Month: March 2021

‘Offloading of LIC stake in IDBI Bank will hit policyholders’

Banking & Finance

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The All-India IDBI Officers’ Association has cautioned that any move by the Life Insurance Corporation (LIC) of India to offload the stake held in IDBI Bank could hurt the interests of policyholders of LIC. The public sector life insurer was permitted to acquire up to 51 per cent equity in IDBI Bank, breaching the cap of 15 per cent originally stipulated for such transactions.

In a letter to the Chairman, Insurance Regulatory and Development Authority of India (IRDAI), Vithal Koteswara Rao AV, General Secretary of the Association, said that various reports in the media have suggested that LIC has been making repeated efforts to offload the stake it holds in IDBI Bank.

Also read: We will try to grow our business in a very calibrated way: IDBI Bank CEO

Loss may be distributed

Any loss that the LIC incurs in the transaction will, in turn, be distributed among the policyholders while declaring bonuses. The stake it holds in the bank was purchased at an average price per share of about ₹60 in 2019 whereas the current market price of the IDBI Bank share is at ₹40, Rao said.

The LIC of India holds 529,41,02,939 shares of IDBI Bank currently. When seen in absolute terms, the deal, if allowed to go through, will cause a loss that could runs into several thousands of crores, Rao said in the letter. It will only force the policyholders of the LIC to bear the brunt of this humongous loss.

“As most of our members are also policyholders of the LIC, we are obliged to make this request on behalf of our members to arrange to initiate suitable measures to see that none of the policyholders is subjected to any financial loss when the LIC seeks to pare the stake it now holds in IDBI Bank,” the letter said.

Series of worrying events

The Association expressed its worry over a series of events initiated with the acquisition of 51 per cent of stake in IDBI Bank in January 2019, followed by an announcement by the Reserve Bank in March that year that the status of IDBI Bank stands changed from a public sector bank to a private bank.

The next was the unilateral modification of service conditions of IDBI Bank officers by the management linking their performance with prospective termination, which the Association feels has been made with a clear intention of subjecting them to victimisation ‘as per the whims and fancies of the management’.

The Union Finance Minister’s observation that interests of the workforce of any public sector bank being privatised would be protected, attracts interest. But the ground reality prevailing at the bank versus the Finance Minister’s pronouncement are contradictory, the Association says.

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Banks closed for up to 10 days in various states in April 2021; check complete list of holidays

Banking & Finance

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According to the Reserve Bank of India (RBI), most states will observe holidays on Good Friday, Dr. Babasaheb Ambedkar Jayanti and Ram Navami. Image: Reuters

Banks in India will remain closed for over 10 days in April 2021, including weekends and festivals. In the first four days of April, banks will remain shut for three days due to the closing of accounts on April 1, Good Friday on April 2, and Sunday on April 4. Apart from these 10 holidays, there are five more state-specific and region-specific holidays. It may be noted that only gazetted holidays are observed by banks all over the country. While planning bank-related work, people are advised to check the holiday date in their respective states. According to the Reserve Bank of India (RBI), most states will observe holidays on Good Friday, Dr. Babasaheb Ambedkar Jayanti and Ram Navami. The list of holidays given below has been notified by RBI under the Negotiable Instruments Act.

List of holidays in April 2021

01 April 2021- To enable banks to close their yearly accounts
02 April 2021- Good Friday
04 April 2021- Weekly off (Sunday)
10 April 2021- Second Saturday
11 April 2021- Weekly off (Sunday)
14 April 2021- Dr. Babasaheb Ambedkar Jayanti/Tamil New Year’s Day/Vishu/Biju Festival/Cheiraoba/Bohag Bihu
18 April 2021- Weekly off (Sunday)
21 April 2021- Shree Ram Navmi (Chaite Dashain)/Garia Puja
24 April 2021- Fourth Saturday
25 April 2021- Weekly off (Sunday)

According to the Reserve Bank of India (RBI), banks will remain operational on April 1, 2021, in Aizawl and Shillong. Also, banks across Agartala, Ahmedabad, Chandigarh, Guwahati, Jaipur, Jammu, Shimla, and Srinagar will not observe holiday on April 2, 2021. On April 14, 2021, banks in states such as Aizawl, Bhopal, Chandigarh, New Delhi, Raipur, Shillong and Shimla will remain functional. Similarly, on Ram Navmi, banks in Aizawl, Bengaluru, Chandigarh, Chennai, Guwahati, Imphal, Jammu, Kochi, Kolkata, New Delhi, Panaji, Raipur, Shilong, Srinagar and Thiruvananthapuram will remain open.

