Month: March 2021

Chennai-based NBFC Five Star Business Finance Limited raises ₹1700 crore

Banking & Finance

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Five Star Business Finance Ltd, a Chennai-headquartered non-banking finance company, has raised ₹1,700 crore ($234 million) from a consortium of global and Indian investment firms. The investment values the company at ₹10,300 crore ($1.4 billion).

The round included investment by existing investors in the company led by Sequoia Capital India, with participation from Norwest Venture Partners, and new investors led by KKR with participation from TVS Capital.

Five Star plans to use the capital to expand its lending business, the company said in a statement.

“In our mission of ‘Funding the unfunded,’ we have created a niche for ourselves empowering small businesses and the self-employed across corners of India by providing them with reliable and responsible funding alternatives. We aim to achieve this social goal through grass-root efforts without compromising on the pillars of asset quality and profitability that are needed to build a sustainable institution of scale,” D Lakshmipathy, Five-Star Business Finance Chairman and Managing Director D Lakshmipathy said.

Mix of investments

The investment will be made through a combination of primary infusion and secondary shares sales by existing investor Morgan Stanley Private Equity. The company’s other existing investors – Martix Partners and TPG Capital – will continue to stay invested.

“The company is a true pioneer in the market having supported the growth MSMEs for decades, playing an important role in India’s economy. Five Star is a terrific example of the type of solutions-oriented business that KKR looks to support through its Global Impact strategy and in India, and we look forward to working with Lakshmipathy and his team to build on Five Star’s long-term success,” Gaurav Trehan, Partner at KKR, said.

KKR’s investment, which is a part of its global impact strategy, marks KKR Global Impact Fund’s second investment in India and fifth in Asia Pacific.

Five Star looks to bridge the funding gap in the industry, which has about 60 million MSMEs, employs about 125 million people and accounts for more than 30 per cent of India’s GDP.

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Fintech will be the silver bullet for growth in 2021

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The fintech sector has facilitated business growth during the pandemic. What seemed like an option in 2019, has become an imperative.

There has been a clear shift of digital payments from a nice idea to an essential service. Consumers started using digital payments for groceries, utility payments, etc and now it has become a preferred mode for all their transactions.

This has been propelled by two factors — convenience and the fear of infection which comes with managing cash. Our conversations with consumers indicate that this trend will continue in the post-Covid world as well. Another interesting trend that we have seen is the use of digital payments by what we call the Silver Tech generation — people in the age group of 50-70 years.

Exediting the adoption

According to IBM’s US Retail Index, the pandemic has accelerated the move from storefronts to e-commerce by five years. The ripple effect of e-commerce has fuelled fintech adoption rates. The mobile payments in India are said to grow by ~ 60 per cent by FY 2022.

As nations plan for the next normal, what should businesses be thinking about to succeed in 2021?

Although consumption continues to be low across economies, consumer spending on e-commerce platforms tell a different story. In October, e-commerce sales in India jumped to $ 4.1 billion – across the sale and festive days announced by e-commerce majors – up by $ 2.7 billion a year ago. This indicates green shoots of recovery in consumption.

Livestreaming

The new record set can be attributed to the convenience and safety of shopping from home. Another driver could be that brands and retailers who livestream or use modern technologies such as augmented reality (AI), appear to have a competitive edge, resonating strongly with their customers.

The hesitancy to handle cash will force the adoption of contactless and digital payments as the preferred transaction method both offline and online. In Q3, we saw 15.2 million new active accounts – our second highest quarter in organic user growth, coupled with 1.5 million new merchants come onboard – twice our usual rate in a quarter.

Consumer trust in e-commerce intensifies amidst pandemic

Salesforce’s State of the Connected Customer research report also found that consumers now spend 60 per cent of their time interacting with companies online compared to 42 per cent before the pandemic. By incorporating the Online to Offline (O2O) model, which refers to services such as online information, discounts or services, member rebates, in-store pick-up of items purchased online, or the allowing of online purchases to be returned to physical stores, to their business strategies, companies can improve customer experience, service and loyalty. On the O2O model, we also expect consumers to opt for payment methods that act as a bridge between online and offline, such as digital wallets offering QR codes.

