Month: February 2021

Pace of underlying growth in Indian economy remains subdued: ICRA

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India’seconomic recovery appears to have entered into a consolidation phase in January 2021, with the year-on-year (y-o-y) performance of a majority of the early available economic indicators recording a loss of momentum relative to the previous month, according to ICRA.

This loss of momentum is led by a combination of factors, such as the fading of the favourable base effect, supply-side issues and price hikes.

Aditi Nayar, Principal Economist, ICRA, opined that a majority of these early economic indicators lost steam in January 2021, relative to December 2020, partly because of an unfavourable base effect, supply-side issues and price hikes, marking a contrast to the improvement in sentiment brought on by the rollout of the Covid-19 vaccines.

“We do not construe the dip in volume performance of a majority of the lead indicators in January 2021 as a sign of alarm regarding the sustainability of the growth recovery.

“However, we do caution that the pace of underlying growth in the Indian economy remains subdued, and do not foresee a sharp ramp up in the pace of GDP expansion in Q4 FY21,” said Nayar.

Per a ICRA note, as many as nine of the 15 high-frequency indicators recorded a weakening of their y-o-y performance in January 2021, relative to December 2020.

“This sub-set includes the output of the passenger vehicles (PVs), motorcycles and Coal India Limited (CIL), vehicle registrations, petrol consumption, ports cargo traffic, generation of GST e-way bills, bank credit and deposits,” the agency said.

In contrast, six indicators – non-oil exports, electricity generation, rail freight traffic, scooter production, diesel consumption and domestic airline traffic – witnessed an improved y-o-y performance in January 2021, relative to December 2020.

The number of indicators displaying a y-o-y contraction rose to five in January 2021 from three in December 2020, with PV production, vehicle registrations and CIL’s output getting added to this sub set.

Based on available data, ICRA projected the growth in the Index of Industrial Production to remain muted at 0.5-2.0 per cent in January 2021 (+1.0 per cent in December 2020).

While it expects the technical recession to have ended already, the ratings agency anticipates that the pace of GDP growth, in real terms, will strengthen only modestly to 2.6 per cent in Q4 FY21 from 0.7 per cent in Q3 FY21.

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HSBC registered 1.8% rise in profit from India operations in FY20

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Banking major HSBC, on Tuesday, said its India operations reported a profit before tax of $1.024 billion in fiscal year 2020, which was a 1.8 per cent increase compared to $1.006 billion in the previous fiscal.

India is the third largest contributor to HSBC’s Group profits, with Hong Kong and Mainland China being the top two contributors.

In its investor presentation, HSBC has outlined that along with Greater China and South East Asia, India will be a key driver of its future growth.

The bank plans to grow wealth and international wholesale banking divisions in India.

“The bank seeks to grow its market share in transaction banking, including trade and foreign exchange, driven by digital and new supply chain solutions,” said the investor presentation.

Top bank for NRIs

In wealth, it seeks to expand insurance and asset management and build position as the top foreign bank for Non-Resident Indians and top 10 insurance player.

“For overseas Indian customers, we will grow NRI hubs, enabled by digital and remittance proposition, addressing significant NRI footprint across HSBC,” the presentation said.

However, overall, on a global basis, HSBC reported 30 per cent drop in profit after tax to $6.1 billion in fiscal year 2020 from a year ago. Profit before tax was down 34 per cent to $8.8 billion due to higher expected credit losses and other credit impairment charges (ECL) and lower revenue, partly offset by a fall in operating expenses, it said.

Of the reported profits from India operations, the most significant contribution was from the global banking and markets division, which reported a profit before tax of $593 million in fiscal year 2020 versus $533 million in the previous fiscal 2019.

Commercial banking division reported profit before tax of $187 million in fiscal year 2020, slightly lower than $201 million a year ago.

Profit before tax of wealth and personal banking was also down to $16 million in fiscal 2020, compared to $67 million in fiscal 2019.

As on December 31, 2020, HSBC had a total workforce of 2,26,000 full-time employees. India is main centre of employment with 39,000 employees.

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2 Better Investment Options To EPF As It Is No Longer Tax-Free

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Investment

oi-Roshni Agarwal

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In the Budget 2021, Nirmala Sitharaman in order to curb the centre’s outgo as tax-free interest on EPF has announced a new tax rule for EPF. Accordingly, for high income earners or those contributing a higher sum of over Rs. 2.5 lakh in a financial year will be taxed on the interest earnings. So, for high income earners, this interest on EPF announced annually and at 8.5% currently shall no longer be tax-free.

