Month: April 2021

Covid Crises: Should You Save Or Invest During a Pandemic?

Personal Finance

[ad_1]

Read More/Less


Planning

oi-Sneha Kulkarni

|

Thanks to the Coronavirus, which has forced people to stay at home, travel less and work from home, some Indians are saving more than ever before, considering the economic turmoil. During the pandemic, many of us were able to save a significant amount of money. If you’re one of the many, you’re probably thinking about how you can put this money to better use than making random purchases.

Given that we are all in the midst of a crisis, it is prudent to put money aside for the time being – whether for supplies, hospital bills, or basic needs.

If you intend to spend the money you’ve saved, make sure to set aside enough money for an emergency fund and a contingency fund. Saving money has always provided a buffer for our difficult times, regardless of the situation. And, in the long run, investments will still assist in the recovery of every pandemic situation.

Covid Crises: Should You Save Or Invest During A Pandemic?

Things to avoid during Covid 19 pandemic:

  • Do not sell any of your investments just because the market is down. This is just a phase that will pass and economic markets will recover.
  • The government has approved withdrawals from the Employees’ Provident Fund because most workers are experiencing financial difficulties (EPF). EPF is a tool for building a retirement fund that will cover your post-retirement needs. However, if you use it to solve a liquidity issue, you risk losing out on the power of compounding, which can help you create a sizable portfolio.
  • It’s important to remember that a loan moratorium isn’t the same as a waiver, and the EMI continues to be added to the unpaid balance, potentially leading to a higher interest bill. As a result, choose it with caution.
  • It’s important to avoid overspending during the pandemic. If you don’t, you’ll end up in even more trouble, with financial issues.

Check if your emergency funds are loaded

Before you invest somewhere, make sure it’s stocked with three to eight months’ worth of living expenses. Calculate your basics budget to make sure you have enough money set aside to cover those costs, such as rent or mortgage, electricity, and basic food if you ever need to find out how much money it is.

Planning to invest

If your funds are in good condition, consider your objectives and period, or when you want to use the money you’ve saved. While retirement is still a long way off for younger generations, it is still a good idea to start preparing for it as soon as possible. This is primarily due to two factors: life expectancy and inflation!

Invest Smartly & Cautiously

It is important to diversify one’s portfolio. As a result, it’s a good idea to allocate 10-15% of your portfolio’s assets to gold as an asset class. The price of gold is inversely proportional to the price of stocks. During stock market crashes, it performs extraordinarily well. There’s also the logic that it takes about three days for an investor to sell their mutual funds and get the money credited to their account. Markets will fluctuate a tonne before then due to uncertainty.

So, if you have a long-term goal in mind, remain invested and don’t make any adjustments to your portfolio. Bonds, also known as fixed-income portfolios, help to reduce portfolio volatility. While the returns are typically lower than those of equities, they are ideal for investors who want to be certain of a return on their investment.

Investments should be connected to long-term objectives so that the investor does not have to scramble for cash when he wants it. In addition to equities, experts recommend diversifying one’s portfolio with mutual funds, fixed deposits, gold ETFs, and government securities.

During the pandemic, smartness refers to how much money you put aside for emergencies and investments based on your current and projected needs.
The war against the Covid pandemic will be long, both personally and financially, and now is not the time to experiment with risky financial products.

GoodReturns.in



[ad_2]

CLICK HERE TO APPLY

Leave a comment

New policy on education loans: A new chapter for students, but is it risky?

Banking & Finance

[ad_1]

Read More/Less


Banks, especially those in the public sector, supporting the higher education dreams of Indians, both within and outside the country, is no longer news.

However, their recent decision to give loans to power the dreams of Non-Resident Indians (NRIs) and Persons of Indian Origin (PIO)/ Overseas Citizens in India (OCI) keen on getting a degree from an Indian institute of higher learning, is news for overseas Indians to sit up and take notice.

