August 2021 – Page 23 – IFSCCodeof.in

Covid second wave raises asset risks for banks: Moody’s

August 26, 2021 root Banking & Finance

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The coronavirus wave will lead to new problem loans in the retail and SME segments, but a severe asset quality decline is unlikely, according to Moody’s Investors Service.

Banks’ improved profitability, capital and loss buffers will help them absorb anticipated loan losses and maintain credit strength, the global credit agency said in a report.

Moody’s observed that India’s second coronavirus wave is increasing asset risks for banks, but the country’s economic recovery, a tightening of loan underwriting criteria and continued government support will prevent a sharp spike in problem loans.

Stable NPL ratio

The agency’s baseline expectation is that newly formed non-performing loans (NPLs) at public sector banks will increase nearly 50 per cent to about 1.5 per cent of gross loans annually in the next two years.

Nevertheless, banks’ average NPL ratios will remain broadly stable, driven by the resolution of legacy NPLs and acceleration of credit growth, the global credit rating agency said in a report.

“A severe deterioration of banks’ asset quality is unlikely, despite an expected rise in new loan impairments, particularly among individuals and small businesses that were hit hardest by the virus outbreak.

“This is because government initiatives like the emergency credit-linked guarantee scheme (ECLGS) have been effective in providing immediate liquidity for businesses,” Alka Anbarasu, a Moody’s Vice President and Senior Credit Officer, said.

In addition, accommodative interest rates and loan restructuring schemes will continue to mitigate asset risks, such that the coronavirus resurgence will delay but not derail the improvements in banks’ balance sheets that had begun before the pandemic.

Moody’s said the banks rated by it also have stronger loss-absorbing buffers, which will help them withstand the asset quality decline and maintain their credit strength.

Banks had reinforced these buffers in the past year through increases in capital, loan-loss reserves and profitability, it added.

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Reserve Bank of India – Tenders

August 26, 2021 root Tenders

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E-Tenders are invited from eligible contractors / firms for the captioned work estimated to cost ₹17.44 lakh through the MSTC portal. The close bid date is 10.09.2021 at 1400 hrs.

NIT Number and Timeline is given below:

S. No.	Activity	Tentative date
1.	Date of Press-Web Advertisements	26.08.2021
2.	e-Tender no.	RBI/Patna/Estate/81/21-22/ET/110
3.	Mode of Tender	e- Procurement System (Online Part I – Techno-Commercial Bid and Part II – Price Bid through www.Mstcecommerce.com/eprochome/rbi)
4.	Date of NIT (along with complete tender document) available to parties to download	12:00 Noon of 26.08.2021
5.	Date of Pre-bid meeting at Estate Department, RBI Main Building, Patna (offline)	12:30 Noon of 02.09.2021
6.	Earnest Money Deposit	₹ 34,888/-
7.	Start Bid date- Date of Starting of e-Tender for submission of online Techno-Commercial Bid and Price Bid at www.mstcecommerce.com/eprochome/rbi–	12:00 Noon of 26.08.2021
8.	Close Bid date- Date of closing of online e–tender for submission of Techno-Commercial Bid & Price Bid	1400 hrs of 10.09.2021
9.	Date & time of opening of Part–I (i.e. Techno-Commercial Bid) : Part–II (Price Bid) : Part–II (Price bid) shall be opened at a later date that will be intimated to vendors earlier.	15:00 hrs of 10.09.2021
10.	Transaction Fee	Payment of transaction fee through MSTC payment gateway/NEFT/RTGS in favour of MSTC LIMITED

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

Sanjiv Dayal
Regional Director
(Bihar)

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Barclays to invest more than $400 million to expand India operations, BFSI News, ET BFSI

August 26, 2021 root Personal Finance

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Barclays Plc will invest more than Rs 3,000 crore ($403.99 million) in its India unit to expand operations, the British lender said on Thursday.

With the investment, Barclays Bank PLC India’s total invested capital in Asia’s third-largest economy will increase to more than Rs 8,300 crore.

Barclays said the investment would help grow its corporate and investment banking, and private clients businesses in the country.

“As economic activity gathers momentum, there is increased demand for capital from clients,” said Jaideep Khanna, head of Barclays, Asia Pacific and Country CEO, India.

Barclays Bank PLC had inaugurated its International Banking Unit branch at GIFT City in Gujarat in February.

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Leave a comment Barclays, barclays bank, barclays india, barclays investment, Barclays Plc, jaideep khanna

MoS Anupriya Patel, BFSI News, ET BFSI

August 26, 2021 root Personal Finance

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NEW DELHI: Union Minister of State for Commerce and Industry Anupriya Patel on Monday said that India is expected to export USD 46 billion to ASEAN in the financial year 2022.

