Month: April 2021

Four applicants each apply for ‘on tap’ licenses to start universal banks, small finance banks

Banking & Finance

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The Reserve Bank of India (RBI) on Thursday said four applicants each have applied for “on tap” licenses to start Universal Banks and Small Finance Banks in the private sector.

The applicants under guidelines for ‘on tap’ licensing of Universal Banks are — UAE Exchange and Financial Services Ltd, The Repatriates Cooperative Finance and Development Bank Ltd (REPCO Bank), Chaitanya India Fin Credit Private Ltd and Pankaj Vaish and others, RBI said in a statement.

The applicants under guidelines for ‘on tap’ licensing of Small Finance Banks are — VSoft Technologies Private Ltd, Calicut City Service Co-operative Bank Ltd, Akhil Kumar Gupta and Dvara Kshetriya Gramin Financial Services Private Ltd, it added.

The guidelines for ‘on tap’ licensing of Universal Banks and Small Finance Banks 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 aforementioned guidelines was announced on March 22, 2021.

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IL&FS: Aggregate debt recovery target raised to ₹61,000 crore

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About ₹43,000 crore of debt of bankrupt Infrastructure Leasing and Financial Services (IL&FS) has been addressed, and the new board and management expects that this would increase to ₹50,000 crore by the end of September this year.

It has also raised the estimate for overall debt recovery to ₹61,000 crore.

“The group has also enhanced its estimates of aggregate debt recovery to ₹61,000 crore – an increase of ₹5,000 crore over its earlier estimate of ₹56,000 crore,” said Uday Kotak, Chairman of the board of IL&FS, on Thursday.

The increased estimate represents resolution of nearly 62 per cent of overall fund-based and non-fund based group debt of about ₹99,000 crore as of October 2018.

“The aggregate debt of ₹43,000 crore addressed till date represents nearly 71 per cent of the overall revised targeted recovery value of ₹61,000 crore and 44 per cent of the overall debt of over ₹99,000 crore (as of October 2018),” said a statement by IL&FS, adding that the recovery target is higher than the average recovery observed under IBC since its inception.

“The upgrade in potentially addressable debt by ₹5,000 crore (to ₹61,000 crore) has been largely on account of improved valuations, better operating performance, and enhanced recoveries from non-group exposures,” it further said.

Of the total 347 entities under IL&FS Group (as of October 2018), a total of 186 entities stand resolved till date, while the remaining 161 entities are under various stages of resolution.

Sale of entities

CS Rajan, MD, IL&FS, said that by September-end the number of entities would come down to double-digits. This would be done by a combination of liquidation, closure of some entities, and sale of some entities.

The ₹43,000 crore of debt addressed includes ₹26,800 crore of completed entity monetisation initiatives and accrued cash balance, ₹14,350 crore of additional net recovery expected from resolution and restructuring applications filed with NCLT, and ₹1,926 crore from Supreme Court verdict passed in favour of Rapid Metro Gurgaon.

IL&FS said that by September 2021 it expects to address about ₹8,000 crore of additional debt by initiatives, including monetisation of stake in ONGC Tripura, Warora Chandrapur and Karyavattom Stadium; Phase 2 of InvIT, including 5 Road SPVs; and receipt of expected settlement claims from road authorities for Khed Sinnar Expressway and Srinagar Sonmarg Tunnel.

Additional recovery

Post-September 2021, it expects additional recovery of over ₹9,950 crore.

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Reserve Bank of India – Press Releases

Press Releases

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The Government of India announces the conversion/switch of its securities through auction for an aggregate amount of ₹20,000 crore (face value). The security-wise details of the conversion/switch are given as under:

Date of Auction Source Securities Notified Amount (FV) of Source Securities Destination Security
April 19, 2021 8.35% GS 2022
(Maturing on May 14, 2022)		 ₹2,000 crore 6.76% GS 2061
(Maturing on Feb 22, 2061)
8.15% GS 2022
(Maturing on Jun 11, 2022)		 ₹2,000 crore 6.76% GS 2061
(Maturing on Feb 22, 2061)
7.16% GS 2023
(Maturing on May 20, 2023)		 ₹2,000 crore 6.76% GS 2061
(Maturing on Feb 22, 2061)
8.83% GS 2023
(Maturing on Nov 25, 2023)		 ₹2,000 crore 6.76% GS 2061
(Maturing on Feb 22, 2061)
5.09% GS 2022
(Maturing on Apr 13, 2022)		 ₹2,000 crore 6.64% GS 2035
(Maturing on Jun 16, 2035)
8.35% GS 2022
(Maturing on May 14, 2022)		 ₹2,000 crore 6.64% GS 2035
(Maturing on Jun 16, 2035)
6.84% GS 2022
(Maturing on Dec 19, 2022)		 ₹2,000 crore 6.64% GS 2035
(Maturing on Jun 16, 2035)
7.16% GS 2023
(Maturing on May 20, 2023)		 ₹2,000 crore 6.64% GS 2035
(Maturing on Jun 16, 2035)
7.68% GS 2023
(Maturing on Dec 15, 2023)		 ₹2,000 crore 6.64% GS 2035
(Maturing on Jun 16, 2035)
7.32% GS 2024
(Maturing on Jan 28, 2024)		 ₹2,000 crore 6.64% GS 2035
(Maturing on Jun 16, 2035)
  Total ₹20,000 crore  