On an average, 88 per cent of shopping carts globally are abandoned, with one of the most common reasons attributed to complex checkout processes.

For businesses looking to keep and grow their customer base in this competitive environment, a simpler, faster, more intuitive checkout process with seamless and safe payment options is critical.

India attracted $2.7 billion in fintech investment in 2020: KPMG

Building trust

This accelerated digital and e-commerce growth, unfortunately, has drawn unwanted attention from bad actors exploiting vulnerabilities for nefarious purposes. Email scams related to Covid-19 have surged in recent times. They will probably continue as scammers push our psychological buttons to acquire our personal and financial information.

With the changing times, consumer preferences have evolved. Retailers now need to review their business models to align to a new normal, where digital DNA will drive growth.

The author is Senior Vice-President, Europe and Australia Enterprise and Growth Markets, Paypal

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IBC threshold limit raise may leave some creditors stranded

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Threshold limit under the Insolvency and Bankruptcy Code (IBC) for invoking an application may have been enhanced from ₹1 lakh to ₹1 crore in a welcome move from the standpoint of a corporate debtor, but it could leave many creditors within that bracket without remedy either under the Companies Act (CA) or the IBC.

This is because, with the introduction of the IBC, the Government had deleted Section 271(2) of the CA, 2013, and asked creditors to approach the tribunal under the IBC in case a company is unable to pay its debts. With the enhancement of the limit from ₹1 lakh to ₹1 crore, those falling within that bracket are unable to exercise their rights neither under CA nor the IBC.

The civil court option

“They will have to approach normal civil courts for recovery of their money, which would lead to further delay. The government should either reduce the limit to invoke an application to a lesser amount or reintroduce the deleted clauses of the CA with suitable modifications to end this predicament,” says Bijoy Pulipra, a Company Secretary and Insolvency Professional.

“Even ₹50 lakh is a big amount for a conventional creditor. The option for him is go to a civil court, but ambiguities abound here since it has no jurisdiction over company matters,” Pulipra told BusinessLine. Citing his own experience, he said he had submitted a claim for Rs 50 lakh on behalf of a corporate creditor. “But with the new default threshold in play, I find myself having ended up neither here nor there,” he added.

Floodgates may open

With the pandemic-induced suspension period envisaged under Section 10A of the IBC having ended on Thursday, Pulipra expects the insolvency floodgates to open. Section 10A was introduced to suspend applicability of corporate insolvency resolution process (CIRP) invoking sections such as 7, 9 and 10 with the intent to protect companies from the adverse economic impact of the pandemic.

The suspension was initially for a period of six months from March 25, 2020, which was extended further by six months. Because of this, no fresh insolvency matters could be admitted by National Company Law Tribunals (NCLTs) across the country. No application could be filed for initiation of CIRP for default occurring during the suspension period.

Classification of NPAs

“It is pertinent to point here that banks and financial institutions did not classify any account as non-performing asset (NPA) during the period and hence no default had technically occurred. Most banks/FIs shall start classifying the defaulting accounts in coming days as part of cleaning up their books which will escalate the number of cases being filed under IBC,” Pulipra said.

Apart from the raise in threshold level, the new IBC regime has also announced the concept of ‘pre-pack insolvency’ that will help the corporate debtor to find a resolution plan with the help of investors before approaching the tribunal. The pre-pack insolvency may get better traction with corporate debtors as they get an opportunity to resolve debt before it escalates to the CIRP stage.

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List Of Banks Providing The Cheapest Rates On Gold Loans

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Things to know before applying for a gold loan