2 Better Investment Options To EPF As It Is No Longer Tax-Free

2 Better Investment Options To EPF As It Is No Longer Tax-Free

Note such a tax implication shall arise in case the employee’s contribution exceeds the stated threshold.

Rationale given for this new ruling on EPF tax

The rationale for introducing the measure is to curtail the practice of parking large sums in the PF account to seek dual benefit of tax exemption and high interest rate,” said S Ravi, Former Chairman of Bombay Stock Exchange, Founder & Managing Partner a of Ravi Rajan & Co.

Impact of the new move

To reduce their tax outgo, wealthy individuals who until now parked an extra sum in their EPF kitty or also for that matter made an extra contribution to VPF or voluntary provident fund, they will now look for other investment options to rake in a higher earning that does not attracts a similar tax structure.

1. NPS:

This is also a retirement savings scheme that provides pension amount and in the case of maturity, the commutation part offers tax-free income. At the maturity, investor has to decide the commutation percentage which is capped at 60%. Also, it is a known fact that NPS funds have yielded a higher return in comparison to EPF. As per the Cleartax website, the NPS scheme return from central government schemes have been over 12 percent for SBI, UTI Retirement Solution and LIC Pension Fund, respectively.

2. ELSS:

ELSS is also tax free up to Rs. 1.5 lakh in a year as per Section 80C of the Income-tax Act. Also, LTCG from the instrument are tax exempt up to Rs. 1 lakh. As these funds come with a lock-in of 3 years, you also get a disciplined approach to investing. For some of the funds as in IDFC Tax Advantage one year return have been 12 percent. ELSS – that offers dual advantage of capital appreciation as well as tax saving – has lower lock-in period (3 years) than PF & NPS,” said Ravi.



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Reserve Bank of India – Press Releases

Press Releases

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(Amount in ₹ crore, Rate in Per cent)
  Volume
(One Leg)		 Weighted
Average Rate 		Range
A. Overnight Segment (I+II+III+IV) 4,49,058.32 2.83 0.01-5.30
     I. Call Money 10,017.62 3.23 1.90-3.50
     II. Triparty Repo 3,35,257.85 2.86 2.51-3.12
     III. Market Repo 1,03,587.85 2.70 0.01-3.15
     IV. Repo in Corporate Bond 195.00 5.30 5.30-5.30
B. Term Segment      
     I. Notice Money** 291.52 3.04 2.50-3.40
     II. Term Money@@ 454.00 – 3.05-3.65
     III. Triparty Repo 200.00 2.90 2.90-2.90
     IV. Market Repo 5.00 2.40 2.40-2.40
     V. Repo in Corporate Bond 0.00 – –
  Auction Date Tenor (Days) Maturity Date Amount Current Rate /
Cut off Rate
C. Liquidity Adjustment Facility (LAF) & Marginal Standing Facility (MSF)
I. Today’s Operations
1. Fixed Rate          
     (i) Repo          
     (ii) Reverse Repo Mon, 22/02/2021 1 Tue, 23/02/2021 4,64,400.00 3.35
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo          
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo – – – – –
3. MSF Mon, 22/02/2021 1 Tue, 23/02/2021 0.00 4.25
4. Long-Term Repo Operations –   –   –
5. Targeted Long Term Repo Operations – – – – –
6. Targeted Long Term Repo Operations 2.0 – – – – –
7. Net liquidity injected from today’s operations
[injection (+)/absorption (-)]*		       -4,64,400.00  
II. Outstanding Operations
1. Fixed Rate          
     (i) Repo          
     (ii) Reverse Repo          
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo Fri, 12/02/2021 14 Fri, 26/02/2021 2,00,017.00 3.52
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo          
3. MSF          
4. Long-Term Repo Operations# Mon, 24/02/2020 365 Tue, 23/02/2021 15.00 5.15
  Mon, 17/02/2020 1095 Thu, 16/02/2023 499.00 5.15
  Mon, 02/03/2020 1094 Wed, 01/03/2023 253.00 5.15
  Mon, 09/03/2020 1093 Tue, 07/03/2023 484.00 5.15
  Wed, 18/03/2020 1094 Fri, 17/03/2023 294.00 5.15
5. Targeted Long Term Repo Operations^ Fri, 27/03/2020 1092 Fri, 24/03/2023 12,236.00 4.40
  Fri, 03/04/2020 1095 Mon, 03/04/2023 16,925.00 4.40
  Thu, 09/04/2020 1093 Fri, 07/04/2023 18,042.00 4.40
  Fri, 17/04/2020 1091 Thu, 13/04/2023 20,399.00 4.40
6. Targeted Long Term Repo Operations 2.0^ Thu, 23/04/2020 1093 Fri, 21/04/2023 7,950.00 4.40
D. Standing Liquidity Facility (SLF) Availed from RBI$       32,842.06  
E. Net liquidity injected from outstanding operations [injection (+)/absorption (-)]*     -90,077.94  
F. Net liquidity injected (outstanding including today’s operations) [injection (+)/absorption (-)]*     -5,54,477.94  
G. Cash Reserves Position of Scheduled Commercial Banks
     (i) Cash balances with RBI as on 22/02/2021 4,35,296.75  
     (ii) Average daily cash reserve requirement for the fortnight ending 26/02/2021 4,49,962.00  
H. Government of India Surplus Cash Balance Reckoned for Auction as on¥ 22/02/2021 0.00  
I. Net durable liquidity [surplus (+)/deficit (-)] as on 29/01/2021 8,48,955.00  
@ Based on Reserve Bank of India (RBI) / Clearing Corporation of India Limited (CCIL).
– Not Applicable / No Transaction.
** Relates to uncollateralized transactions of 2 to 14 days tenor.
@@ Relates to uncollateralized transactions of 15 days to one year tenor.
$ Includes refinance facilities extended by RBI.
& As per the Press Release No. 2019-2020/1900 dated February 06, 2020.
* Net liquidity is calculated as Repo+MSF+SLF-Reverse Repo.
# As per the Press Release No. 2020-2021/287 dated September 04, 2020.
^ As per the Press Release No. 2020-2021/605 dated November 06, 2020.
¥ As per the Press Release No. 2014-2015/1971 dated March 19, 2015.
Ajit Prasad
Director   
Press Release : 2020-2021/1137

