Reserve Bank of India (RBI) Governor Shaktikanta Das, on Monday, advised bank chiefs to remain watchful of the evolving situation amid the second wave of Covid-19 pandemic.
He asked them to continue taking measures proactively for maintaining their business continuity, sharpening business strategies, and raising adequate capital for strengthening balance sheets.
At meetings with the MD and CEOs of public and private sector banks over video conference, Das underscored the importance of credit flows in sustaining the nascent economic recovery. The meetings were also attended by Deputy Governors MK Jain, M Rajeswar Rao and a few other senior officials of the RBI.
The Governor also emphasised the need for banks to maintain close vigil on the payments and other IT systems operated by them, and fortifying those for enhanced efficiency and resilience so as to offer seamless and uninterrupted customer service.
Mini-lockdowns
The aforementioned observations by Das come even as some States have begun imposing lockdowns/ mini-lockdowns to stem the second wave of the pandemic.
Last year, just before the country went into lockdown (from March 25 till May 31), the central bank had created a crack team of 150 officers, staff and service providers for essential services such as currency in circulation, retail and wholesale payment and settlement systems, reserve management, financial markets and liquidity management, financial regulation and supervision, and a host of other services so that the nation may survive Covid-19.
Banks and financial institutions rose to the occasion then, ensuring normal functioning of the financial system. The Governor had praised their efforts.
The other issues that were discussed at today’s meeting include the progress in the implementation of Covid Resolution Framework; outlook on stressed assets; capital augmentation; liquidity scenario and monetary transmission; credit flows to different sectors, including to stressed sectors, MSMEs, retail.
Vaccination programme
In a statement last week, Das observed that prospects for 2021-22 have strengthened with the progress of the vaccination programme.
The recent surge in infections has, however, imparted greater uncertainty to the outlook and needs to be closely watched, especially as localised and regional lockdowns could dampen the recent improvement in demand conditions and delay the return of normalcy, he added.
ICRA has estimated the gross non-performing assets (GNPAs) of housing finance companies (HFCs) for FY21 to be higher by 50-100 basis points compared to FY2020, and will remain elevated in FY22 as well.
HFCs, which were already facing growth moderation and asset quality woes in the wholesale segment, witnessed an even more challenging operating environment in FY21 due to Covid-19-induced disruptions, the credit rating agency said in a report.
Asset quality
ICRA assessed that these HFCs not only witnessed slowdown in disbursements and hence moderation in portfolio growth, but also witnessed increased pressure on asset quality in 9M (April-December) FY21.
However, steady growth in disbursements in the last two quarters, driven by gradual pick-up in demand for housing credit, has provided some hope of incremental growth trajectory.
Sachin Sachdeva, Vice-President and Sector Head, Financial Sector Ratings, ICRA, said: “Given the cash flow stress faced by the borrowers, the overdues of HFCs increased in 9M FY21 as reflected by proforma (assuming no asset classification dispensation as per the Supreme Court’s order) GNPAs of around 2.7 per cent as on December 31, 2020, compared to reported GNPA of 2.4 per cent as on March 31, 2020.
“The asset quality indicators could be further impacted in Q4 (January-March) FY21.”
The report said the on-book portfolio growth moderated for HFCs in 9M FY21 (compared to March 2020) to 4.3 per cent (excluding the portfolio of one large player, which had sizeable write-offs) from portfolio growth of 6 per cent year-on-year (yoy) in FY20.
However, with revival in demand for housing credit in the industry in the last two quarters, most of the HFCs have already reached near pre-Covid level disbursements and are targeting to achieve further higher disbursements in Q4 FY21.
“This is expected to push up the growth rate for FY21 to 6-8 per cent. Thereafter, ICRA estimates the growth of 8-10 per cent for on-book portfolio of HFCs in FY22,” the report said.
Sachdeva noted that notwithstanding the improvement in business in Q3 (October-December) FY21 and Q4 FY21, relatively lower business growth than the earlier years, and asset quality pressures would moderate the profitability for the HFCs in FY21.
Nevertheless, healthy provision cover maintained by most of the entities, is expected to provide cushion and protect the profitability from Covid-related asset quality stress in FY22, he added.
“While HFCs are expected to regain their profitability and growth trajectory in FY22, the rising Covid-19 infections and localised lockdowns remain a concern area. HFC’s ability to maintain the growth momentum and keep slippages under control would be critical for maintaining the credit profile,” he said.
Private sector lender Axis Bank has launched a new feature to send money abroad on its mobile banking app in over 100 different currencies.