Other state-specific holidays in April 2021

05 April 2021- Babu Jagjivan Ram’s Birthday (Hyderabad)
06 April 2021- General Elections to Tamil Nadu Legislative Assembly 2021 (Chennai)
13 April 2021- Gudhi Padwa/Telugu New Year’s Day/Ugadi Festival/Sajibu Nongmapanba/1st Navratra/Baisakhi
15 April 2021- Himachal Day/Bengali New Year’s Day/Bohag Bihu/Sarhul
16 April 2021- Bohag Bihu (Guwahati)

Only Hyderabad will observe a bank holiday on April 5, 2021, on account of the birthday of Babu Jagjivan Ram. While on April 6, 2021, only Chennai will observe a bank holiday due to the assembly poll election in Tamil Nadu. Similarly, banks in Guwahati will remain shut for Bohag Bihu. Only banks in states such as Belapur, Bengaluru, Chennai, Hyderabad, Imphal, Jammu, Mumbai, Nagpur, Panaji and Srinagar, will observe a holiday on April 13, 2021. Similarly, on April 15, banks in only five states — Agartala, Guwahati, Kolkata, Ranchi and Shimla will remain closed.

Even as banks will remain shut on the above mentioned days, customers can avail online services. Moreover, mobile and internet banking will remain operational.

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Reserve Bank of India – Tenders

Tenders

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It has been decided with the approval of competent authority to extend bid submission end date and bid opening date. Accordingly, Calendar of Events (Page 4 of Tender Document) stands modified/amended as under:

Existing Amended
Last Date for Submitting Applications and Opening of Quotations March 23, 2021 (Tuesday) Last Date for Submitting Applications and Opening of Quotations March 30, 2021 (Tuesday)
Opening of Technical Bid and Issue of Draft Empanelment List March 26, 2021 (Friday) Opening of Technical Bid and Issue of Draft Empanelment List April 01, 2021 (Thursday)

2. All other terms and conditions of the tender remain unchanged.

3. The above clarifications/modifications/amendments shall be part of the Bid document for all purposes

Note:

Last date of Tender submission: March 30, 2021 by 1500 hours

Opening of Technical bids: April 01, 2021

Regional Director
Reserve Bank of India
Bengaluru

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IDBI Bank to focus on retail loans in life out of PCA, BFSI News, ET BFSI

Banking & Finance

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After its exit from Reserve Bank’s stringent prompt corrective action (PCA) framework, IDBI Bank is looking to return to the growth league as the government looks to sell it to a strategic investor and current promoter LIC seeks attractive valuations in its upcoming IPO.

The bank’s capital adequacy ratio is 14.77 per cent and has earned profit continuously for the last five quarters while its other ratios such as liquidity coverage ratio are much above the RBI’s norms.

Under PCA

Under the PCA imposed by RBI in 2017, the bank’s balance-sheet shrank as it could not extend loans to corporates and was not allowed to open branches.

It used the four years of PCA to restructure its business, cut exposure to large loans and bulk deposits and create verticals for various lending businesses to speed up turnaround time.

The bank has worked for the last four years on various parameters, done recoveries and raised its provision coverage ratio to 97%.

The lender is looking at Rs 4,000 crore of recoveries in the next fiscal.

Retail loans

The share of corporate loans, which was about 67% four years back when it went under PCR, has shrunk to 40% now with 60% loans being retail. The bank is now targeting 55% loan book as retail and rest corporate. It wants to maintain low costs retail deposits at 48% of total deposits.

As a result, the institution has transformed from a project financier to a retail lender.