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AU Small Finance Bank appoints Sharad Goklani as CTO, BFSI News, ET BFSI

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AU Small Finance Bank has appointed Sharad Goklani as President & CTO. He will be based out of Jaipur and will report to the company’s CIO, Ankur Tripathi.

In his new role, Goklani would be responsible for ensuring technology deployment and adoption across the bank.

“Moreover, given the diverse personas of our customer base, as a CTO of a tech-first Bank, Mr. Goklani would be responsible for creating technology interfaces, which are adaptable are flexible enabling tailor-made services for our unique set of customers,” the company told ETCIO.

Founded in Jaipur in 1996 as Au Financiers, a non-deposit taking NBFC, the company transformed into AU Small Finance Bank in 2017.

As a retail-focused bank constantly innovating to make banking simple for its customers, AU Bank is now moving towards being a digitally-led Bank with a pan India presence.

Previously, Goklani was EVP & CTO at Equitas Small Finance Bank. He has close to 25 years of professional experience and has worked with companies like Bharti Airtel and NIIT Limited in the past.

Purani has done his MCA from the University of Rajasthan.



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SBI Annuity Scheme vs SBI FD vs SBI RD: A Comparison For Good Returns

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Minimum deposit amount required for SBI Annuity Scheme

For the SBI annuity deposit, the minimum deposit amount with no upper limit is based on a minimum monthly annuity of Rs 1,000 for the applicable duration. And it is, the minimum deposit amount will be Rs. 36,000 for three years. For a fixed time, the interest starts on the balance deposited by the customer.

Required deposit amount and tenure of different SBI FD Schemes

Required deposit amount and tenure of different SBI FD Schemes

Under SBI fixed deposit schemes, the following plans are available for the customers:

SBI Term Deposit: Investors can easily select a maturity period that ranges from 7 days to 10 years. Rs. 1,000 is the minimum required contribution. Loans against FD and options for early withdrawal are open.

SBI Tax Saving FD: Here, the deposit tenure is set for 5 years. Rs. 1.5 Lakh is the highest investment amount. Loans against FD and premature withdrawal facilities, however, are not open.

SBI Fixed Deposit Reinvestment Plan: The maturity duration is between 6 months and 10 years for this scheme. With a deposit of only Rs. 1,000, investors can invest in this scheme.

