Month: April 2021

Bajaj Finance acquires more customers after HDFC Bank’s halt on credit card, BFSI News, ET BFSI

Banking & Finance

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Bajaj Finance, the behemoth in consumer lending, posted a slight drop in new consumer loans at 5.5 million in January March quarter against 6 million a year ago. However, the company acquired 2.3 million new customers in Q4 FY21 as compared to 1.9 million in the fourth quarter of fiscal 2020.

As it kept the customer accretion rate healthy Bajaj Finance seems to have benefited from the setback to HDFC Bank, which was penalised by the Reserve Bank of India over digital lapses and has been unable to issue new credit cards.

According to analysts, the asset under management growth of Bajaj Finance exceeded expectations at 4% year on year and 6% sequentially as it acquired more customers.

Bajaj Finance’s Q4 performance

Bajaj Finance’s deposits rose 21% on year to Rs 25,800 crore as on March 31. The consolidated deposit book was at Rs 23,777 crore as on December 31. Assets increased by Rs 9,500 crore in the March quarter, taking the financier’s total assets under management to Rs 1.53 lakh crore as on March 31. The company’s customer franchise rose 14.1% on year to 48.6 million as on March 31.

The company is well capitalised and its liquidity position remains strong, as its consolidated liquidity surplus was Rs 16000 crore as on March 31. Bajaj Finance had a consolidated liquidity surplus of Rs 14347 crore as on December 31, representing 11.6% of its total borrowing. The capital adequacy ratio was 28.4% as of March 31, which is an improvement over 28.18% as on December 31, according to the provisional figures for the January March quarter.

Analysts expect the company to show healthy traction in consumer B2B (business to business) loans and commercial loans. They also see a gradual uptick in mortgage loans and consumer B2C (business to consumer).

Covid impact on Bajaj Finance.

However, with the surge in Covid cases, asset quality remains a worry as they may increase provisioning and credit costs for Bajaj Finance in upcoming quarters. In the third quarter, the company provided Rs 1,352 crore for loan losses and provisions, which was significantly higher than Rs 831 crore it provided in the same quarter last year. During the third quarter, the company has done a one-time write-off of principal outstanding amount of Rs 1,970 crore and interest outstanding of Rs 365 crore on account of Covid-19 related stress.

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Bank unions threaten with aggressive protest against privatisation move, BFSI News, ET BFSI

Banking & Finance

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Bank unions across India have not yet given up and in order to support their stance against the proposed privatisation of some state-run banks, they have made threats of holding more strikes against the Union government. This comes after the general council meeting of the All India Bank Employees’ Association (AIBEA) on Sunday.

“The general council meeting has called upon all our unions and members all over the country to continue the struggle against bank privatisation, get ready for prolonged strikes and intensify our campaign to defend public sector banking and defeat attempts of privatization,” the union said in a statement.

FM Niramala Sitharaman announced in the Union Budget speech on February 1 that the government will conduct privatisation of two more public sector banks besides IDBI Bank, in the financial year 2022. Following this major development, on March 15 and 16, about 10 million bank employees participating from nearly 9 bank unions conducted a two-day bank strike

Bank unions have also begun engaging with customers and the public at large, on what they believe are the ill-effects of privatization.

In a statement AIBEA added, “Public sector banks provide permanent jobs for the educated youth. But we know the plight of the employees working in the new private banks where job security is totally absent. Fair wages are denied. Trade union rights are non-existent. Thus, privatisation of banks will enslave the young employees into these adverse conditions.”

The 2-day national bank strike led to Heavy losses of about Rs 16,500 crore due to clearance of cheques and payment instruments only on the first day of the strike. Payment instruments such as cheques, demand drafts and pay orders are processed by three large centres.

While Chennai handles 5.8 million instruments worth ₹5,150 crore every day, Mumbai handles 8.6 million instruments worth ₹6,500 crore and Delhi processes 5.7 million instruments worth ₹4,850 crore.

Also Read: Privatisation…Long (not) live Public Sector Banks



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Wish To Invest In Bitcoin After Its 800% Run In FY21: Here Are The 4 Watch Outs

Personal Finance

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Investment

oi-Roshni Agarwal

|

At a time when Indian government is considering roll out of its own digital currency and carving out a route for investors to exit their investments in crypto, considering past returns of a huge 800 percent in the financial year gone by on bitcoin, you may be tempted to bet on these highly popular digital tokens.