The company is looking to target the mid-corporate segment and will now avoid overexposure to certain industries and grow the business in a calibrated manner.

It sees over 12% growth in retail loans and 8-10% rise in corporate loans.

Growth

IDBI Bank plans to ramp up growth, regain lost corporate customers and sell stakes in its insurance, capital markets and technology arms. The lender plans to grow the loan book at 8-10% in the next fiscal and raise net interest margin beyond 3%.

The bank will focus on lending to manufacturing and maintain selective exposure to infrastructure.

The lender is looking to bring down the cost to income ratio to below 50% by pushing up income.

Stake sales

It willing to sell a 25% stake in Ageas Federal Life to the foreign partner if they wanted to acquire the stake after the increase in foreign direct investment (FDI) is allowed and also in other subsidiaries.

IDBI Fintech is a 100% subsidiary of the bank, which provides end-to-end IT services to IDBI Bank, its group companies, its ultimate parent company LIC, as well as other external clients in the BFSI sector. The company was currently in the process of appointing merchant bankers to help identify a strategic joint venture partner. IDBI Capital Markets is the merchant banking arm of IDBI Bank and the lender is looking for a strategic partner in this company as well.

Borrowings

Earlier this month, IDBI Bank’s board approved borrowing up to Rs 8,000 crore through rupee-denominated bonds in one or two tranches for FY2021-22.

Of the total, the bank will borrow up to Rs 3,000 crore via additional tier-I (AT1) bonds in one or more tranches, and up to Rs 1,000 crore in senior/infrastructure bonds by way of private placement.



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Axis vs Kotak vs IDBI Bank: Revised Interest Rates On FD Compared

Personal Finance

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Axis Bank Fixed Deposit

With effect from March 18, Axis Bank has updated its fixed deposit interest rates (FDs). Axis Bank provides FDs in terms ranging from seven days to ten years. Axis Bank is providing a 2.50 percent interest rate on FDs for a maturity period of 7 to 29 days. The bank provides 3% on FDs with a maturity period of 30 days to less than 3 months. 3.5 percent for FDs with a maturity period of 3 to 6 months. For FDs maturing in six months to less than 11 months 25 days, Axis Bank offers a 4.40 percent interest rate. 5.15 percent from 11 months and 25 days to less than one year and five days. For term deposits maturing in 18 months or less than two years, Axis Bank currently provides 5.25 percent interest rate. Long-term deposits maturing in 2 to 5 years offer a 5.40 percent interest rate, while deposits maturing in 5 to 10 years earn a 5.75 percent interest rate. On select maturities, Axis Bank provides senior citizens a higher interest rate compared to the general public. On deposits maturing in 7 days to 10 years, senior citizens can get interest rates ranging from 2.5 percent to 6.50 percent. The current Axis Bank FD interest rates, effective March 18, for both non-senior citizens and senior citizens on deposits of below Rs 2 Cr, are listed below.

Tenure ROI in % for general public ROI in % for senior citizens
7 days to 14 days 2.5 2.5
15 days to 29 days 2.5 2.5
30 days to 45 days 3 3
46 days to 60 days 3 3
61 days < 3 months 3 3
3 months < 4 months 3.5 3.5
4 months < 5 months 3.5 3.5
5 months < 6 months 3.5 3.5
6 months < 7 months 4.4 4.65
7 months < 8 months 4.4 4.65
8 months < 9 months 4.4 4.65
9 months < 10 months 4.4 4.65
10 months < 11 months 4.4 4.65
11 months < 11 months 25 days 4.4 4.65
11 months 25 days < 1 year 5.15 5.4
1 year < 1 year 5 days 5.15 5.8
1 year 5 days < 1 year 11 days 5.1 5.75
1 year 11 days < 1 year 25 days 5.1 5.75
1 year 25 days < 13 months 5.1 5.75
13 months < 14 months 5.1 5.75
14 months < 15 months 5.1 5.75
15 months < 16 months 5.1 5.75
16 months < 17 months 5.1 5.75
17 months < 18 months 5.1 5.75
18 Months < 2 years 5.25 5.9
2 years < 30 months 5.4 6.05
30 months < 3 years 5.4 5.9
3 years < 5 years 5.4 5.9
5 years to 10 years 5.75 6.5