“With the addition of this feature on the Mobile App, Axis Bank brings a convenient and hassle-free service to its customers where one can now send money abroad through a simple two-step process,” it said in a statement on Monday.
Customers can send money abroad in over 100 different currencies, without any need to visit a branch. They can send up to $25,000 per transaction for various purposes such as education fee payment, family maintenance, health-related expenses.
“To make the proposition richer, Axis is also offering a preferential rate on digital channels,” it further said.
Satheesh Krishnamurthy, EVP and Head, Private Banking and Third Party Products, Axis Bank, noted that forex transactions are traditionally viewed as complex transactions involving lengthy documentation. “However contrary to this belief, in most cases, it’s as simple as a domestic transfer. Our Mobile App journey demonstrates this by offering a frictionless and simplified process,” he said.
Kotak Mahindra Bank has decided to continue its special interest rate on home loans of 6.65 per cent per annum.
“In the interest of consumers and on the back of strong demand trends, Kotak continues to offer possibly the lowest home loan interest rate in the market,” it said in a statement on Monday, adding that the rate is applicable across all loan amounts.
“Both fresh home loan applicants and balance transfer cases are eligible for interest rates beginning at 6.65 per cent per annum. Interest rates are linked to borrowers’ credit score and the Loan to Value ratio,” Kotak Mahindra Bank further said.
The move comes at a time when State Bank of India’s concessional home loan rate came to an end on March 31, 2021. The lender has restored the original interest rates starting from 6.95 per cent.
Kotak Mahindra Bank had earlier said the special home loan rate was available until March 31, 2021.
However, Ambuj Chandna, President, Consumer Assets, Kotak Mahindra Bank, noted that there has been a healthy growth in home sales in recent months led by several factors, including the drop in home loan interest rates. The bank also sees it as an excellent opportunity to build a quality home loan book.
“We expect this trend to continue with consumers keen to purchase and live and work in their own homes. We would like to assure home buyers that Kotak stands by them and our home loan rate continues unchanged at 6.65 per cent per annum,” he said.
The Reserve Bank of India (RBI) on Monday said Real Time Gross Settlement (RTGS) system service will not be available from 00:00 hrs to 14.00 hrs on April 18, 2021 (Sunday).
The central bank said RTGS will not be available on April 18 as a technical upgrade of the system, aimed at enhancing the resilience and further improving the Disaster Recovery Time of the system, is scheduled after the close of business of April 17, 2021 (Saturday).
The NEFT (National Electronic Funds Transfer) system will continue to be operational as usual during this period.
RBI asked Member banks to inform their customers to plan their payment operations accordingly. RTGS Members will continue to receive event update(s) through system broadcasts.
Under RTGS, there is a continuous and real-time settlement of fund transfers, individually on a transaction-by-transaction basis (without netting).
The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is ₹ 2 lakh with no upper or maximum ceiling. It is available on a 24x7x365 basis.
NEFT is an electronic fund transfer system, which is available round the clock throughout the year on all days — on a 24x7x365 basis. NEFT presently operates in batches on half-hourly intervals throughout the day.
The Employees Pension Scheme (EPF), run by the Employees Provident Fund Organization or EPFO, serves to give pension to organized-category employees. Employees who have been contributing to the EPF for at least ten years are eligible for this scheme. When the applicant hits the age of 58, the scheme begins to generate monthly pensions. The pension contribution in EPF is not covered by employees and employers, unlike the EPF contribution. The EPS pension gets just 8.33 percent of the employers’ share of the 12 percent. Here we will discuss all the rules and eligibility criteria to avail the benefits of the EPF pension scheme.
Eligibility criteria
An individual must meet the following criteria in order to be eligible for benefits under the Employees’ Pension Scheme (EPS):
He or she must be a member of EPFO
He or she must have completed at least 10 years of service or employment.
He or she must have reached 58 years of age.
Even so, all members of the Miscellaneous Provision Fund, as well as Employee Provident Fund’s beneficiaries, are eligible for the EPF pension scheme.
How to calculate pension uunder EPS?
The monthly pension benefit under the Employees Pension Scheme is determined by the employee’s pensionable salary and pensionable service period. The following formula can be used to calculate the amount.
For pensionable salary: The pensionable salary is the employee’s overall monthly salary for the last 12 months of service. Any non-contributory day in the previous 12 months will not be taken into account, and the amount will be paid to the employee.
