City Union Bank has not put growth as a priority this year, due to the impact of Covid-19.
“In February 2020, even before the onset of Covid, we said that we are taking our legs off the growth pedal because we are not entirely comfortable with how things were panning out at that moment. After the onset of Covid also we clearly communicated that growth is not going to be a priority until things get back to normal,” said N Kamakodi, MD & CEO, Citi Union Bank.
He added that they have seen the bulk of the growth from the Emergency Credit Line Guarantee Scheme (ECLGS) and gold loans.
Credit demand
According to Kamakodi FY22 will be a better year.
“We will start the investment for particularly building the capacity of businesses only after the current capacity is fully utilised, which we believe will happen around the half of FY 21-22,” he said.
He finds the current pick-up in the economy genuine and sustainable.
In a detailed interview, Kamakodi explained that his bank will take only those accounts to IBC which are already declared as NPA. He also said that SARFAESI is much better than IBC.
On privatisation, Kamakodi said that the government should think of privatising those banks which are unable to generate the cost of capital. He also believes that DFI is an appropriate move and helps solve the problem of infrastructure financing.
New York: FTSE Russell placed Indian government bonds on the watchlist for possible inclusion in its debt index, a move that may bring the nation closer to its aim of joining a global bond gauge after several false starts.
Rupee securities will be considered for addition to the FTSE Emerging Markets Government Bond Index, FTSE said as part of its semi-annual review. In the coming weeks, it’ll start an index that tracks securities issued under the Fully Accessible Route after investors expressed an interest in the notes.
India has been trying to gain entry into a global debt index since 2019, but talks with index compilers have made little headway. A report this month said India’s efforts have been stymied by demands from global bond funds including a request that the government doesn’t change tax rules to the disadvantage of investors.
“The attractiveness of IGBs as an ongoing investment will not solely depend on index inclusion,” said Arthur Lau, head of Asia ex-Japan indexed income at PineBridge Investments Asia. “Other factors including expected returns based on the prevailing economic conditions, government policies, and relative value to other local bond markets should be taken into account.”
$10 billion inflows
Inclusion in FTSE’s index may attract about $10 billion of inflows into rupee securities, said Dariusz Kowalczyk, a senior emerging-market strategist at Credit Agricole CIB in Hong Kong, adding that this was an initial estimate.
At its September review, JPMorgan said Indian bonds remain off index and were still under review for inclusion, although about $115 billion in notional value of current and upcoming government debt have been marked for accessibility.
How will India benefit?
If India becomes part of the EMGBI, foreign portfolio investors could step up investments in the Government Securities (G-Sec) market, say market players.
The move will aid the massive government borrowing of Rs 12 lakh crore planned for fiscal 2022. Bond traders are demanding higher rates of G-Secs, forcing RBI to devolve a significant portion of the auction on primary dealers
Inclusion in FTSE will bring in new investors and reduce pressure on banks to invest in government bonds and free resources relatively for lending.
IF G-Sec yields go down, it will benefit corporates too as corporate bond yields mirror government securities.
However, the quantum of flows will depend on the percentage allocation to India. Also, FTSE is a smaller index when compared to Bloomberg Barclays and JP Morgan Emerging Market Government Bond Index (GBI-EM).
China inclusion
Index provider FTSE Russell has given its final approval for Chinese sovereign bonds to be included in its flagship bond index from later this year, setting the stage for billions of dollars of inflows into the world’s second-largest economy.
But a longer-than-expected inclusion period – of 36 months, rather than one year, as FTSE had previously announced – reflects persistent concerns among some global investors about investing in the world’s second-largest bond market.
Chinese government bonds (CGBs) will be added to the FTSE World Government Bond Index (WGBI) over three years from the end of October, FTSE Russell said in a statement.
In August 2019, RBI had issued a framework for processing of e-mandates on recurring online transactions. Initially applicable to cards and wallets, the framework was extended in January 2020 to cover Unified Payments Interface (UPI) transactions as well.
After much hand-wringing by banks and payment companies over the March 31 deadline for activating the additional factor of authentication (AFA) framework for auto debit transactions, the central bank relented on Wednesday. The new deadline for implementing the framework has been set at September 30, 2021.
The Reserve Bank of India (RBI) made its displeasure with system players clear and said it would issue a circular on penalties for non-compliance. “This non-compliance is noted with serious concern and will be dealt with separately. The delay in implementation by some stakeholders has given rise to a situation of possible large-scale customer inconvenience and default,” RBI said, adding that the deadline is being extended solely to prevent inconvenience to customers.
“Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action. A circular advising the above is being issued by the Reserve Bank today,” the central bank said.
In August 2019, RBI had issued a framework for processing of e-mandates on recurring online transactions. Initially applicable to cards and wallets, the framework was extended in January 2020 to cover Unified Payments Interface (UPI) transactions as well.
The requirement of AFA has made digital payments in India safe and secure, RBI said. In the interest of customer convenience and safety in use of recurring online payments, the framework mandated use of AFA during registration and first transaction (with relaxation for subsequent transactions up to a limit of Rs 2,000, which was later enhanced to Rs 5,000), as well as pre-transaction notification, facility to withdraw the mandate, etc.
“The primary objective of the framework was to protect customers from fraudulent transactions and enhance customer convenience,” RBI said. This is the second time the deadline is being extended on the insistence of banks. Earlier, based on a request from the Indian Banks’ Association (IBA) for an extension of time till March 31, 2021, to enable the banks to complete the migration, the regulator had advised the stakeholders in December 2020 to migrate to the framework by March 31, 2021.
Banks were all set to miss the March 31 deadline, with some of them having already sent communications to their customers telling them that auto debits from debit and credit cards will be disabled with effect from April 1, 2021. They have requested customers to make recurring payments through the websites of the respective service providers. This may still go through for banks who have already begun to migrate to the new framework. Most customers, though, can breathe easy for the next six months, industry experts said.
Some experts believe the AFA framework involves a playoff between security and convenience, a balance the industry is struggling to strike. Fintech expert Parijat Garg was of the view that the RBI guidelines in their current form are focused more on security than convenience and they might make things more challenging for people who are now habituated to the convenience of auto debits. “Part relief is for the auto-debit transactions of up to Rs 5,000, which should cover large proportion of such transactions. A better approach would have been to ensure stricter security and privacy responsibilities which will come through data protection laws as well on players who are responsible for storing this information and using it, and possibly putting in more guidelines around tokenisation,” Garg said. He added that right now, the concern is around the card information being stored and getting leaked as has been seen in some recent instances, where the consumer’s data was put to risk and the organisations liable for them did not face any action.
Payments Council Of India (PCI) chairman Vishwas Patel told PTI on Tuesday, “All the ecosystem players, be it banks and payment gateways, are guilty of not taking RBI directive seriously from 2019 and not being able to come on a single platform, which we should have done at least a couple of months back, so that there could have been a smooth transition to the new way of doing recurring transactions.”
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