Kotak Mahindra Bank Fixed Deposit

Kotak Mahindra Bank Fixed Deposit

The interest rate on fixed deposits (FDs) has been updated by Kotak Mahindra Bank, with effect from March 25, 2021. On FDs maturing in 7 to 30 days, 31 to 90 days, and 91 to 179 days, Kotak Mahindra Bank provides interest rates of 2.5 percent, 2.75 percent, and 3.25 percent, respectively. For term deposits maturing in 180 days or less than a year, Kotak Mahindra Bank offers 4.40 percent interest. For deposits maturing in one year to 389 days, the bank offers 4.50 percent interest rate. For FDs maturing in 390 days to less than 23 months, the bank will now offer 4.90 percent interest rate. For deposits maturing in 23 months to less than 3 years, Kotak Mahindra Bank will provide a 5% interest rate. For term deposits with a maturity period of three years or more but less than four years, the bank will pay 5.10 percent. For deposits maturing in 4 years or more but less than 5 years, Kotak Mahindra Bank offers a 5.25 percent interest rate. For FDs maturing in 5 years or more, up to and including 10 years, the bank offers 5.30 percent. Senior citizens will get interest rates that are 50 basis points higher than the general public. On FDs maturing in 7 days to 10 years, the bank provides interest rates ranging from 3% to 5.8% respectively. On deposits of below Rs 2 Cr the current interest rates on FD of Kotak Mahindra Bank for both the general public and senior citizens are listed below:

Tenure ROI for general public ROI for senior citizens
7 – 14 Days 2.50% 3.00%
15 – 30 Days 2.50% 3.00%
31 – 45 Days 2.75% 3.25%
46 – 90 Days 2.75% 3.25%
91 – 120 Days 3.25% 3.75%
121 – 179 days 3.25% 3.75%
180 Days 4.40% 4.90%
181 Days to 269 Days 4.40% 4.90%
270 Days 4.40% 4.90%
271 Days to 363 Days 4.40% 4.90%
364 Days 4.40% 4.90%
365 Days to 389 Days 4.50% 5.00%
390 Days (12 months 25 days) 4.90% 5.40%
391 Days – Less than 23 Months 4.90% 5.40%
23 Months 5.00% 5.50%
23 months 1 Day- less than 2 years 5.00% 5.50%
2 years- less than 3 years 5.00% 5.50%
3 years and above but less than 4 years 5.10% 5.60%
4 years and above but less than 5 years 5.25% 5.75%
5 years and above up to and inclusive of 10 years 5.30% 5.80%

IDBI Bank Fixed Deposit

IDBI Bank Fixed Deposit

The interest rates on IDBI Bank’s multiple fixed deposit schemes have also been updated. Since March 18, the updated IDBI FD rates are in force. After the new adjustment, IDBI FDs maturing in 7 days to 20 years will provide interest rates ranging from 2.9 percent to 5.1 percent. For senior citizens, the IDBI Bank FD rate varies from 3.4 percent to 5.6 percent. IDBI Bank provides 2.9 percent on deposits for a maturity period of up to 30 days. It provides 3% interest for 31 to 45 days, 3.25 percent interest for 46-90 days, and 3.6 percent interest for 91 days to 6 months. The interest rate on FDs with a maturity period of six months to one year is 4.3 percent, while the rate on deposits with a maturity period of one year to ten years is 5.1 percent. For 10- to 20-year FDs, the bank will bid 4.8 percent. Term deposits with a 5-year maturity period will provide 5.1 percent interest. On deposits of below Rs 2 Cr the current interest rates on FD of IDBI Bank are as follows:

Tenure ROI in % for general public ROI in % for senior citizens
07-14 days 2.9 3.4
15-30 days 2.9 3.4
31-45 days 3 3.5
46- 60 days 3.25 3.75
61-90 days 3.25 3.75
91-6 months 3.6 4.1
6 months 1 day to 270 days 4.3 4.8
271 days up to< 1 year 4.3 4.8
1 year 5 5.5
> 1 year – 2 years 5.1 5.6
>2 years to < 3 years 5.1 5.6
3 years to < 5years 5.1 5.6
5 years 5.1 5.6
> 5 years – 7 years 5.1 5.6
>7 years – 10 years 5.1 5.6
>10 years – 20 years 4.8 5.3



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MobiKwik denies data breach of 3.5 million users amid IPO plans, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: Digital wallet and payments company MobiKwik, reportedly planning an initial public offering (IPO) around September this year to raise $200-250 million, on Monday denied claims that sensitive data of millions of its users has been leaked.

Independent cyber security researchers have claimed that a database containing KYC details of nearly 3.5 million users of MobiKwik is up for sale on the Dark Web.

First tweeted by independent cyber security researcher Rajshekhar Rajaharia and then by French researcher Elliot Alderson on Monday, the alleged breach includes 8.2TB data containing users’ phone numbers, emails, hashed passwords, addresses, bank accounts and card details.

MobiKwik, however, vehemently denied any such breach. “Some media-crazed so-called security researchers have repeatedly attempted to present concocted files wasting precious time of our organisation as well as members of the media,” the company said in a statement shared with IANS.

“We thoroughly investigated and did not find any security lapses. Our user and company data is completely safe and secure,” the company added.

Alderson had tweeted: “Probably the largest KYC data leak in history.” Rajaharia had claimed earlier that “11 crore Indian cardholder’s cards’ data including personal details and KYC soft copy (PAN, Aadhaar etc) allegedly leaked from the company’s server in India”.

According to the researchers, the entire database is available for 1.5 Bitcoin (nearly $84,000) on the Dark Web.

The reports surfaced as MobiKwik last week raised $7.2 million in a funding round prior to the listing on the stock exchange, according to regulatory filings with the Ministry of Corporate Affairs.

According to Entrackr, Mobikwik’s post-money valuation currently stands at $493 million with the latest funding round.



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Visa moves to allow payment settlements using cryptocurrency

Banking & Finance

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Visa has said it will allow the use of the cryptocurrency USD Coin to settle transactions on its payment network, the latest sign of growing acceptance of digital currencies by the mainstream financial industry.

The company told Reuters it had launched the pilot programme with payment and crypto platform Crypto.com and plans to offer the option to more partners later this year.

Bitcoin, the most popular crypto coin, jumped to a one-week high on the news on Monday, rising as much as 4.5 per cent to $58,300 and heading back toward a record-high above $61,000 hit earlier this month.

Visa subsequently confirmed the news in a statement.

The USD Coin (USDC) is a stable coin cryptocurrency whose value is pegged directly to the US dollar.

Visa’s move comes as finance firms including BNY Mellon, BlackRock and Mastercard take steps to make more use of cryptocurrencies for investment and payment purposes.

Tesla boss Elon Musk, a major proponent of cryptocurrencies, said last week that customers can buy its electric vehicles with bitcoin, hoping to encourage more day-to-day use of the digital currency.

“We see increasing demand from consumers across the world to be able to access, hold and use digital currencies and we’re seeing demand from our clients to be able to build products that provide that access for consumers,” said Cuy Sheffield, head of crypto at Visa.

Traditionally, if a customer chooses to use a Crypto.com Visa card to pay for a coffee, the digital currency held in a cryptocurrency wallet needs to be converted into traditional money.

The cryptocurrency wallet will deposit traditional fiat currency in a bank account, to be wired to Visa at the end of the day to settle any transactions, adding cost and complexity for businesses.

Visa’s latest step, which will use the ethereum blockchain, strips out the need to convert digital coin into traditional money in order for the transaction to be settled.

Visa said it has partnered with digital asset bank Anchorage and completed the first transaction this month — with Crypto.com sending USDC to Visa’s Ethereum address at Anchorage.