Wish To Invest In Bitcoin After Its 800% Run In FY21: Here Are The 4 Watch Outs

Wish To Invest In Bitcoin After Its 800% Run In FY21: Here Are The 4 Watch Outs

Further the centre is considering putting a ban on trading in cryptos and for it, they are looking at blocking IP addresses of such platforms.

So, as a matter of fact here are some watch-outs to consider if you too are inclined to invest in cryptos including Bitcoin that showed remarkable gains over the last fiscal year:

1. Sharp rally and huge volatility in the asset class makes it difficult to put forth any trend. Also, being highly volatile these should be opted by only investors with high risk-appetite. Besides, the past return of a huge 800 percent is seen as unsustainable for now.

2. Also, as the current format of trading in such cryptos is designed keeping regulation out of transactions, the price movement on a daily basis becomes unpredictable. Thus lump sum investments in such asset class which lack government support and regulatory framework should be strictly avoided to keep huge losses at bay.

Instead investors can still look at the SIP option in cryptos or bitcoin which is a disciplined investment approach similar to mutual funds.

3. Amid the various, regulations to curb their trading, stakeholders are making representations before the government and are coming up with ways to establish investment credentials for such assets.

4. Even though there remain insights that the bitcoin could scale to levels of $1,00,000 mark in this ongoing fiscal year, nonetheless what can come as a hurdle are the regulatory guidelines and any profit booking. Factors though pushing the crypto higher include its limited supply as well as mainstream acceptance by global financial institutions.

GoodReturns.in



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How Much Time Does It Take To Double The Returns Of Your Investments?

Personal Finance

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Planning

oi-Vipul Das

|

Because of the influence of compound interest, if you put your capital in the right ways, it will rise significantly over the years. A secure investment is one that involves little to no uncertainty. They are usually appropriate for individuals who are retired who do not want to welcome risks. Currently, there are many equity opportunities available in the market that offer decent returns while still providing tax advantages. Small savings schemes such as PPF, Sukanya Samriddhi Yojana, Senior Citizens Savings Scheme, NSC, and others are popular investment strategies for risk-averse investors. For investors with a low-risk appetite, there are bank FDs and debt mutual funds in addition to small savings schemes. That being said, in order to choose the right choice for you, you must first assess your investment period and financial objectives. If you’re still not sure which one to go for, look at the return factor to see which one has the highest returns across the shortest period of time. The easiest ways to do this is to figure out how long it takes each investment product to double your money. It would be easier to choose a scheme until you know which strategy will double your holdings the fastest. You can simply achieve this by using the ‘Rule of 72.’

How Much Time Does It Take To Double The Returns Of Your Investments?

What is “Rule of 72”?

The Rule of 72 is an easy way to calculate how long it will take for an investment to double the fixed annual rate of interest. Investors can get a rough estimate of how much time it will take for their investment to double by dividing 72 by the annual rate of return. This rule is commonly used in instances concerning compound interest. It should be noted that a simple interest rate does not fit effectively with the Rule of 72. Bank FDs are presently providing around 5% interest to regular investors. If you want to deposit Rs 5 lakh in a fixed deposit of a bank with an interest rate of 5%, divide 72 by the interest rate of 5% to find out how long it will take for Rs 5 lakh to double. So 72/5 equals 14.4 years. As a result, if the interest rate is 5%, the money will double in 14.4 years. If your average annual equity return is 15%, your investment will double in 4.8 years (72/15). The thumb rule is typically applied to fixed-rate instruments rather than volatile asset categories such as equities. You can also use this rule and find out how much interest rate you need to double your money in a certain period of time. For instance, suppose you want your money to double in ten years. 72 divided by ten equals 7.2 per cent. To double your money in ten years, you’ll need a 7.2 per cent interest rate.

Types of fixed-income instruments that double your returns

Here are several investments that can double the returns of your investments in a certain period of time.