  • When you apply for a gold loan, you must carry your gold ornaments with you in order to pledge it as a security against your loan.
  • When applying for a gold loan, you will need Aadhaar or PAN as proof of identity, utility bills as a proof of address, income proof and passport size photographs.
  • Banks have different minimum and maximum loan amounts. Similarly, gold loan terms range from three to 36 months depending on the bank.
  • Most of the banks charge up to 1.5 percent of the loan amount for processing fees plus GST, which you must pay before the loan is allocated. In addition to processing fees, banks charge valuation fees.
  • Your first option should be a public sector bank because interest rates are cheaper than that of private sector banks and non-banking financial companies (NBFCs).
  • The purity of the gold is examined by the lenders. The market price of your gold ornaments is then determined based on the gold rate on the day of the loan approval. You will get up to 90% of the value of the gold vowed. When you pledge gold ornaments, the lender only considers the gold portions when measuring the value; other metals, stones, and gems are not included. Foreclosure is authorized by banks. When an account is closed within three months, banks charge a nominal closure fee of up to 2% plus GST as foreclosure charges.
  • If you don’t pay back the loan on or before the deadline, the bank will deliver you an alert and charge you a late payment fee as a penalty. Over and above the applicable rate of interest, most banks impose penalty fees of up to 2% a year. If you do not pay back the loan despite repeated reminders, the bank can acquire and sell your pledged gold to reclaim the unpaid balance. Your credit history will suffer as a result of this.

How to claim tax benefits on gold loan?

How to claim tax benefits on gold loan?

  • Under the guidelines of the Income Tax Act of 1961, you can receive tax benefits on loans such as a home loan. For a gold loan, though, this is not the truth. The tax incentives you will get from this loan choice are determined by how you use the loan amount. You will get tax benefits on your gold loan in a variety of ways, such as:
  • If you need to cover major maintenance costs or make upgrades to meet shifting standards of your home, the necessary funds could be important. To cover these costs, you can take out a loan on your gold assets and thereby benefit from tax relief on gold loans. You can claim a tax benefit on a loan for home renovation under Section 80C of the Income Tax Act of 1961. This exemption is limited to Rs. 1.5 lakh a year and relates to the principal amount.
  • If the property you purchase or establish is self-occupied, you can assert a tax deduction of up to Rs. 2 lakh in a financial year under Section 24 of the Income Tax Act, 1961. If the residential property is rented, you can deduct the whole amount of interest accrued in the fiscal year from your tax liability.
  • You can also use a gold loan to get tax advantages on assets other than property investment. That being said, when you sell those securities within the fiscal year, the stated advantage falls in. You must add the interest charged on such a loan as part of the worth of acquisition to qualify for this advantage. You can reduce the capital gains tax that you have to pay by doing so.

Factors that impact gold loan interest rates

Factors that impact gold loan interest rates

To select the best Gold Loan interest rates for you, you must first understand the factors that influence gold loan rates.

Loan amount: As you might be aware, the loan amount is determined by the total gold value pledged by you. The gold loan amount is usually between 65 and 90 percent of the total gold value. The higher the loan amount, the higher the interest rate on a gold loan. Many lenders set interest rates based on the value of gold pledged by you the bank.

Purity of the gold: The maximum gold loan amount is determined by the quantity and nature of the gold articles. A bank-appointed valuer inspects the gold articles for consistency and quantity. Most banks will not recognise gold ornaments that are less than 18 karats.

Monthly income: Your repayment potential is calculated by your monthly income. If you don’t have any financial debt in the form of credit card or loan EMIs, a higher monthly salary may improve your repayment potential. Low gold loan interest rates can be obtained with a higher monthly income. Because of your high repayment potential, lenders will feel secure that you will be eligible to reimburse the loan on deadline. Most banks do not require borrowers to have proof of income. Banks, on the other hand, choose to loan to borrowers who have a steady income stream.

Credit score: One of the most significant variables that affects your interest rates is your credit rating. A high credit score means that an individual has a positive repayment history and is creditworthy. Credit score determines an applicant’s eligibility for unsecured loans, while credit score influences interest rates on gold loans. As a result, borrowers with strong credit scores of 700 or higher will get better interest rates than borrowers with poor credit ratings. Aside from that, keep in mind that when determining gold loan interest rates, lenders owe a spread, mark-up, and margin on the RLLR and MCLR.

Gold Loan Interest Rates

Gold Loan Interest Rates

We’ve curated here a compilation of gold loan interest rates presently being provided by some major banks for Rs 5 lakh gold loans taken for a three-year period to help you make knowledgeable choices.

