Month: May 2021

UBS expects record IPO year for India despite Covid-19 crisis, BFSI News, ET BFSI

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By Baiju Kalesh

India’s sharp surge in Covid-19 cases will not prevent the country’s markets from setting a record for initial public offerings in 2021, as a cohort of technology companies make their much-anticipated debuts later in the year, according to UBS Group AG.

Last year companies amassed $4.6 billion from IPOs, according to data compiled by Bloomberg, and Anuj Kapoor, head of investment banking at UBS India, believes the figure will be easily eclipsed.

“I would say we will surpass twice the money we raised in 2020 through IPOs,” Kapoor said.

Before the arrival of the coronavirus pandemic’s second wave, India’s markets were full of optimism. So far in 2021, IPOs in India have raised nearly $3 billion, the best start to the year since 2018, the data show. The activity was aided by ample liquidity, with foreign investors as well as retail stock-pickers looking for new ideas to invest in, Kapoor said.

The latest outbreak of Covid-19 cases has had a serious impact on the equities market, and there has been a decoupling of Indian versus global markets since March, Kapoor said. The benchmark Sensex index has risen 2.2% this year, compared to the 9.3% gain year to date in the MSCI World index.

Overseas investors sold $1.4 billion worth of Indian stocks in the month to April 29, the biggest monthly outflow since March last year when the nation imposed one of the strictest lockdowns in the world to curb the spread of the pandemic.

“We will see a few more tough weeks ahead before Covid-19 plateaus and starts declining,” said Kapoor, who is also on the board of UBS India. “Hopefully, this should not linger beyond June.”

Kapoor expects tech companies to start hitting the market in the second half of the year. He predicts fewer than five will list this year, however that figure could more than double in 2022.

Online food delivery startup Zomato Ltd. recently filed its initial prospectus with the regulator for an IPO that could raise as much as 82.5 billion rupees ($1.1 billion). Other tech-based businesses waiting in the wings include cosmetics retailer Nykaa E-Retail Pvt and insurance aggregator Policybazaar, Bloomberg News has reported.

On the mergers and acquisitions front, Kapoor sees more deal activity from local companies and foreign players buying Indian firms than in domestic firms targeting assets overseas.

Global private equity funds have a strong interest in the health-care and pharmaceutical sectors, he said. Last year saw KKR & Co. buy a majority stake in J.B. Chemicals & Pharmaceuticals Ltd. in a $371.3 million deal that completed in November. A month earlier, Carlyle Group Inc. closed a transaction to acquire a 20% interest in Piramal Pharma Ltd. for $466 million.

Locally, some of the largest investors in tech companies will push the firms toward consolidation.

“We are going to see this theme play out as business models mature,” he said. He also sees combinations occurring in areas such as financial services.

Kapoor’s bullishness stems from his unit’s performance in 2020, UBS’s best year ever in India by revenue, driven primarily by equities activity, he said. The firm added new junior banker roles in March, and will recruit talent judiciously, he said.

“This year we will have a healthy mix of capital markets and M&A,” he said. “2021 should be better for deal activity than 2020.”



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Warren Buffett sees a ‘red hot’ economy with creeping inflation, BFSI News, ET BFSI

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By Katherine Chiglinsky

Warren Buffett delivered a clear verdict Saturday on the state of the U.S. economy as it emerges from the pandemic: red hot.

“It’s almost a buying frenzy,” the Berkshire Hathaway Inc. chief executive officer said during the conglomerate’s annual meeting, which was held virtually from Los Angeles. “People have money in their pocket and they’re paying higher prices,” he said.

Buffett attributed the faster-than-expected recovery to swift and decisive rescue measures by the Federal Reserve and U.S. government, which helped kick 85% of the economy into “super high gear,” he said. But as growth roars back and interest rates remain low, many — including Berkshire — are raising prices and there is more inflation “than people would have anticipated six months ago,” he said.