Fixed-income instruments Current ROI Rule 72 Money will be double in
Bank FDs Around 5% 72/5 14.4 years
Public Provident Fund (PPF) 7.10% 72/7.1 10.14 years
Sukanya Samriddhi Yojana 7.60% 72/7.6 9.47 years
Kisan Vikas Patra 6.90% 72/6.9 10.43 years
National Savings Certificate 6.80% 72/6.8 10.5 years
5-Year Post Office Recurring Deposit Account (RD) 5.80% 72/5.8 12.41 years
Senior Citizen Savings Scheme 7.40% 72/7.4 9.72 years

Note: It is important to note that the Rule of 72 should be used to make financial calculations and take into account the nature of compound interest. As long as the interest rate is less than around 20%, the “rule” is pretty effective.



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Lendingkart’s NBFC arm raises ₹108 crore from Dutch bank FMO

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Lendingkart, a financial services and fintech start-up, announced a new round of fund raising of $15 million (₹108 crore) in debt funding from FMO, the Dutch entrepreneurial development bank. With this deal, Lendingkart strengthens its three-year relationship with the bank, having received funds through NCDs (non-convertible debentures) and increasing its cumulative exposure to $19 million with this transaction.

FMO supports sustainable private sector growth in developing countries and emerging markets. This new influx of funds to Lendingkart will be utilised towards expanding the reach of financial products to the MSME segment through Lendingkart’s digital platform across 100 sub-industries spread across India.

Lendingkart to launch ‘credit intelligence services’ for banks

Lendingkart Group is a leading Fintech company in India, providing short-term working capital loans to SME borrowers under Lendingkart Finance Limited — a non-deposit taking NBFC arm of Lendingkart Group. Founded in 2014 by Harshvardhan Lunia, Lendingkart has evaluated nearly half a million applications, disbursing 1,00,000+ loans to more than 91,000 MSMEs in 1300+ cities across all 29 States and Union Territories of the nation, making it the NBFC with the largest geographical footprint in the country.

Focus on women entrepreneurs

The Group which has received an equity infusion of ₹1,050 crore to date, is financed by reputed international investors like Fullerton Financial Holding (FFH) (100 per cent subsidiary of Singapore Sovereign Fund Temasek Holdings), Saama Capital, Mayfield India, Bertelsmann, Sistema Asia and India Quotient. The Group had received an equity infusion of ₹319 crore in FY 2021.

Lendingkart ramps up headcount, promotes high performers

“We raised ₹1,800 crore in debt funding last fiscal. To support our growth plans we plan to raise a further ₹3,000 crore in debt funding from PSU and Private Banks, Small Banks, NBFCs, AIFs, HNIs and Overseas Funds. We are targeting 40 per cent growth over the pre-Covid year, this fiscal. We closed last fiscal with ₹30 crore in profits and sustained this till December 2020 despite the pandemic. With this new fund raise, Lendingkart will fast-track its efforts to improve financial inclusion and credit reach to 5,000 + new MSMEs with a focus on small businesses and women entrepreneurs,” Sudeep Bhatia, Lendingkart Group CFO, told BusinessLine. By FY 22, Lendingkart has planned to onboard 1.25 lakh MSMEs on its portfolio.

“Lendingkart Finance is a fast-evolving company and has become a leader in the fintech space in India. The new transaction is aligned to FMO’s ambition to accelerate financial inclusion through innovative technological solutions. As India recovers from the pandemic and uncertainties presented by it, we are pleased we can partner with Lendingkart to better support its customers, with a focus towards women-run businesses and micro enterprises” said Huib-Jan de Ruijter, Chief Investment Officer (a.i.), FMO.

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Types of Standard Insurance Policies Launched During Covid-19 Pandemic

Personal Finance

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Insurance

oi-Sneha Kulkarni

|

With the second wave engulfing the country, let us take a look at the insurance options available to keep oneself and one’s family financially safe during this pandemic. The Insurance Regulatory and Development Authority of India (Irdai) had asked insurers to introduce standard insurance policies in all categories during the coronavirus pandemic. The majority of existing health insurance policies allow claims against Covid-19 for hospitalisation costs, subject to exclusions, waiting periods, and pre-existing conditions. Covid-specific insurance products offer a number of advantages that a standard health insurance policy might not. In these times of increased risk, you should review your current health insurance plan and make an informed decision about whether you should purchase an additional Covid-specific plan or not after carefully weighing your options.