SBI Multi Option Deposit: It is a mix of an FD and a savings account. Investors can partially withdraw the amount, while interest continues to be received on the remaining balance. With a minimum contribution threshold of Rs. 10,000, the tenure varies from 1 and 5 years under this scheme.

SBI Annuity Deposit: 36, 60, 84 and 120 months are tenure options. Rs. 25,000 is the minimum contribution permitted under this scheme. Premature withdrawal is possible only after the account holder’s demise.

SBI Annuity Deposit vs SBI RD: Know the key difference

SBI Annuity Deposit vs SBI RD: Know the key difference

The customer performs installment payments and receives the maturity amount in the Recurring Deposit Account at the maturity. A one-time deposit and that balance plus interest on the declining principal are returned to the customer in installments under the SBI annuity deposit over the tenor preferred by the customer.

SBI Annuity Deposit Scheme vs SBI FD: Know the key difference

SBI Annuity Deposit Scheme vs SBI FD: Know the key difference

In the case of STDR, the customer makes a one-time payment and receives the maturity balance at the maturity date, which includes principal and interest, and principal only in the case of TDR, as interest is paid annually on the SBI FD account. The SBI annuity deposit allows a one-time deposit and the balance is returned in EMIs to the customer over the tenor chosen by him/her, along with interest.

Interest rates comparison

Interest rates comparison

At present, SBI offers an interest rate of 2.9 per cent to 5.40 per cent on deposits maturing in 7 days to 10 years. The interest rates applied to the SBI annuity scheme is similar to that of the SBI FD which are in effect from January 8, 2021.

SBI RD Rates

Tenure ROI for non-senior citizens ROI for senior citizens
1 year to 1 year 364 days 5.00% 5.50%
2 years to less than 3 years 5.10% 5.60%
3 years to less than 5 years 5.30% 5.80%
5 years and up to 10 years 5.40% 6.20%

SBI FD Rates For Amount Below Rs 2 Cr

SBI FD Rates For Amount Below Rs 2 Cr

Tenure ROI for non-senior citizens ROI for senior citizens
7 days to 45 days 2.90% 3.40%
46 days to 179 days 3.90% 4.40%
180 days to 210 days 4.40% 4.90%
211 days to less than 1 year 4.40% 4.90%
1 year to less than 2 year 5% 5.50%
2 years to less than 3 years 5.10% 5.60%
3 years to less than 5 years 5.30% 5.80%
5 years and up to 10 years 5.40% 6.20%



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Aditya Birla Health Insurance offers mental well-being cost support

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Aditya Birla Health Insurance is offering customers mental health support in terms of counselling and consultation, apart from hospitalisation expenses, under its new comprehensive health insurance policy.

The move comes after the insurer’s experience with a mental health helpline for customers during the Covid-19 lockdown that registered a lot of interest and calls.

Also read: Is mental illness cover worth the money?

“Mental stress levels had gone up during the Covid-19 lockdown. People were at home, income levels in some cases were impacted, or just the pressure of dealing with so many things. So we started a mental helpline for our consumers free of cost. We were expecting not too many people to call because normally there is this taboo around that. But we were positively surprised that so many customers of ours actually use that facility,” said Mayank Bathwal, CEO, Aditya Birla Health Insurance, adding that they then decided to make it a part of the product offerings.

The insurer has recently launched a revamped version of its flagship product, Activ Health, which also offers customers access to mental counselling.

Under the facility, the customer can first call the helpline and talk to a counsellor and if the counsellor assesses that they need more detailed counselling support, then the product provides them that feature and they do not have to pay for it, Bathwal explained.

The insurer has tied up with Mpower, run by Neerja Birla, for counselling support.

“When we talk about mental health, the first thing is counselling support, and not necessarily anything to do with hospitalisation,” he pointed out, adding that the product not just covers mental health from a hospitalisation perspective but also includes mental counselling cost support.

Meanwhile, commenting on the health insurance sector, Bathwal said opportunities for the sector continue.

“It was already a very fast growing category. So my sense is that will continue. Covid has only increased the awareness level for health insurance, because people have realised that something like this can happen to any and everyone,” he said.

Between April and December 2020, Aditya Birla Health Insurance grew by 57 per cent with total gross written premium of ₹859 crore in the period.

