Month: July 2021

How PSU banks are catching up in the digital world, BFSI News, ET BFSI

Banking & Finance

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– By Amol Dethe & Ishwari Chavan

The banking sector in India, in response to evolving forces of consumer behaviour shift, demographics and technology, has gone through some significant changes in the past decades.

Almost every sector in the economy reflects the massive impact technology has had on them. But the banking sector, in particular, has been aggressively adapting and transforming in the face of constantly evolving technology.

The notion holds that the Public sector banks (PSBs) have lagged their private counterparts in adapting to these changes. But the PSBs have geared up and banking experts believe the future does look good for PSBs.

PSBs adopting tech

The PSBs have already started investing heavily in technology. Artificial Intelligence, blockchain technology, and robotic process automation are the key innovations that are likely to impact the banking scenario in India in a transformative way.

The field of artificial intelligence has produced several cognitive technologies. Individual technologies are getting better at performing specific tasks that only humans could do. It is these technologies that PSBs may focus their attention on. Analytics can improve customer understanding and personalisation. PSBs are in the process of aggressively adopting these technologies that enhance bank and customer engagement.

Speaking at the ETBFSI session on Digital future of PSU Banks, Raj Kiran Rai, MD & CEO, Union Bank of India and V G Kannan, former CEO, Indian Banks’ Association shared their insights and experience on how PSBs are transforming.

Rai said, “Based on the transactions of a customer, these models can predict if he/she can be a potential housing loan customer, a potential vehicle loan customer, or a personal loan customer. So it helps to do targeted marketing. We are still in the initial phases of using it. But we are investing a lot in this.”

Developing skills

PSBs are heavily recruiting the young population while skilling and reskilling them. Rai mentioned that the average age of employees has come down to 38. He added that the “tech-savvy” young can be easily skilled and reskilled through the e-learning modules that are being introduced. Prioritising the employees who can read and analyse large data over traditional number-crunching can be increasingly seen as a pattern.

Among other skills, marketing is one of the most valuable skills for the digital future of PSBs. According to Rai, marketing skills are where public sector employees are lacking. He said things will take off very fast once the digital products are marketed, pushed to customers, and made comfortable to use.

Fast Moving Consumers & FinTechs

VG Kannan, Former Chief Executive, Indian Banks’ Association, said, “The more and more the customers can use these things, the load on the bankers will come down and they can make it more efficient, provide higher interest rate and provide better services at a lower cost. So it’s going to be a win-win for everyone.”
While a large section of the population in India will be comfortable using digital products, banks will still have to maintain a physical presence, especially in rural areas where the customers are more inclined towards it.

Financial Literacy Centres (FLCs) can play an important role in promoting financial literacy by creating awareness about banking services. Thus, integrating the informal and formal financial sectors can further make digital banking services more accessible to a large chunk of the population that otherwise prefers the physical branches.

Furthermore, to stay relevant in an ever-evolving customer pool, PSBs need to make the most out of the dynamic changes in the BFSI sector in the country. The success of these banks will largely depend on the alliances they form. Thus creating innovative partnerships will ensure the growth of PSBs.

It is no more about banks versus FinTech. Partnerships between banks and FinTech companies will allow banks early access to innovative technologies while the FinTechs would benefit from the vast experience and infrastructure of the PSBs. Both Kannan and Rai believe that a lot of such partnerships may be witnessed over the coming years.

The very technologies that drive revolutionary transformations also invite security risks with them. Technologies are getting sophisticated, and so are the cyber risks. Thus, for PSBs to ensure a secure infrastructure may be very crucial.

Rai and Kannan concurred that growth through innovation is where the PSBs are headed.



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Cooperation Ministry: Cooperatives’ financial heft seen behind Centre’s bid for greater control

Banking & Finance

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There are about 8.5 lakh co-operatives in the country with roughly 38 crore members. Of these, 1,539 are urban cooperative banks (UCBs) and 97,006 rural ones with a combined asset size of as much as Rs 17-18 lakh crore, an official source told FE.

From a tiny wing of the agriculture ministry with less than a dozen employees in a nondescript corner of Krishi Bhawan, the department of cooperation’s morphing into a full-fledged ministry last week, with Amit Shah at its helm, is seen as having not just political but economic ramifications.

There are about 8.5 lakh co-operatives in the country with roughly 38 crore members. Of these, 1,539 are urban cooperative banks (UCBs) and 97,006 rural ones with a combined asset size of as much as Rs 17-18 lakh crore, an official source told FE.