Banks will also consider education loan applications of students born abroad (have overseas citizenship by birth, when parents were on deputation with Foreign Government/ Government agencies or International/ Regional Agencies) and are now studying in India (after repatriation of their parents) for higher studies in the country.

Education loan to the aforementioned category of students will be subject to Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations, as per the Indian Banks’ Association’s ‘Model Educational Loan Scheme for Pursuing Higher Education in India and Abroad (2021)’. The earlier version of the ‘Model Educational Loan Scheme For Pursuing Higher Education in India and Abroad (2015)’ specifically stated that a student should be an Indian national to be eligible for an education loan.

Tweak in nationality criteria

The tweak in the nationality criteria in IBA’s Educational Loan Scheme ensures that it dovetails with the National Education Policy/NEP 2020 (released in July 2020). NEP envisages stepping up current public (Centre and States) expenditure on education in India from 4.43 per cent of GDP to 6 per cent and allowing select foreign universities – those from among the top 100 universities in the world – to operate in India.

According to banking expert V Viswanathan, the revamped loan scheme will be an incentive for meritorious students belonging to the NRI/PIO/OCI category to pursue studies in Indian institutions of international repute such as IITs/IIMs/IISc/XLRI.

“This will increase the number of students studying in Indian educational institutions of higher learning considerably. The number of foreign students studying in an educational institution is an important criteria in getting international ranking,” he said.

For NRI/ PIO/ OCI students, the new scheme requires the co-applicant to be a permanent resident of India. However, if the parents are also NRI / PIO/ OCI, banks may stipulate an additional co-applicant (who is a permanent resident of India). As per the scheme, normally, the student borrower may not have a credit history and as such he/she is assumed to be creditworthy. However, in case of an adverse credit history, banks, at their discretion, may frame suitable criteria based on their risk appetite.

Covers exchange programme

The scheme now also covers expenses towards exchange programme, whereby an Indian education institution sends its students to pursue education at a partner foreign university for six months to a year.

As for the documents required to take a student loan, the scheme makes it mandatory to submit passport in case of studies abroad. It says Aadhaar (unique identification) should be made mandatory, wherever applicable, as per the Supreme Court decision; and PAN Card is a mandatory document.

However, in case the student is not able to submit PAN details at the time of application, the same may be submitted subsequently as per the timeline decided by the respective banks (a minimum time of at least six months from the date of disbursal of the loan may be given).

Viswanathan observed that passport details can help banks in tracing an overseas student-borrower through the embassy/consulate in India in case he/she stops servicing the education loan.

Adequate financing

The scheme underscored that while assessing the quantum of finance, banks should ensure that a student is neither over-financed nor under-financed.

When it comes to the quantum of finance, the new scheme has not prescribed any cap. It only specifies that need-based finance should be provided to meet the expenses, taking in to account minimum margins.

The earlier scheme had capped the maximum finance for studies in India and abroad at up to a maximum of ₹10 lakh and ₹20 lakh, respectively. However, banks could consider higher quantum of loan on course to course basis (courses in IIMs, ISB).

Due to the rise in bad loans in the up to ₹4 lakh category, the new scheme has incorporated a clause, whereby parent(s)/ guardian(s) have to be joint borrower(s), along with a suitable third-party guarantee. The scheme says that it will also be open to banks to offer differential interest rates based on rating of courses/ institutions or even students.

The revamp of the model educational loan scheme also comes in the context of loans to this segment hitting the slow lane and non-performing assets hovering at over 5 per cent.

The educational loan portfolio of public sector banks (PSBs) rose by 9.1 per cent year-on-year (y-o-y) to ₹65,335 crore as on March-end 2016.

However, the growth slowed to 2.9 per cent y-o-y as on March-end 2020 (to ₹72,891 crore) and further to 1.5 per cent y-o-y as on December-end 2020 (to ₹73,977 crore), as per RBI data.

While the new scheme is a welcome development, there are rising concerns on possible defaults in education loans amid the Covid-19 pandemic, which has laid the economy low since March 2020.