The market participants are required to place their bids in e-Kuber giving the amount of the source security and the price of the source and destination security expressed up to two decimal places.

The auction would be a multiple-price based auction, i.e. successful bids will get accepted at their respective quoted prices for the source and destination securities.

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) between 12:00 noon to 1:00 P.M. The result of the auction will be announced on the same day and settlement will take place on April 20, 2021 (Tuesday).

Government of India reserves the right to:

  • Accept offers for less than the notified amount.

  • Purchase marginally higher than the notified amount due to rounding-off effect.

  • Accept or reject any or all the offers either wholly or partially without assigning any reason.

Operational guidelines for switch transactions and other details are given in the Annex.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/57

Annex

Operational Guidelines for Switch/Conversion Transactions with the Government of India

Switch module on e-kuber

1. The market participants can bid in the switch auction through the Switch Transaction module provided in the e-kuber portal.

Bidding in a switch transaction

2. Bidding in the auction implies that the market participants agree to sell the source security/ies to the Government of India (GoI) and simultaneously agree to buy the destination security from the GoI at their respective quoted prices.

Placing of bids

3. Each bid should specify the following details:

  1. Amount of the source security (Face Value) that the participants are willing to sell.

  2. Price of the source security (expressed up to two decimal places).

  3. Choice of destination security and the price of the destination security (expressed up to two decimal places), at which the participants are willing to buy the destination security.

4. The participants can choose to bid for any/all the destination security/ies, but the aggregate amount of bids for the source security should not exceed their holdings of the source security in face value terms.

Minimum Bid size

5. Minimum bid size would be ₹10,000 and in multiples of ₹10,000 thereafter. The participants are allowed to submit multiple bids. However, the aggregate amount of bids submitted should not exceed the notified amount of source security/basket of source securities in the auction.

Price of source security

6. The price of the source security quoted must be equal to the FBIL closing price of the source security as on the previous working day.

7. Bids for source security not as per the price mentioned above will be rejected.

Price of destination security

8. Bids for the destination security may be placed after taking into account the price of source security as mentioned above.

Method of auction

9. The auction will be a multiple-price based auction, i.e. successful bids will get accepted at their respective quoted prices for the source and destination securities.

Auction decision

10. The auction cut-off will be decided based on the price of the destination security/ies.

11. Successful bidders are those who have placed their bids at or above the cut-off price. All bids lower than the cut-off price will be rejected.

12. There will be provision of pro-rata allotment, should there be more than one successful bid at the cut-off price.

Amount of destination security and dealing in odd amounts during switch auction

13. The switch ratio, which is the ratio of the price of the source security to the price of the destination security, would be rounded off at 8 decimal places.

14. The amount of destination security to be issued for each successful bid will be computed by multiplying the allotted amount (FV) of the source security with the rounded-off switch ratio. The amount of destination security (FV) would be rounded-off to the nearest lower value in multiples of ₹10,000.

15. The odd amount of destination securities (less than ₹10,000) which has been rounded-off, would be notionally allotted and bought back from the bidders at the quoted bid price of the destination security. The net cash consideration to be paid to the bidder for such odd amounts would be the clean price of these securities (as the accrued interest received during notional allotment and paid during notional buyback offset each other).

Fund settlement

16. Though the conversion would be broadly cash neutral, there will be fund settlement for the net accrued interest (accrued interest for the source security FV – accrued interest for the destination security FV) for each bid. Cash consideration (due to rounding-off of face value of destination security) computed for each bid would be added to the net accrued interest. Accordingly, fund settlement will be done for the final amount (Net accrued interest + cash consideration) for each bid.