Buffett reunited with his long-time friend and business partner Charlie Munger for this year’s meeting. Munger didn’t make it to last year’s meeting in Omaha, Nebraska — Buffett’s hometown — due to the shutdowns across the country. Some shareholders were relieved to see the duo fielding questions together again.

“I really feel that both Charlie and Warren displayed their usual and amazing level of acuity and intellectual energy,” said James Armstrong, who manages assets including Berkshire shares as president of Henry H. Armstrong Associates.

Buffett and Munger spent hours fielding questions, from the economy, to climate and diversity, the SPAC boom, taxes and succession. Here’s the lowdown:

Climate Pressure:
Berkshire faced pressure from two shareholders proposals, one to improve transparency related to its efforts on climate change. The topic was bound to be a feature at the meeting — and it was.

When asked about the proposals, Buffett stuck to his previous stance. Measures to produce big reports on diversity and climate for his business lines spanning energy to railroads were, he said, “asinine.” The proposals were later voted down.

Buffett was also asked about Berkshire’s stake in oil and gas producer Chevron Corp., which it disclosed earlier this year. Buffett said he felt “no compunction” in the least about its ownership in the company, which he said had benefited society in many ways. While he acknowledged the world is shifting away from hydrocarbons, people on the extreme sides of either argument are “a little nuts,” he said.

Greg Abel, chairman of Berkshire Hathaway Energy, called climate change a “material risk.” He added that they’re setting targets and spending $18 billion over 10 years on transmission infrastructure.

Killer SPACs:
Buffett warned investors that Berkshire might not have much luck striking deals amid the boom in special purpose acquisition companies that gripped the market over the past year.

“It’s a killer,” Buffett said about the influence of SPAC companies on Berkshire’s ability to find businesses to buy. “That won’t go on forever, but it’s where the money is now, and Wall Street goes where the money is.”

Buffett, 90, also spent part of Berkshire’s annual meeting Saturday addressing the recent boom in retail and day trading. A lot of people have entered the stock market “casino” over the past year, he said.

Tax:
Buffett said President Joe Biden’s proposals for a corporate tax hike would hurt Berkshire shareholders. He added that antitrust laws and tax policy could change things for the company but new tax laws wouldn’t alter its no-dividend policy.

Succession:
Buffett and Munger, 97, fielded the majority of questions at Saturday’s meeting, but their two top deputies Abel and Ajit Jain, who runs the insurers, also shared the stage. Investors were able to get a closer look at the pair who are considered the top candidates for the job.

Munger dropped a little mention of the post-Buffett years that drew speculation on social media about the most likely candidate to succeed Buffett. The CEO was pointing out that decentralization doesn’t work everywhere because it requires a certain type of culture that businesses need to have.

“Yeah, but we do,” Munger insisted. “And Greg will keep the culture.”

Abel has long been considered the top candidate to replace Buffett, especially when he was promoted to a vice chairman role overseeing all non-insurance operations, which gives him a wide array of responsibilities, including oversight of the railroad BNSF and the energy business.

Errors:
Buffett offered a few mea culpas during Saturday’s meeting. He noted that selling some Apple Inc. stock last year was a mistake and even said that Haven, the health care venture with JPMorgan Chase & Co. and Amazon.com Inc., thought it could fight the “tape worm” of American health care costs but the worm won.

“That was probably a mistake,” Buffett said of those Apple stock sales last year. Berkshire still owned a roughly $110 billion stake in the iPhone maker at the end of March. “In fact, Charlie, in his usual low-key way, let me know that you thought it was a mistake too,” he said to Munger, who shared the stage with him.

Cash Pile:
Before the annual meeting started, the company released its first-quarter earnings, giving investors a dive into the 19.5% operating profit gain during the period.