Now, if student borrowers, who completed the final year of their course in 2020, did not get a job during the pandemic period, banks’ exposure to them could turn sour. The one-year repayment holiday/ moratorium after completion of course for these borrowers would either have been over by now or nearing completion.

So, the government, the Reserve Bank of India, and banks may have to consider an extended repayment holiday to alleviate the student-borrowers’ loan repayment woes as the pandemic has reared its ugly head again in the form of a second wave, and companies weigh their hiring plans from the point of view of demand for goods and services and the need to contain costs.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

5 Financial Tasks To Complete In April 2021

Personal Finance

[ad_1]

Read More/Less


Personal Finance

oi-Roshni Agarwal

|

Now as the first month of the new FY 2021-22 is about to end, amid the raging pandemic you need to complete some of the financial tasks in April itself.

5 Financial Tasks To Complete In April 2021

5 Financial Tasks To Complete In April 2021

1. Tax planning should be started early:

Tax planning: beginning tax planning exercise early in a financial year helps significantly. As accordingly, you would be able to evaluate rightly the amount you would need to invest to save maximum task. Further, this tax planning at the start is crucial if you wish to invest in market-linked investments such as NPS and ELSS. One can also start a SIP in ELSS fund that can save tax as well as enable the investor to benefit from the volatility in the markets.

2. Submit form 15G/15H:

While you may be afraid to step out of the house amid the pandemic, you with investments in FD can submit form 15g or 15H online to avoid tds deduction on FD income in case your taxable income is less than the basic tax exemption limit of Rs. 2.5 lakh.

Last year for the financial year 2019-20, the government extended the validity of form 15G or form 15H till June 30, 2021.

3. Open or Invest towards PPF:

For getting a higher payout, it is always advised that one starts PPF investment early i.e. at the beginning of the financial year. This is because investments made early in the financial year will enable the person to earn interest all through the year. Also, the interest on PPF is calculated monthly i.e. on the monthly minimum balance at the credit of account from the close of the 5th day of the month and the end of the month.

Also, there can likely be a case that after the political reasons due to which the small savings rate cut was reversed, may still propel the government to again reduce the key small savings rate. So, better to lock in investments at a higher return.

4. Start investing in small savings scheme:

Apart from the equities, one should also safeguard one’s investment by parking their corpus in safe investments such as small savings scheme that are backed by sovereign guarantee. Investors can earn a fixed return on them and over the years time, they help in enhancing one’s fortunes.

5. You can also increase your EPF contribution:

In case your salary increment or your disposable income allows you can also increase your employee contribution. But remember from this year there has been put new tax limitation in respect of EPF. For any contribution to PF over Rs. 2.5 lakh in a year, interest accrued on it will now draw tax implication.

One can also consider stepping up investment in other financial investments such as SIPs to take advantage of the rupee cost averaging and also to make it at par with your salary increment. This is such that your life time financials goals could be reached early in life.

GoodReturns.in



[ad_2]

CLICK HERE TO APPLY

Leave a comment

Data bank: Setback for the housing sector

Banking & Finance

[ad_1]

Read More/Less


|
Updated on


April 26, 2021

 

Published on


April 26, 2021

[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,

Reserve Bank of India – Tenders

Tenders

[ad_1]

Read More/Less


Estate Office, Mumbai Regional Office, Reserve Bank of India has invited open e-tender for “Design, Supply, Installation, Testing & Commissioning of UVGI Assembly In Air Handling Units (AHU’s) for Bank’s Mumbai Regional Office at Mumbai” through MSTC portal (www.mstcecommerce.com/eprochome/rbi) and Bank’s website

