ltd. (https://www.mstcecommerce.com/) not later than 02.00 PM on February 18, 2021. All interested bidders must register themselves with MSTC through the above referred website to participate in the e-Tendering process. Only those firms who are qualified for the work as per qualification criteria stipulated in the tender are eligible to participate in this tender. Bidders are advised to upload the documents in support of their eligibility for this tender during the submission.

a. e-Tender Name Tenders for Replacement of batteries of 2 X 80 KVA Uninterrupted Power Supply System at Reserve Bank of India, 6, Sansad Marg, New Delhi.
b. e-Tender no RBI/New Delhi/Estate/320/20-21/ET/457
c. estimated cost Rs. 08.50 Lakh
d. Mode of Tender e-Procurement System
(Online Part I – Techno-Commercial Bid and Part II – Price Bid through www.mstcecommerce.com/eprochome/rbi)
e. Date of NIT available to parties to download 2.00 P M of January 20, 2021 onwards.
f. Pre-Bid clarification (through e-mail) Clarification can be sought by visiting our New Delhi office or queries may be sent through e-mail on estatenewdelhi@rbi.org.in upto February 12, 2021.
g. Earnest Money Deposit ₹17,000/- (Rupees Seventeen thousand only)

In the form of NEFT / BG (as per Annexure III of NIT part 1)

Details for NEFT:
Beneficiary Name: RBI New Delhi
IFSC: RBIS0SCPA01
Account No.: 186004001

Proof of remittance with transaction number (Scanned copy) shall be Attached/ uploaded.

The bidders are also advised to send the proof of remittance with transaction number (scanned copy) to estatenewdelhi@rbi.org.in.

Qualification Criteria

Bidders must have minimum 5 years’ experience in the field of undertaking similar works viz. Replacement of batteries for Centralized UPS System or Replacement of centralized UPS for UPS capacity of rating 2X80 KVA or more and associated works for the office buildings/commercial premises/industrial houses and have, during the last 5 years (works completed on or after 31st DECEMBER 2015), executed successfully similar works individually costing as under:

(a) Three works each costing not less than 40% of estimated cost.

OR

(b) Two works each costing not less than 50% of estimated cost.

OR

(c) One work costing not less than 80% of estimated cost.

AND

(d) Have a minimum yearly turnover of 100% of estimated cost during the last 3 years supported by audited financial statements.

AND

(e) Have a complete service set up at New Delhi for rendering after sales service.

Bidders should upload the following documents in respect of fulfilling their eligibility with suitable file names as indicated.

i. Copies of detailed work order indicating scope and value of works. (File name eg: WO1, WO2 etc.) for indicating the experience (work completed before December 2015) and for the qualifying works (work completed after December 2015)

ii. List of completed works with all the details (File name eg: CW1, CW2 etc.)- In the format of Annexure I

iii. Client certificate regarding performance of the contractor for the qualifying works. (File name eg: CC1, CC2 etc.) – In the format of Annexure II

iv. Proof of remittance of EMD/ Bank Guarantee In Lieu Of Earnest Money Deposit as per Annexure III

v. Banker’s Certificate as per Annexure VI

vi. Audited financial statement for turnover for last 3 years (File name e.g.: FS1, FS2 etc.)

vii. Details of service setup- In the format of Annexure VII

viii. Details of technical deviations proposed – As per Annexure VIII

ix. The particulars/Catalogues and the names of manufacturers of specified item.

x. Details of Bankers as per Annexure IX

xi. Copy of Power of Attorney as per Annexure X (Original to be submitted by the successful bidder to RBI New Delhi)

xii. Technical details of proposed system as per Section X

xiii. Any other information relevant to the proposed work

xiv. In case of non-fulfilment of the eligibility (pre-qualification) criteria of the bidders, their bid shall not be considered for further evaluation and their part-II shall not be opened.

Regional Director/O-I-C

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Federal Bank awaits regulatory nod to pick up additional 4% stake in IDBI Federal Life

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Federal Bank is awaiting regulatory approval to pick up an additional 4 per cent stake in IDBI Federal Life Insurance Company Ltd (IFLI), according to MD & CEO Shyam Srinivasan.

Further, the Bank has no plans to dilute its stake in non-banking finance company (NBFC) subsidiary, Fedbank Financial Services Ltd (FedFina).

Srinivasan emphasised that when the Bank is seeking to increase stake in IFLI (an associate company), it will not want to dilute stake in another company (FedFina).

IFLI is a three-way joint venture of IDBI Bank (25 per cent stake), Belgium’s Ageas (49 per cent) and Federal Bank (26 per cent stake).

Srinivasan said down the line FedFina could go for an initial public offer (IPO). Federal Bank has a 74 per cent stake in the NBFC.

FedFina, which has a presence in 12 states via 360 branches, has a loan book of ₹4,337 crore. In the third quarter, the NBFC reported a 40 per cent year-on-year increase in net profit at ₹15 crore.