Berkshire ended the quarter with a near-record $145.4 billion of cash on hand as it continued to generate funds faster than Buffett could deploy them. But Buffett also ended pulling back on some capital deployment levers during the period. He bought back just $6.6 billion of Berkshire’s own stock, short of the record $9 billion set in prior quarters, and ended up with the second-highest level of net stock sales in the first quarter in almost five years.



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SBI chief, BFSI News, ET BFSI

Banking & Finance

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State Bank of India (SBI) will try to keep the interest rates benign as long as possible with a view to supporting the economic growth, its chairman Dinesh Kumar Khara has said.

On the impact of the second wave of COVID-19 on non-performing assets of the bank, the SBI chief said that as the lockdown was not pan-India, one will have to wait and watch to assess its impact on the banking sector.

Observing that multiple variables including inflation have a bearing on the interest rates, he said, “our effort is to support the growth initiatives. To really ensure that happens, we will try to keep the soft interest rate regime for as long as possible.”

In an interview to PTI, Khara said it is too early to give any colour to likely scenario of NPAs because of local restrictions.

The impact of lockdown differ from states to states as it is not uniform, he said, adding, “so, probably we can wait and watch for some more time before making any comment on impact on economy and NPA situation.”

Speaking about various initiatives of the country’s largest lender, Khara said, SBI has decided to set up makeshift hospitals with ICU facilities for COVID-19 patients in some of the worst affected states.

The bank has already earmarked Rs 30 crore and is engaging with non-governmental organisations (NGOs) and hospital management for setting up medical facilities on an emergency basis for the treatment of COVID-19 patients.

He said the bank intends to put in place 1,000 beds with 50 ICU facilities in the states that are the worst affected.

SBI is also collaborating with hospitals and NGOs to provide oxygen concentrators for patients.

“We have put in place an action plan. We have earmarked Rs 70 crore plus out of which we are giving Rs 21 crore to 17 circles for COVID-19 related initiatives,” he said.

For the safety of employees and their families, he said, the bank has tied up with hospitals across the country to facilitate treatment of those who have fallen sick on a priority basis.

About 70,000 employees out of 2.5 lakh strong staff strength have already got vaccinated. The bank has decided to bear the cost of vaccination for its employees and their dependent family members.



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RBI to strengthen risk-based supervision of banks, NBFCs, BFSI News, ET BFSI

Banking & Finance

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The Reserve Bank has decided to review and strengthen the Risk Based Supervision (RBS) of the banking sector with a view to enable financial sector players to address the emerging challenges.

The RBI uses the RBS model, including both qualitative and quantitative elements, to supervise banks, urban cooperatives banks, non-banking financial companies and all India financial institutions.

“It is now intended to review the supervisory processes and mechanism in order to make the extant RBS model more robust and capable of addressing emerging challenges, while removing inconsistencies, if any,” the RBI said while inviting bids from technical experts/consultants to carry forward the process for banks.

In case of UCBs and NBFCs, the Expression of Interest (EOI) for ‘Consultant for Review of Supervisory Models’ said the supervisory functions pertaining to commercial banks, UCBs and NBFCs are now integrated, with the objective of harmonising the supervisory approach based on the activities/size of the supervised entities (SEs).

“It is intended to review the existing supervisory rating models under CAMELS approach for improved risk capture in forward looking manner and for harmonising the supervisory approach across all SEs,” it said.

Annual financial inspection of UCBs and NBFCs is largely based on CAMELS model (Capital Adequacy, Asset Quality, Management, Earnings, Liquidity, and Systems & Control).

The RBI undertakes supervision of SEs with the objective of assessing their financial soundness, solvency, asset quality, governance framework, liquidity, and operational viability, so as to protect depositors’ interests and financial stability.

The Reserve Bank conducts supervision of the banks through offsite monitoring of the banks and an annual inspection of the banks, where applicable.

In case of Urban Cooperative Banks (UCBs) and NBFCs, it conducts the supervision through a mix offsite monitoring and on-site inspection, where applicable.