These cooperative banks, both urban and rural, account for an overwhelmingly large share of the cooperative sectors’ finances. While many of them are starved of capital and riddled with management woes, the co-operative banking sector, as a whole, still retains much financial as well as political clout over voters at the critical grassroots level. Against this backdrop, the Centre’s bid to regulate policies governing co-operatives through the new ministry assumes significance.

Some of the large UCBs are cash-rich, and this makes them a potent financial force. The deposit base of UCBs stood at Rs 5 lakh crore as of March 2020 (deposits constitute about 90% of the cooperatives’ resource base). Their loan portfolio was as high as Rs 3 lakh crore at the end of FY20, constituting a sizeable share of credit flow in the overall cooperative sector, mainly to agriculture.

Similarly, the UCBs’ cash reserves grew 7.9% on year to Rs 5,812 crore in FY20 and balances with banks rose 8.6% to Rs 66,212 crore. Their investments stood at Rs 1.62 lakh crore in FY20, 60% of which were in central government securities and another 27% in state government papers. Their asset size stood at Rs 6.2 lakh crore as of March 2020.

Once the financials of rural co-operative banks are included, the asset size sees a substantial jump. These rural co-operatives make up 65% of the total asset size of all co-operative banks put together, according to an RBI assessment.

Given the financial prowess of many of the co-operatives and the sheer large number of their members, the political parties that exercise considerable control over them potentially have a significant advantage over others in times of elections. For instance, the Congress and the NCP have tremendous clout over them in Maharashtra, the BJP in Gujarat and the Left parties in Kerala.

No wonder, opposition parties have called the move to carve out the ministry of cooperation from the agriculture ministry a “political mischief” and an onslaught on the country’s federal structure. Co-operatives, being a state subject (the Union government’s role is mostly restricted to multi-state co-operative societies), should be overseen by the states and the new ministry must not be used to usurp their power or curb their innovation, they say.

For instance, to fund development activities and ease credit flow to farmers, Kerala formed the Kerala Cooperative Bank (KCB) (branded Kerala Bank) by merging district cooperative banks. The KCB is now the country’s largest cooperative bank with as many as 820 branches. The state’s ministry of cooperation lists as many as 11,892 cooperative societies that function across sectors, including agriculture, dairy, industry and services such as banking and hospitality.

More importantly, many of the cooperatives, thanks to their opaque structure and severe governance issues, are allegedly used to funnel black money. The crisis at the Punjab Maharashtra Co-operative (PMC) Bank and some others in recent years are a testament to it.

Of course, the government last year amended the Banking Regulation Act to bring urban and multi-state co-operative banks under the RBI regulation. While the move aims to protect the interests of depositors and better scrutinise the affairs of these cooperative banks, given the enormity of the task, strict supervision and regulation will take some time to evolve to the desired standards. Moreover, the sphere of the RBI regulation is limited to only those offering banking services and doesn’t cover the entire universe of co-operatives.

According to the notification issued by the government, the new ministry will deal with general policy in the field of cooperation while other relevant ministries will be responsible for cooperatives in their respective fields. For example, IFFCO will continue to be driven by the policies of the fertiliser ministry and Gujarat Cooperative Milk Marketing Federation (Amul) by the dairy ministry. Agri cooperative Nafed, which undertakes the procurement of oilseeds and pulses, will remain with the agriculture ministry.

So, the new ministry will get to oversee the central registrar of cooperative societies that regulate and govern all multi-state cooperative societies, a function that was earlier undertaken by the agriculture ministry.

The step assumes significance as some of the financial companies were allegedly converted to multi-state cooperatives to evade regulating authorities like RBI and Sebi.

As of December 2020, there were 1,469 registered multi-state co-operative societies. Maharashtra led the pack of states with 622 of them, followed by Delhi (153), Uttar Pradesh (149), Tamil Nadu (124) and Rajasthan (74).

Rejecting criticism of the move, government officials say the much-neglected co-operative sector will get its due share of attention now following the formation of a dedicated ministry and catalyse a bottom-up growth approach. It will bolster the country’s cooperative movement and deepen its reach at the grassroot level, they add.

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Paytm Payments Bank may soon apply for conversion to Small Finance Bank

Banking & Finance

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Paytm Payments Bank, an associate entity of IPO-bound Paytm, may consider applying for conversion into a Small Finance Bank (SFB) on completion of the required time period under law.