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Mutual fund exposure to NBFC debt grows marginally in Q3

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Mutual fund exposure to the debt instruments of non-banking finance companies (NBFCs), which was on a declining trend, has witnessed a slight uptick at the end of the third quarter of the current fiscal.

Amid underlying asset quality concerns and risk aversion due to a spate of high-profile defaults, mutual funds have been cutting down their exposure to the debt instruments of non-banking lenders over the last two years.

From a combined exposure of ₹2.65-lakh crore to corporate debt (bonds and NCDs) and Commercial Papers (CPs) of NBFCs in July 2018, mutual funds’ exposure to these instruments fell to ₹1.33-lakh crore as of April 2020.

High-profile defaults

A series of high-profile defaults starting with IL&FS, followed by DHFL, Altico Capital, Reliance Home & Commercial Finance and Reliance Capital, have heightened the risk aversion among debt mutual funds and asset management companies (AMCs) towards NBFC debt instruments.

In its latest ‘Report on Trend and Progress of Banking in India 2019-20’, the Reserve Bank of India said: “NBFCs mobilise resources largely via debentures and bank borrowings. With the IL&FS default and the related downgrade cascade, market access shrank and NBFCs’ reliance on banks for funds continued to rise.”

According to the report, bank borrowings of NBFCs on a year-on-year basis grew by 13 per cent to ₹7.08-lakh crore as on March 2020 from ₹6.26-lakh crore a year ago. On the other hand, NBFC fundraising through commercial papers fell by 56 per cent to ₹89,065 crore (₹1.59-lakh crore) during the same period.

“In 2020-21 (up to September), market confidence revived and NBFCs’ borrowings from banks and FIs accelerated, buoyed by the various policy measures taken by the Reserve Bank and the government to combat Covid-19 impact,” the RBI added.

As per latest data, mutual fund exposure to NBFC debt instruments increased to ₹1.47-lakh crore as of December 2020 against ₹1.33-lakh crore as of April. Within this, exposure to bonds marginally dipped to ₹89,410 crore as of December 2020 (from ₹89,678 crore in April), while exposure to commercial paper increased to ₹58,079 crore (₹44,096 crore) during the same period.

However, the combined exposure of ₹1.47-lakh crore as of December 2020 is still lower than the ₹1.64-lakh crore recorded in December 2019 and ₹2.30-lakh crore in December 2018.

According to CARE Ratings’ debt market update, the overall commercial paper issuances (as per the RBI) in December 2020 rose to ₹1.89-lakh crore, which is 5 per cent higher than the corresponding month last year. Financial services / investment sector alone accounts for 23 per cent.

“The cost of borrowing via commercial paper fell to 3.35 per cent in December by 11 bps lower than the previous month and 2.15 per cent than the corresponding period last year. There has been a broad-base decline in the cost of borrowings across NBFCs, HFCs, AIFs and non-NBFC categories on a month-on-month basis,” the report added.

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Reserve Bank of India – Press Releases

Press Releases

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Auction Results 91 day 182 day 364 day
I. Notified Amount ₹ 4000 Crore ₹ 7000 Crore ₹ 8000 Crore
II. Competitive Bids Received
(i) Number 97 112 99
(ii) Amount ₹ 25719.16 Crore ₹ 19819.55 Crore ₹ 24105.05 Crore
III. Cut-off price / Yield 99.1781 98.2650 96.5100
(YTM: 3.324%) (YTM: 3.541%) (YTM: 3.6261%)
IV. Competitive Bids Accepted
(i) Number 32 77 49
(ii) Amount ₹ 3998.525 Crore ₹ 6999.897 Crore ₹ 7999.554 Crore
V. Partial Allotment Percentage of Competitive Bids 86.55% 13.39% 36.90%
(1 Bids) (2 Bids) (1 Bids)
VI. Weighted Average Price/Yield ₹ 99.1825 ₹ 98.2830 ₹ 96.5397
(WAY: 3.3060%) (WAY: 3.5036%) (WAY: 3.5942%)
VII. Non-Competitive Bids Received
(i) Number 4 1 1
(ii) Amount ₹ 2401.475 Crore ₹ 0.103 Crore ₹ 0.446 Crore
VIII. Non-Competitive Bids Accepted
(i) Number 4 1 1
(ii) Amount ₹ 2401.475 Crore ₹ 0.103 Crore ₹ 0.446 Crore
(iii) Partial Allotment Percentage 100% (0 Bids) 100% (0 Bids) 100% (0 Bids)

Ajit Prasad
Director   

Press Release: 2020-2021/971

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Federal Bank Q3 profit falls 8% at ₹404 crore

Banking & Finance

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Federal Bank reported an 8 per cent decline in third quarter standalone net profit at ₹404 crore against ₹441 crore in the year-ago quarter.

The bottomline was weighed down by a 161 per cent year-on-year (y-o-y) jump in provisions, including towards loan loss and standard accounts, at ₹421 crore (₹161 crore in the year-ago period).

Net interest income/ NII (difference between interest earned and interest expended) was up 24 per cent y-o-y to ₹1,437 crore (₹1,155 crore).

