Month: August 2021

Govt notifies changes to FEMA

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The Finance Ministry has made changes to the Foreign Exchange Management Act (FEMA) regulations to ensure that private banks having joint venture or subsidiary in the insurance sector do not breach the 74 per cent cap on FDI.

Investment limit

Earlier this year, the government enacted a legislation to allow foreign investment limit to 74 from 49 per cent, along with foreign ownership and control with safeguards. Similarly, private banks have foreign investment limit of 74 per cent, but with a condition that no shareholder, irrespective of the shareholding, will have more than 15 per cent of the total voting right.

A notification issued by the Economic Affairs Department of the Finance Ministry said that the application for FDI in private banks having joint venture or subsidiary in insurance sector may be addressed to the RBI for consideration, in consultation with the Insurance Regulatory and Development Authority of India (IRDAI). This needs to be done to ensure that foreign investment limit in insurance is not breached.

Conditions attached

The notification also provided for maintaining conditions attached with foreign investment in insurance sector. One such conditions was that for a bank to act as an insurance intermediary, the foreign equity investment caps applicable in that sector would continue to apply. The said entity will also have to see that revenue from the primary business must remain above 50 per cent of their total revenues in any financial year.

Officials say there could be a situation where the private bank is controlled by Indian residents and its insurance business by a foreign company. As on date, many of the private sector banks have tie-ups with foreign entities for insurance business – ICICI Bank has a tie up with Prudential while PNB has partnered with Metlife.

The RBI guidelines do not permit banks to undertake insurance business with risk participation departmentally; they can do so only through a subsidiary or joint venture set up for the purpose.

Now, if a bank plans to set up such a subsidiary to undertake insurance business with risk participation, it will have to fulfil certain conditions – the net worth of the bank should not be less than ₹1,000 crore, Capital Adequacy Ratio should not be less than 10 per cent, NPA should not be more than 3 per cent, and should have been profitable for the last three consecutive years.

“It should also be ensured that risks involved in the insurance business do not get transferred to the bank, and that the banking business does not get contaminated by risks that may arise from the insurance business. There should be an ‘arm’s length’ relationship between the bank and the insurance outfit,” according to RBI norms.

Banks can also set up a subsidiary or JV for insurance broking or corporate agency. Here, the criteria would be different. These include net worth not less than ₹500 crore, Capital Adequacy Ratio of 10 per cent or more, NPA should not be more than 3 per cent, and the bank should have made a net profit for the last three continuous years.

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PM Kisan Samman Nidhi: These People Are Ineligible For Income Support Under The Scheme

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Personal Finance

oi-Roshni Agarwal

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The PM Kisan Samman Nidhi was brought about to supplement farmers’ income and an annual pay out under the scheme for farmers was Rs. 6000 in 3 equal installments. But there are people are wrongly taking advantage of the scheme and trying to capitalize on the amount even when they are not eligible.

PM Kisan Samman Nidhi: These People Are Ineligible For Income Support Under The

PM Kisan Samman Nidhi: These People Are Ineligible For Income Support Under The Scheme

So, thus after the latest 9th installment has been disbursed, in totality the amount paid out under the PM Kisan Scheme is Rs. 1.57 lakh crore. And as a complimentary benefit those farmers eligibles for a pay-out under the scheme can also avail loans using the KCC or Kisan Credit Card scheme.

Here thus we put in place all the people who shall ineligible to receive the grant under the PM-KISAN scheme:
a) All institutional landholders; and
b) Farmer families wherein one or more of its members belong to the following categories: –
1. Former and present holders of constitutional posts
2. Former and present ministers, State Ministers and former and present Members of Lok Sabha, Rajya Sabha, state Legislative Assemblies, State Legislative councils, former and present Mayors of Municipal corporations, former and present Chairpersons of District Panchayats.
3. All super annulated, retired pensioners whose monthly pension is Rs 10,000 or more, excluding multi-tasking staff, Class IV, Group D employees.
4. All persons who paid income tax in the last assessment year
5. All serving or retired officers and employees of Central and State Government Ministries, Offices, Departments and its field units Central or State PSEs and attached offices, autonomous institutions under Government as well as regular employees of the local bodies (Excluding Multi-Tasking staff, Class lV, Group D employees
6. Professionals like Doctors, Engineers’ Lawyers, Chartered Accountants, and Architects registered with Professional bodies and carrying out profession by undertaking practices.
So, as part of the scheme scrutiny shall be done and state government and UT administration will identify the farmer families that are eligible for support .