If the firm is successful in conversion, Paytm Payments Bank will be able to undertake additional banking activities such as lending.

The plan to consider applying for conversion into a SFB has been disclosed in the draft red herring prospectus filed by One 97 Communications (Paytm) with SEBI recently for the digitial financial services major’s ₹16,600 crore initial public offering (IPO).

Currently, under the existing RBI guidelines for ‘on tap’ licensing of Small Finance Banks in private sector, existing payments banks with successful track record of at least five years can apply for conversion into SFB.

Moreover, an internal working group of the RBI had recently suggested that a successful track record of three years may be considered sufficient for such conversion.

It maybe recalled that Paytm Payments Bank got its licence to operate as a payments bank from the RBI in 2017.

Net profits

Meanwhile, for the year-ended March 31,2021, Paytm Payments Bank, which has the largest scale among all payment banks, had recorded net profit of ₹17.88 crore on sales of ₹1,987.84 crore, financial data disclosed in the prospectus showed.

One 97 Communications owns 49 per cent equity interest in Paytm Payments Bank, while the rest 51 per cent is owned by Vijay Shekhar Sharma.

The objective of a payments bank is to widen the spread of payment and financial services to small business, low income households, migrant labour workforce in secured technology driven environment. A payments bank is like any other bank without involving any credit risk. It can carry out most banking operations but cannot provide loans or issue credit cards. It can accept demand deposits up to ₹2 lakh, offer remittance services, mobile payments/transfers/purchases and other banking services like ATM/debit cards, net banking and the third party fund transfers.

As at end-March 2021, Paytm Payments Bank had 6.4 crore bank accounts and demand deposits of ₹5,200 crore (including savings accounts, current accounts, fixed deposits with partner banks and balance in wallets). As of March 31, 2021, more than 50 percent of its registered merchants (over two crore20 million) hold an account with Paytm Payments Bank.

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Buy This Stock, It Is Now Available With A Dividend Of Rs 58 Per Share

Personal Finance

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Investment

oi-Sunil Fernandes

|

Shares of government owned, Bharat Petroleum Corporation Ltd (BPCL) is available at a solid dividend, with the company recently announcing a hefty dividend of Rs 58 per share.
The final dividend would be paid within 30 days from the date of its declaration at the AGM, which is not yet announced.

If the investor would buy the stock now it is trading at Rs 448, and assume post the dividend it drops by Rs 58, the stock should go to Rs 390, which should be very attractive given significantly higher targets by brokerage firms in the past few months.

Earlier, ICICI Direct had a “buy” call on the stock of BPCL, which it had anticipated could reach a price target of Rs 495 per share. If you include the cost of acquisition (Rs 390, inclusive of dividend) than the price target of Rs 495, leaves ample room for appreciation in the stock.

According to an earlier report from ICICI Direct, marketing sales reached near normal level in Q4FY21, second wave of Covid-19 and subsequent movement restrictions led to reduction in fuel demand.

“This has affected capacity utilisation as well that reduced up to 86- 87% in May. Improvement in global product cracks and further recovery in fuel demand will be important for Bharat Petroleum Corporation Ltd’s profitability in the near term.
The progress on divestment, response by bidders and subsequent valuation ascertained to the company will be a key monitorable and will drive stock price. We roll over valuations to FY23E and maintain HOLD recommendation on the stock with a target price of Rs 495 based on average of P/BV multiple and price to earnings multiple at Rs 495 per share each,” the brokerage has said.

In a report Motilal Oswal also had upped the price target on the stock, citing faith in the privatization measures of the company. The company had placed a buy on the stock, in its last research report on BPCL.

“BPCL posted better-than-estimated profitability, driven by better marketing volumes and refining/marketing margin, further aided by inventory gains. The company made huge progress towards privatization in FY21, despite challenges posed by COVID-19, by streamlining its subsidiaries (divested its entire stake in NRL, consolidated its stake in BORL, merged BGRL with BPCL) and sold off its trust shares,” the brokerage said.

Buy This Stock, It Is Now Available With A Dividend Of Rs 58 Per Share

Why you should buy the stock ahead of privatization?

