Month: April 2021

Housing demand structural, here to stay: Deepak Parekh

Banking & Finance

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Housing Development Finance Corporation (HDFC) Ltd Chairman Deepak Parekh on Thursday said the demand for housing is not pent-up demand but is structural demand and is here to stay.

“In my 44 years of working in the housing sector, I have to say that the strong demand that one has seen for housing in the recent period has certainly surprised on the upside,” he said at the One World One Realty Global Proptech Summit 2021.

The growth in home loans has been aided by low interest rates, softer or stable property prices and continued fiscal benefits on home loans, he further said.

“Technology has enabled developers to virtually showcase their properties and home loan providers, too, have leveraged their digital platforms to continue to serve new and existing customers,” he said.

HDFC enters into co-lending partnership with Indiabulls Housing Finance

According to Parekh, demand for housing is a combination of first time homebuyers, customers moving up the property ladder by shifting to larger homes; acquiring a second home in another location; and the current work from home situation in which proximity to the workplace is perhaps less compelling.

He also noted that the government’s ‘Housing for All’ programme has given a boost to the sector.

Under the Prime Minister’s Awas Yojana, as at March 31, 2021, an estimated 1.13 crore homes have been sanctioned, Parekh said. “This has been a game-changer for the housing sector as the ultimate objective is building a more inclusive and property owning democracy,” he said.

HDFC Bank Q4FY21: What is spooking HDFC Bank’s stock

Meanwhile, noting that infrastructure creation is one way to ensure a sustained recovery, without spiralling inflation, Parekh said that construction and real estate development is going to play a key role in all major global economies.

“And now more than ever before, the role of technology and innovation becomes extremely important,”he said, while pointing out that the construction industry is one of the least digitalised sectors in the world.

Stressing the need for digital infrastructure for the real estate sector, he said prop tech companies can play a big role in accelerating the government’s smart city mission as well as help local level bodies and municipalities in terms of facilitating online approvals of building permits.

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National Pension System (NPS): All You Need To Know About The 5 Recent Updates

Personal Finance

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1. Entry and exit age limit to be modified

Individuals between the age group of 18 and 65 can currently enter the NPS. The regulator is planning to hike the limit to 70 years. The proposed exit age of 70 years may be increased to 75 years. PFRDA Chairman Supratim Bandyopadhyay commented on the matter that “When we hiked the entry age to 65 from the 60 years, more than 15,000 60-plus people subscribed to the NPS. With the longevity increasing, it makes sense to hike the maximum entry and exit age to 70 years and 75 years, respectively. These are just enabling conditions – not mandatory.”

2. Exit option to be hiked

2. Exit option to be hiked

NPS contributors can withdraw 60% of their contribution after retirement, while the remaining 40% must be maintained to purchase annuity. Those who accumulate only up to Rs 2 lakh by the time they reach retirement age, on the other hand, are entitled to withdraw the entire amount. The PFRDA is planning to hike the limit to Rs 5 lakh. To put it more simply, if a subscriber has a corpus of Rs 2 lakh or less at the time of retirement, it is not necessary for that individual to purchase an annuity since the amount provided as a monthly pension is very low. Currently, under the National Pension System (NPS), once money has accumulated in the fund, one must contribute 40% of the corpus to purchase an annuity and the remaining 60% will be paid out as a lump sum until retirement at the age of 60. During a virtual meeting, PFRDA Chairman Supratim Bandyopadhyay said that “This is also an enabling condition. If a subscriber does not want to commute the full amount, they may go ahead with the annuity option.”

3. PFRDA planning to issue minimum assured return

3. PFRDA planning to issue minimum assured return

To lure more subscribers, the Pension Fund Regulatory and Development Authority (PFRDA) is working on strategies to launch new retirement benefit options, such as one that has a minimum assured return. PFRDA Chairman Supratim Bandyopadhyay said at a virtual conference that “Apart from NPS and Atal Pension Yojana (APY), we propose to have some innovative products to attract more and more customers. The first product that we are targeting is a product which will have a minimum assured return.” “The moment they (pension fund managers) start giving guarantee on products, it will have a lot of bearing on their capital requirements and capital adequacy structure,” he said. He further added that “The pension advisory committee has already given an approval to the guaranteed product. Now the actuarial firm will design it. We expect to launch it in the next one or two months.”