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IDBI Bank eyes stake sales in subsidiaries, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: IDBI Bank plans to ramp up growth, regain lost corporate customers and sell stakes in its insurance, capital markets and technology arms following its exit from the banking regulator’s prompt corrective action (PCA) framework for weak lenders.

IDBI Bank MD & CEO Rakesh Sharma told TOI that the bank had used the four-year interregnum to restructure its business, cut exposure to large loans and bulk deposits and create verticals for various lending businesses to speed up turnaround time. As a result, the institution has transformed from a project financier to a retail lender.

“While our retail portfolio grew during the moratorium period, we were not able to cater to the corporates. We are now looking at the mid-corporate segment, particularly the good companies which were our partners earlier and we could not extend loans because of restrictions under the PCA,” said Sharma.

He said that the bank was looking at Rs 4,000 crore of recoveries in the next fiscal year. In addition, it was willing to sell a 25% stake in Ageas Federal Life (formerly IDBI Federal Life) to the foreign partner if they wanted to acquire the stake once the increase in foreign direct investment (FDI) is allowed.

IDBI Fintech is a 100% subsidiary of the bank. The company provides end-to-end IT services to IDBI Bank, its group companies, its ultimate parent company LIC, as well as other external clients in the BFSI sector. The company was currently in the process of appointing merchant bankers to help identify a strategic joint venture partner. IDBI Capital Markets is the merchant banking arm of IDBI Bank and the lender is looking for a strategic partner in this company as well.

The RBI’s PCA places restrictions on weak banks from offering large loans to corporates and offering salary hikes for management and from expanding business. Sharma said that the bank did hire specialists from the market, but now that it was out of PCA it would do more lateral recruitments and continue to hire from campuses.



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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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Bank NPAs may rise by Rs 2 lakh crore in March quarter, face Rs 30,000 cr provisioning, BFSI News, ET BFSI

Banking & Finance

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The Supreme Court‘s lifting of the stay on classifying overdue loans is not only set to add to a sizeable chunk to banks’ non-performing assets, but hit their balance-sheet substantially.

In absence of a standstill by the Supreme Court, the GNPAs for the banks would be higher by Rs 1.3 lakh crore (1.2%) and net NPAs would have been higher by Rs 1 lakh crore (1%), according to estimates by ICRA.

However, the Icra estimates exclude the stressed loans recommended by K V Kamath panel for restructuring. The Kamath panel has suggested certain norms for restructuring loans in 16 sectors most hit by the pandemic and banks are in the process of identifying such loans. While the restructuring of such loans has to be done June 2022, the RBI may ask banks to recognise these loans as NPAs in the March quarter itself, which may raise the bank NPAs to Rs 2 lakh crore.

Also, banks will need to provide about Rs 30,000 crore for the newly added soured loans as per the norms. They need to provide 15% in the first year and the rest over three years.

Interest booked

Banks follow the accrual method of accounting and in the absence of the NPA tag, they were booking interest on these loans, even though the money was not coming into their accounts. With these loans now classified as NPAs, banks have to reverse the interest they have booked, which may lead to Rs 10,000 crore hit for them.

Silver lining

However, most banks have made provisions on proforma NPAs, which they will be allowed to write back. This will not lead to any large impact on the balance-sheets of most lenders. Also, proforma NPAs are falling, while the provision coverage ratio has improved by an average of 300 basis points to over 70% for private banks and above 65% for public sector banks in the same period.

The proforma numbers

Following the Supreme Court (SC) stay order, banks have not tagged overdue loans as NPAs since August 2020. However, they have been listing such loans as portfolio-level proforma NPAs and making provisions for them.

Compound interest hit

Banks may have to take a hit of Rs 7,500 crore after the Supreme court extended the compound interest relief to loans above Rs 2 crore.

As per Icra, compound interest for six months of moratorium across all lenders is estimated at Rs 13,500-14,000 crore.

The government had already announced relief for borrowers having loan up to Rs 2 crore which was estimated to cost about Rs 6,500 crore to the exchequer. If the government takes the burden of Rs 7,500 crore on compound interest relief for large borrowers above Rs 2 crore, banks will be relieved to that extent.



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