2. However, due to the prevailing extra-ordinary circumstances in the wake of Corona virus outbreak, the schedule of tender activities for the captioned work has been revised as under:

a. Name of the work : Design, Supply, Installation, Testing & Commissioning of UVGI Assembly In Air Handling Units (AHU’s) for Bank’s Mumbai Regional Office at Mumbai
b. E-tender Number : RBI/Mumbai/Estate/421/20-21/ET/658
c. Estimated Cost of the work : ₹ 24 Lakhs (Rupees Twenty-Four lakhs only)
d. Last date of submission of Pre-qualification papers : May 6, 2021 before 5.00PM
e. Schedule of Off line pre-bid meeting of eligible bidders only.   May 17, 2021 at 11.00 AM at Reserve Bank of India, Estate office, Fort, Mumbai – 400001
f. Last Date of submission of EMD   May 27, 2021 before 2.00PM
g. Close Bid Date and Time : May 27, 2021 at 2.00PM
h. TOE start time (Opening of Part I – Technical Bid)   May 27, 2021 at 3.00PM

3. The remaining timelines remain unchanged.

[ad_2]

CLICK HERE TO APPLY

Leave a comment

Bitcoin hits lowest since early March before retaking $50,000, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


By Joanna Ossinger

Bitcoin fell to the lowest in seven weeks on Monday as it continued to struggle with the $50,000 level and nearby technicals.

The largest cryptocurrency dropped as low as $47,079 in early Asia trading before rebounding. It was up 5.3% at $50,666 as of 9:01 a.m. in Hong Kong. That comes after it fell below the 100-day moving average late last week for the first time since early October after JPMorgan Chase & Co. cautioned that its upward momentum could be at risk.

“Bitcoin created a large gap down last week that could stick around far longer than bulls would want to see,” said Rick Bensignor, president of Bensignor Investment Strategies, in a note Monday.

The digital asset has stumbled since reaching a record $64,870 on April 14, buoyed by enthusiasm from the Coinbase Global Inc. listing. The collapse of two crypto exchanges in Turkey at the end of last week also may have depressed sentiment amid debate about whether cryptocurrencies could be in a bubble.

The lack of momentum over the weekend continued despite another potential reference to cryptocurrencies from Elon Musk on Twitter on Saturday. “What does the future hodl?” He asked, using a term often seen as meaning “hold on for dear life” that crypto supporters use to refer to buying and holding their digital assets.

Bitcoin hits lowest since early March before retaking $50,000Still, Bitcoin has done well over the medium term, retaining a gain of about 70% year-to-date as big-name investors endorse it and institutions from Goldman Sachs Group Inc. to Bank of New York Mellon advance their offerings around cryptocurrencies. JPMorgan’s John Normand reiterated in a note Friday that Bitcoin’s ascent has been steeper than any other financial innovation or bubble of the past 50 years.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Perpetual bonds – where do we go from here?

Banking & Finance

[ad_1]

Read More/Less


It has been over a month since SEBI announced guidelines for perpetual bonds and almost a month since the valuation of such bonds under the new methodology has been implemented. Before we get into implications of such valuation, lets quickly understand what these bonds are, and how did they actually impact market sentiment.

AT-1 (additional tier 1) bonds are issued predominantly by banks to raise additional Tier 1 capital without any maturity date (perpetual), but they have a call option. Banks issue AT-1 bonds to meet their capital adequacy requirement. Higher capital adequacy norms came into force with the implementation of Basel III guidelines.

These guidelines were formed after the 2008 financial crisis with the collapse of a few banks and financial institutions. Similarly, Basel III Tier 2 bonds issued by banks are expected to provide to their depositors and senior creditors an additional layer of protection.

According to the Basel III guidelines issued by the RBI, Basel III-compliant Tier 2 bonds normally come with a finite maturity.

The regulation

On March 10,SEBI put certain restrictions on investment in these bonds by Mutual Funds – no mutual fund under all its schemes shall own more than 10 per cent of such instruments issued by a single issuer; mutual fund scheme shall not invest (a) more than 10 per cent of its NAV of the debt portfolio of the scheme in such instruments and (b) more than 5 per cent of its NAV of the debt portfolio of the scheme in such instruments issued by a single issuer; and the investments of mutual fund schemes in such instruments in excess of the limits specified may be grandfathered, and such mutual fund schemes shall not make any fresh investment in such instruments until the investment comes below the specified limits. Given that mutual fund ownership of such Tier 1 bonds was around one-third of the total outstanding, it did create some anxiety across the perpetual bond segment.