Patel on Monday inaugurated the “India-ASEAN Engineering Partnership Summit” organised by the Engineering Exports Promotion Council (EEPC) with support from the Ministry of External Affairs and the Department of Commerce.

While addressing the inaugural session, Patel said: “As one of the largest destinations for Indian exports, ASEAN will be an important region for India with an export target of USD 46 billion in meeting the global export target of USD 400 billion in the financial year 2021-22.”

“Both India and ASEAN have large share of skilled population, robust service and manufacturing sectors and there are many complementary sectors and products available for greater cooperation. With a combined economy of approx. USD 5.8 trillion, there is significant potential for enhancing trade and investment partnership between India and ASEAN.”

Patel further said that Prime Minister Narendra Modi has set a target of USD 400 billion of merchandise exports for fiscal 2021-22 and also envisioned a roadmap to achieve this milestone.

“As a part of the Atmanirbhar Bharat Abhiyaan, the Central government has recently approved the Production-Linked Incentive (PLI) Scheme worth USD 26 billion covering 13 sectors, including electronics, pharmaceuticals, solar modules, speciality steel, automobiles, and medical devices for attracting investment and enhancing India’s manufacturing capabilities,” she said.

Supported by the Ministry of Commerce and Industry and Ministry of External Affairs, the four-day India-ASEAN Engineering Partnership Summit is expected to see the participation of over 300 delegates from the Indian industry. A sizable number of delegates from ASEAN countries will also join the summit. The summit will also cover B2B meetings and interactions. The thematic sessions will cover a range of topics including country sessions, and emerging areas of cooperation like Industry 4.0, integration of MSME in the regional value chain. The Government of Tamil Nadu joined the event as “Partner State” while the Government of Haryana as the “Focus State”.

This year is special for both partners as it marks the 25thanniversary of the India-ASEAN dialogue partnership and 10 years of the Strategic Partnership.

An E-Book on India-ASEAN trade and investment emphasizing the engineering and MSME sector was also launched during the inaugural session. The book covers several important aspects of enhancing bilateral trade and investment and also provides exhaustive information on India and ten ASEAN nations.

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Leave a comment Anupriya Patel, ASEAN, exports, Ministry of Commerce and Industry, ministry of external affairs, MSME, Narendra Modi

Only card networks and issuing banks may get to tokenise data, BFSI News, ET BFSI

August 26, 2021 root Banking & Finance

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Only card-issuing banks and card scheme operators, such as the National Payments Corporation of India, Visa and Mastercard, would be allowed to tokenise customer card data, Reserve Bank of India (RBI) is said to have indicated to the industry in a meeting Monday.

The central bank has clarified to the industry that none of the intermediaries, even licensed payment gateways and acquiring banks, would be allowed to store card data and offer tokenised files to merchants under the upcoming payment aggregator and payment gateway regulatory regime kicking in from 2022, two sources aware of the matter told ET.

Under the new norms, every online merchant processing transactions for customers will only have access to a ‘tokenised’ key linked with the consumer’s cards instead of the entire card file. The meeting saw participation of members from industry pockets such as payments, banking and web-commerce, the sources added.

“The central bank has reiterated its stance that it only sees tokenisation as an alternative solution for merchants aiming to offer a one-click checkout facility to customers,” said a source present at the meeting.

“It has also been made clear that only card networks and issuing banks will be allowed to tokenise files corresponding to customer card details. Payment aggregators and merchants will have to devise systems to avail this tokenised link from their respective banks or networks,” the person added.

Tokenisation is an encryption technology that enables card operators to mask actual details of a debit or credit card by substituting with a secure, unique digital token linked to a customer device.

Only this proxy token can be stored by merchants and aggregators to process payments to offer one-click checkouts. Those merchants without access to tokenised links will have to ask customers to fill in the entire details of their card including the 16-digit number every time they make a payment.

The central bank’s insistence on strict card storage norms is on the back of several recent high-profile cyber attacks such as those on JusPay, Mobikwik, Big Basket, Air India and Upstox.

RBI is said to be firm on its stand on customer security where it doesn’t want entities that are not under its direct supervision to be storing card details of customers on servers.

While payment aggregators will be allowed to store card details for processing of redressals and chargebacks, the new rules will stipulate a fixed time under which this data will have to be deleted.