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Thinking of Gold Loan? Things to Consider Before Applying

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Loam amount

It is not possible to obtain a loan of 100% against the worth of gold. Gold loans given can be as little as 60% of the value of gold and can be up to a limit of 85-90% depending on the lending institution.

The price of gold is also fluctuating. There are two ways in which the cost of gold is calculated. Some measure the prices of gold for the past two weeks and then use the average price to decide the rate per gram of gold. While some people take the daily rate to value the gold. Consider the option that better matches you, and the plan that gives the gold a higher worth.

Credibility

Credibility

Before you approach the lender, do a background search to know about the security steps taken by the lender to protect your properties. At the end of the day, the gold you pledge should be in safe possession. So select a trustworthy organization that guarantees protection. The odds of fraud with jewellers and lesser established NBFCs are the highest. So be careful when you choose your lender.

However, you have no assurance from the lender that poses the issue of the protection of gold. As there is no documentation or documents obtained from a local vendor. Gold loans are fast that you will get a lot faster than most other loans.

Interest Rate

Interest Rate

Gold loan interest rates vary from lender to lender. However, the calculation of the Gold Loan is based on two forms as below:

Fixed-rate of interests: The interest rate paid on the loan amount remains unchanged over the length of the loan. As a result, the EMI Gold Loan remains the same during the repayment schedule.

Floating rate of interest: Interest rates thus continue to adjust under market conditions. Also, because the rate is not set, the EMI Gold loan can increase or decrease suddenly.

Gold Loan Tenure

Gold Loan Tenure

Gold Loans are short-term loans. Most institutions offer a gold loan for a duration of one year, and some can extend it for up to 24 months. So, before you get a gold loan, you must be sure to repay it for the agreed period. Gold loans are a good way of receiving immediate cash to fulfill the needs in case of emergencies.

Non- Payment

Lenders have the right to sell your gold if you are unable to repay the loan on time. The lender would like to retain the loan-to-value ratio all the time; that is, greater than the money they have disbursed should be the value of the gold they possess.

Repayment Structure

Repayment Structure

The repayment option is another important factor, and there are a few options you could consider.

Bullet payment: The repayment amount of the loan is calculated on a monthly basis, but you pay the full amount, including interest, at the maturity of your loan period.

Upfront Interest: You can pay interest at the beginning of tenure and principal at the end.

Standard EMI: You have the option of paying back the loan along with interest on a month-on-month basis.

Things to note

Things to note

  • The majority of banks charge a minimum transaction fee of Rs 1,000 to 2%.
  • If you wish to partly repay your debt ahead of time, it is considered part prepayment.
  • It is called foreclosure in the event that you plan to settle the whole debt balance before time.
  • In such cases, banks usually levy prepayment or foreclosure costs, and these can vary from zero to even up to 1%.

Documents for Gold Loan

The documents required for availing of the gold loan are:-

  • Two passport size photographs
  • Identity proof such as PAN card, passport/, Aadhaar card, voter id card
  • Address proof (Electricity bill/ telephone bill/ bank statement

How much you will receive on your gold?

How much you will receive on your gold?

You will be given the highest prices for specially minted gold coins from banks of up to 50 grams or 22-carat gold ornaments.

  • If you sell hallmarked jewelry, a lower payment fee will be charged and the loan rate will also be lower.
  • Your lesser gold loan sum will be granted to lower purity gold ornaments of 18 and 20 carats.
  • Diamond, pearl, ruby, etc. Ornaments do not get you a decent loan amount as banks subtract the weight of these gems to measure the total gold weight.

GoodReturns.in



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Top 10 Banks That Offer The Lowest Interest Rates On Personal Loans

Personal Finance

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Investment

oi-Vipul Das

|

For just about every reason, like debt consolidation, unexpected expenses bill, a holiday, and so on, a personal loan can be your only perfect partner. Usually, for two or five years, with payments in annual installments a personal loan can be reimbursed. Personal loans are also widely called unsecured ones as they are not backed by collateral. To apply for a personal loan, there are several points to follow, but choosing the perfect one that suits your needs with a low-interest rate is the smart strategy here. And taking the same into account, public sector banks tend to drive the way by attempting to offer cheaper interest rates on loans across segments relative to the leading private sector banks of India. Here we have taken the cheapest interest rates on personal loans of Rs 5 lakhs that are currently being provided by leading banks of India.

