The new fiscal year 2020-21 has begun on a happy note for around 1.14 lakh employees of Life Insurance Corporation of India (LIC) with a pay hike of over 25%, according to the Union Leader. The revised pay packets for LIC employees were announced by the central government on Thursday. The wage increase will take effect on January 1, 2017.
“The employees are happy with the wage revision that has come at a difficult situation. The pay hike for the employees is expected to be over 25 per cent per month,” Shreekant Mishra, General Secretary, All India Insurance Employees Association (AIIEA) told IANS.
According to him, a 15% loading was applied after the dearness allowance (DA) was completely neutralised at 6,352 points on the consumer price index (CPI).
For all cadres, an additional Special Allowance ranging from Rs.1,500 to Rs.13,500 per month has been implemented, which will be used to calculate dearness allowance (DA) but will not be used for any other reason, such as house rent allowance, city compensatory allowance, privilege leave encashment, gratuity, superannuation income, and so on.
According to Mishra, the LIC’s total wage bill will rise by around Rs 2,700 crore per year. He also mentioned that LIC workers would work a five-day week.
The LIC initial public offering (IPO) will be India’s largest ever. The insurer is India’s oldest and biggest, with a 72 percent market share and a 66.24 percent share of total first-year premium collection. LIC’s overall value is estimated to be between Rs 9-10 lakh crore. With a cumulative premium set of Rs 45 lakh crore, LIC has 28 cores of policies in force.
Highlights of the announcement:
1) LIC employees to get a pay hike of over 25%
2) Special Allowance ranging from Rs.1,500 to Rs.13,500 per month has been implemented
3) Dearness Allowance (DA) neutralised at 6,352 points
4) Five day week for LIC employees.
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Government think-tank NITI Aayog, in consultation with the Finance Ministry, has started deliberations to finalise the names of two public sector banks that will be privatised in the current fiscal as part of the disinvestment process. NITI Aayog has been entrusted with the task of selection of names of two public sector banks and one general insurance company for the privatisation as announced in the Budget 2021-22.
The work in this respect is going on, sources said, adding, a couple of meetings have been convened by the NITI Aayog on the subject.
There are various aspects that have to be looked into including regulatory issues, HR management, financial health etc before reaching a conclusion, sources added.
Once NITI Aayog makes its recommendations, it will be vetted by the Core Group of Secretaries on Disinvestment headed by Cabinet Secretary.
The other members of the high-level panel are Economic Affairs Secretary, Revenue Secretary, Expenditure Secretary, Corporate Affairs Secretary, Secretary Legal Affairs, Secretary Department of Public Enterprises, Secretary Department of Investment and Public Asset Management (DIPAM) and the Secretary of administrative department.
Following clearance from the Core Group of Secretaries, the finalised names will go to Alternative Mechanism (AM) for its approval and eventually to the Cabinet headed by the Prime Minister for the final nod.
Changes on the regulatory side to facilitate privatisation would start after the Cabinet approval.
Last month, Finance Minister Nirmala Sitharaman had said “interests of workers of banks which are likely to be privatised will absolutely be protected whether their salaries or scale or pension all will be taken care of.”
Explaining the rationale behind the privatisation, Sitharaman had said that banks in the country needed to be bigger, just like the State Bank of India (SBI).
“We need banks which are going to be able to scale up… We want banks that are going to be able to meet the aspirational needs of this country,” Sitharaman had said, adding that a lot of thought had gone behind the intention to privatise some public sector banks.
Meanwhile, banking sector regulator RBI also said it is in discussion with the government over the privatisation of public sector banks.
The government has budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including 2 PSU banks and one insurance company, during the current financial year. The amount is lower than the record budgeted Rs 2.10 lakh crore to be raised from CPSE disinvestment in the last fiscal.
The universal bank licensing guidelines state that resident individuals and professionals having 10 years of experience in banking and finance at a senior level are eligible to promote universal banks
The Reserve Bank of India (RBI) on Thursday announced names of applicants under its on-tap licensing window for universal banks and small finance banks (SFBs). The list includes a foreign exchange services provider, two cooperative banks and a former banker.
Applicants under guidelines for on-tap licensing of universal banks are UAE Exchange and Financial Services, The Repatriates Cooperative Finance and Development Bank (Repco Bank), Chaitanya India Fin Credit, and Pankaj Vaish and others. Applicants seeking licences for SFBs are VSoft Technologies, Calicut City Service Co-operative Bank, Akhil Kumar Gupta, and Dvara Kshetriya Gramin Financial Services.