Note: An illustration for the calculation of cash consideration due to rounding-off of destination security face value is as given below:

Amount of Source Security (FV) ₹10,00,00,000.00
Price of Source Security ₹97.50
Price of Destination Security ₹99.20
Switch Ratio (rounded-off at 8 decimals) 0.98286290
Destination Security FV before rounding off ₹9,82,86,290.00
Destination Security FV re-issued after rounding-off ₹9,82,80,000.00
Odd amount of rounded-off destination security (FV) ₹6290.00
Cash consideration due to rounding off (Clean Price calculated at the quoted price of destination security) ₹6240.00

17. The settlement of the auction would be held on T+1 basis.

Help Desk

18. In case of technical difficulties, Core Banking Operations Team should be contacted (email; Phone no: 022-27595415, 27595666, 27523516). For other auction related difficulties, IDMD auction team can be contacted (email; Phone no: 022-22702431, 22705125).

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Stopped recovering charges in BSBD accounts from mid-Sept last year: SBI

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State Bank of India (SBI), on Thursday, clarified that it has stopped recovering charges in Basic Savings Bank Deposit Accounts (BSBDAs) on all digital transactions with effect from September 15, 2020, while retaining charges on cash withdrawals over and above four free withdrawals allowed per month.

Systematic breach

This clarification comes in the wake of Ashish Das, Professor, Department of Mathematics, IIT-Bombay, claiming in a recent report that there had been systematic breach in RBI regulations on BSBDAs by a few banks, most notably SBI, which hosts the maximum number of BSBDAs, by charging ₹17.70 for every debit transaction (even via digital means) beyond four a month.

“This imposition of service charges resulted in undue collections to the tune of over ₹300 crore from among nearly 12 crore BSBDA holders of SBI during the period 2015-20, of which, the period 2018-19 alone saw collection of ₹72 crore, and the period 2019-20, ₹158 crore,” Das alleged in the report, ‘Regulating Basic Savings Bank Deposit Accounts: Do We Need to Care for These Marginalised Depositors?’

SBI, in a statement, said the Reserve Bank of India, in August 2012, mandated that banks are free to levy reasonable charges in BSBD accounts beyond four free transactions. The availment of such additional services shall be at the option of the customers, it added.

Accordingly, SBI introduced charges for debit transactions beyond four free transactions in BSBD accounts with effect from June 15, 2016, with prior intimation to the customers.

India’s largest commercial bank observed that the Central Board of Direct Taxes (CBDT), in August 2020, advised banks to refund the charges collected, if any, on or after January 1, 2020, on transactions carried out using the digital mode and not to impose charges on future transactions carried out through such modes.

SBI emphasised that: “In terms of CBDT directives, SBI has refunded the charges recovered in respect of all the digital transactions to the BSBD customers with effect from January 1, 2020, to September 14, 2020.

“SBI has stopped recovering charges in such accounts on all digital transactions with effect from September 15, 2020, while retaining charges on cash withdrawals over and above four free withdrawals allowed per month,

The objective is also to encourage BSBD account holders, including PMJDY (Pradhan Mantri Jan Dhan Yojana) account holders, to adopt digital payment through the prescribed modes vis-à-vis the cash transactions, it added.

The bank said it has also waived fees levied on SMS services and on maintenance of monthly average balance to all its Savings Bank account holders.

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Reserve Bank of India – Press Releases

Press Releases

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Reserve Bank of India announces the auction of Government of India Treasury Bills as per the following details:

Sr. No Treasury Bill Notified Amount
(in ₹ crore)		 Auction Date Settlement date
1 91 Days 15,000 April 20, 2021
(Tuesday)		 April 22, 2021
(Thursday)
2 182 Days 15,000
3 364 Days 6,000
  Total 36,000    

The sale will be subject to the terms and conditions specified in the General Notification F.No.4(2)-W&M/2018 dated March 27, 2018 along with the Amendment Notification No.F.4(2)-W&M/2018 dated April 05, 2018, issued by Government of India, as amended from time to time. State Governments, eligible Provident Funds in India, designated Foreign Central Banks and any person or institution specified by the Bank in this regard, can participate on non-competitive basis, the allocation for which will be outside the notified amount. Individuals can also participate on non-competitive basis as retail investors. For retail investors, the allocation will be restricted to a maximum of 5 percent of the notified amount.

The auction will be Price based using multiple price method. Bids for the auction should be submitted in electronic format on the Reserve Bank of India’s Core Banking Solution (E-Kuber) system on Tuesday, April 20, 2021, during the below given timings:

Category Timing
Competitive bids 10:30 am – 11:30 am
Non-Competitive bids 10:30 am – 11:00 am

Results will be announced on the day of the auction.