A technical advisory group consisting of senior officers of the RBI would examine the documents submitted by the applicants in connection with EOI.

EOI said the consultant would be required to work in close co-ordination with officers of RBI’s Department of Supervision in Mumbai.



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ICAI to move RBI for tweaking of bank auditor appointment norms

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The Reserve Bank of India’s new rules on statutory auditor appointments for banks and NBFCs has not come as any jolt for the audit profession, but the CA Institute plans to approach the central bank for certain inclusions in order to improve overall bank audit and get a better outcome for the fraternity, Nihar N Jambusaria, President, ICAI, said.

The missing points in the new guidelines as regards the cooling-off period for auditors, the need to give higher weightage for experienced firms compared to new firms, and fixing the minimum number of Statutory Central Auditors while leaving the decision of the maximum number to the banks are some of points the ICAI would like to see in the new guidelines and will pitch for them, Jambusaria told BusinessLine.

The RBI had, on April 27, brought in new set of rules — without sharing them with the ICAI for its views — for appointment of statutory auditors of banks and non-bank finance companies (NBFCs), including housing finance firms.

Joint audit

The central bank has now made joint audit mandatory for entities with asset size of ₹15,000 crore and above, capped the number of audits a firm can perform in a year (four banks, and eight NBFCs and urban cooperative nanks) and reduced the tenure of auditors to three years from four. It has also done away with the concept of cooling period that was part of the previous set of guidelines. Approval of the central bank is mandatory for the appointment of statutory auditors of commercial banks.

Currently, if one firm has done audit of a bank for three years, there has to be a cooling period for three years. “There are many capable firms that are getting a chance to do audit. Now what they (the RBI) have decided is that after completion of the tenure of three years, the same firm can be appointed by another bank without any rest. Continuing with the cooling period concept will be better as more firms will be able to do audits. Many capable firms are there. They will all get a chance, too. The concept of cooling period should be retained and we will pitch for it,” Jambusaria said.

Instead of leaving it to banks to decide on the minimum number of Statutory Central Auditors (SCAs), it should be set by the RBI. The maximum number can be decided by the banks and this would enable smooth conduct of audits, he said.

Experienced vs new firms

The ICAI President said the new guidelines do not distinguish between the experienced and the new firms. Previously, the old guidelines had a ratio — 60 per cent for experienced firms and 40 per cent for new firms — in the appointment of auditors.

“…the 60:40 ratio should be there. Its removal may help big firms and banks will be at liberty to appoint all new or all experienced auditors. The balance will be lost. It needs to be retained,” he said.

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We will be aggressive in loan growth, recoveries: YES Bank CEO and MD

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One year after YES Bank and the private sector lender believes it’s now on a firmer footing and plans to focus on loan growth and recoveries.

“After one year, we have been able to achieve some very good numbers. Deposits have been taken care of, capital has been raised. Even the gross non-performing assets have started coming down and the bank has made decent recoveries. Going forward, we will be aggressive in loan growth and also in terms of recoveries,” said Prashant Kumar, Managing Director and CEO of Yes Bank.

In an interaction with BusinessLine after the bank’s Q4 results, Kumar outlined plans for the bank’s lending growth. It expects to grow the loan book by 15 per cent in 2021-22, including 10 per cent growth in corporate and 20 per cent in retail and MSME.

Comfortable on liquidity

“We have relationships with a large number of corporates; we are managing their cash flows. We are comfortable on the liquidity front and we intend to participate in their working-capital requirement. It would give us two benefits — increase the loan book and if you are a working-capital lender, you can also manage current account as per the new RBI regulation,” Kumar said.

The bank also wants to participate in infrastructure funding with another lender and may look at funding ₹250 crore to ₹300 crore for each such loan.

