Month: July 2021

Share of upgraded listed debt issues at a three-year high for ICRA and Crisil in Q4 FY21: FSR

Banking & Finance

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The share of upgraded listed debt issues was at a three-year high for two rating agencies while the share of downgraded listed debt issues in total outstanding ratings fell in the fourth quarter of 2020-21 as against previous quarters.

This was revealed by the Financial Stability Report, July 2021 of the Reserve Bank of India.

“On an aggregate basis, the share of downgraded listed debt issues in total outstanding ratings declined significantly during the fourth quarter of 2020-21 vis-à-vis earlier quarters, while the share of upgraded listed debt issues was at a three-year high for both ICRA and CRISIL,” the FSR said.

For ICRA, upgraded and re-affirmed listed debt issues was 99.8 per cent in the fourth quarter of last fiscal while downgraded and suspended issues were 0.2 per cent. This is in contrast to just 88 per cent upgraded and re-affirmed listed debt issues in the fourth quarter of 2019-20.

Similarly, in the case of Crisil upgraded and re-affirmed listed debt issues was 99.9 per cent in the March 2021 quarter versus 91.2 per cent in the fourth quarter of 2019-20.

For Care Ratings too, upgraded and re-affirmed listed debt issues had risen to 95.2 per cent in the fourth quarter of 2020-21 as against 78 per cent in the same period in the previous fiscal.

“Out of the rating downgrades during the fourth quarter of 2020- 21, the share of the NBFC and housing finance company sectors as well as banks and financial services went down significantly as compared to the preceding quarter,” the FSR further noted.

In the quarter ended March 31, 2021, the rating downgrades for NBFCs accounted for 11.1 per cent of the overall downgrades in the quarter as against 28.6 per cent in the December 2020 quarter.

The share of banks, financial services in rating downgrades was nil in the March 2021 quarter versus 11.9 per cent in the previous quarter.

The power sector had the largest share of rating downgrades in the March 2021 quarter at 38.9 per cent as against 38.1 per cent in the previous quarter.

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Mswipe looks to transform into a digital bank for small merchants

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Mswipe is looking to transform into a full digital bank for small merchants by offering them more focussed products.

“We should be looking at a digital bank focussed on small merchants and try to cover the merchant ecosystem to the best of our ability. We should be a one stop shop for whatever the merchant needs relating to payment and finance starting from a payment terminal, QR or terminal. We will also look at how to help them with their business with inventory management, lending, buy now pay later platform that is more focussed on the merchant’s requirement,” said Ketan Patel, CEO, Mswipe.

Mswipe, which is a financial services platform for MSMEs, had announced Patel’s appointment on July 1.

Also read: Digital India: Paytm sets aside ₹50 crore for reward program

Mswipe also aspires to be an NBFC and hopes to have its own license in the next three to six months. At present, it dispenses loans through partners. It has also created a hybrid credit score with Equifax for MSMEs.

“This is the first step to lending from our own books,” he said. Patel said payments will continue to be the core focus of Mswipe but it will also look at other engagement opportunities with merchants. The company is in talks to enable merchants to offer insurance to customers as well as micro ATMs.

“We want the terminal to create new revenue opportunities for the merchant. They can sell small ticket insurance such as two wheeler and health using the POS terminal. This will be an additional revenue item for them,” he said.

Also read:Indian crypto exchanges flounder as banks cut ties after RBI frown

Similarly, the merchant can offer micro ATMs to dispense cash and earn additional revenue, Patel said.

Mswipe has about 6 lakh merchants as of now and targets to have over 10 lakh merchants over the next three years. At present, it is the largest independent mobile POS merchant acquirer and network provider with 6.75 lakh POS and 11 lakh QR merchants across the country.

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Reserve Bank of India – Tenders

Tenders

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Reserve Bank of India invites E-Tender for Electrical Renovation Works for 4 Nos. of Grade ‘A’ officer flats at TNOQ Officer’s Quarters, RBI Kanpur. The tendering would be done through the e-Tendering portal of MSTC Ltd. (http://mstcecommerce.com/eprochome/rbi). All Bank’s empaneled electrical contractors/agencies/firms enlisted for works more than 05 lakhs must register themselves with MSTC Ltd through the above-mentioned website to participate in the tendering process. The Schedule of e-Tender is as follows:

E-Tender No RBI/Kanpur/Estate/10/21-22/ET/10
a. Estimated cost Rs. 6.5 Lakh
b. Mode of Tender e-Procurement System (Online Part I – Techno-Commercial Bid and Part II – Price Bid through www.mstcecommerce.com/eprochome/rbi)
c. Date of NIT available to parties to download July 02, 2021
d. Pre-Bid meeting Offline at 11:30 AM on July 26, 2021 Venue: Reserve Bank of India, 2nd Floor Estate Department, Mall Road, Kanpur.
e. i) EMD through DD//NEFT or Banker’s Cheque issued by a Scheduled Bank and intimate/forward the transaction details (UTR number OR scanned copies (in PDF) of DD to estatekanpur@rbi.org.in and upload www.mstcecommerce.com/eprochome/rbi) Rs. 13,000/- by NEFT paid through NEFT/DD/Banker’s Cheque issued by a Scheduled Bank only to in our A/c No. 186003001, IFSC RBIS0KNPA01 (where ‘0’ represents zero) to Reserve Bank of India Kanpur.
ii) Tender Fees NIL
f. Last date of submission of EMD. August 05, 2021 till 11:00 AM
g. Date of Starting of e-Tender for submission of on line Techno-Commercial Bid and price Bid at RBI Kanpur at e-Tendering portal of MSTC (http://mstcecommerce.com/eprochome/rbi). July 26, 2021
h. Date of closing of online e-tender for submission of Techno-Commercial Bid & Price Bid. August 05, 2021 till 11:00 AM
i. Date & time of opening of Part-I (i.e. Techno-Commercial Bid) Part-II Price Bid: Date of opening of Part II i.e. price bid shall be informed separately August 05, 2021 at 12:00 PM
j. Transaction Fee (To be submitted separately by the vendors to MSTC vide MSTC E-Payment Gateway for participating in the E-Tender) Rs. 1,180/- inclusive of GST @ 18% Payment of Transaction fee through MSTC payment gateway /NEFT/RTGS in favour of MSTC LIMITED

Intending tenderers shall pay as earnest money a sum of Rs. 13,000/- by way of NEFT to Reserve Bank of India, Kanpur or by a Demand Draft or Banker’s Cheque issued by a Scheduled Bank in favour of Reserve Bank of India payable at Kanpur. MSME registered firms are exempted from submission of EMD.

Applicants intending to apply will have to satisfy the Bank by furnishing documentary evidence in support of their possessing required eligibility and in the event of their failure to do so, the Bank reserves the right to reject their bids. Tenders without EMD or proof of MSME registration will not be accepted under any circumstances.

The Bank is not bound to accept the lowest tender and reserves the right to accept either in full or in part any tender. The Bank also reserves the right to reject all the tenders without assigning any reason thereof.

Any amendments / corrigendum to the tender, if any, issued in future will only be notified on the RBI Website and MSTC Website as given above and will not be published in the newspaper.

Regional Director
Reserve Bank of India
Kanpur

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Reserve Bank of India – Press Releases

Press Releases

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The Reserve Bank of India today released the data showing daily merchant and inter-bank transactions in foreign exchange for the period May 03, 2021 to May 07, 2021.

All Figures are in USD Millions
Position Date MERCHANT INTER BANK
FCY / INR FCY / FCY FCY / INR FCY / FCY
Spot Forward Cancel Forward Spot Forward Cancel Forward Spot Swap Forward Spot Swap Forward
Purchase
03-05-2021 3,233 730 1,211 153 111 100 7,995 14,635 166 1,873 2,190 123
04-05-2021 2,324 1,276 1,642 104 52 20 7,651 17,152 416 2,612 1,829 179
05-05-2021 2,174 1,245 960 232 83 143 8,793 12,856 596 2,116 1,728 94
06-05-2021 2,774 591 1,039 118 120 80 8,916 11,221 619 2,526 1,996 489
07-05-2021 2,669 1,016 956 576 158 112 7,751 11,628 1,462 2,724 2,166 545
Sales
03-05-2021 2,974 1,960 469 151 116 77 7,575 15,177 747 1,832 1,819 123
04-05-2021 2,992 2,387 363 104 53 19 7,000 16,092 1,187 2,589 1,962 179
05-05-2021 3,018 1,430 541 232 82 142 8,686 12,472 1,045 2,102 1,903 94
06-05-2021 2,519 1,754 629 119 120 80 8,256 12,026 1,106 2,427 2,073 489
07-05-2021 2,445 2,664 403 583 139 111 7,832 12,044 1,020 2,719 2,206 545
(Provisional Data)

Ajit Prasad
Director   

Press Release: 2021-2022/473

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LIC Unveils Saral Pension (Annuity Plan): Here’s All You Need To Know About

Personal Finance

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Investment

oi-Vipul Das

|

On July 1, 2021, the Life Insurance Corporation of India (LIC) unveiled the Saral pension plan, which is a non-linked, non-participating, single premium, individual immediate annuity plan, according to LIC. This is a Standard Immediate Annuity Plan as defined by the Insurance Regulatory and Development Authority of India (IRDAI), which stipulates the same terms and conditions to all life insurance companies. Here’s all you need to know about the new offering.