Many analysts believe that once the privatization move of BPCL is over, it could drive the stock of the company even higher.
Reports suggest that Vedanta is among the bidders for BPCL. There were also reports that the Union government is considering a proposal to allow up to 100 per cent foreign investment under the automatic route in oil and gas PSUs that have an ‘in-principle’ approval for disinvestment. This could be a big trigger for the stock. However, we cannot confirm whether it is speculation or such things could happen. But, all things put together the acquisition cost of Rs 390, makes the stock a good buy.

However, putting all things together and also from what brokerages are saying, if you get the stock of BPCL at Rs 390 per share, it would certainly be a good stocks to buy.

Buy This Stock, It Is Now Available With A Dividend Of Rs 58 Per Share

Disclaimer

Investing in stocks is risky and investors need to be cautious. Neither Greynium Information Technologies nor the author, nor the brokerage houses mentioned would be responsible for any losses incurred based on decisions made from the article. Investors are also advised caution as the markets have closed at an historic high.



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HDFC Securities to enter discount broking to win market share, BFSI News, ET BFSI

Personal Finance

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Mumbai, July 18: HDFC Securities is creating its own discount broking architecture to compete with new-age firms like Zerodha which are eating into market shares of entrenched players in the business, its parent HDFC Bank‘s managing director Shashidhar Jagdishan has said. Over the next two-three years, the company targets to gain market, Jagdishan said, making it clear that the largest private sector lender does not have any plans to sell stakes in the brokerage.

It can be noted that over the last few years, discount brokerages which help an investor transact by paying a fraction of commissions and fees have become popular with investors, forcing many of the entrenched players to offer similar offerings.

“I’m happy to say that our own HDFC Securities also has a plan and you will see that countering the threats from discount brokerages with its own neo architecture or discount kind of an architecture as well,” Jagdishan told the bank’s shareholders at its annual general meeting on Saturday.

He added that HDFC Securities will be responsible and exuded confidence that it will gain market share in the next 2-3 years.

The company, which registered a 94.9 per cent growth in its June quarter net profit to Rs 260.6 crore, is doing extremely well, Jagdishan said.

As per filings, HDFC Securities’ total income grew by 67.3 per cent to Rs 457.8 crore in the June quarter as against Rs 273.7 crore in the year-ago period. It had 215 branches across 147 cities / towns in the country.

Meanwhile, speaking at the bank’s AGM, its non-executive chairman Atanu Chakraborty said the largest lender in the private space is on its way to scale technology adoption and transformation agenda through scaling infrastructure, disaster recovery resilience, information security enhancements and having a monitoring mechanism.

He said the bank has taken the regulatory actions arising out of challenges faced on technology in the right spirit and the management has displayed grace and humility.



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5 Top-Rated SBI Debt Mutual Fund Investments For Better Returns Than Bank FDs

Personal Finance

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SBI Magnum Medium Duration Fund Direct

SBI Magnum Medium Duration Fund Direct returns have been 6.67 percent during the last year. Since its debut, it has returned an average of 9.98 percent every year.

The fund has a 0.68 percent expense ratio, and you can start investing in it with a minimum of Rs 1000. The fund’s top holdings are in Reserve Bank of India, State Bank of India, Mahindra Rural Housing Finance Ltd., Tata Realty and Infrastructure Ltd., Flometallic India Pvt. Ltd. The AUM of SBI Magnum Medium Duration Fund is Rs 9,412 Crs.

ValueResearch Online and Morningstar have given the fund a 5-star rating. The most significant benefit of investing in the SBI Magnum Medium Duration Fund is that you will have exposure to a portfolio that includes debt and money market securities. This fund is appropriate for investors with a three- to the four-year investment horizon. On the other hand, this cannot be compared to the returns of an equity fund during a market peak.

SBI Banking and PSU Fund

SBI Banking and PSU Fund

As of July 17, 2021, the fund had Rs 14,078 crore in assets under management (AUM) and a NAV of Rs 2,597.98. The fund has a 5 Star Rating from Morningstar. The 1-year returns on SBI Banking and PSU Fund Direct-Growth are 4.16 percent. It has returned an average of 8.77 percent per year since its inception. The fund’s top holdings are in Oil & Natural Gas Corpn. Ltd., State Bank of India, National Housing Bank, Rural Electrification Corpn. Ltd., Axis Bank Ltd..

Banking and public sector undertakings (PSU) funds primarily invest in bonds issued by banks, PSUs, and public financial institutions. They are appropriate for a two- to three-year investment horizon, as well as a fixed-income proportion in a longer-term portfolio. You can expect larger returns than you would get from a bank fixed deposit. The fund’s expense ratio is 0.34 percent, which is comparable to that of most other Banking and Public Sector Union funds.