4. Payout options to be flexible

4. Payout options to be flexible

Subscribers must deposit 40% of their NPS deposits with one of the 12 insurance companies that the NPS has partnered with. Bandyopadhyay states that annuity rates have dropped sharply, to the point where the interest rate on a return of purchase price option in annuities ranges between 5% and 6%. Since annuities are taxable, when you factor in taxes and inflation, you end up with a poor return. This is why we want to offer innovative payout options, said Bandyopadhyay. “We are also looking at a mixture of annuity and systematic withdrawal plans. We are getting actuarial firms to look into the viability of it.” he added. To receive a decent return, the regulator is considering allowing subscribers to keep 40% of their capital with the pension fund managers. At the virtual conference he also stated that “The moment you think about such a scheme, you have to take IRDA and SEBI on the same page too so that they are clear that we are not trailing into their area.”

5. Distribution channel to be expanded

5. Distribution channel to be expanded

A distribution licence is now only available to institutions. They’re known as Point of Presence (POP). Considering the same, Bandyopadhyay said that “We are expanding the distribution channel. We are exploring if we can have individuals as our distribution partners. However, we do not have wherewithal to hire individual PoPs. Existing POP can recruit them as their sub-entities. Besides, we will soon be rationalising the commission fee for POPs as we did for pension fund managers on fund management fee.”



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IOB appoints EY as its digital consultant

Banking & Finance

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Chennai-headquartered Indian Overseas Bank (IOB) has roped in Ernst & Young as its digital consultant to transform its banking services, with an aim to boost digital transactions share.

The bank believes that EY would help it to stay more focussed on leveraging and adopting new technologies and to enhance the service quality and service delivery to its customers.

This initiative would also help the bank accelerate digitalisation in all the areas of banking, including its assets and liability products and services, according to a statement.

“With this new initiative, IOB is poised to attract Millennial customers who are tech-savvy. Bank will now be confident of providing all customers a hassle free and seamless banking experience,” said Partha Pratim Sengupta, MD & CEO of IOB.

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Creditas Solutions plans global expansion

Banking & Finance

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Creditas Solutions, a technology company that provides delinquency management solutions to banks and FIs through the digital route, plans to go international this fiscal. It hopes to partner with at least two banks each in West Asia and South-East Asia markets, said its co-founder Anshuman Panwar.

“In the last 2-3 months, we have had lot of inbound queries from West Asia and South-East Asia. We are looking to go to new markets. We hope to partner 2-4 banks in our initial international foray in these markets to test the waters. Then depending on results we will scale that up,” Panwar told BusinessLine.

At the same time, it’s not that the focus of this six-year-old fintech will get entirely shifted abroad, he added.

Creditas had, about three years back, raised capital from a clutch of angel investors, and this year, too, more capital will be raised for investments in technology and international expansion, he added.

Creditas Solutions, which is currently working with 11 private banks and NBFCs, will soon take efforts to work with public sector banks as well, especially given the huge market opportunity that public sector banks provided, said Panwar.

It usually takes a lot of time to bag mandates from public sector banks, but efforts will be taken this year to bring them on board, he said.

Creditas Solutions, which is expected to close current fiscal with revenues of about ₹100 crore, expects to achieve ₹1,000-crore in annual revenue in the next five years, Panwar added.

Creditas helps banks make loan recoveries and uses latest concepts such as Artificial Intelligence to speed up the process. Being digital enables the lenders to radically improve collection performance.

A major fillip

He said that Covid-19 had given a major fillip to the business of Creditas Solutions, as several banks could utilise the fintech’s digital collection services during lockdown. “Having used us, the banks have also realised the gain in opportunity in using digital recovery solutions,” he added. Panwar said that Creditas solutions were being used by banks to do restructuring as well.

The bounce rate – percentage of people who have not paid – was anywhere between 10-18 per cent, depending on the different portfolio and product types for banks across India. During Covid-19, this bounce rate had gone up to 40 per cent, and after October last year this started coming down to touch 25 per cent in mid-March this year.