Also read: YES Bank posts net loss of ₹3,788 crore in Q4

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Distraught depositors want PMC Bank revived soon

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Distraught depositors of the scam-hit Punjab and Maharashtra Co-operative (PMC) Bank want the Reserve Bank of India (RBI) to speed up revival/reconstruction of the bank as they are in dire need of money to meet exigencies arising from the second wave of the Covid-19 pandemic.

Some of the depositors, especially the elderly, are barely able to get by despite having lakhs and crores of rupees locked up in the bank, as the RBI clamped down on deposit withdrawal since September 24, 2019, capping it at ₹1 lakh per depositor for the entire period that the bank is under Directions.

With RBI extending its Directions against the bank for the fourth time from April 1 to June 30, 2021, depositors are wringing their hands in despair that even after 19 months no solution to their woes is in sight.

RBI extends ‘directions’ against PMC Bank by 3 months

They pointed out that while depositors of other troubled banks such as YES Bank and Lakshmi Vilas Bank were rescued in double-quick time, when it comes to their bank, the rescue process has been drawn out.

Complex process, says RBI

Chander Purswani, President, PMC Depositors’ Forum, said: “The Bank should be revived/ reconstructed on SOS basis…Depositors are losing their lives amid the raging pandemic. These are testing times for all of us. The authorities should have some mercy on us.”

PMC Bank revival: Phased deposit withdrawal likely for customers

In a statement issued on March 26, 2021, the RBI observed that PMC Bank had received binding offers from certain investors for its reconstruction, in response to the Expression of Interest (EOI) floated by the bank in November 2020.

“RBI and PMC Bank are presently engaging with prospective investors in order to secure best possible terms for the depositors and other stakeholders while ensuring long-term viability of the reconstructed entity,” the central bank said.

The RBI also emphasised that given the financial condition of PMC Bank, the process is complex and is likely to take some more time.

Depositors’ angst: tweets say it all

Vasu Chhabria (@vasuchhabria) tweeted: “Reqst PMCBank Reconstruction/Resolution on war footing. Depositors losing lives. Pls don’t punish innocent citizens tax payers.

“Delay is costing lives. 19 months passed 118 depositors dead. What is their fault? It’s their hard earned money…”

Prem Kodnani (@drkodnani) tweeted: “If corona virus symptoms 1: difficult to get tested 2: difficult to get ambulance 3: difficult to get bed 4: difficult to get oxygen 5: difficult to get Remedesivir 6: to get all this, we require money…”

Srikanth Iyer (@SrikanthIyer10) tweeted: “Pls have humanity towards us v r also citizens of India rescue us by merging Pmc Bank with nationalised bank immediately it’s need of the hour…We can’t have access to our own hard-earned money.”

PMC bank was placed under RBI Directions with effect from the close of business on September 23, 2021, due to a huge fraud perpetrated by the promoter of a real estate group and some bank officials.

The Centrum-BharatPe combine is believed to be the front-runner in the race to buy PMC Bank.

As per the EOI floated by PMC Bank in November 2020, subsequent to commencement of the normal day-to-day operations, it will be open for the investor(s) to convert the bank into a Small Finance Bank (SFB) by making an application to RBI, subject to compliance with the RBI guidelines on Voluntary Transition of Primary (Urban) Co-operative Banks (UCBs) into SFBs.

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The coolest digital banks around the world, BFSI News, ET BFSI

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– By Varun Mittal, Global Emerging Markets, FinTechs Leader, EY Singapore

Digital banks can be thought of as the Netflix and Spotify of banking. It has radically disrupted existing financial institutions by democratising banking services whereby they run on a subscription model like Netflix, and brought down the cost of servicing for both the low and high income users. With most if not all services brought on a digital platform, traditional banking service such as refreshments at branches or private lounges for premiere banking have been rendered irrelevant. The cost advantage can be significant, with the average operating cost per customer at £20 to £50, compared to over £170 for an incumbent bank.