Yields on such bonds shot up by ~1 per cent. The assumption here was MFs will panic exit such bonds and, hence, bids started inching up.

The volatility in perpetual bond space we saw was largely due to the uncertainty around the impact of valuation methodology. It is important to keep in mind that this in no way was a credit event, but a valuation method change for mutual funds. Since then, the yields have only softened (eased by 50-60 bps) from peak levels as carry chasers stepped in to buy such bonds. Also, we did not see mutual funds undertake panic sales, as the regulator has allowed grandfathering of such exposures.

What’s next?

Markets have now reconciled to business as usual with regard to perpetual bonds. It is important to note that the regulator has not barred MFs from investing in such bonds. Hence, the option remains with MF managers whether or not they would want to own such bonds. All perpetual bonds cannot be categorised as one. Like every debt instrument, perpetual bonds should be evaluated based on the banks fundamentals.

The primary focus remains to evaluate such bonds basis the underlying credit metrics, capital adequacy ratios and systemic importance to the Indian economy. As an investor, one needs to follow the same process in case he/she has exposure to AT1 bonds directly or via mutual funds. The current interest rate scenario may mean adequate liquidity and range-bound interest rates.

In such a scenario, carry yield in fixed income assumes a lot of significance. Such bonds do offer a spread over plain vanilla bonds. The acid test, however, would be to see how the appetite is if banks issue fresh bonds. Also, with valuations now being delinked from call option date, will banks want to continue to hold on to the existing bonds rather than exercising a call option on such bonds?

Markets will get more clarity over next few months as some tier 1 bonds approach their call date. However, market activity in such bonds so far is suggestive of call option being exercised, though it will have to be a wait and watch.

To sum up, AT1 bond offers credit comfort (based on underlying) and reasonable accruals for the investor. In case of MFs, it would best left to the discretion of the portfolio manager to hold the AT1 bonds till call/maturity as per the investment contours of respective schemes. Investors should be aware of the nature of the underlying investment rather than any action based on external noises. After all panic leads to pain, no one really stands to gain.

 

(The writer is CIO – Debt & Head – Products, Kotak Mahindra Asset Management Company. Views expressed are personal and do not reflect the views of Kotak Mahindra Asset Management Company Limited)

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

Reserve Bank of India – Press Releases

Press Releases

[ad_1]

Read More/Less


(Amount in ₹ crore, Rate in Per cent)
  Volume
(One Leg)		 Weighted
Average Rate 		Range
A. Overnight Segment (I+II+III+IV) 438,417.18 3.18 0.01-3.50
     I. Call Money 11,074.66 3.21 1.90-3.50
     II. Triparty Repo 320,491.60 3.20 3.15-3.35
     III. Market Repo 106,850.92 3.09 0.01-3.35
     IV. Repo in Corporate Bond 0.00   –
B. Term Segment      
     I. Notice Money** 1,063.75 3.35 2.70-3.40
     II. Term Money@@ 465.00 – 3.25-3.60
     III. Triparty Repo 1,424.10 3.24 3.10-3.28
     IV. Market Repo 450.00 3.15 3.15-3.15
     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 Fri, 23/04/2021 3 Mon, 26/04/2021 390,042.00 3.35
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo Fri, 23/04/2021 14 Fri, 07/05/2021 200,017.00 3.47
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo – – – – –
3. MSF Fri, 23/04/2021 3 Mon, 26/04/2021 149.00 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 (-)]*		       -589,910.00  
II. Outstanding Operations
1. Fixed Rate          
     (i) Repo          
     (ii) Reverse Repo          
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo          
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo          
3. MSF          
4. Long-Term Repo Operations# 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
7. On Tap Targeted Long Term Repo Operations€ Mon, 22/03/2021 1095 Thu, 21/03/2024 5,000.00 4.00
D. Standing Liquidity Facility (SLF) Availed from RBI$       27,122.06  
E. Net liquidity injected from outstanding operations [injection (+)/absorption (-)]*     109,204.06  
F. Net liquidity injected (outstanding including today’s operations) [injection (+)/absorption (-)]*     -480,705.94  
G. Cash Reserves Position of Scheduled Commercial Banks
     (i) Cash balances with RBI as on 23/04/2021 552,892.93  
     (ii) Average daily cash reserve requirement for the fortnight ending 23/04/2021 537,119.00  
H. Government of India Surplus Cash Balance Reckoned for Auction as on¥ 23/04/2021 0.00  
I. Net durable liquidity [surplus (+)/deficit (-)] as on 09/04/2021 712,322.00  
@ 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. 2020-2021/520 dated October 21, 2020, Press Release No. 2020-2021/763 dated December 11, 2020 and Press Release No. 2020-2021/1057 dated February 05, 2021.
¥ As per the Press Release No. 2014-2015/1971 dated March 19, 2015.
Rupambara
Director   
Press Release : 2021-2022/107