LIC Unveils Saral Pension (Annuity Plan): Here’s All You Need To Know About

Regular fixed payments: Under this pension plan, the policyholder can contribute a lump sum amount as the purchase price and get a predetermined payout at regular intervals for the remainder of his or her lifespan. A policyholder can earn a minimum annuity of Rs 12,000 per year. The minimum purchase price is determined by the annuity type, option, and age of the subscriber or policyholder. The upper limit of the purchasing price, however, is uncapped.

Options on payment of a lump sum amount: The policyholder can select between two types of annuity when receiving a lump sum payout. Policyholders can choose between a life annuity with a payout of 100% of the purchase price and a joint life last survivor annuity with a payout of 100% of the total purchase price on the demise of the last survivor. According to LIC, annuity rates are fixed from the outset of the policy, and annuities are paid for the rest of the annuitants’ lifespan.

Annuity modes: The annuitant can choose between monthly, quarterly, or half-yearly payments, according to the terms of this LIC Saral pension plan. As a result, the minimum monthly annuity offered under this plan is Rs 1,000, the minimum quarterly annuity is Rs 3,000, and the minimum half-yearly annuity is Rs 6,000. An increase in the annuity price is provided as an incentive for purchase prices exceeding Rs 5 lakhs, respectively.

Loan facility and age limit: The plan is offered to those between the ages of 40 and 80. After 6 months from the policy’s launch date, the loan will be available anytime.

Story first published: Friday, July 2, 2021, 12:29 [IST]



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Reserve Bank of India – Press Releases

Press Releases

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In the underwriting auctions conducted on July 02, 2021 for Additional Competitive Underwriting (ACU) of the undernoted Government securities, the Reserve Bank of India has set the cut-off rates for underwriting commission payable to Primary Dealers as given below:

(₹ crore)
Nomenclature of the Security Notified Amount Minimum Underwriting Commitment (MUC) Amount Additional Competitive Underwriting Amount Accepted Total Amount underwritten ACU Commission Cut-off rate
(paise per ₹100)
5.63% GS 2026 11,000 5,502 5,498 11,000 19.00
GoI FRB 2033 4,000 2,016 1,984 4,000 3.85
6.64% GS 2035 10,000 5,019 4,981 10,000 9.43
6.67% GS 2050 7,000 3,507 3,493 7,000 11.67
Auction for the sale of securities will be held on July 02, 2021.

Ajit Prasad
Director   

Press Release: 2021-2022/471

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RBI worried over growing clout of Amazon, Google and Facebook in financial services in India, BFSI News, ET BFSI

Banking & Finance

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As Amazons and Googles line up expansion in financial services in India, the Reserve Bank of India has expressed concerns over their presence.

Big Tech is a term used for the five most dominant information technology firms in the world —Google, Amazon, Facebook, Apple and Microsoft—that have market capitalisation ranging between $1 trillion and $2 trillion, each.

“Big Techs offer a wide range of digital financial services…of several advanced and emerging market economies. While this holds the promise of supporting financial inclusion and generating lasting efficiency gains, including by encouraging the competitiveness of banks, important policy issues arise. Specifically, concerns have intensified around a level playing field with banks, operational risk, too-big-to-fail issues, challenges for antitrust rules, cybersecurity and data privacy,” RBI said in its Financial Stability Report.

Big techs present at least three unique challenges. First, they straddle many different (non-financial) lines of business with sometimes opaque overarching governance structures. Second, they have the potential to become dominant players in financial services.

Third, big techs are generally able to overcome limits to scale in financial services provision by exploiting network effects. it said. Interestingly, the RBI concern comes at a time when the government is engaged in a tussle with the companies over media rules.

For central banks and financial regulators, financial stability objectives may be best pursued by blending activity and entity-based prudential regulation of big techs. An activity-based approach is already applied in areas such as anti-money laundering [AML] /combating the financing of terrorism; an activity-based approach is the provision of cloud services, where minimising operational and in particular, cyber risk is paramount, it said. Furthermore, as the digital economy expands across borders, international coordination of rules and standards becomes more pressing, it said.

Growing Big Tech clout

Facebook, Apple, Google and Amazon are leveraging their huge user bases to push their financial services. With consumer user data at hand, these companies can use it to curate personal financial products for them. which entered Indian fintech market in 2016 with Amazon Pay, has taken several strides. It has partnered ICICI Bank to issue credit cards, become a part of the Indian government’s payment network through the Amazon Pay UPI, launched insurance services, and entered into the digital gold space.