ET reported last week that industry forums, including the Payments Council of India (PCI), have suggested alternative solutions beyond encryption through tokenisation – such as secure reference on files – to minimise customer inconvenience to the central bank.

RBI didn’t respond to ET’s mailed queries.

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Government gives hefty pension boost to bank employees, BFSI News, ET BFSI

August 26, 2021 root Banking & Finance

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MUMBAI: The government has announced changes to the pension scheme of public sector banks. For family members of employees, the ceiling on family pension has been lifted and, for current employees, the banks’ contribution to the scheme has been increased by 4 percentage points to 14% from earlier 10%.

“Earlier, the scheme had slabs of 15%, 20% and 30% of the pay that a pensioner drew at that point of time. It was capped subject to a maximum of Rs 9,284. That was a very paltry sum and finance minister Nirmala Sitharaman was concerned and wanted that to be revised so that family members of bank employees get a decent amount to survive and sustain,” said Debashish Panda, secretary in the department of financial services, at a press conference held by Sitharaman.

The second change is that the employer contribution to the New Pension Scheme (NPS) corpus has been enhanced to 14% of the pay from 10% earlier.

The changes are in continuation of the 11th bipartite settlement signed by banks with unions on wage revision last year. In addition to the wage revision, there was a proposal for enhancement in family pension and also the employer’s contribution under the NPS.

A statement issued by the government said that thousands of families of public sector banks will be benefited by the enhanced family pension scheme, while increase in employer contribution will provide increased financial security to the bank employees under the NPS.

Those employees who have been with banks before 2004 are eligible to a defined benefit pension scheme where the monthly payout is determined by a formula based on their last drawn wage. These employees will benefit from the increase in pension limits.

Employees who have joined after 2004 are part of the NPS where the employees and the banks contribute toward a retirement corpus. After retirement, the corpus must be used to buy an annuity from an insurance company that will provide monthly income. The extent of monthly income depends upon the size of the corpus and cost of annuity.

With the fall in interest rate, the returns through annuity schemes have been shrinking, resulting in a call for higher contribution. The insurance regulator is also working with the industry to develop an inflation-linked annuity scheme.

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Leave a comment Debashish Panda, employer, Nirmala Sitharaman, NPS, paltry

Reserve Bank of India – Press Releases

August 26, 2021 root Press Releases

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(Amount in ₹ crore, Rate in Per cent)

	Volume (One Leg)	Weighted Average Rate	Range
A. Overnight Segment (I+II+III+IV)	4,40,062.39	3.14	0.01-5.30
I. Call Money	7,091.91	3.19	1.95-3.40
II. Triparty Repo	3,43,574.30	3.13	2.92-3.15
III. Market Repo	89,391.18	3.15	0.01-3.29
IV. Repo in Corporate Bond	5.00	5.30	5.30-5.30
B. Term Segment
I. Notice Money**	719.45	3.28	2.00-3.50
II. Term Money^@@	416.75	–	3.28-3.80
III. Triparty Repo	0.00	–	–
IV. Market Repo	496.15	3.40	3.40-3.40
V. Repo in Corporate Bond	30.00	5.35	5.35-5.35