[ad_2]

CLICK HERE TO APPLY

Leave a comment

HSBC remains bullish on India, to grow local biz, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


MUMBAI: HSBC has retained its growth forecasts for India despite the second wave of Covid and has said that it intends to grow its business in the country. The bank, which has around 39,000 employees here, gets a big chunk of revenue from the country and sees it as the third-largest economy by 2030.

Speaking to TOI, HSBC India CEO Surendra Rosha said, “We do not see short-term challenges with regard to things related to Covid dislocating our strategy.” Even as multinational rivals like Citi have announced their exit from the consumer business in India amid the pandemic, HSBC has said that it is going the other way.

While the bank did rationalise its branch operations in India a few years earlier, which gave an impression of shrinking, the customer base in India has grown. This is because of the shift to digital channels. “A positive development is that adoption of digital has increased and the payoff for investment in digital is much better than it was a few years ago,” Rosha added.

Rosha pointed out that HSBC’s number of customers has increased 37% since December 2017 to 10.5 lakh in December 2020. The bank’s pre-tax profits from India have been over $1 billion for 2019 and 2020. He added that India was among the top three markets for HSBC in 2020 and has always been part of the top five.

HSBC has the advantage of having a strong presence in countries where the Indian diaspora is predominant. This includes the UK, Middle East, Southeast Asia, Australia, Canada and the US. As a result, it has been able to target persons of Indian origin as well as Indians looking to invest in these markets or move there for studies.

While the overall economy has shrunk due to Covid, for a multinational bank like HSBC the opportunities have increased in the last 18 months. This is because of some government measures, which include a reduction in the corporate tax rate, production-linked incentives and the disinvestment plan. All of these provide an opportunity to facilitate inward investment. “Covid is a damper, but India is not an unknown quantity to global corporations. It is about telling them the opportunity in the next few years. So, Covid is not going to be a showstopper for foreign investment,” said Rosha.

Despite the second wave, HSBC research has retained its growth forecast of 11.2% for FY22. “We feel that if there is an impact in the first half of the fiscal, it will be made up in the second half. While the situation is evolving, what we have seen is that with the decline in cases there was a strong pick-up in economic activity,” said Rosha. “So, while we feel that growth will be similar to what the projections are, there will be some adjustment between the first half and the second half,” he added.

As part of its strategy of targeting Indians with an international connection, HSBC provides borderless banking services that allow customers to have a consolidated view of accounts across countries and lets them move money across markets.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

China digital currency trials show threat to Alipay, WeChat duopoly, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


SHANGHAI: In China‘s commercial hub Shanghai, six big state banks are quietly promoting digital yuan ahead of a May 5 shopping festival, carrying out a political mandate to provide consumers with a payment alternative to Alipay and WeChat Pay.

The banks are persuading merchant and retail clients to download digital wallets so that transactions during the pilot programme can be made directly in digital yuan, bypassing the ubiquitous payment plumbing laid by tech giants Ant Group, an affiliate of Alibaba, and Tencent.