Guidelines for on-tap licensing of universal banks and SFBs in the private sector were issued on August 1, 2016 and December 5, 2019, respectively. The constitution and composition of the standing external advisory committee for evaluating the applications received under the guidelines was announced on March 22, 2021.
The universal bank licensing guidelines state that resident individuals and professionals having 10 years of experience in banking and finance at a senior level are eligible to promote universal banks. Large industrial houses are excluded as eligible entities but are permitted to invest in the banks up to 10%. Non-operative financial holding company (NOFHC) has been made non-mandatory in case of promoters being individuals or standalone promoting/converting entities who/which do not have other group entities.
For SFBs, the minimum paid-up voting equity capital / net worth requirement shall be Rs 200 crore. For primary (urban) co-operative banks (UCBs) desirous of voluntarily transiting into SFBs, the initial net worth requirement shall be at Rs 100 crore, which will have to be increased to Rs 200 crore within five years from the date of commencement of business. The net worth of all SFBs currently in operation is in excess of Rs 200 crore.
Bounce rates of anything above 25% remain a cause for concern as it shows retail delinquencies remain well above pre-Covid levels.
The failure rates of auto-debit transactions on the National Automated Clearing House (NACH) platform, many of which are EMI requests, eased in March, showed data released by the National Payments Corporation of India (NPCI). However, at 32.73% in volume terms, the bounce rate remained well above pre-Covid levels, raising concern about lenders’ asset quality after the lifting of an interim judicial stay on recognition of bad loans after August 31, 2020.
The share of unsuccessful auto-debit requests in volume terms eased from 36.65% in February. In value terms, the bounce rate in March – 27.48% – remained at nearly the same level as in the previous month. Bankers have been insisting that the high bounce rates are due in large part to defaults at fintech lenders, whose collections are still below pre-Covid levels. Listed banks and non-bank lenders will start reporting their Q4 results this Saturday.
Bounce rates of anything above 25% remain a cause for concern as it shows retail delinquencies remain well above pre-Covid levels. Analysts will be closely watching lenders’ non-performing asset (NPA) numbers as these will be the first set of quarterly results after the Supreme Court (SC) allowed banks to resume recognition of bad loans as per income recognition and asset classification (IRAC) norms.
Non-banking financial companies (NBFCs) have already started to bear the brunt of a resurgence in Covid-19 infections. In a report on Wednesday, rating agency Icra said that asset quality pressures would play out fully in FY22 as the level of economic activities is yet to substantially pick up over pre-Covid levels, with risks further compounded by the recent rise in the infection rate. “While NBFCs can proceed with the overdue recoveries post lifting of the Supreme Court order on the NPA classification in March 2021, ICRA notes that performance of most of the key target asset/ borrower segments continues to be sub-optimal, which would impact realisations leading to higher loan losses,” the report said.
Earlier this month, Fitch Ratings said that asset quality concerns remain since banks’ financial results are yet to fully factor in the first wave’s impact and the stringent 2020 lockdown due to the forbearances in place. “We consider the micro, small and medium enterprises (MSME) and retail loans to be most at risk. Retail loans have been performing better than our expectations but might see increased stress if renewed restrictions impinge further on individual incomes and savings,” Fitch said.
The company is targeting to grow the share of retail loans to about two-thirds of the book from 11% at present, and will also add other loan categories such as education loans and small business loans.
Piramal Retail Finance, a business entity under Piramal Capital and Housing Finance, on Thursday said it has made a foray into used-car financing and digital unsecured lending. The company is targeting to grow the share of retail loans to about two-thirds of the book from 11% at present, and will also add other loan categories such as education loans and small business loans.
The lender is entering into partnerships with various participants in the tech ecosystem. By Q4FY21, Piramal had gone live with two fintech partnerships – with ZestMoney in the purchase finance space and with CARS24 in the area of used-car financing. With these launches, Piramal Retail now offers seven products – affordable housing loans, mass affluent housing loans, loans against property (LAP), secured small business loans, purchase finance, unsecured loans and used-car loans.
Jairam Sridharan, chief executive officer, Piramal Retail Finance, said that the company has grown its product base quite significantly and is pivoting to a multi-product retail lending strategy rather than a purely home loans-driven business. “We are looking to be among the largest in the retail lending business in India but in a responsible way and in a way right for the customer, not necessarily driven by balance sheet growth intent,” he said.