Types of Standard Insurance Policies Launched During Pandemic

Saral Jeevan Bima

Saral Jeevan Bima is a Standard, Individual term life insurance product that is specially designed for the first-time life insurance buyer. Saral Jeevan Bima is a simple and affordable Term Insurance Plan that pays a lump sum benefit in the event of the Life Assured’s death. The Basic Sum Assured, Premium Payment Term, Policy Term, and Premium Payment Frequency can all be customised to meet your insurance needs. The total amount of premium payable in a policy year, excluding taxes, underwriting extra premiums, and any modal premium loadings, is known as the annualised premium. It is an individual, Non-Linked, Non-Participating Life Insurance Pure Risk Premium Product.

Saral Pension Annuity Policy

This is a pension-related product. Except to the extent that commutation of such benefits is allowed under the Income Tax Rules, benefits by way of surrender, complete withdrawal, or maturity/vesting will be available in the form of annuities. It is an individual non-linked traditional pension plan with Guaranteed Bonuses for the first 5 years and Simple Reversionary Bonuses thereafter, if any, for the remainder of the policy term. An annuity is a payment that is made for the rest of the annuitant’s life. Following the annuitant’s death, the nominee or legitimate heirs will receive a full refund of the purchase price. Monthly, quarterly, half-yearly, and annual intervals are available. Only arrears payments are made, ensuring that the first annuity payout occurs after the modal term.

Corona Kavach

On a positive COVID-19 diagnosis in a government-approved diagnostic centre that necessitates hospitalisation, policyholders are entitled to the benefits of the policy. Individual and family floaters are available for the “Corona Kavach Policy.” The following family members can be covered under the policy. This is a one-time payment COVID-19 treatment indemnity policy that covers COVID-19 treatment for up to 9.5 months. The expenses incurred during organisational treatment or hospitalisation are covered by this policy. All bill settlements have been made completely cashless, allowing the doctor to focus entirely on the patient rather than making endless rounds to the insurance company. This policy covers pre-hospitalization expenses for 15 days and post-hospitalization expenses for 30 days.

Corona Rakshak

The Corona Rakshak Health Insurance Policy pays out a lump sum that can be used to cover medical expenses. It is an individual, Non-linked, Non-participating, Health Insurance, Pure Risk Premium product. No medical examination is required for this streamlined issuance. A minimum premium of Rs 156.50 is required, with a maximum premium of Rs 2,230. Anyone between the ages of 18 and 65 can apply for coverage. Short-term health insurance is provided by the Corona Rakshak Health Insurance Plan. You have the option of 3.5 months, 6.5months, or 9.5 months of coverage. COVID 19 tests performed outside of a government-approved facility will not be accepted. If a person travels to a country where the Indian government has imposed travel restrictions, the overage will be stopped.

Mashak Rakshak

According to the Insurance Regulatory and Development Authority of India’s guidelines, starting April 1, all general and health insurance companies must offer Mashak Rakshak, a standard vector-borne disease health policy (IRDAI). On positive diagnosis of any of the following vector-borne diseases requiring hospitalisation for a minimum continuous period of 72 hours, a lump sum benefit equal to 100% of the Sum Insured shall be payable. Dengue fever and malaria are two of the most common Vector-Borne diseases transmitted by mosquitoes, ticks, and other insects. At the same time, because of the rising cost of medical care, treatment for these diseases ranges from Rs 25,000 to Rs 1 lakh or more.

Arogya Sanjeevani health policy

Medical expenses have the potential to throw your financial plans into disarray! As a result, it is recommended that you secure your medical expenses with a cost-effective insurance plan that will provide financial assistance in the event of a medical emergency. This health insurance plan aims to provide a wide range of coverage to protect you from financial hardships caused by hospital bills.



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Tax Dept Has Unveiled New Offline JSON-based Utility For The AY 2021-22

Personal Finance

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To strengthen the tax filing method, the Income Tax Department has retired the excel and java-based utility and replaced them with a new offline JSON-based utility for the fiscal year 2021-22. The new tool will assist taxpayers in importing pre-filled data and editing it before filing their income tax return (ITR). Let’s take a look at the benefits of this new offline utility.