“People will realise that digital yuan payment is so convenient that I don’t have to rely on Alipay or WeChat Pay anymore,” said a bank official involved in the rollout of e-CNY for the Shanghai trial, under the guidance of China’s central bank. The official is not authorised to speak with media and declined to be identified.

China’s development of a sovereign digital currency, which is far ahead of similar initiatives in other major economies, looks increasingly poised to erode the dominance of Ant Group’s Alipay and Tencent’s WeChat Pay in online payments.

That turf encroachment coincides with Beijing’s expanding effort to clamp down on anticompetitive behaviour in the internet sector, part of a wider reining in of the clout of sector heavyweights.

Regulators scuppered Ant’s record $37 billion IPO in November and earlier this month imposed a sweeping restructuring on the fintech conglomerate controlled by Jack Ma. Ma’s Alibaba Group Holdings was recently hit with a record $2.8 billion antitrust penalty.

In public, the People’s Bank of China (PBOC) says e-CNY won’t compete with AliPay or WeChat Pay, and serves only as a “backup” or “redundancy”.

But in private, state banks marketing the digital fiat currency for the central bank bluntly describe Beijing’s intention to undercut the duo’s dominance.

“Big data is wealth. Whoever owns data thrives,” said another banking official tasked with promoting the e-CNY.

“WeChat Pay and Alipay own an ocean of data,” so the e-CNY rollout facilitates China’s anti-trust campaign and helps the government control big data, he added.

The PBOC and Tencent declined to respond to requests for comment.

Ant declined to comment on the relationship between Alipay and e-CNY. Ant-backed MYbank said it is “one of the parties participating in the research and development” of the e-CNY, and “will steadily advance the trial pursuant to the overall arrangement of the People’s Bank of China.”

Digital cash

The e-CNY digitalises a portion of China’s physical notes and coins, or currency in circulation (M0), and was launched last year in small pilot schemes in four cities.

Under a two-tier distribution system, the PBOC issues the digital currency to banks, which pass the money to individuals and companies.

The six banks in the e-CNY pilot schemes include China’s biggest lenders such Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank.

“The e-CNY’s ease of use will likely be comparable to Alipay and WeChat Pay, while its security function will likely be higher, and as sophisticated as Bitcoin,” HSBC wrote in a recent report, adding that it expects the digital currency to “proliferate” within China.

Among a slew of likely motivations cited by HSBC behind the push is the central bank’s desire to gain control of payment channels and consumption data from Alipay and WeChat Pay.

Conspicuously absent

Digital wallets, which are still being beta tested, can be bundled with a dozen popular apps including Meituan, JD.com, Didi and Bilibili, but conspicuously can not be linked to WeChat or Alipay. That means none of the participating banks can transfer e-CNY between their digital wallets and the two established payment platforms.

“PBOC doesn’t want to see the money being routed through third-party payment systems,” a banker said, citing the need for “information segregation”.

The e-CNY will digitise “the last mile” of consumption, enabling banks and merchants to capture data and gain insights into spending patterns, said Wilson Chow, Global TMT Leader, PwC China.

That data is now dominated by Alipay and WeChat Pay, which control a combined 94% of China’s online payment market.

Mass adoption of the e-CNY won’t happen overnight.

Chow predicts that e-CNY will account for roughly 10% of China’s electronic payments market in a few years, co-existing with Alipay and WeChat Pay.

To entice users, bankers said the PBOC will likely give “red envelopes” of free digital cash or discounts to Shanghai citizens around the upcoming shopping festival, an event aimed at promoting spending to fuel economic recovery from Covid-19.

PBOC deputy governor Li Bo told a forum last week that domestic adoption will precede cross-border payments with e-CNY, which many analysts believe will bolster the yuan’s global status as China seeks ultimately to break the dominance of the dollar settlement system.

“The priority of the yuan’s digitalisation is currently to promote its domestic use,” Li said.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,
1 … 18 19 20 21 22 … 95