During FY21, the lender has expanded its employee base to about 1,000 from 500, and it intends to double the number again in the next 12 months. Its presence has grown to 40 locations from 14 in FY21 and it is looking to add another 10 locations in three months. “Then the rest depends on what happens on one of the inorganic transactions that we are waiting on. We started the year with two products and now have grown into seven products and looking to add another four in the next twelve months,” Sridharan said.
The Piramal group’s overall lending book stands at about Rs 45,000 crore, of which Rs 5,000 crore, or 11%, is retail. The group has received the approval of the antitrust regulator to acquire Dewan Housing Finance’s (DHFL) loan book. That book has also got a substantial retail portion and depending on when the transaction happens and on how the accounting is done, the share of retail will grow to the mid-40s, Sridharan said.
“Our intent in the medium term is to grow retail to about two-thirds of our financial services business, with wholesale comprising the rest. Even though we have launched a lot of non-mortgage products, with the DHFL acquisition, which is almost entirely a mortgage business, our business is going to become very mortgage-heavy,” he said. That is why the company is keen to launch all its non-mortgage businesses now so that it has something to cross-sell to the large base of DHFL customers, he added.
The pandemic has necessitated being digital, from a consumer side rather than the traditional walk-in model.
Federal Bank’s digital channels now account for 86% of the total transactions and the lender has a market share of 17.50% in personal inward remittance business in 2020. Nilufer Mullanfiroze, country head for deposits, cards & unsecured lending (retail business) of Federal Bank, tells Rajesh Ravi about consumer behaviour during the pandemic and the use of technology.Excerpts:
Have you seen a paradigm shift in behaviour of customers during the pandemic? Earlier online transactions, using mobile banking, net banking, were ‘nice to do’ activities from a customer perspective. It was more due to the fact that customers were habituated in a certain manner with regards to their banking habits. The pandemic moved the needle from ‘nice to do’ towards ‘need to do’ during lockdown to keep social distance, avoid usage of cash, etc. Hence the pandemic has definitely changed consumer behaviour.
CASA of many banks have seen an increase during the pandemic. Are the customers saving more and is this a temporary phenomenon? I believe it is a little of both, i.e. “saving more” as well as “spending less”. With regards to ‘spending less’ discretionary spends like movies, restaurant-dining, etc, as well as pent-up demand, refurbishing homes, etc, will come back as the economy truly opens up. We are hence focusing on consumer finance loans, where customers can buy washing machines, dishwashers, etc, which did see a unprecedented increase in demand during lockdown. Suddenly these moved from ‘luxury items’ to ‘day-to-day need items’ as many families relied on doing all chores themselves during the pandemic. With limited day-to-day spends avenues, there has been an automatic ‘saving more’ that has happened as well.
Could you tell us how the bank has become the preferred bank for NRI remittance? The pandemic has necessitated being digital, from a consumer side rather than the traditional walk-in model. It was a habit based on consumer’s muscle-memory, more than anything else. Till around 12 months back, app-based inward remittance was more a PUSH model from banks and exchange-houses; the shift, led by pandemic, is now likely to become a habit for customers. Again, since the bank had the digital capabilities in place, even as the volumes scaled, we didn’t have to do much from an infrastructure perspective nor did we need to throw more people for processing, as it was fully automated already.
What is the status of the credit card and the partnership with Fiserv? The bank’s credit card should be launched soon. We have a large existing customer base, which we plan to tap first and complete the product-suite of offerings to our existing customer base. Our active debitcard base itself is 80 lakh plus and we are the 5th largest private sector bank with regards to debit-spends. Fiserv is a robust platform for credit-card management, not only in India but globally. Hence, post evaluating other possible platforms, we decided to go with them.
What about the demand for personal loans from the consumers ? The contours of loans has changed to some extent. Earlier, the customer had to take a personal loan and then use the same to say purchase a mobile, fridge, holiday-package, etc. With consumer finance, the customer can now simply swipe his debit card and create a loan to buy many of the consumer durables, both in-store and on large on-line platforms. This is truly taking the loan to the place-of-consumption. Various fintechs, POS-providers and online companies have invested in this form of lending under the umbrella BNPL, lazy-pay, Debit-Card-EMI, Credit-card-EMI, etc. Banks like ours, who have the full digital stack, with no need of any paper and hence can give these loans in less than 60 seconds, will benefit from the demand of end-used based personal loans.
Could you tell us the long-term plan of the bank given the fact that technology is disrupting the conventional models? The bank has been investing in technology for many years now. What is now visible is the culmination of all the various enhancements and system-upgrades, etc. Federal Bank now has a comprehensive stack of APIs, which can be consumed by various vendors and partners. Since the bank has long believed in ‘distribution heavy, branch light’, we have used the method of partnerships to grow our businesses rather than feet-on-street (FOS model). Technology has always been the backbone for Banking, it is now getting its due share of appreciation, by being the face-of-banking, in general. Hence, banks which have invested in technology will reap the fruits of it.