SBI Magnum Income Fund

SBI Magnum Income Fund

Medium to long-term debt funds mostly invests in bonds as they attempt to earn higher returns than similar-term bank fixed deposits. These funds have a low chance of losing money throughout the specified time period, but they may suffer some volatility in response to interest rate changes. The last one-year growth returns on the SBI Magnum Income Direct Plan were 5.76 percent. It has had an average yearly return of 8.85% since its inception. The fund’s top holdings are in Reserve Bank of India, Indian Bank, GOI, Embassy Office Parks REIT, Tata Realty and Infrastructure Ltd. SBI Magnum Income Fund’s direct plan has an expense ratio of 0.8 percent. ValueResearch Online and Morningstar have given the fund a 5-star rating.

SBI Savings Fund

SBI Savings Fund

It has an AUM of Rs 22,380.83 crores, and the most recent NAV declared as of 17 July 2021 is 34.591 crores. The fund has received a 4-star rating from ValueResearch and a 5-star rating from Morningstar. . The fund charges a 0.75 percent cost ratio, which is more than most other Money Market funds. GOI, Reserve Bank of India, Axis Bank Ltd., National Bank For Agriculture & Rural Development, and RBL Bank Ltd. are among the fund’s top holdings. It has had an average yearly return of 7.25 percent since its inception.

Money Market Debt Funds invest in short-term bonds with a one-year maturity. They are designed to earn somewhat higher returns than a bank account or a short-term fixed deposit. These funds have a minimal chance of losing money throughout the specified duration, but they do not guarantee returns or capital protection.

SBI Credit Risk Fund

SBI Credit Risk Fund

Credit risk funds primarily invest in bonds with credit ratings of AA or lower from credit rating agencies. The lower grade suggests that there is a greater chance that these bonds may fail to return investors’ money. As a result, these funds are the riskiest of the debt fund categories. However, they make up for the increased risk with a bigger return potential, as these bonds pay higher interest rates than the highest-rated bonds. The fund has received a 4-star rating from ValueResearch and a 5-star rating from Morningstar.

SBI Credit Risk Fund-Growth is a medium-sized fund in its category, with assets under management (AUM) of 3,473 crores. The fund’s expense ratio is 1.54 percent, which is greater than the expense ratios charged by most other Credit Risk funds.

SBI Credit Risk Fund’s 1-year growth returns are 6.98 percent. It has had an average yearly return of 7.64 percent since its inception. GOI, IndInfravit Trust, Tata International Ltd., Flometallic India Pvt. Ltd., and Godrej Industries Ltd. are among the fund’s top holdings.

Who Should Invest in Debt Funds?

Who Should Invest in Debt Funds?

Debt funds are great for investors who want a steady stream of income but don’t want to take any risks. Debt funds are less riskier than equities funds since they are less volatile. Debt mutual funds may be a better alternative if you’ve been saving in traditional fixed income products like Term Deposits and are looking for consistent returns with low volatility. They help you achieve your financial goals in a more tax-efficient manner and hence earn greater returns.

Debt funds are similar to other mutual fund schemes in that they invest in stocks and bonds. They do, however, outperform stock mutual funds in terms of safety. When the market collapses, for example, the NAVs of your stock funds fall sharply, whereas the NAVs of your debt funds do not fall as sharply. However, debt funds can only provide moderate returns, whereas high-risk equity funds can provide significant returns over a longer time horizon.

The difficulty in suggesting mutual fund schemes is that no single mutual fund scheme can maintain a 5-star rating for an extended length of time. As a result, a mutual fund strategy that appears to be profitable now may not be profitable tomorrow. Kindly be aware that the Nifty is near 16,000 points, a new high, indicating that the markets are not only pricey, but extremely overpriced.

Disclaimer

Disclaimer

Market risks apply to mutual fund investments; read all scheme-related papers carefully. The NAVs of the schemes may rise or fall in response to variables and pressures impacting the securities market, such as interest rate variations. The opinions and investment information offered by Greynium Information Technologies’ authors and employees should not be taken as investment advice to purchase or sell stocks, gold, currency, or other commodities. Investors should not make any trading or investment decisions solely on the basis of information presented on GoodReturns.in.