GoodReturns.in

Story first published: Saturday, August 21, 2021, 10:52 [IST]



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This Is What Maximum Banks’ Owe To Their Locker Customers In Case Of Damage or Loss To Their Locker Content

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Personal Finance

oi-Roshni Agarwal

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The apex banker recently announced guidelines of bank locker after Supreme Court bench of Justices including Mohan M Shatanagoudar and Vineet Saran asked the RBI to come up with uniform set of rules for all banks concerning locker management within six months.

This Is What Banks' Owe To Their Locker Customers In Case Of Loss

This Is What Maximum Banks’ Owe To Their Locker Customers In Case Of Damage or Loss To Their Locker Content

For banks the regulator has asked banks to keep a track of the bank lockers vacant and at the same provide an acknowledgement against any fresh bank locker application by the new customer. The new guidelines shall be put to effect from the new year, January 1, 2022. The set of guidelines requiring maintaining a proper list of bank lockers occupied or vacant will boost the transparency in their allotment.

What’s in store for bank locker customers- An highly important issue that may arouse chaos among bank locker holders:

The new rules state that banks liability shall be maximum up to 100 times of the annual rent in case of fire, theft, building collapse or fraud even if by a bank employee.”As banks cannot claim that they bear no liability towards their customers for loss of contents of the locker, in instances where the loss of contents of the locker are due incidents (like fire, theft/ burglary/ robbery, dacoity,) or attributable to fraud committed by its employee(s), the banks’ liability shall be for an amount equivalent to one hundred times the prevailing annual rent of the safe deposit locker,” it said.

Further the RBI said the bank will provide for a Board-approved policy that outlines the responsibility they owe in case of loss or damage to the locker contents owing to their negligence. “The bank shall not be liable for any damage and/or loss of contents of locker arising from natural calamities or Acts of God like earthquake, floods, lightning and thunderstorm or any act that is attributable to the sole fault or negligence of the customer,” it said.

Furthermore, for meeting out the bank’s 3 year charges and other charges for breaking open the locker under any circumstance, banks can ask for a term deposit. However the same cannot be enforced upon current bank locker customers or those who continue to maintain a satisfactory account.

GoodReturns.in

Story first published: Saturday, August 21, 2021, 10:31 [IST]



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MPC Minutes: ‘Not for extended accommodative stance’

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Covid-19 is beginning to resemble a neutron bomb and the ability of monetary policy to mitigate a human tragedy of this nature is very limited, cautioned Jayanth R Varma, the lone member of the monetary policy committee (MPC) to vote against the accommodative stance at its meeting earlier this month.

While Varma, Professor, Indian Institute of Management, Ahmedabad, was on the same page as the other five MPC members when it came to keeping the policy repo rate unchanged at 4 per cent, he disagreed with them on the resolution to continue with the accommodative stance.

He observed that Covid-19 is beginning to look more and more like tuberculosis which kills a large number of people every year without inflicting major damage to the economy.

“The possibility that Covid-19 will haunt us (though with lower mortality) for the next 3-5 years can no longer be ruled out.

“Keeping monetary policy highly accommodative for such a long horizon is very different from doing so for what was earlier expected to be a relatively short crisis,” he said.

The Professor, in his statement, felt that the monetary policy is much less effective than fiscal policy in providing targeted relief to the worst-affected segments of the economy.

Varma felt that easy money today could lead to high interest rates tomorrow.