After identification of fraud, it is mandatory to immediately file a complaint with law enforcement agencies so that to avoid loss of relevant relied upon documents, non-availability of witnesses and absconding of borrowers and also money trail getting cold in addition to asset stripping by the fraudulent borrower, RBI stated.
The Reserve Bank of India and the SBI-led consortium of lenders on Thursday sought the Supreme Court’s view on whether an opportunity of personal hearing is required to be given by a lender to a borrower before classifying its account as fraudulent as per the Master Circular of July 1, 2016.
Both RBI and the lenders have challenged the Telangana High Court’s December 10 ruling that asked them to ensure that the clauses in the ‘Master Direction on Frauds – Classification and Reporting by Commercial banks and select FIs,’ issued by the banking regulator for detecting frauds in the banking sector, include the principles of natural justice in order to give an opportunity to the affected party/person to present their case, lest the circular be unconstitutional.
A bench led by Justice R F Nariman refused to stay the entire HC judgment, but stayed a part which dealt with granting of personal hearing to a borrower/account holder. It also sought response from Rajesh Agarwal of BS Company, who had moved in HC seeking to declare the RBI circular relating to fraud loan accounts as arbitrary as it violated the principle of natural justice in as much as there is no provision for opportunity of hearing before an account is classified and reported as fraud.
The apex court posted the matter for further hearing in July. RBI and the lenders told the SC that the HC providing an opportunity of hearing to the borrower before classifying and reporting loan frauds may defeat the very purpose of the 2016 circular — early detection of fraud and prompt reporting of the same.
Stating that the reporting by a bank of an account as fraud is never arbitrary, solicitor general Tushar Mehta and senior counsel Rakesh Dwivedi, appearing for SBI and RBI, respectively, argued that the classification of fraud is for sharing the information with other banks, on a private and secure basis; the data on frauds is accessible to only the authorised officers of the banks to enable them to exercise due caution while dealing with such parties, RBI further said that once a fraud is reported by a bank, it is important that other banks are sensitised regarding the fraud.
After identification of fraud, it is mandatory to immediately file a complaint with law enforcement agencies so that to avoid loss of relevant relied upon documents, non-availability of witnesses and absconding of borrowers and also money trail getting cold in addition to asset stripping by the fraudulent borrower, RBI stated.
According to the petitions, “before reporting a fraud, banks rely on internal or/and external audits/examination, and fraud is classified and reported mainly based on the provisions of IPC. Banks would have to satisfy one or more of the provisions… There is also a criminal element in ‘frauds’ unlike in the case of ‘wilful default’. Such criminal element ascertained by banks leads to their decision on identifying the ‘fraud’ and immediate reference of case to police/investigation agencies.”
Senior counsel Mukul Rohatgi, appearing for Agrawal, opposed any stay, saying the HC judgment was based on the apex court’s ruling in case of Jha Developers which dealt with the wilful defaulters, which is a “milder declaration than being called a fraud.”
The BS Company’s account was declared as fraud on February 15, 2019 by the SBI-led consortium in tune with the RBI circular. The company took loans of `1,400 crore and defaulted on repayment. As the forensic audit of the company accounts revealed discrepancies, the SBI and other banks formed to a joint lenders’ forum (JLF) and initiated action against Agarwal’s bank account. The fraud identification committee (FIC) also recommended action against the account of Agarwal.
Please refer to the tender notice for the captioned tender published on the Bank’s website www.rbi.org.in on April 07, 2021 inviting applications from eligible vendors for “Renovation of Toilets: RD’s Bungalow at Officers’ Quarters Nayapalli, Bhubaneswar, Odisha” through e-tender route on MSTC website (https://www.mstcecommerce.com/eprochome/rbi/).
The close bid date for the captioned tender has been extended.
Extended dates for submission of bids are as under:
1.
Last date of Submission of EMD
: April 20, 2021 by 2:00 PM
2.
Date of closing of online e-Tender for submission of Techno-commercial Bid and Financial Bid
: April 20, 2021 at 2:00 PM
3.
Date & Time of opening of Part-I (i.e. Techno-Commercial Bid)
: April 20, 2021 at 3:00 PM
All other terms and conditions mentioned in the tender remains unchanged.