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This Is The Cheapest Mutual Fund: Here’s Why You Can Consider SIP Investment In It

Personal Finance

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About Navi Mutual Fund

This AMC company is owned by Flipkart co-founder Sachin Bansal and the company is registered with the SEBI and the Sponsor is Anmol Como Broking Private Limited. Navi AMC Limited is the Investment Manager to Navi Mutual Fund. Navi Trustee Limited is the trustee to Navi AMC Limited.

Apart from the AMC arm, the company is into offering financing facilities such as personal loan, housing loan, 2-wheeler loan, SME Business loan as well as general insurance services.

Features of Navi Nifty 50 Index Fund

Features of Navi Nifty 50 Index Fund

Investment in the fund is currently open

It is an open ended Index fund with large cap equity orientation

Entry and exit load are 0%

Fund Manager- Mr. Girish Raj

Minimum investment- Rs. 500 via SIP as well as through lump sum payment

Benchmark- Nifty 50 TRI

Investment objective: The fund will typically replicate Nifty 50 returns and as the exposure is typically in large caps, the fall shall not be drastic in case when the markets dives. Hence suitable for more conservative investors who do not like high risk exposure.

Direct plan of Navi Index fund-0.06% shall be the cheapest within the categpry. Within direct plans of the index fund,, the cheapest funds carry a minimum expense ratio of between 0.1-0.15%

Index funds as an investment are the safest?

Index funds as an investment are the safest?

Typically index funds being passively managed and providing and working to offer return closest to the benchmark index are highly safe. Furthermore, these provide exposure to a set of stocks comprising the benchmark index and so in the case of Navi Index fund the portfolio shall be Nifty stocks. Another positive with this Index fund is that they can be bought directly from the AMC’s site and one need not have a demat account.

Past Nifty returns

Past Nifty returns

The Nifty index has offer a five-year CAGR of 15.7% and a 10-year CAGR of 12.5% (as of 25 June). Further on a year to date basis, the returns have been over 13% while in the last one year it has been to the tune of over 48%.

Why Navi Nifty 50 Index Fund?

Why Navi Nifty 50 Index Fund?

Ace Investors’ like Warren Buffet even promote the idea of investing in index funds for naïve investors or first time investors for whom stock picking is highly difficult. Further he goes onto say many of the average investor cannot do stock picking. Also, note this fund is likely to yield you good enough returns if you remain invested for long. Not to forget, this is not the first offering by the AMC and there are other 2 funds also to its credit namely Navi Long Term Advantage Fund and Navi 3 in 1 fund.

Also, because of the lowest cost structure within the category, the investors’ return shall increase in the same proportion.

Note while past performance is integral in the selection of any fund for that matter, here for the index funds barring the tracking error, the fund typically would more or less replicate Index returns which herein is the Nifty index.

Disclaimer:

Disclaimer:

Note herein the views expressed are just for information and investors need to do their own research before considering the investment option detailed out here. Author, neither the company nor the AMC shall not be responsible for any decision taken based on the above report.

GoodReturns.in



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IDBI Bank to explore avenues to grow corporate credit: Rakesh Sharma

Banking & Finance

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IDBI Bank may explore avenues to grow its corporate credit book, especially in the mid-corporate segment, in a risk-calibrated and cautious manner, following the exit from the Reserve Bank of India’s (RBI) Prompt Corrective Action (PCA) framework, according to MD & CEO Rakesh Sharma.

The bank’s loan book composition of retail to corporate advances was at 62:38 as at end-March 2021, against 56:44 as at end-March 2020.

When IDBI Bank was brought under PCA in May 2017, its loan book composition of retail to corporate advances was at 43:57.

“The exit from the RBI’s PCA framework (with effect from March 10, 2021) has unlocked huge potential for your bank as it can now undertake a wide-range of banking activities and tap the emerging opportunities to boost its business performance. Your bank will continue to remain committed towards its strategic positioning as a retail-oriented bank with focus on growing the share of the loan book of retail and small & medium-sized enterprises,” Sharma said in a message to the shareholders.

When RBI initiates PCA for a bank, it imposes restrictions on the expansion wholesale portfolio, branch expansion, dividend distribution, among others.

PCA is invoked by RBI when a bank breaches any of the four risk thresholds relating to capital, asset quality, profitability and leverage.

IDBI Bank was able to reduce its Risk Weighted Assets (RWA) from Rs 1.59 lakh crore as at end-March 2020 to Rs 1.57 lakh crore as at end-March 2021. According to Sharma, this was a consequence of shifting towards a more retail-oriented portfolio mix, coupled with certain strategic capital conservation measures.

