Month: April 2021

AU Small Finance Bank has launched a Platinum Family Banking Program that will offer facilities of family banking as well as offerings such as preferential pricing, priority processing, on-boarding offers, and a complimentary lifetime free debit card.

Significantly, it will also provide a dedicated relationship officer to address the financial needs of the entire family.

“This single point of contact will take care of the entire family’s banking needs, including deposits, investments, loans, insurance, and payments. Family banking offers them the ease of maintaining requisite balance across family member accounts,” said AU Small Finance Bank in a statement.

“We observed a big gap in the banking experience delivered to the mass affluent segment of this country, which is where we present the all-new Platinum Savings Program. It is a perfect mix of smart banking, supreme privileges and personalised experience,” said Rishi Dhariwal, Chief of Branch Banking, AU Bank.

Customers will also have access to product offerings from AU Bank, including deposits, loans, insurance, mutual funds, and investment products, as well as higher savings interest rates of up to seven per cent, and unique monthly interest pay-out and everywhere banking feature exclusively offered on AU Bank savings accounts, the lender further said.

Northern Arc Investments, the alternative investment arm of non-banking financial company Northern Arc Capital, today announced the successful maturity and closure of IFMR FImpact Investment Fund with a higher-than-expected return.

Launched in 2015, the IFMR FImpact Investment Fund is the maiden fund from Northern Arc Capital’s investment platform. It was also the first microfinance-focussed private credit fund in India. The fund raised ₹1,000 million in commitments from an investor base, which included banks, insurance companies and HNIs.

In a press release, the company said that the fund’s investment portfolio comprised 13 companies, which, in turn, disbursed over 10 million end-loans to the unbanked and underbanked segments in India.

Volatile phases

During its six-year tenure, the fund witnessed some very volatile phases in India’s financial history, including the government’s demonetisation in November 2016, GST rollout in July 2017, the tightened liquidity conditions afflicting the financial services industry post the NBFC crisis in 2018-19, besides the Covid-19-induced national lockdown in 2020, the company added.

“At the time of its launch, the IFMR FImpact Investment Fund was an untested play in the financial inclusion space in India, and has since served as a powerful proof-of-concept for private credit funds to successfully operate in this segment,” Kshama Fernandes, MD and CEO, Northern Arc Capital, was quoted in the release.

“This exit is truly reflective of our sectoral expertise and strong underwriting practices, which enabled us to maintain excellent portfolio quality even during challenging times,” she added.

Net returns

Despite significant external headwinds, the fund maintained excellent portfolio quality and delivered consistent cash flow payouts to investors throughout its tenure with no instances of shortfall or delay. Upon final maturity, the fund delivered net returns (pre-tax, post all other expenses) of over 15 per cent (in rupee terms) to its investors, well ahead of its target return of 13 per cent, the company said.

“This is our second consecutive timely exit from our investment platform in the last two years, reinforcing our track record as an experienced private credit fund manager from India,” Ravi Vukkadala, CEO, Northern Arc Investments, was quoted in the release.

In February 2020, Northern Arc Investments also exited from one of its earliest debt funds, IFMR FImpact Medium Term Microfinance Fund, with better-than-expected returns.

Receivables Exchange of India Ltd (RXIL), on Tuesday, said it recorded the highest monthly transaction volume of more than ₹1,000 crore in March in terms of discounting invoices of micro, small and medium enterprises (MSMEs).

The Trade Receivables Discounting System (TReDS) platform, in a statement, said the growth in transaction volumes from ₹69 crore in April 2020 to ₹1,105 crore in March 2021 mimics the revival and resumption of economic activity.

Throughput

RXIL logged a throughput of more than ₹6,500 crore by way of discounting of invoices of MSMEs in FY21, the statement added.

On a cumulative basis, RXIL said it processed throughput of more than ₹10,000 crore since inception in 2017.

There are three constituents on a TReDS platform – sellers (MSMEs), buyers (large corporates, Central public sector enterprises, and government undertakings who buy from MSMEs), and financiers.

“It is a transparent and online auction-based price discovery platform where financing has been at interest rates as low as 3.99 per cent per annum with the average rates between 6 per cent per annum to 8 per cent per annum, resulting in reduction of interest costs for MSMEs by almost 50 per cent for their working capital funding,” said RXIL.

Promoters of RXIL

The promoters of RXIL are Small Industries Development Bank of India (SIDBI) and NSE Strategic Investment Corporation Ltd, a wholly-owned Subsidiary of NSE.

Vikram Limaye, MD & CEO, NSE, observed that TReDS enables MSMEs secure finance on the strength of their buyer’s credit rating without having to negotiate with financiers. TReDS plays a critical role in ensuring seamless liquidity to MSMEs and can play a part in filling up the credit gap.

V Satya Venkata Rao, Deputy Managing Director, SIDBI, emphasised that many MSMEs joined TReDS with the support of SIDBI’s Swavalamban Crisis Responsive Fund (SCRF), which paid their registration fees on the TReDS platform during the pandemic.

Ketan Gaikwad, MD and CEO, RXIL, said TReDS is gaining traction and helping multitudes of MSMEs receive their payments on time.

“To have an efficient working capital management and a healthy supply chain has resulted in the corporates utilising TReDS to ensure timely payments to their MSME sellers without affecting their own cashflows,” he said

Terming capital markets as the engine of the country’s growth, veteran banker and CII President Uday Kotak, on Tuesday, said that policymakers need to keep in mind that this engine needs to be nurtured and sustained.

“The most defining aspect of the economy in the last one year was the way the capital markets stood by and supported the economy. We saw probably among the highest level of fund raise, active and functioning capital market, and the regulator SEBI and Ministry of Corporate Affairs were on their toes to do what is right for markets and its functioning and ensuring a delicate balance between the interest of issuers and investors,” he said at a CII Corporate Governance Summit.

Kotak, who is Managing Director and CEO, Kotak Mahindra Bank, further said: “It is here that we have had actually great support to our economy at a time of a crisis probably once in a 100 years.”

Those who had access to capitalwere able to navigate and survive the turbulent time, Kotak noted.

Access to capital

To have access to capital, corporate India must see continuous improvement in governance standards, he said, stressing that the success and failure of enterprise are now being determined by this very important point of corporate governance.

Addressing the event, Keki Mistry, Vice-Chairman and CEO, Housing Development Finance Corporation, said investors use corporate governance as an indicator to judge the quality of a company’s management and the effectiveness of its board.

“It is now widely accepted by companies that sound principles of corporate governance are now necessary for their long term sustainability,” he said, adding that it is one of the focus areas of global investors when they make investments.

Governance trends

Outlining six key corporate governance trends, which have found traction in India in recent times, Mistry said independent directors should be adequately compensated for the additional time they spend in carrying out their duties through means such as stock options, apart from cash consideration.

“There should be no regulatory and legal bar in providing stock options to independent directors, in addition to cash compensation so long as the combination falls within the remuneration limit prescribed under the Companies Act,” he said, adding that the Ministry of Corporate Affairs and SEBI may consider this.

The six trends he listed on corporate governance include risk management, role of independent directors, reshaping of the board, shareholder activism, and whistle-blower policy.