Other income, including fee income and profit on sale of securities, increased by 18 per cent to ₹482 crore (₹408 crore).

Credit growth

Shyam Srinivasan, MD and CEO, said the 24 per cent growth in NII came on the back of a 6 per cent credit growth, indicating that interest income streams are well-structured.

Gross non-performing assets (NPAs) declined to 2.71 per cent of gross advances against 2.84 per cent in the preceding quarter.

Net NPA position improved to 0.60 per cent of net advances against 0.99 per cent in the preceding quarter.

Including the proforma slippages (whereby the Supreme Court directed banks that the accounts that were not declared NPA till August 31, 2020, shall not be declared NPA till further orders), GNPA and NNPA would have been 3.38 per cent and 1.14 per cent, respectively, in the reporting quarter.

Ashutosh Khajuria, ED and CFO, said the bank has made 15 per cent provision for the proforma slippages as per IRAC (Income Recognition, Asset Classification) norms.

Srinivasan observed that against the initial expectation of accounts aggregating about ₹3,500 crore getting restructured in FY21, the bank now expects only about half this amount to get restructured.

Total advances grew 6 per cent y-o-y to ₹1,28,180 crore. This came on the back of 16 per cent growth in retail advances (with gold loans jumping 67 per cent); business banking (13 per cent); agriculture (24 per cent); and commercial banking (8 per cent). Corporate advances, however, de-grew 7 per cent.

Total deposits increased by 12 per cent y-o-y to ₹1,61,670 crore. The proportion of low-cost CASA (current account, savings account) deposits increased to 34 per cent of total deposits from 31 per cent a year ago.

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10 Best 2-Year FDs With Good Returns Up To 7.15%

Personal Finance

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Investment

oi-Vipul Das

|

Fixed deposits are a stable investment alternative that promises stable interest rates, special interest rates for seniors, multiple options for paying interest, and tax benefits. Before opening a new fixed deposit or renewing a current one, it is essential to measure the recent fixed deposit rates among the major banks in the country. There is a range of banks and Non-Banking Financial Companies (NBFC) that provide decent guaranteed returns on 2-year FDs. On 2-year FDs the current interest rates go up to 8.25 per cent for the general public and 0.50 per cent additional interest rate to senior citizens. Considering the assured returns, premature withdrawal, loan against FD, nomination facility and so on term deposits can be a good bet for the general public as well as senior citizens. Hence, considering your 2-year of investment horizon we have framed below the top banks that can currently fetch you an interest rate up to 7.15%.

10 Best 2-Year FDs With Good Returns Up To 7.15%

2 Year FD Rates

Banks ROI in % per annum for general public ROI in % per annum for senior citizens
Suryoday Small Finance Bank 7.15 7.65
Utkarsh Small Finance Bank 6.75 7.25
Yes Bank 6.50 7.00
DCB Bank 6.50 7.00
RBL Bank 6.50 7.00
ESAF Small Finance Bank 6.25 6.50
KTDFC 6.00 6.25
IDFC First Bank 5.75 6.25
ICICI Bank 5.15 5.65
Lakshmi Vilas Bank 4.75 5.25

Why you should opt FD on your portfolio?

When investing in market-linked securities to gain better returns, investors can be exposed to risks. Therefore, investors often need to pursue stable investment alternatives to ensure sustainable profitability. Fixed deposits are stable and, as compared to highly risky instruments, relate to assured returns. Firstly, even though an investor misses capital on other financial strategies, a part of its losses will be recovered from FD deposits.

Pros and cons of fixed deposits

Investors looking to invest in FDs, the following advantages can be beneficial for them:

  • FDs provide assured returns on the invested amount, unlike most other investment vehicles.
  • When it applies to the tenure of the scheme, the best FD plans provide flexibility as the tenure varies from 7 days to 10 years of most financial institutions.
  • For non-cumulative fixed deposit plans, the lender can specify the frequency of the interest payout. They will, thus, serve as an additional income source.
  • Though bank fixed deposits are of great value to many, they often suffer from some drawbacks. Fixed interest rates on deposits do not escalate with time or are in step with inflation. Consequently, if a person is attempting to beat inflation, they are not the right option for investment.
  • For a fixed time, a lump sum balance is locked-in. If you wish to maintain reasonable returns from the deposit, you should not use this money in case of an emergency. Premature withdrawals relate to penalties and unwanted charges.
  • When an investor wishes to pursue a premature exit from an FD, a part of their investment income from the scheme will end up being forfeited.
  • Investors are not eligible for any tax deductions or rebates on fixed deposit interest earnings until an investor actively chooses for tax-saving FDs.

Why you must invest in fixed deposits?

For potential investors, fixed deposits are ideal investment vehicles. In addition, such structures can significantly benefit risk-averse people. There is almost no chance of principal failure, as FDs give guaranteed returns. That being said, investors should note that, as opposed to other high-risk alternatives, the rate of return on such an investment is restricted.



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