Assume that one employee’s monthly salary is Rs 30,000. Because the employer contributes 8.33 percent of this salary to the employee’s EPS fund, the pensionable salary in this case is:
Rs 30,000 x 8.33 / 100 = Rs 2,499 (monthly pension amount), Annual pension amount will be: Rs 2,499 x 12 = Rs 29,988.
If an employee does not start employment on the first of the month, his or her salary for the month will be calculated based on his or her working days rather than 30 days. If someone starts working on the 5th of the month, the salary will be determined for the next 25 days depending on the amount paid per day. That being said, for EPS calculation, the monthly salary will be the salary for the whole month.
For pensionable service: The term “pensionable service” refers to the period an employee has worked. If an individual withdraws from the EPS scheme before serving the required minimum service period, i.e. 10 years, the contribution to the EPS scheme will have to be updated. The member’s actual service period is called pensionable service. While determining the pensionable service period, service periods by various employers are added together. Any time an employee changes the existing job he must receive an EPS Scheme Certificate and submit it to his new employer. It’s important to note that after 20 years of employment, the employee receives an additional 2 years of pensionable service. As six months is the minimum period of pensionable service, it is used to calculate the pensionable service period. The term of pensionable service will be classified as 5 years and 3 months if the service duration is 5 years and 3 months. That being said, if the period exceeds six months, it is considered as a year, so a span of five years and six months or more is classified as six years. Let’s use the previous formula to measure the monthly pension.
Rs 29,988 (annual pensionable salary) x 18 years (years of pensionable service) / 70 = Rs 7,711.2 (monthly EPS pension amount).
Pension benefits under EPS
From the time they start withdrawing their pension, all EPFO members who are eligible will receive pension benefits based on their age. The amount of the pension varies depending on the circumstances which are as follows:
Pension at the age of 58 years: Upon reaching the age of 58, a member is eligible for pension benefits. When he reaches the age of 58, though, he must have served for at least ten years in order to be eligible for pension benefits. An EPS Scheme Certificate is issued, which can be used to fill Form 10D for monthly pension withdrawals.
Pension benefit on leaving employment before being eligible for Monthly Pension: If a member is unable to continue his or her service for ten years until reaching the age of 58, he can withdraw the whole amount by filling out Form 10C at the age of 58; however, he will not receive monthly pension payments until retirement.
Pension on disabled totally and permanently: Regardless of whether or not he has completed the pensionable service duration, an EPFO member who becomes completely and permanently disabled is eligible for a monthly pension. To be eligible for the pension, his employer must deposit funds in his EPS account for at least one month.r From the day of permanent disability, the member is liable for a monthly pension, which is provided for the rest of his or her life.
Pension in case of death of the member: If a member dies while on employment and the employer has deposited funds in his EPS account for at least one month, if the member has served 10 years of employment and dies before reaching 58 years of age, or if the member dies after the monthly pension begins, the member’s family becomes liable for pension payments.
Types of pensions under EPS
Pensions for widows, children, and orphans are among the many forms of pensions available under EPS. Follow the below-listed points to know in brief:
Widow pension: Widow pension is provided to the widow of a pension-eligible member. The pension balance will be paid until the widow’s death or remarriage. If there are multiple widows, the pension will be paid to the oldest widow. The amount of the widow’s pension is determined by the employee’s pension amount. The widow pension has a minimum amount of Rs 1,000.
Child pension: The surviving child of a deceased employee receives a child pension from the Employee Pension Scheme. The overall amount of a child pension that can be issued is 25% of the widow pension. The child will be entitled to the pension until he or she turns 25. It’s important to note that the child pension is calculated in the same way as the widow pension.
Orphan pension: If the employee dies without a surviving widow, the orphan pension becomes eligible to the surviving children. His children will be eligible for a monthly orphan pension of 75% of the monthly widow pension.
Reduced pension: If an employee chooses to withdraw his or her pension before meeting the age of 58, he or she will receive a 4 per cent annually at a reduced rate. When a member of the EPFO has served ten years of service and is between the age of 50 and 58, he or she is qualified for an early pension. Under this situation, the pension amount is reduced by 4% for every year if the pensioner is under the age of 58.
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After crossing Rs 5 lakh crore in home loans, State Bank of India has set a similar target for the small and medium enterprises (SME) segment.
The bank plans to increase its SME market share to t 20% from 15% at present and grow its loan book to Rs 4 lakh crore in three years, according to a report.
How the bank plans to do it
State Bank of India plans to revamp its entire operational setup for lending to micro, small and medium enterprises to improve turnaround time and customer experience while keeping bad loans under a lid. It is seeking bids from consultants for the process.