Payment by successful bidders to be made on Thursday, April 22, 2021.

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. In case of technical difficulties, Core Banking Operations Team should be contacted (email; Phone no: 022-27595666, 022-27595415, 022-27523516). For other auction related difficulties, IDMD auction team can be contacted (email; Phone no: 022-22702431, 022-22705125).

Rupambara
Director   

Press Release: 2021-2022/58

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Reserve Bank of India – Press Releases

Press Releases

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The Reserve Bank of India had set up a Regulations Review Authority (RRA) initially for a period of one year from April 1, 1999 for reviewing the regulations, circulars, reporting systems, based on the feedback from public, banks and financial institutions. The recommendations of the RRA enabled streamlining and increasing the effectiveness of several procedures, simplifying regulatory prescriptions, paved the way for issuance of master circular and reduced reporting burden on regulated entities.

2. Considering the developments in regulatory functions of the Reserve Bank over the past two decades and evolution of the regulatory perimeter, it is proposed to undertake a similar review of the Reserve Bank’s regulations and compliance procedures with a view to streamlining/ rationalising them and making them more effective. Accordingly, it has been decided to set up a new Regulations Review Authority (RRA 2.0) for a period of one year from the date of its establishment to review the regulatory prescriptions internally as well as by seeking suggestions from the RBI regulated entities and other stakeholders on their simplification and ease of implementation.

3. The RRA 2.0 will focus on streamlining regulatory instructions, reduce compliance burden of the regulated entities by simplifying procedures and reduce reporting requirements, wherever possible. The terms of reference of RRA 2.0 would be as under:

  1. To make regulatory and supervisory instructions more effective by removing redundancies and duplications, if any;

  2. To reduce compliance burden on regulated entities by streamlining the reporting mechanism; revoking obsolete instructions if necessary and obviating paper-based submission of returns wherever possible;

  3. To obtain feedback from regulated entities on simplification of procedures and enhancement of ease of compliance;

  4. Examine and suggest the changes required in dissemination process of RBI circulars/ instructions (this would entail suggestions on the areas where the manner of issuing circulars, their updation and website linkages); and

  5. Identify any other issue germane to the subject matter.

4. Shri M. Rajeshwar Rao, Deputy Governor has been appointed as the Regulations Review Authority. The Authority would be set up for a period of one year from May 01, 2021, unless its tenure is extended by the Reserve Bank.

5. The RRA will engage internally as well as externally with all regulated entities and other stakeholders to facilitate the process.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/56

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RBI constitutes second regulations review authority

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The Reserve Bank of India (RBI) has decided to set up a new Regulations Review Authority (RRA 2.0) to streamline regulatory instructions, reduce compliance burden of the regulated entities by simplifying procedures, and reduce reporting requirements, wherever possible.

The authority has been constituted considering the developments in the regulatory functions of the central bank over the past two decades and evolution of the regulatory perimeter, the RBI said in a statement

M Rajeshwar Rao, Deputy Governor, has been appointed as the Regulations Review Authority. The authority will be set up for a period of one year from May 1, unless its tenure is extended by the Reserve Bank.

Terms of reference

The terms of reference of RRA 2.0 include making regulatory and supervisory instructions more effective by removing redundancies and duplications, if any; and to obtain feedback from regulated entities on simplification of procedures and enhancement of ease of compliance.

The authority will seek to reduce compliance burden on regulated entities by streamlining the reporting mechanism; revoking obsolete instructions if necessary and obviating paper-based submission of returns wherever possible.

The RRA will examine and suggest the changes required in dissemination process of RBI circulars/ instructions (this would entail suggestions on the areas where the manner of issuing circulars, their updation and website linkages).

The authority will engage internally as well as externally with all regulated entities and other stakeholders to facilitate the process. The RBI had set up the first RRA initially for a period of one year from April 1, 1999, for reviewing the regulations, circulars, reporting systems, based on the feedback from public, banks and financial institutions. The then Deputy Governor YV Reddy was the RRA.

The recommendations of the RRA enabled streamlining and increasing the effectiveness of several procedures, simplifying regulatory prescriptions, paved the way for issuance of master circular, and reduced reporting burden on regulated entities, the RBI said in the statement.

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4 Reasons Why ETFs Score As A Good Mutual Fund Class

Personal Finance

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Investment

oi-Roshni Agarwal

|

ETFs with their functioning similar to mutual funds are different in the sense that they are passively managed, implying to say there are no fund managers to buy the stocks based on the objective of the fund scheme. So, ETFs or exchange traded funds are mutual funds that are listed on exchanges and traded similar to stocks.