Consumers also value speed and convenience more, which can be enabled with mobile technology, bringing features such as managing credit card and e-KYC all within the mobile banking app. With the improvement in customer experience, they gain an average Net Promoter Score of 62 compared to just 19 for incumbent banks. The only disparity in services are different tiers offered, which are not exclusive to anyone. Any consumer can simply upgrade their subscription for special perks and benefits offered by the digital banks.

On one hand, incumbent banks are threatened to retain market share and investible assets. On the other, they are partnering with these fintechs and adopting their culture of innovation in order to boost their internal digitalisation. One of the biggest bottlenecks that incumbent banks are facing is that they require credit scores, and a large proportion of youths and underserved customer segments who are still paying for loans or taking irregular income do not qualify.

When it comes to the youth segment, more than 46% of the younger population are choosing digital assistance over human interaction approach when it comes to financial services and products. That means that incremental and continuous innovation such as a mobile banking app to check balances and transfer money would not be enough. This would require radical innovation including end-to-end digitalisation on the backend with APIs. Given how many of us in emerging economies are already accustomed to e-wallets and scanning QR codes, it may not be long till more people keep branch visits to the minimum and adopt these digital banks.

However, digital banks can be kept as a supplementary account because of the inherent risk of tech integration. Several digital banks stalled its services because of failure from third-party tech integration or face difficulty in financing and keeping up its operations. Monzo faced a downround while Chime service outage of more than 24h left their 5 million customers without access to their accounts. Given such risks, it may be wise to distribute our savings across incumbent banks and digital banks.

Here are a list of notable digital banks, followed by cases of digital bank crisis:

N26

Countries offered: Europe, U.S.

Who would love it: Globetrotters

Year founded: 2016

Number of users: 5 mil

Known for: Subscription plans with free ATM withdrawals and insurance.

  • Offers no foreign exchange fees and a handy feature to help users save for a specific dream purchase, like a luxurious vacation! Users can start banking with the app before the Mastercard arrives.
  • Statistics, which automatically categorizes expenses into categories to gain better insights into users spending habits, so saving up for a trip would not be as painful as it seems.
  • N26 also rounds up card purchases to the nearest euro and transfers the difference to a different ‘space’ for passive saving.

Security: Fingerprint identification (available in most smartphones now) and advanced 3D Secure technology, and the money protected up to €100,000.

Cons: N26 is discontinuing operations in the UK after failing to attract and monetise customers with their premium products.

Latest updates: N26 just launched a mid-tier subscription plan, N26 Smart, at €4.90 which excludes travel insurance and travel perks that the lowest and highest tier subscription plans come with. This is unsurprising given how travellers will not be able to use the free overseas ATM withdrawals or currency exchange soon.

Nubank

The coolest digital banks around the worldCountries offered: Latin America

Who would love it: Fun-loving Gen Z and millennials

Year founded: 2013

Number of users: 25 million

Known for: The first fully mobile digital bank that allows users to have full control over the credit card with the app. Nubank is also known for creating access to a large unbanked population in South America who do not qualify for the major banks.

  • Reduced complexity by empowering users with their signature purple credit card, that has no annuity fees, and can be used to pay off utility bills.
  • Cool feature #2: Users can add on Nubank Rewards, where the points accumulated from spending can be used for discounts for flight tickets, meals and accommodation.

Cons: There is not much to dislike about Nubank except for the fact that the apps have a lot of bugs and the frequent updates impede the user experience.

Latest Updates: Chubb partners with Nubank with the launch of a fully digital life insurance in Brazil.

Chime

The coolest digital banks around the worldCountries offered: United States

Who would love it: Young employees

Year founded: 2013

Number of users: 8 million

Known for: Overdrawing account by up to $100 on debit card purchases without a fee or minimum balance required.

  • Cool feature #1: Users can get paid 2 days earlier with direct deposit.
  • Cool feature #2: 1% yield saving account, and users can choose to save by automatically rounding up the differences of purchases to go into savings or save 10% of each incoming payment.