Google has partnered Wise and Western Union to enter the $470 billion remittance market under which Google users in the US can send money in Inda.

Also Read: BigTech and Cyber are the major risks for Banks and FIs: Sopnendu Mohanty, MAS



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Now, Indian crypto exchanges hit by payment processors pullout, BFSI News, ET BFSI

Personal Finance

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Just as they were breathing easy with the Reserve Bank of India clarifying that banks can do due diligence of crypto clients, Indian crypto exchanges have been hit by another hurdle.

With the RBI reiterating that it does not favour cryptocurrencies, major payment gateways have pulled out hitting transactions.

Customer complaints have inundated all India’s key exchanges as the pullout by major payment gateways, including Razorpay, PayU and BillDesk has hit transactions, according to social media and users.

The options

Options being resorted to including tying up with smaller payment gateways, building their own payment processors, holding back on immediate settlements or offering only peer-to-peer transactions.

At least two exchanges have tied up with smaller payment processing firm, Airpay, as its larger peers have cut ties.

Some crypto exchanges, such as WazirX, are forced to stick only to peer-to-peer transactions on certain days, while others, such as Vauld, allow bank transfers with manual settlement as they hunt for a payment processor, backing up settlements.

Smaller payment gateways have not proved very successful in executing high volumes of transactions, leading to failures that have resulted in a flood of user complaints.

Others, such as Bitbns, have built their own basic payment processor, allowing some essential transactions since the systems do not require prior approval from the Reserve Bank of India, the central bank.

A grey area

Despite the boom, cryptocurrencies are in a grey area in India, with the Reserve Bank hostile towards it and the government unsure about its prospects.

There is no legislation or regulatory code yet to govern the crypto ecosystem, leading to confusion among customers, businesses and financial institutions providing banking services.

In 2018, the Reserve Bank of India barred financial institutions from supporting crypto transactions, which the Supreme Court overturned in 2020. The government has circulated a draft bill outlawing all cryptocurrency activities, which has been under discussion since 2019.

Last month, the RBI asked banks not to cite its 2018 circular and clarified that banks can do their own KYC for crypto clients. With this, banks are now reassessing the situation, but several banks currently lack the technical expertise to make a supervisory assessment on these transactions.



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RBI Announces Interest Rate On Floating Rate Savings Bond For Period July-December 2021

Personal Finance

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Investment

oi-Vipul Das

|

The Government of India had released the RBI’s Floating Rate Savings Bonds in 2020. These bonds’ interest rates are changed in every 6 months and can be purchased through public and private sector lenders. The interest rate on the Floating Rate Savings Bond, 2020 has been declared by the RBI for the period July 2021 to December 2021. The interest rate on the Floating Rate Savings Bond, 2020 for the period July 1, 2021 to December 31, 2021 and due on January 1, 2022 stays unchanged i.e. at 7.15 per cent. The interest is payable every six months and no cumulative option is available.

RBI Announces ROI On Floating Rate Savings Bond For Period July-December 2021

The interest rate is fixed at a premium of 35 basis points, or 0.35 per cent, above the current National Savings Certificate (NSC) rate. And as the government kept the interest rates of small saving schemes unchanged for the quarter ending September 30, 2021, The interest rate on a 5-year NSC remains at 6.8 per cent respectively. The interest rate of NSC is influenced by the yield of government securities and is adjusted on a quarterly basis. It indicates that the market rate eventually influences the floating interest rate of taxable bonds of RBI. These bonds can be purchased by resident individuals and HUFs either individually or jointly.

One can start investing with an initial contribution of Rs 1000 with no upper limit. These bonds have a tenure of 7 years and the interest rate may fluctuate over this period. The interest payouts from the bonds are made in January and July every year. The interest on these bonds will be taxed according to your tax bracket. Furthermore, TDS will be levied on the interest earned. Interest rates are adjusted every six months, and the present interest rate on bonds is higher than those of other investment alternatives such as NSC, Fixed Deposits with Banks, Public Provident Fund and other small savings schemes.

Since they are issued by the Government of India, these bonds are secure to bet. As a result, Floating Rate Savings Bonds give an investment choice for risk-averse individuals and those looking to diversify their portfolios with a risk-free instrument. One of the most important factors for an individual to consider when investing in these bonds is taxation. They must also keep in mind that these are floating-rate bonds and are adjusted on a regular basis, so hoping for a fixed return is not possible.

Story first published: Friday, July 2, 2021, 11:20 [IST]



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