Reserve Bank Governor Shaktikanta Das said continued policy support with a focus on revival and sustenance of growth was the most desirable and judicious policy option at the moment. “The need of the hour is twofold: first, continue the monetary policy support to the economy; and second, remain watchful of any durable inflationary pressures and sustained price momentum in key components so as to bring back the CPI inflation to 4 per cent over a period of time in a non-disruptive manner,” he said.

Varma noted that while there is some comfort that inflation is forecast to be below the upper end of the tolerance band (6 per cent), it is important to emphasise that the inflation target for the MPC is 4 per cent and not 6 per cent or even 5 per cent.

Emphasising that he is conscious of the fact that the MPC’s mandate is supposed to be restricted to the repo rate, the Professor said: “I have for some time now being arguing that if the reverse repo rate does not fall within the remit of the MPC, then the announcement of this rate should be in the Governor’s statement and not in the MPC’s statement…”

 

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IPO bandwagon getting bigger and bigger; Aug sees 23 filings so far, BFSI News, ET BFSI

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Mumbai, The raging IPO frenzy has set a record of sorts this month with the first 20 days of August witnessing as many as 23 filings seeking regulatory permission to launch primary share sales worth around Rs 40,000 crore while eight companies already raising over Rs 18,200 crore in the month. Several of these companies are from the startup space such as fintech, e-commerce, online travel and SaaS (software-as-a- service) segments.

So far this year, over 40 new listings have raked in around Rs 70,000 crore. The depth of investor interest, especially from the retail, is very visible with many IPOs being oversubscribed over 100 times and many brokerages say total number of issues may well top the 100-mark this year.

The IPO market is so hot that it has caught the attention of the monetary authority which in its latest bulletin says “year 2021 could well turn out to be the year of IPOs for the country”.

Some of the major filings among the total 23 in the month include the Delhi-based PB Fintech, the promoters of insurance distributor Policybazaar, that is seeking Sebi nod for a Rs 6,000-crore issue; and the Pune-based Emcure Pharma that is seeking to raise Rs 5,000 crore.

Besides, Adani Wilmar, the FMCG arm of the Adani Group, is seeking to mop up Rs 4,500 crore, and the Mumbai-based online fashion and apparel brand Nykaa, whose holding firm FSN E-Commerce, has filed for an Rs 4,000 crore issue.

The list also includes the Gurugram-headquartered Le Travenues Technology, the promoters of online travel booking firm Ixigo, which is looking to collect Rs 1,800 crore from an issue; and Rategain Travel Technologies, the first SaaS (software-as-a-service) company to go public in the country with a Rs 1,500 crore issue; and the Noida-based Rategain is the country’s largest SaaS firm in the hospitality and travel space.

Another main issue is from the Kolkata-based Tarsons Products that manufactures a range of quality lab-ware products. Tarsons has a diversified product portfolio with over 1,700 stock-keeping units across 300 products and operate five manufacturing facilities in Bengal.

Other mid-sized IPOs include the Kochi-based automobile retailer Popular Vehicles & Services which last week filed for a Rs 700-crore issue; beauty care & wellness firm VLCC; Sapphire Foods which operates all the Yum Brands outlets in the country like KFC, Pizza Hut and Taco Bell; Go Fashion India (Go Colors); Fusion Microfinance; and the payment solutions provider AGS Transact Technologies which filed a Rs 800-crore issue on Friday.

And the biggest day for the street was August 4, when four companies–Krsnaa Diagnostics (Rs 1,213 crore), Windlas Biotech (Rs 401 crore in fresh issue and the rest in OFS), Devyani International, which is the largest franchisee of Pizza Hut, KFC and Costa Coffee in the country (Rs 1,838-crore), and Exxaro Tiles that manufactures vitrified tiles (Rs 161-crore) — filed for IPOs.

The companies are buoyed by bumper listings of Clean Science & Technology, GR Infraprojects, Zomato (which was the biggest issue so far this year with Rs 9,300 crore issue) and Tatva Chintan Pharma Chem.