	Auction Date	Tenor (Days)	Maturity Date	Amount	Current Rate / Cut off Rate
C. Liquidity Adjustment Facility (LAF) & Marginal Standing Facility (MSF)
I. Today’s Operations
1. Fixed Rate
(i) Repo
(ii) Reverse Repo	Wed, 25/08/2021	1	Thu, 26/08/2021	5,72,484.00	3.35
(iii) Special Reverse Repo^~
(iv) Special Reverse Repo^ψ
2. Variable Rate^&
(I) Main Operation
(a) Reverse Repo
(II) Fine Tuning Operations
(a) Repo
(b) Reverse Repo
3. MSF	Wed, 25/08/2021	1	Thu, 26/08/2021	0.00	4.25
4. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs)^£
5. Net liquidity injected from today’s operations [injection (+)/absorption (-)]*				-5,72,484.00
II. Outstanding Operations
1. Fixed Rate
(i) Repo
(ii) Reverse Repo
(iii) Special Reverse Repo^~	Fri, 13/08/2021	14	Fri, 27/08/2021	4,481.00	3.75
(iv) Special Reverse Repo^ψ	Fri, 13/08/2021	14	Fri, 27/08/2021	352.00	3.75
2. Variable Rate^&
(I) Main Operation
(a) Reverse Repo	Fri, 13/08/2021	14	Fri, 27/08/2021	2,50,029.00	3.43
(II) Fine Tuning Operations
(a) Repo
(b) Reverse Repo
3. MSF
4. Long-Term Repo Operations^#	Mon, 17/02/2020	1095	Thu, 16/02/2023	499.00	5.15
	Mon, 02/03/2020	1094	Wed, 01/03/2023	253.00	5.15
	Mon, 09/03/2020	1093	Tue, 07/03/2023	484.00	5.15
	Wed, 18/03/2020	1094	Fri, 17/03/2023	294.00	5.15
5. Targeted Long Term Repo Operations^	Fri, 27/03/2020	1092	Fri, 24/03/2023	12,236.00	4.40
	Fri, 03/04/2020	1095	Mon, 03/04/2023	16,925.00	4.40
	Thu, 09/04/2020	1093	Fri, 07/04/2023	18,042.00	4.40
	Fri, 17/04/2020	1091	Thu, 13/04/2023	20,399.00	4.40
6. Targeted Long Term Repo Operations 2.0^	Thu, 23/04/2020	1093	Fri, 21/04/2023	7,950.00	4.40
7. On Tap Targeted Long Term Repo Operations^€	Mon, 22/03/2021	1095	Thu, 21/03/2024	5,000.00	4.00
	Mon, 14/06/2021	1096	Fri, 14/06/2024	320.00	4.00
8. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs)^£	Mon, 17/05/2021	1095	Thu, 16/05/2024	400.00	4.00
	Tue, 15/06/2021	1095	Fri, 14/06/2024	490.00	4.00
	Thu, 15/07/2021	1093	Fri, 12/07/2024	750.00	4.00
	Tue, 17/08/2021	1095	Fri, 16/08/2024	250.00	4.00
D. Standing Liquidity Facility (SLF) Availed from RBI^$				23,295.80
E. Net liquidity injected from outstanding operations [injection (+)/absorption (-)]*				-1,47,274.20
F. Net liquidity injected (outstanding including today’s operations) [injection (+)/absorption (-)]*				-7,19,758.20
G. Cash Reserves Position of Scheduled Commercial Banks
(i) Cash balances with RBI as on		25/08/2021		6,06,510.35
(ii) Average daily cash reserve requirement for the fortnight ending		27/08/2021		6,27,870.00
H. Government of India Surplus Cash Balance Reckoned for Auction as on^¥		25/08/2021		0.00
I. Net durable liquidity [surplus (+)/deficit (-)] as on		30/07/2021		10,95,060.00
^@ Based on Reserve Bank of India (RBI) / Clearing Corporation of India Limited (CCIL).
– Not Applicable / No Transaction.
** Relates to uncollateralized transactions of 2 to 14 days tenor.
^@@ Relates to uncollateralized transactions of 15 days to one year tenor.
^$ Includes refinance facilities extended by RBI.
^& As per the Press Release No. 2019-2020/1900 dated February 06, 2020.
* Net liquidity is calculated as Repo+MSF+SLF-Reverse Repo.
^# As per the Press Release No. 2020-2021/287 dated September 04, 2020.
^ As per the Press Release No. 2020-2021/605 dated November 06, 2020.
^€ As per the Press Release No. 2020-2021/520 dated October 21, 2020, Press Release No. 2020-2021/763 dated December 11, 2020 and Press Release No. 2020-2021/1057 dated February 05, 2021.
^¥ As per the Press Release No. 2014-2015/1971 dated March 19, 2015.
^£ As per the Press Release No. 2021-2022/181 dated May 07, 2021.
^~ As per the Press Release No. 2021-2022/177 dated May 07, 2021.
^ψ As per the Press Release No. 2021-2022/323 dated June 04, 2021.
Ajit Prasad Director
Press Release: 2021-2022/744

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Reserve Bank of India – Tenders

August 26, 2021 root Tenders

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E-Tenders are invited from eligible contractors / firms for the captioned work estimated to cost ₹17.44 lakh through the MSTC portal. The close bid date is 10.09.2021 at 1400 hrs.