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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) 0.00 – –
     I. Call Money 0.00 – –
     II. Triparty Repo 0.00 – –
     III. Market Repo 0.00 – –
     IV. Repo in Corporate Bond 0.00 – –
B. Term Segment      
     I. Notice Money** 0.00 – –
     II. Term Money@@ 0.00 – –
     III. Triparty Repo 0.00 – –
     IV. Market Repo 0.00 – –
     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 Wed, 21/04/2021 1 Thu, 22/04/2021 48,336.00 3.35
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo          
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo – – – – –
3. MSF Wed, 21/04/2021 1 Thu, 22/04/2021 5,201.00 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 (-)]*		       -43,135.00  
II. Outstanding Operations
1. Fixed Rate          
     (i) Repo          
     (ii) Reverse Repo Tue, 20/04/2021 2 Thu, 22/04/2021 378,478.00 3.35
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo Fri, 09/04/2021 14 Fri, 23/04/2021 200,017.00 3.48
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo          
3. MSF Tue, 20/04/2021 2 Thu, 22/04/2021 0.00 4.25
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 (-)]*     -469,290.94  
F. Net liquidity injected (outstanding including today’s operations) [injection (+)/absorption (-)]*     -512,425.94  
G. Cash Reserves Position of Scheduled Commercial Banks
     (i) Cash balances with RBI as on 21/04/2021 513,744.52  
     (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¥ 20/04/2021 0.00  
I. Net durable liquidity [surplus (+)/deficit (-)] as on 26/03/2021 808,301.00  
@ 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 : 2021-2022/88

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Banks tag more borrowers as wilful defaulters during IBC suspension, BFSI News, ET BFSI

Banking & Finance

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Banks slapped more borrowers with a wilful defaulter tag during April-December 2020 when the Insolvency and Bankruptcy Code was under suspension.

They classified loans of over Rs 28000 as wilful defaults during the first nine months of last fiscal as against around Rs 23,000 a year ago, according to a report.

A borrower is labelled wilful defaulter if the loans is not repaid despite having the means to repay or it is diverted for use other than the purpose.

A wilful defaulter tag borrower then faces a ban on bank funding the total outstanding wilful default as of December 31 at Rs 2.4 lakh crore with State Bank of India accounting for Rs 62,000 crore, of which Rs 18,000 crore were added in the first nine months of the last fiscal, according to data from credit bureau TransUnion Cibil.

The largest share of wilful defaulters is Maharashtra at over Rs 80,000 crore, followed by Delhi at Rs 32,000 crore and West Bengal at Rs 23,000 crore.

Fearing investigations, audit and vigilance inquiries, bankers generally do not want to opt for resolution and go for full recovery from the defaulter.

Top borrowers

The country’s top 100 wilful defaulters owe Rs 84,632 crore to banks as of March 2020, with the top 10 including, Winsome Diamonds & Jewellery and accounting for 32% of it, data from the Reserve Bank of India shows.

Banks tag more borrowers as wilful defaulters during IBC suspension

While banks wrote off nearly three-fourth of it to clean their balance sheet and get tax benefits, the default borrowers continue to appear in RBI’s internal CRILC database till they clear the default.
The total size of the top 100 wilful defaults rose 5.34% in FY20 from Rs 80,344 crore as of March 2019, according to data shared by RBI in response to an application under the Right to Information (RTI) Act.

Mehul Choksi-owned Gitanjali Gems topped the wilful defaulters’ list with Rs 5,693 crore dues, followed by Jhunjhunwala brothers’ REI Agro with Rs 4,403 crore and Jatin Mehta’s Winsome Diamonds & Jewellery with Rs 3,375 crore.

The top 10 wilful defaulters include another jewellery maker Forever Precious Jewellery, and Vijay Mallya’s Kingsher Airlines.

The stack-up

Punjab National Bank had the highest exposure to Gitanjali Gems with Rs 4,644 crore of non-performing assets (NPA) as on March 2020.

PNB also had Rs 1,447 crore exposure to Gili India and Rs 1,109 crore to Nakshatra Brands.

State Bank of India had Rs 1,875 crore dues from top 10 wilful defaulter ABG Shipyard with the bank writing o the entire amount. Uco Bank had Rs 1,970 crore exposure to REI Agro with half of it being written off.

Write-offs are accounting entries for shifting NPAs from the active balance sheet to off-balance-sheet accounts. These are backed by 100% provision and therefore any recovery from these accounts adds to net profit.

RBI collects credit data from banks monthly, with data on defaults being collected on a weekly basis. The regulator has mandated banks to provide fully against NPAs older than four years and allowed to write these old NPAs.

Subscribe to ETBFSI Daily Newsletter and stay updated.
https://bfsi.economictimes.indiatimes.com/etnewsletter.php



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HDFC-Indiabulls Housing co-lending partnership: Is it a prelude to something bigger?