4 Reasons Why ETFs Score As A Good Mutual Fund Class

4 Reasons Why ETFs Score As A Good Mutual Fund Class

Now what distinguishes these ETFs or how ETFs can help one generate good return over time

1. Sectoral investment also possible:

These help us to diversify one’s portfolio and are available across indices so enable investors to choose from any of the asset class. Moreover, there are sectoral ETFs also available say you see pharma stocks booming amid the pandemic but are not able to choose one then you can go for pharma ETF that has the benchmark as Nifty Pharma index. And so, the ETF shall largely replicate the returns generated by Nifty Pharma.

2. Easy and Low-cost means to get exposure to Nifty and Sensex basket:

By just buying a single ETF share, investors will have exposure to the entire basket of Nifty 50 and Sensex stocks. So it entails a very easy process to buy into ETFs with no compulsion to spend immensely. ETFs being managed passively carry low charge in comparison to mutual funds.

3. Multiple assets can be bought into:

Other than stocks, these ETFs also offer the opportunity to buy into gold, government securities as the underlying.

4. Offer High liquidity:

In comparison to other mutual fund types such as ELSS or equity linked savings scheme that come with a definite lock-in of 3 years, there is no liquidity constraint with ETF. In fact they score over general mutual funds as transaction in mutual funds can be done only at the day-end NAV declared by the fund house.

Best ETFs based on 1-year performance

While only last one-year performance shall not be the sole criteria in picking up ETFs. Here we list some of them offering 1-year returns of more than 70 percent:

1. Motilal MoSt.Oswal Midcap 100 ETF

2. ICICI Pru Midcap Select ETF

3. Kotak NV 20 ETF

4. ICICI Prudential NV 20 ETF

5. Motilal Oswal Nasdaq 100 ETF

6. Nippon ETF Shariah BEES

7. Edelweiss ETF Banking

GoodReturns.in



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Reserve Bank of India – Press Releases

Press Releases

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April 14, 2015





Dear All




Welcome to the refurbished site of the Reserve Bank of India.





The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.





With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.




The site can be accessed through most browsers and devices; it also meets accessibility standards.



Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.



Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.



Thank you for your continued support.




Department of Communication

Reserve Bank of India


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Piramal Retail Finance enters consumer & used car finance

Banking & Finance

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With a focus on retail lending, Piramal Retail Finance on Thursday announced its foray into consumer and used car finance, even as it expects the retail share of the lending book of the Piramal Group to increase to over 40 per cent with the merger of Dewan Housing Finance Corporation Ltd (DHFL) with Piramal Capital and Housing Finance Ltd.

“The overall lending book is at about ₹45,000 crore, of which ₹5,000 crore or 11 per cent of the total lending book is from retail. DHFL book has got a substantial retail portion as well. By end of the fiscal year, retail share of the financial services business is likely to grow to mid-40s,” said Jairam Sridharan, Chief Executive Officer, Piramal Retail Finance.

focus on Non-mortgage products

In the medium term, it plans to grow the retail book to about two-thirds of the financial services business.

“With DHFL, though we have launched a lot of non-mortgage products, our business will become very mortgage heavy. We are keen to launch more non-mortgage products so that we can cross sell products to these consumers as and when the transaction happens,” Sridharan told reporters at a virtual press conference.

“The acquisition of DHFL fits perfectly into our overall retail strategy,” he said.

Earlier this week, the Competition Commission of India gave its nod to the acquisition of DHFL by PCHFL. Sridharan did not give a timeline for the expected approval from the National Company Law Tribunal but said the process is going as per expectations.

The Reserve Bank of India had in February this year approved the resolution plan for DHFL submitted by the Piramal Group.

Expansion plans

Meanwhile, elaborating on plans for Piramal Retail Finance, Sridharan said it aims to be one of the top five non-bank retail lenders over the next five years.

On Thursday, it announced the launch of its expanded multi-product retail financing platform. It is targeting ₹3,000 crore of new loan originations organically in next 12 months, in addition to inorganic growth.

Sridharan said the company, which plans to launch four more products this fiscal, is also looking at two wheeler financing and education financing in the next 12 months.

“We are working on a loans-against-shares product as well. We will also grow unsecured and multi-collateral lending products for small businesses,” he said.

At present, Piramal Retail offers seven products in its target markets –affordable housing loans, mass affluent housing loans, loans against property, secured small business loans, purchase finance, unsecured loans, and used-car loans. It is also looking to expand to 10 more locations in the next three months over the 40 locations it is already present in.

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