Sr No. Banks ROI in % p.a.
1 Punjab & Sind Bank 7
2 Bank of India 7.35
3 State Bank of India 7.5
4 Canara Bank 7.65
5 Karnataka Bank 8.42
6 Indian Bank 8.5
7 UCO Bank 8.5
8 Federal Bank 8.5
9 Punjab National Bank 8.75
10 Union Bank 8.85
11 Jammu & Kashmir Bank 8.85
12 Bank of Baroda 9
13 Central Bank 9.05
14 Indian Overseas Bank 9.25
15 HDFC Bank 9.5
16 Dhanlaxmi Bank 9.7
17 Karur Vysya Bank 10.1
18 ICICI Bank 11
19 South Indian Bank 11.95
20 Axis Bank 12.5
Source: Bank Websites



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2 Buy Calls By HDFC Securities For Gains In The Near Term

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Investment

oi-Roshni Agarwal

|

Stock indices after plunging sharply for the last two days have regained their momentum on Friday, 1st day of April series and are trading higher with gains of more than 1.5 percent on the Nifty.

Next lower levels to be watched out on the Nifty are at around 14350-14300 in the next few session before showing another round of small upmove from the lows. Any pullback rally could find resistance around 14675-14750.

2 Buy Calls By HDFC Securities For Gains In The Near Term

Now given the market mood, here are 2 buy calls by HDFC Securities for gains in the near term:

1. Buy Sequent Scientific Ltd – Target price: Rs. 272

As per the weekly timeframe chart, the downward correction in the stock price of Sequent Scientific of the last 5 weeks seems to have completed. On Tuesday-Wednesday, the scrip saw sharp gains and settled higher. After a downtrend this pattern is suggestive of an attempt of upside breakout.

The weekly 10 period EMA is consistently providing support for the stock price and the latest upside movement has occurred from near this support around Rs. 225 levels. The momentum oscillator shows positive indication. Buying can be done in the stock of Sequent at a CMP of Rs. 248.05 and added more on dips down to Rs. 238 with a target of Rs. 272 in the next 3-4 weeks. Place a stop loss of Rs. 232.

2. Buy Balrampur Chini Mills – Target price:

Over the last few weeks, the prices of sugar stocks are seeing an uptrend. The losses of the previous week have been recouped as the stock is up by over 7%. Upmove from here could result in an upside breakout of the hurdle of Rs. 226 and that could pave way for more upside in the short term. Weekly 14 period RSI has turned higher from near 60 levels that indicates possibility of an upside momentum. With gains in the stock price, volume in the counter has also started to expand.

Buying in the stock can be initiated at levels of Rs. 218, add more on dips down to Rs. 210 and wait for the upside target of Rs. 240 in the next 3-4 weeks. Place a stop loss of Rs. 203.

GoodReturns.in



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CBI carries out searches at 100 locations across 11 states, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: The Central Bureau of Investigation (CBI) on Thursday carried out nationwide searches at 100 locations in separate alleged bank fraud cases of over Rs 3,700 crore, officials said.

The coordinated search operation was spread across 11 states and pertained to 30 FIRs related to bank fraud, they said.

“These searches are part of a special drive to book fraudsters on the complaints received from different nationalised banks in India. The complainant banks include Indian Overseas Bank, Union Bank of India, Bank of Baroda, Punjab National Bank, State Bank of India, IDBI, Canara Bank, Indian Bank and Central Bank of India,” CBI spokesperson R C Joshi said.

The searches were spread across Kanpur, Delhi, Ghaziabad, Mathura, Noida, Gurgaon, Chennai, Thiruvarur, Vellore, Tiruppur, Bengaluru, Guntur, Hyderabad, Ballari, Vadodara, Kolkata, West Godavari, Surat, Mumbai, Bhopal, Nimadi, Tirupati Visakhapatnam, Ahmedabad, Rajkot, Karnal, Jaipur and Sri Ganganagar.

“It may be stated that the CBI has been receiving a number of complaints from various banks alleging cheating, diversion of funds, submission of fake/forged documents by different defaulting firms while obtaining loans/credit facilities etc,” Joshi said.

The CBI added it was receiving allegations that such firms have been turning defaulters, resulting in the loans becoming Non-Performing Assets (NPAs), thus causing heavy losses to the public sector banks.

“After scrutiny, the cases are registered by CBI. Thorough investigation is carried out in order to book the culprits, take them to face the law and endeavour to salvage public money,” Joshi said.