The Reserve Bank of India has launched the 53rd round of its Order Books, Inventories and Capacity Utilisation Survey (OBICUS). The survey is for the reference period January-March 2021 (Q4:2020-21).
The Reserve Bank has been conducting the Order Books, Inventories and Capacity Utilisation Survey (OBICUS) of the manufacturing sector on a quarterly basis since 2008. The information collected in the survey includes quantitative data on new orders received during the reference quarter, backlog of orders at the beginning of the quarter, pending orders at the end of the quarter, total inventories with a breakup between finished goods (FG), work-in-progress (WiP) and Raw material (RM) inventories at the end of the quarter, item-wise production in terms of quantity and value during the quarter vis-à-vis the installed capacity from the targeted group and the reasons for changes in production / installed capacity during the quarter. The level of capacity utilisation (CU) is estimated from these responses. The survey provides valuable input for monetary policy formulation.
The survey findings are released on the website of the bank regularly. The latest results pertaining to the quarter October-December 2020 were released on April 07, 2021.
During this quarter, selected manufacturing companies will be approached by the Bank. Other manufacturing companies may also participate in the survey by downloading the survey questionnaire from the Reserve Bank’s website https://www.rbi.org.in. The survey questionnaire is placed under the head ‘Forms’ (available under the ‘More Links’ at the bottom of the home page) and sub-head ‘Survey’. The duly authenticated filled-in survey schedule may be e-mailed as per contact details provided in the survey schedule.
Company level data are treated as confidential and never disclosed.
In case of any query/clarification, kindly contact us at the following address:
The Director, Division of Enterprise Surveys, Department of Statistics and Information Management, Reserve Bank of India, C-8, 2nd floor, Bandra-Kurla Complex, Bandra (East), Mumbai-400051, Phone-022-26578235/279; Please click here to send email.
The following State Governments have offered to sell securities by way of auction, for an aggregate amount of ₹ 3,250 Cr. (Face Value).
Sr. No.
State
Amount to be raised (₹ Cr)
Additional Borrowing (Greenshoe) Option (₹ Cr)
Tenure (Yrs)
Type of Auction
1
Arunachal Pradesh
400
–
10
Yield
2
Nagaland
350
–
10
Yield
3
Rajasthan
1000
–
10
Yield
4
Telangana
1500
–
30
Yield
Total
3250
The auction will be conducted on the Reserve Bank of India Core Banking Solution (E-Kuber) system on April 19, 2021 (Monday). The Government Stock up to 10% of the notified amount of the sale of each stock will be allotted to eligible individuals and institutions subject to a maximum limit of 1% of its notified amount for a single bid per stock as per the Scheme for Non-competitive Bidding Facility.
Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on April 19, 2021 (Monday). The non-competitive bids should be submitted between 10:30 A.M. and 11:00 A.M. and the competitive bids should be submitted between 10:30 A.M. and 11:30 A.M. In case of technical difficulties, Core Banking Operations Team (email; Phone no: 022-27595666, 022-27595415, 022-27523516) may be contacted.
For other auction related difficulties, IDMD auction team can be contacted (email; Phone no: 022-22702431, 022-22705125).
Only in the event of system failure, physical bids would be accepted. Such physical bids should be submitted to the Public Debt Office (email; Phone no: 022-22632527, 022-22701299) in the prescribed form obtainable from RBI website (https://www.rbi.org.in/Scripts/BS_ViewForms.aspx) before the auction timing ends.
The yield percent per annum expected by the bidder should be expressed up to two decimal points. An investor can submit more than one competitive bid at same/different rates of yield or prices in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system. However, the aggregate amount of bids submitted by a bidder should not exceed the notified amount for each State.
The Reserve Bank of India will determine the maximum yield /minimum price at which bids will be accepted. Securities will be issued for a minimum nominal amount of ₹10,000.00 and multiples of ₹10,000.00 thereafter.
The results of the auction will be announced on April 19, 2021 (Monday) and payment by successful bidders will be made during banking hours on April 20, 2021 (Tuesday) at Mumbai and at respective Regional Offices of RBI.
The State Government Stocks will bear interest at the rates determined by RBI at the auctions. For the new securities, interest will be paid half yearly on October 20 and April 20 of each year till maturity. The Stocks will be governed by the provisions of the Government Securities Act, 2006 and Government Securities Regulations, 2007.
The investment in State Government Stocks will be reckoned as an eligible investment in Government Securities by banks for the purpose of Statutory Liquidity Ratio (SLR) under Section 24 of the Banking Regulation Act, 1949. The stocks will qualify for the ready forward facility.
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