In the request-for-proposal (RFP) dated March 26, the bank said “With the objective of becoming banker of choice for MSMEs, SBI intends to improve existing processes and structure in the SME space for achieving improvement in market share/enhance the portfolio while ensuring the asset quality,” SBI said.
The document said that the bank is looking to increase its market share in this category from 15%.
The bank wants to increase onboarding in its Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which is seeing poor offtake and high non-performing assets. It is looking to develop analytics tools to generate supply chain financing business from its existing current account (CA) base.
The segments
The bank lends to MSMEs under four verticals — SME Centre and relationship managers, supply chain finance, CGTMSE and cluster financing.
According to the RFQ, for the supply chain finance (SCF) vertical, SBI is looking to benchmark current dealer/vendor financing SCF journeys with global players and identify gaps. It wants to develop value chain analytics capabilities, including an analytics framework on the lack of transaction flows of the existing current account base to generate leads for vendor and dealer onboarding.
For the CGTMSE segment, the bank wants to under the reasons for the poor offtake of schemes and is seeking remedial measures. It wants to identify deficiencies while onboarding that could hurt asset quality.
At the SME centre, the bank is looking to identify gaps in the end-to-end process of loan origination, sanction and monitoring and propose changes in process flow and end-to-end digitisation specific to loans up to Rs 1 crore. It wants to reduce the turnaround time and improve on-boarding. To enable the relationship manager (RM), the bank wants to benchmark the digital offerings of RMs of peers and identify areas of data obtention that can be digitised and centralised.
In cluster financing, the bank wants to build a coordination mechanism with various government agencies for increased thrust in the cluster portfolio. The bank is also looking at tie-up with new fintech firms.
SBI has 1,770 relationship managers to cater to the MSME segment. It has more than 1,100 specialised SME intensive and MSME branches.
CoinDCX, a cryptocurrency exchange and a liquidity aggregator, said it has witnessed a spike in investments in cryptocurrency from Karnataka. Graduates and IT professionals are the key crypto investors in the state.
The company said as per its internal data, majority of investors investing in cryptocurrency in Karnataka are graduates and working IT professionals. The data further states that a large section of the investors fall under the age of 35.
To ensure early adopters of cryptocurrency do not suffer fraud, the company has introduced CoinDCX Go, an easy investment platform in crypto, backed by secured features.
Sumit Gupta, CEO CoinDCX, said Bengaluru, Chennai and Hyderabad are some of the cities witnessing a rise in investment in crypto assets. Women from these cities are also increasingly investing in crypto assets, almost contributing to around 20 per cent of the pie chart.
The company recently launched app CoinDCX Go, and is trying to bridge the gap between those challenged by knowledge on crypto and those concerned by their investments’ safety and security. “CoinDCX Go app is available for Android and IoS devices and has been downloaded more than 1,50,000 times since its launch is meant for new users to come on board the crypto space,” company release said.
According to the Reserve Bank of India (RBI) holiday calendar, banks will be closed in most parts of the country from tomorrow (13 April) to 16 April due to various festivals. These holidays are declared under Negotiable Instruments Act. Banking holidays depend on festivals observed in particular states and can vary from one state to another.
On 13 April, Banks in Belapur, Bengaluru, Chennai, Hyderabad, Imphal, Jammu, Mumbai, Nagpur, Panaji, and Srinagar will remain closed on account of Gudhi Padwa/Telugu New Year’s Day/Ugadi Festival/Sajibu Nongmapanba (Cheiraoba)/1st Navratra/Baisakhi.
On 14 April, Banks in Agartala, Ahmedabad, Belapur, Bengaluru, Bhubaneswar, Chandigarh, Chennai, Dehradun, Gangtok, Guwahati, Hyderabad, Imphal, Jaipur, Jammu, Kanpur, Kochi, Kolkata, Lucknow, Mumbai, Nagpur, New Delhi, Panaji, Patna, Ranchi, Srinagar, Thiruvananthapuram will remain closed on account of Dr Babasaheb Ambedkar Jayanti/Tamil New Year’s Day/Vishu/Biju Festival/Cheiraoba/Bohag Bihu.
On 15 April, Banks in Agartala, Guwahati, Kolkata, Ranchi, and Shimla will remain closed on account of Himachal Day/Bengali New Year’s Day/Bohag Bihu/Sarhul.
On 16 April, Banks in Guwahati will remain closed on account of Bohag Bihu.. Apart from these banks will remain closed on 21 April and 24 April on account of Ram Navmi and Second Saturday.