Cons: Chime only allows one spending and one saving account.

Latest Updates: Chime experienced their third power outage since July, leaving 5 million customers stranded outside restaurants and stores without access to the mobile app and website. This was due to a technical issue with the third party payment processor Galileo.

Liv. Bank (by Emirates NBD)

The coolest digital banks around the worldCountries offered: UAE

Who would love it: Fun-loving Gen Z and millennials

Year founded: 2017

Number of users: 200,000

Known for: Lifestyle perks such as access and discounts to concerts and events, and exclusive benefits at Careem, Burger King and more.

  • Split bills with friends with social media.
  • Cool feature #2: Track spending and Emirates miles accumulated, and even raise disputes digitally.

Cons: Liv. Credit Card is only available for customers with 5000+ of salary and are above 21.

Latest updates: Liv. renewed their partnership with Visa to launch more co-branded offerings.

Jenius

Countries offered: Indonesia

Who would love it: Young entrepreneurs and Self-employed

Year founded: 2016

Number of users: 2.4 million

Known as: Bank BTPN financial product for younger audience.

  • $Cashtag feature enables customers to use their names as their account identifier without having to remember long strings of numbers.
  • Cool feature #2: Jenius for Business for SMEs to manage their finance.
  • Cool feature #3: KYC video call is used for new account creators to be verified anywhere

Cons: Jenius’ billing option is not as robust as other banking apps.

Latest Updates: Jenius will be rolling out an investment product in the near future.

HMBradley

Countries: U.S.

Who would love it: Newcomers

Year founded: 2019

No. of users: N.A.

Known for: Encouraging new credit card users to save

  • HMBradley rewards users with 1% to 3% cashback on their top spending categories. You know it’s meant for youths when their site shows Alcohol and Bars as the top category demo.
  • Cool feature #2: Encourage saving with Savings Tier calculated every quarter, where users can save more to be upgraded and earn up to 3% APY

Cons: HMBradley Credit Card charges $60 annual fee.

Latest updates: The savings-focused baking platform raised $18.25 million at the last week of November.

These digital banks are winning the hearts of the youths by offering lifestyle perks, easy application and low or no fees. Incumbent banks are soon to join the digital bank race, but whether they can appeal to the youths with great mobile banking experience as well as the fintech startups remains to be seen.

The coolest digital banks around the worldSource: Bain

Digital Bank Crisis

Monzo Down Round and Salary Cuts

The UK-based neobank Monzo reported losses of GBP 115.4 million for its FY 2019/20, more than two times higher than in the previous year, stating a significant impact on its revenue due to Covid and the related uncertainty as one of the reasons. Their loan volume was GBP 143.9 million and expected credit losses was GBP 20.3 mil. The fast-growing FinTech has implemented salary cuts for executives and reduced working hours for its workforce in an effort to cut costs. The company warned that “there are material uncertainties that cast significant doubt upon the Group’s ability to continue” in light of these developments and current market environment.

At the end of 2020 Q2, it was set to close its funding round at £1.25bn, raising £70-80m at around a 40% discount from the £2bn valuation it raised at last June. This round came about from regulatory pressure to maintain minimum capital requirements at least 8% of its risk-weighted assets in liquid cash.

Chime Bank Service Outage

Chime, the leading branchless bank in the U.S., was in the midst of a service outage that left millions of customers without access to their accounts. Card transactions and ATM withdrawals have since been restored, but the main touchpoint for Chime’s 5 million users – its mobile app and website – is still down after more than 24 hours. The outage was caused by an issue with the database of payment processor Galileo, a company that connects banks to credit card processors through APIs, and counts Robinhood, Monzo, Revolut, Varo and TransferWise as customers.

Many challenger banks lean on third parties to connect to a payment network. It reduces the complexity of integrating directly with a company like Visa or Mastercard. But that can come with issues around downtime and outages. After similar outages faced by Monzo and Revolut Bank, many challenger banks have shifted payment processes in house.