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BharatPe launches instant liquidity facility for SME

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With its focus on small and medium enterprises, BharatPe on Friday announced the launch of a new lending product that would provide instant liquidity to distributors, wholesalers, traders and dealers.

Called Distributor to Retailer (D2R) Finance, it would offer collateral-free loans of up to ₹50 lakh for a period of seven days to 30 days.

BharatPe raises $108 million in Series D equity round

“BharatPe has already facilitated D2R loans of ₹50 crore in the first month of launch and aims to facilitate disbursal of ₹2,500 crore via this new product in the next fiscal year 2021-22,” it said in a statement.

The facility is live in 10 cities and has close to 2,000 SME registrations in just one month of launch, it further said, adding that the loan is available at a low interest rate, with zero processing fees and involves minimal paperwork.

“We aim to provide this offering in all 100 cities where we are present,” said Suhail Sameer, Group President, BharatPe.

BharatPe, third-largest player in UPI payment acceptance space

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Reserve Bank of India – Tenders

Tenders

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Applications are invited from Bengaluru based firms/companies/agencies for inclusion in the Bank’s panel of suppliers/printers, which will remain operational for a period of three years (2021 – 2024), subject to satisfactory performance.

Applications can be made in respect of:

  • Office Stationery Articles

  • Computer Consumables (Printer Cartridge, CD/DVD etc.)

  • Printed Materials (Registers, Forms & Visiting Cards)

  • Rubber Stamps (as per Bank’s requirement)

2. The Application Form can be downloaded from Bank’s website link https://www.rbi.org.in/scripts/BS_ViewTenders.aspx or can be obtained from HRMD, Reserve Bank of India, Bengaluru, between 10:30 hours to 15:00 hours on all working days (Monday to Friday) up to April 27, 2021.

3. The duly completed application forms super scribed “Application for Empanelment of suppliers/printers (Panel Year 2021-2024)” may be submitted in sealed covers, addressed to the Regional Director, Human Resource Management Department, Reserve Bank of India, 10/3/8, Nrupathunga Road, Bengaluru 560001, not later than 15:00 hours on April 27, 2021. Suppliers/Printers/Vendors who are currently on the Bank’s panel may apply afresh for empanelment.

Regional Director
Bengaluru

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Former RBI deputy Governor KC Chakrabarty passed away

Banking & Finance

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Former Reserve Bank of India (RBI) Deputy Governor (DG) KC Chakrabarty passed away in Mumbai on Friday due to a heart attack. He was 69.

An outspoken and witty commercial banker, Chakrabarty was elevated as RBI DG in 2009 after being at the helm of Punjab National Bank from 2007 to 2009.

Prior to taking charge of PNB, he was Chairman & Managing Director of Indian Bank for two years. He was also the Chairman of the Indian Banks’ Association (IBA) for a brief period.

In a speech at the 2013 Bankers’ Conference (BANCON), he chastised Bankers that it was during the pre-crisis years (when Banks with higher credit growth in 2004-08 ended up with higher growth in non-performing assets during 2008-13 period) that deficiencies in credit appraisal crept in, credit monitoring was neglected and recovery efforts slowed.

“Evidence suggests that the banks were not taking adequate cognisance of the build-up of leverage while sanctioning or renewing limits….Ironically, the banks were found to be lending more to sectors that had high impairments, pointing to possible lacunae in credit appraisal standards. Restructuring was extended to companies that were facing larger problems of over-leverage and inadequate profitability pointing to possible lack of due diligence in assessing viability while restructuring,” Chakrabarty said in his speech.

He observed that public sector banks suffer from some structural deficiencies related to the management and governance arrangements. Instances of lax credit management (credit appraisal, credit supervision, etc.) and poor governance and management standards which, though persisting even before the crisis, were not dealt with in time and eventually impacted much more emphatically than was anticipated.

A Doctorate in Statistics from the Banaras Hindu University (BHU), Chakrabarty started his career in teaching and research at BHU and later joined Bank of Baroda, where he rose to the position of General Manager.

His comments on combating inflation in 2010 reportedly did not go down well with the Governor. He was banker who did not pull any punches.

Chakrabarty abruptly put in his papers about two months ahead (April 25, 2014) of the completion of his five-year term at RBI (June 15, 2014).

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