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IT Dept Launches Offline Utility For Taxpayers Filing ITR 1, 4 For FY 20-21

Personal Finance

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Taxes

oi-Vipul Das

|

The Income Tax Department has issued an offline utility for taxpayers filing ITR 1 and 4 for the financial year 2020-21. “The user can now download and fill the offline utility for ITR 1 & 4 (AY 2021-22),” according to the online e-filing site. It also claimed that the utility for other ITRs will be unlocked soon. The offline utility is accessible on the e-filing platform and is centered on emerging technologies “JSON” (JavaScript Object Notation), a lightweight data storage format. The offline utility is available for use on computers running Windows 7 or later editions. While issuing the procedure for filing, the department also confirmed that “This Offline Utility is enabled only for ITR-1 and ITR-4. Other ITRs will be added in the utility in subsequent releases.” ITR Form 1 (Sahaj) and 4 (Sugam) are forms that serve a significant number of small and medium-sized taxpayers.

IT Dept Launches Offline Utility For Taxpayers Filing ITR 1, 4 For FY 20-21

An individual with an income of up to Rs 50 lakh who earns income from salary, one house property / other sources, interest, and so on can file a Sahaj. Individuals, Hindu Undivided Families (HUFs), and firms with a total income of up to 50 lakh and income from business and profession can file ITR-4. IT return tax preparers can import and pre-fill data from the e-filing site, as well as fill in the gaps. Because the option to upload ITR to the e-filing portal is not yet available, filers can use the offline utility to fill out and save their returns. The department further added that “Once filing is enabled, you can upload the same at e-filing portal.”

Taxpayers need to use the offline utility to retrieve pre-filled data from the income tax e-filing site and upload it into the new utility, which allows taxpayers to edit and save returns, pre-filled data, and profile data as well. According to Nangia Andersen India Director Neha Malhotra, the fresh utility is a user-friendly functionality for filing returns and will provide greater convenience to taxpayers. She further confirmed with PTI that “The utility itself provides help in the form of FAQs, guidance notes, circulars and provisions of the law so as to enable hassle-free return filing. The government’s efforts, to build a favourable tax regime for taxpayers cannot be disregarded. Augmenting simplicity and removing impediments will go a long way in increasing compliance and facilitating good governance.”

According to the newly notified forms, an individual whose tax has been deferred due to ESOPs allotted by an eligible startup is not permitted to file ITR 1 or 4. Now, the employee does not have to pay tax when exercising the option, i.e. when converting the ESOPs into shares.



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ARCs may be allowed to tie up with AIFs for asset turnaround, BFSI News, ET BFSI

Personal Finance

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After proposing to set up a bad bank, the government is looking to give more leeway to asset reconstruction companies (ARCs) in buying NPAs and reconstruction.

The government is looking into proposals to allow ARCs to team up with private equity and venture capital funds to recapitalise and ensure the turnaround of a defaulting company.

The Reserve Bank of India (RBI) may also set up a task force comprising industry veterans and experts to review the regulations governing.

If an ARC, ties up with an alternative investment fund (AIFs) such PE or VCs to arrange finance for reviving a company through equity infusion, or acts as a sponsor in an AIF, then its investment commitment would be lower than 15% cash as required under the current rules. That could help in more loan sale transactions between banks and ARCs.

According to the rules, an ARC must pay a minimum 15% of the deal value in cash and the balance as ‘security receipts’ (SRs) which are similar to seven-year bonds.

What ails ARCs

The cash proportion of 15% has pushed the ARCs to raise their returns through securitisation and asset reconstruction

Unless the ARC recovers 130% of the acquisition value, it will not make its return. Even at 100%, ARC will make a loss because the management fee of 1-2% doesn’t make any ARR for ARC. Recovery should be over 130% so that 100% of security rights will be redeemed.

Provisioning impediment

Also, in September 2016, the Reserve Bank of India introduced new regulatory guidelines regarding provisioning. From April 2018 banks have to sell at 90% cash and 10% SRs. If a bank holds more than 10% SR, it had to continue provisioning for the loan which is not even on their books. So there is no incentive for them to transfer to ARCs. Now no banks transfer on 15:85 and all deals are in cash.

Cash deals

At such high levels of cash, the market becomes unviable for all but a few. Some ARCs such as Edelweiss, JM Financial that have raised money from Alternative Investment Funds (AIFs) do transactions on a cash basis, but other ARCs have deployed whatever capital they had, and now have none.

The holdings of such AIFs which have the capital to invest in newly-issued security receipts have risen sharply. These funds hunt for viable assets. Vulture funds and AIFs look for 25% plus returns while the ARCs look at 18-20%.



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