Banking & Finance

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Is the co-lending partnership between Housing Development Finance Corporation Ltd (HDFC) and Indiabulls Housing Finance Ltd (IBHFL) a prelude to something bigger?

Currently, the Reserve Bank of India (RBI) only has guidelines for co-lending by banks and non-banking finance companies (NBFCs) for lending to the priority sector.

There are no specific RBI guidelines governing co-lending by two NBFCs (including housing finance companies/ HFCs).

 

So, the co-lending partnership between HDFC, India’s largest standalone HFC, and IBHFL, whose loan book shrunk in the second and third quarters of FY21, comes as a surprise.

In terms of RBI’s “Co-Lending Model”(CLM), banks are permitted to co-lend with all registered NBFCs (including HFCs) based on a prior agreement.

Under this model, NBFCs are required to retain a minimum of 20 per cent share of the individual loans originated by them on their books, with the partner banks taking their share on a back-to-back basis in their books.

As per RBI guidelines, CLM is aimed at improving the flow of credit to the unserved and underserved sector of the economy and make available funds to the ultimate beneficiary at an affordable cost, considering the lower cost of funds from banks and greater reach of the NBFCs.

HDFC, in a statement, said the objective of the co-lending program is to increase its distribution bandwidth, which will lead to additional retail housing loan business.

Under the co-lending programme, IBHFL will originate and process retail home loans as per jointly formulated credit parameters and eligibility criteria. The Corporation will have 80 per cent of the total loan in its books. IBHFL will service the loan account throughout the life cycle of the loan

So, once the co-lending partnership matures, what could be the next logical step? Is this partnership a smoke signal on a possible amalgamation down the line? Only time will tell.

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Pension Goals: Looking for Lifelong Regular Income? Here’s How

Personal Finance

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Planning

oi-Sneha Kulkarni

|

Our lifestyle aspirations have improved as a result of technological advancements. We use gadgets, appliances, and utilities that did not exist two or three decades ago. Who knows what the next 2-3 decades have in store for us?

A comprehensive retirement package that provides a large retirement corpus to policyholders in order to meet their medical costs, insurance contingencies, and other needs has become the need of the hour in the wake of the COVID-19 pandemic.

Even in our second innings of life-retirement-it is important that we have an assurance that our lifestyle goals are met.

Bajaj Allianz is offering Life Guaranteed Pension Goal, which ensures your lifestyle goals by providing a guaranteed income for the rest of your life, as per your preferences and needs.

Pension Goals: Looking for Lifelong Regular Income? Here's How

Bajaj Allianz Life Guaranteed Pension Goal Plan

Bajaj Allianz Life Guaranteed Pension Goal is a Non-Participating, Non-Linked, Individual Deferred & Immediate Annuity Plan.

Annuity Details

Your annuity sum is guaranteed at the start of the policy and is compensated on a regular basis based on your preferences. An annuity will begin right away or after a few years, depending on your choice. A joint-life annuity with a 50% or 100% annuity payable to your partner after your death is an option. Pay a lump sum and the Annuity will begin paying out as soon as the next month, depending on the Annuity frequency choice you selected. Pay a lump sum or a regular/limited premium, and the Annuity will begin paying out after the deferment period you selected at the time of purchase.

Return of capital (Purchase price)

Bajaj Allianz Life’s retirement plan also includes a return of capital (purchase price) feature, which allows policyholders to earn the entire capital back upon death, regardless of whether they have a single or joint life cover. The scheme also offers an option of return of purchase price upon survival, according to a statement released by Bajaj Allianz. The annuity or income is payable for the rest of your life in all cases.

Bajaj Allianz Life Guaranteed Pension Goal has many additional features and flexibilities, including the ability to select premium payment terms over a period of 5 to 10 years, adjust the Annuity (income) payment frequency at every policy anniversary, and even choose a single premium policy.

Customers can buy this plan online or in-person through Bajaj Allianz Life’s vast network of Insurance Consultants (Agents) and select bank partners.

How does the Plan Work?

Step-1 Choose the Deferred or Immediate Annuity option.

Step-2 Enter the Purchase price

Step-3 Choose the Annuity payout frequency

Step-4 Receive annuity payouts as per the chosen frequency

Note: The choice of an annuity must be selected at the start, and once chosen, it cannot be modified.

GoodReturns.in



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