The IDBI Bank Chief said, “Since the muted operating environment clouds the outlook for the lending activity, your bank will focus on maximising fee income. At the same time, to boost the bottom-line, your Bank will work towards minimising its operating expenses and increasing productivity.”

MR Kumar, Chairman, IDBI Bank, in his message to the shareholders, observed that it is inevitable that the year ahead will be peppered with challenges stemming from wavering confidence among businesses as well as consumers as also sputtering momentum of economic activities.

“A health emergency of this magnitude has demanded extraordinary responses and outcomes from all the affected population, businesses as well as policymakers. Under these circumstances, the Bank remains committed to being with its customers and ensuring seamless delivery of financial services and will participate in the relief measures to mitigate the impact of the crisis,” Kumar said.

He underscored that IDBI Bank is cognisant of the elevated risks in the operating environment and will take steps to remain strong and resilient and be well-positioned to absorb potential losses that could arise.

Meanwhile, referring to the Government’s directive of rationalisation of overseas operations, IDBI Bank said it is undertaking necessary steps.

IDBI Bank has one overseas branch at Dubai International Financial Centre (DIFC). It has completed 11 years of operations.

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CPI writes to finance minister opposing govt proposal to privatise nationalised banks, BFSI News, ET BFSI

Personal Finance

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New Delhi, Jul 17 () CPI general secretary D Raja wrote to Finance Minister Nirmala Sitharaman on Saturday, hitting out against the government proposal to privatise nationalised banks. In his letter, Raja said the finance minister had mentioned in her budget speech that the government has proposed to privatise two nationalised banks.

“Since privatisation of any bank is not in the interest of our economy and people, we have expressed our strong opposition to the same, both inside Parliament and outside. Our opposition to such privatisation of banks is on account of the fact that our banks today represent huge public savings of the common masses and these precious savings are safe only if the banks are in government control,” he said.

The Left leader pointed out that a large-scale failure of many private banks was the reason behind the move to nationalise banks in the first place, adding that the government is thinking about privatisation of banks at a time when many private companies have turned out to be major loan defaulters.

“It would be imprudent to hand over the banks to private hands, whose efficiency is also not guaranteed going by the recent experiences of some of the private banks. Nationalised banks have been greatly helping and supplementing the government’s efforts to boost the economy and hence, need to be further strengthened with adequate measures from the government,” he said.

Raja said media reports have quoted a Niti Aayog recommendation proposing the names of the Central Bank of India and the Indian Overseas Bank for privatisation.

“Even though these are news items not authenticated by any official agency of the government, nonetheless, the same is creating a lot of anxiety and anguish amongst the employees and officers of these two banks.

“I have learned that even some deposits are being withdrawn by customers. Hence, it will be desirable for the government to make a statement clarifying the position,” he added.

“In case the government has any such proposal to privatise any bank, our party is opposed to it. Such a decision must be reviewed and rescinded,” the Communist Party of India (CPI) said. ASG RC



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Facebook’s payment system will extend to online retailers in August, BFSI News, ET BFSI

Personal Finance

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Facebook‘s payment system is all set to extend to online retailers in August this year.

As per The Verge, online shoppers will eventually see another option listed next to the usual payment methods, now that Facebook Pay will expand beyond the company’s own platforms.

Not long after credit card companies dropped out of its Libra cryptocurrency project, Facebook launched its payments system for use across the main site, as well as WhatsApp and Instagram.

Now, just like Google’s stored cards, PayPal integrations, Amazon Pay, and others, Facebook Pay is opening itself up for use in transactions with participating retailers. Shopify merchants are first in line to add the system on their sites, with others to follow after it launches in August.

Of course, this isn’t just an easier way for retailers to get paid with cards customers have already stored in their Facebook profiles, it’s also a way to get even more data into Facebook.

The announcement points to this privacy page for Facebook Pay, which clearly states:

1. As with previous payment options on our apps, when you make payments with Facebook Pay, we’ll collect information about the purchase such as the payment method, transaction date, billing, shipping and contact details. We designed Facebook Pay to securely store and encrypt your card and bank account numbers.

2. As with our other products, the actions you take with Facebook Pay can be used for purposes such as to deliver you more relevant content and ads, to provide customer support and to promote safety and integrity.

The card and bank account numbers you provide will not be used to personalize your experience or inform the ads you see.



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