The outage, reportedly Chime’s third since July, comes at a sensitive time for the San Francisco start-up. Chime was in the process of raising new funding from investors at a valuation of at least $5 billion.

DISCLAIMER: The views expressed are solely of the author and ETBFSI.com does not necessarily subscribe to it. ETBFSI.com shall not be responsible for any damage caused to any person/organisation directly or indirectly.



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Will try to keep soft interest rate regime as long as possible: SBI chief

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State Bank of India will try to keep the interest rates benign as long as possible with a view to supporting the economic growth, its chairman Dinesh Kumar Khara has said.

On the impact of the second wave of Covid-19 on non-performing assets of the bank, the SBI chief said that as the lockdown was not pan-India, one will have to wait and watch to assess its impact on the banking sector.

Impact of local restrictions

Observing that multiple variables including inflation have a bearing on the interest rates, he said, “our effort is to support the growth initiatives. To really ensure that happens, we will try to keep the soft interest rate regime for as long as possible.” In an interview to PTI, Khara said it is too early to give any colour to likely scenario of NPAs because of local restrictions.

Also read: SBI’s Business Activity Index dips to a new low

The impact of lockdown differ from State to State as it is not uniform, he said, adding, “so, probably we can wait and watch for some more time before making any comment on impact on economy and NPA situation.” Speaking about various initiatives of the country’s largest lender, Khara said, SBI has decided to set up makeshift hospitals with ICU facilities for Covid-19 patients in some of the worst affected States.

Fighting the pandemic

The bank has already earmarked ₹30 crore and is engaging with non-governmental organisations (NGOs) and hospital management for setting up medical facilities on an emergency basis for the treatment of Covid-19 patients.

He said the bank intends to put in place 1,000 beds with 50 ICU facilities in the States that are the worst affected.

SBI is also collaborating with hospitals and NGOs to provide oxygen concentrators for patients.

“We have put in place an action plan. We have earmarked ₹70 crore-plus out of which we are giving ₹21 crore to 17 circles for Covid-19 related initiatives,” he said.

For the safety of employees and their families, he said, the bank has tied up with hospitals across the country to facilitate treatment of those who have fallen sick on a priority basis.

Also read: Banks roll out special schemes to protect, treat employees amidst Covid surge

About 70,000 employees out of 2.5 lakh strong staff strength have already got vaccinated. The bank has decided to bear the cost of vaccination for its employees and their dependent family members.

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Government names T Rabi Sankar as Deputy Governor of RBI, BFSI News, ET BFSI

Banking & Finance

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North Block appointed T Rabi Sankar, executive director of the Reserve Bank of India as the fourth deputy governor of the central bank, said a government source with knowledge of the matter.

“The Appointments Committee of the Cabinet has approved the appointment of Shri T. Rabi Sankar, Executive Director, Reserve Bank of India to the post of Deputy Governor, Reserve Bank of India for a period of three years from the date of joining the post or until further orders, whichever is earlier,” the government said in an internal circular.

Sankar will succeed incumbent BP Kanungo, who retired last month after completing one year extension period. Rabi Sankar’s portfolio includes fintech, information technology, payments system and risk monitoring at the RBI. He had joined the central bank as a research officer way back in September 1990, show a LinkedIn profile.

Sankar has a Master’s degree in Science and Statistics from Banaras Hindu University. He earned his diploma in Development Planning from the Institute of Economic Growth. The other three deputy governors are Mahesh Kumar Jain, Michael Patra and Rajeshwar Rao. Last year Sankar also became the Chairman of Indian Financial Technology & Allied Services (IFTAS), a wholly-owned subsidiary of RBI.

More than a decade ago, Sanker had worked with the International Monetary Fund (IMF) on bond market development for the government and central bank of Bangladesh. He was also associated with the Bank of International Settlement on capital market activities.



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