Tips to get a personal loan at the lowest interest rates

Tips to get a personal loan at the lowest interest rates

Below are the few considerations that you can follow to get the lowest interest rates on a personal loan while applying for it:

  • Strong credit history plays an important role while applying for a personal loan. Banks and financial institutions support borrowers who have a good credit score with the lowest personal loan interest rates. Therefore, before applying for a personal loan, you must review your credit score. You should look at options to boost your credit score if it is less than 750. If your credit score is above 750, there are more possibilities for you to have a personal loan at the cheapest rate.
  • Your credit score can be negatively impacted if you miss a loan or credit card reimbursement. Typically, lenders take the debt history into consideration before agreeing on the interest rates for a personal loan. A lower interest is usually applied to those who have paid their previous EMIs and credit card payments on or before the deadline.
  • During festive times, banks and financial institutions typically give attractive interest rates for a short period. So it is considered to apply for a personal loan during a festive season to get the lowest rates.
  • There is a need to compare the personal loan interest rates provided by different NBFCs and banks before applying to a specific bank for a personal loan. It will enable you to take advantage of a personal loan at a reasonable interest rate.
  • You can receive the lowest interest rate if you are a current customer of a bank or have a positive relationship with the lender.

Factors that influence personal loan interest rates

Factors that influence personal loan interest rates

  • When determining the interest rate, loan providers consider the income stream of the individual first. Individuals with a high salary can get a personal loan at the lowest possible rate.
  • Lending institutions can give borrowers different interest rates depending on whether they are self-employed or salaried individuals.
  • The individual’s age may also have an effect on the interest rate provided by the lender. A higher interest rate can be charged to individuals who are entering the retirement age.
  • At the time of applying for a personal loan, current customers of a bank/financial institution may be given a lower interest rate, provided they have a strong relationship with the issuer of the loan.

Facts to consider while applying for a personal loan

Facts to consider while applying for a personal loan

There are a few other considerations to keep in mind while choosing a personal loan with a low-interest rate and they are:

  • A one-time charge known as the processing fee is charged by loan providers and just because a low interest is paid to you, the transaction fee charged by multiple lenders must be reviewed and compared.
  • If you repay the unpaid loan balance before the expiration of the loan repayment period, some banks may bill you a pre-closure fee. Thus, whether a pre-closure fee is charged by the bank/financial institution you are applying to is must be checked.
  • You must review the customer service networks that are open before submitting your loan application and how responsive the provider is to support you when requested.
  • Although personal loans at low-interest rates may be offered by a bank or financial institution, you should make an effort to verify whether you follow the eligibility rules stated by the lender. You must confirm that you verify whether your salary meets the defined cap and whether you follow the stated age criteria for this reason.
  • If you are applying for a personal loan because of an emergency, it is necessary to consider the duration of the disbursement of the loan.
  • Although the lender can bill you a marginally higher interest rate, the processing fee, default charges, prepayment fee, Loan Cancellation Fee, Stamp Duty Fee, Duplicate statement fee and so on are the charges that you must check.

Personal Loan Interest Rates

Personal Loan Interest Rates

The cheapest personal loan is provided by Union Bank of India at a rate of 8.9% per annum, followed by Punjab National Bank at 8.95%. The Federal Bank and HDFC Bank, the higher on the below table cost 10.49 per cent and 10.5 per cent respectively across private sector banks. The interest rate obtained from the websites of the respective banks as of February 4, 2021. Banks are classified on the grounds of interest rate in increasing order, i.e., banks providing the cheapest interest rate are put at the top and the highest at the edge. Based on the terms and conditions of these banks, the interest rates listed below can differ. As an applicant, if your credit history is poor you may be paid a much higher rate based on certain aspects, such as your salary, profession and age.

Sr No. Banks ROI in % p.a.
1 Union Bank of India 8.90
2 Punjab National Bank 8.95
3 Central Bank of India 8.95
4 Indian Bank 9.05
5 Bank of Maharashtra 9.55
6 SBI 9.60
7 UCO Bank 10.05
8 Bank of Baroda 10.10
9 Federal Bank 10.49
10 HDFC Bank 10.50



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Global banks innovating in a borderless environment, BFSI News, ET BFSI

Banking & Finance

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Global banks are tapping local talent and FinTechs in India to strengthen their global innovation capability across their presence in different regions. A centralised innovation team with local presence is a common methodology found across different global banks.

In an exciting panel discussion hosted last week on ‘Innovation In A Borderless Environment’ we explore how global banks are placed in developing their innovation capabilities.