NIT Number and Timeline is given below:

S. No.	Activity	Tentative date
1.	Date of Press-Web Advertisements	26.08.2021
2.	e-Tender no.	RBI/Patna/Estate/82/21-22/ET/111
3.	Mode of Tender	e- Procurement System (Online Part I – Techno-Commercial Bid and Part II – Price Bid through www.Mstcecommerce.com/eprochome/rbi)
4.	Date of NIT (along with complete tender document) available to parties to download	12:00 Noon of 26.08.2021
5.	Date of Pre-bid meeting at Estate Department, RBI Main Building, Patna (offline)	13:00 PM of 02.09.2021
6.	Earnest Money Deposit	₹ 34,888/-
7.	Start Bid date- Date of Starting of e-Tender for submission of online Techno-Commercial Bid and Price Bid at www.mstcecommerce.com/eprochome/rbi-	12:00 Noon of 26.08.2021
8.	Close Bid date- Date of closing of online e–tender for submission of Techno-Commercial Bid & Price Bid	1400 hrs of 10.09.2021
9.	Date & time of opening of Part–I (i.e. Techno-Commercial Bid) : Part–II (Price Bid) : Part–II (Price bid) shall be opened at a later date that will be intimated to vendors earlier.	15:30 hrs of 10.09.2021
10.	Transaction Fee	Payment of transaction fee through MSTC payment gateway/NEFT/RTGS in favour of MSTC LIMITED

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

Sanjiv Dayal
Regional Director
(Bihar)

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Chief Economic Advisor K V Subramanian, BFSI News, ET BFSI

August 26, 2021 root Banking & Finance

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Exhorting the Indian BFSI sector to make a mark globally, Chief Economic Advisor K V Subramanian has said India should have at least six banks in the global top 100.

“It is a matter of mindset now, the mindset has to be one where we are not happy with just being lions at home and lambs abroad, we have to be lions globally as well, Krishnamurthy Subramanian said, delivering the keynote address at ETBFSI Summit.

Stating that India has to become a big player in the BFSI space in the next decade, he said the sector must seek inspiration from IT, pharma & sports.

BFSI sector needs to have that hunger which will also help the Indian economy, Subramanian said, adding, “Five Chinese banks are in the top 100 global, Swedish banks, American banks. There is no reason why our banks cannot be in the top 20 either.”

Ruing that India has only one bank in the global top 100 — SBI at 55th position, he said for the size of the economy, India should have at least six banks in the global top 100, some in the top 10 or the top 20.

Drawing an analogy with cricket, he said the Indian BFSI sector appears like the Indian cricket team of the 1990s which could boast a lot of victories at home but had nothing noteworthy outside the shores, globally.

The sector has to aspire to become like a cricket team under Sourav Ganguly, Mahindra Singh Dhoni or Virat Kohli where they’re achieving global recognition.

“The BFSI sector has to start mattering globally, their aspirations need to be scaled up. Aspiration has to be set, given the aspiration that India has set for the economy itself.”

Fixing problems

The CEA said India’s BFSI sector has a quality and quantity problem which needs to be fixed, especially when the Prime Minister has outlined Rs 100 lakh crore infrastructure building apart from the National Infrastructure Pipeline.

“Infrastructure will actually require the BFSI sector to be able to participate and thereby learn how to do high-quality lending without suffering the problem of non-performing assets, crony lending, evergreening of loans, gold plating of loans, all the kind of problems that we have witnessed in the Indian financial sector over the last decade,” he said.

He said the country has large corporates and large borrowers who end up borrowing but not repaying, and yet many times banks actually end up giving credit to the defaulters as well.

Observing that on the credit side India is far behind, he said, “The ratio of credit to private credit to GDP at about 58% is one-third of the global average of, close to 170 per cent.”

He said the BFSI sector should avoid the phenomenon of accelerating credit, and braking when bad loans mount, if credit expansion has to happen in a sustained manner to push economic growth.

“It is very important for credit expansion to happen at a consistent pace without the usual accelerator brake phenomenon that has been the characteristic of the Indian financial sector ever since liberalisation where, when the economy starts doing well, credit expands significantly oftentimes in the process. The credit underwriting norms are relaxed, and as a result, the seeds for a crisis are sown during good times,” he said.

Leveraging tech, data analytics

Underscoring the importance of technology and data analytics, Subramanian said banks and financial institutions which were very efficiently leveraging data and analytics had much lower bad loans, and their balance sheet expansion did not come under pressure. “Those banks were also able to grow consistently, and thereby contribute to the economy. That is the objective that the Indian BFSI sector must have,” he said.

The CEA said a lot of the private sector banks have used data and analytics for retail lending, but the usage of the same is very low for large ticket lending and SME lending. “The Indian BFSI sector should hire far more engineer MBAs to bring this technology driven in banking,” he said.

“In BFSI sector leaders need to be those that are technologically very well drained not only to be able to come up with models for retail lending, but also models for large-ticket corporate lending,” Subramanian said.

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Leave a comment banking, banking news, bfsi, BFSI Tech Tales, data analytics, gdp, Indian financial sector, K V Subramanian, policy

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