Ash Malik, MD & Head-Technology Centres India, Deutsche Bank, said, “Deutsche Bank is a universal bank offering services from corporate banking to asset management across the globe and we believe in localization which means building deep expertise of the local market and reg environment on ground itself. We’ve regional SMEs in local markets globally aligned so we can provide support round the clock. In the first 6 months of 2020, Deutsche Bank transacted a record of $15 billion dollars of local issue currency and FX for clients across normal Asian market hours and this kind of intense customer focus led to Deutsche Bank being awarded crisis response year award in September.”

Malik explained that they have a local management structure which works closely with desks and play a critical role in establishing relationships with local government and regulators. Last year, DB became the first European bank to receive approval from SAFE Shanghai and to join its pilot payments rail and the objective is to expand cross border trade and simplify the payment process. DB customers now no longer have to perform onerous processes and instead connect to FX payments in seconds.

Malik adds, “Additionally we are partnering with FinTech companies across the region. Overall we’ve a global network of innovation teams across major centres and identify the adoption of strategic emerging technologies. We essentially do it for three key channels, a demand driven model where we co-innovate and collaborate with customers on ground, second, we’ve a scouting team and this team monitors key technologies and capabilities which bank considers strategic like cryptocurrency/blockchain which is going to be key for cross-border transaction this knowledge is used internally to innovate further and finally what we have is internal incubation where all employees in DB are given a platform to innovate.”

Rathnaprabha Manickavachagam, MD & Head-Innovation & Digital Transformation, India & Romania, Societe Generale, Global Solution Centre is driving innovation and digital transformation from India. She said, “We’ve a centralized innovation team headquartered in Paris which specifically looks at mergers and acquisitions like open banking models, collaboration with GAFAs, looking at a variety of ways for cross-border interaction. As they discover models, they work with 27 arms of the bank. Being an outpost in Asia, we’re extremely execution focused where we get different business use cases from businesses and give hands on solutions working with FinTechs and internal teams on emerging technologies. Major work is also delivered on value chain and product transformation.”

She explained how they interact with 16 innovation centres set-up across by Soc Gen, with additional smaller outposts in Singapore and Hong Kong. The innovation ecosystem is quite inter-linked across Soc Gen while we are connected on the strategy, we have a very good connection with extended teams of businesses in Asia, India and Romania, we can also work for the rest of the group in different regions.

She added, “We worked with 8 start-ups in Africa for our bank in the African region, we’ve that kind of mandate interlinked with strategic focus where businesses need help to improve product or topline or customer experience or introduce something new. The innovation set-up is centralized and local as well as convenience and strategic connects on specific projects.”

Ellis Wang, Sr EVP, Group Head of Technology, Transformation and Information at Mashreq Bank has executed a digital inside-out and outside-in strategy. He said, “Digital services became mainstream and we moved our applications to cloud to deliver seamless service. Our digital team is working on internal and external processes, by internally how we can adopt more digital to increase efficiency and reduce operational cost with higher STPs, more automation, etc. When we moved to cloud, we also explored allowing more touch points for our clients. Our innovation team is called ‘One Digital’ we also designed digital inside-out where we leverage APIs to service our clients for their requirements and different ecosystem services from e-commerce to insurance.”

At Mashreq Bank for Ellis the idea is to drive engagement by providing end-to-end service. He adds, “We also look at digital outside-in where we leverage external digital channels to target customers through these channels. We are preparing for hybrid operations. The One Digital team thinks about leveraging emerging tech to service corporate and retail customer base by knowing the customer base and tech.”

At Wells Fargo, Bharat Raizada, Lead-Chief Technology Office for India & Philippines has embraced cross-border capabilities over more than a decade ago and explains how as a part of global organisation innovation is being driven from India and Philippines.

Bharat said, “For innovation, there’s an organisation called Strategy Digital Platforms & Innovation which reports up to the CEO and is focused on driving innovation across organisation and driving value for customers. This SDI organisation works closely with all lines of businesses and has a presence in India and Philippines as well and we continue to work actively from a technology point of view to understand new innovation requirements from short and long term investment perspective.”

“There is a big play from quantum computing on how we can rapidly calculate risk on financial transactions as well as how we think of cryptography. How do we do interplay of data not only big data but small data too. A lot of the work gets done in India and Philippines,” adds Bharat.



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