The AGS issue is purely an offer-for-sale of equity shares by promoter Ravi B Goyal and other selling shareholders. Goyal will sell shares worth up to Rs 792 crore through the OFS and other selling shareholders will offload shares worth Rs 8 crore.

Meanwhile, the first 15 days of August saw eight companies successfully completing IPOs and collecting over Rs 18,200 crore in proceeds.

Some of the marquee names that completed the share sale process are the Chennai-based specialty chemicals manufacturer Chemplast Sanmar which raised Rs 3,850 crore; contract development and manufacturing organization Windlas Biotech (Rs 401 crore); home financier Aptus Value Housing (Rs 2,780 crore), the online auto retailing platform Cartrade Tech (Rs 3,000 crore), and drug firm Krsnaa Diagnostics (Rs 1,213 crore), also completed share sale.

Despite an over 20.3 times oversubscription to the Rs 3,000-crore Cartrade issue, the stock made a tepid debut on the Street on Friday and tumbled nearly 8 per cent at close even it opened lower at Rs 1,600, as against the issue price of Rs 1,618.

Besides, Nuvoco Vista Corporation, which has completed the IPO and is set for listing next Monday, is part of the Nirma Group and is among the largest cement and concrete manufacturers, offering a range of products like cement, ready-mix concrete, building materials like adhesives, wall putty, dry plaster, cover blocks, among other.



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Coins worth Rs 11 crore go missing from SBI branch, BFSI News, ET BFSI

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JAIPUR: State Bank of India (SBI) officials of Mehandipur Bajalji town in Karauli district were shocked after learning about embezzlement of coins worth Rs 11 crore.

Bank authorities have lodged a case at Todabhim police station and have also asked police to probe the role of bank officials who worked in this branch five years ago.

According to police, complianant Hargovind Meena, manager of Mehandipur Bajalji branch, in an FIR lodged on August 16 said coins worth Rs 13,62,11,275 were deposited according to bank records, but only Rs 1.39 crore were found.

“The embezzlement came to light when the bank management awarded a tender to a private firm for counting the coins on August 10. After this, the manager of the bank intimated higher authorities and later it was decided to lodge an FIR. We have registered an FIR and have initiated an investigation,” said a police officer.

It was also been mentioned in the FIR that about 15 armed miscreants threatened one of the employee of the firm not to count the coins on August 11. “The manager has also demanded an inquiry into the employees working in the bank in the last 5 years,” the officer added.

In the complaint, it was also alleged that the former manager of the bank and other employees had connived in this embezzlement. “We have registered an FIR and an assistant sub-inspector rank officer is been assigned the task to investigate the matter. We will visit the bank and if needed will call upon the former employees,” the officer added.

Police said there are two possibilities in this embezzlement. “Either the coins sent to the firm for counting were less or there might have been the involvement of the firm which was assigned to count the coins. We will probe into every angle of this,” said an officer.



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Jitendra Singh, BFSI News, ET BFSI

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NEW DELHI: Supported by competitive and cutting-edge technology, the Micro, Small, and Medium Enterprises (MSME) will be the foundation for bigger industries in India, Union Minister Jitendra Singh said on Thursday.

“New business enterprises are heavily dependent on scientific technology and for the industry and also the big and small enterprises to realise their optimum utilisation in contemporary India, not only scientific applications but also scientific temper and scientific attitude will be essential for success,” he said in his keynote address at the 7th India International MSME Expo Summits 2021 here, according to an official statement.

He also asked the scientific community to share successful R&D outcomes with the industries and corporate houses.

Noting that MSME Ministry has set a target to enhance its contribution to GDP up to 50 per cent by 2025 as India becomes a $5 trillion economy, he said: “With around 36.1 million units, MSMEs contribute around 6.11 per cent of the manufacturing GDP and 24.63 per cent of the GDP from service activities. Moreover, it is the second largest employment generating sector after agriculture as it provides employment to around 120 million persons in India.”

With low investment requirements, operational flexibility, and the capacity to develop appropriate indigenous technology, small and medium enterprises have the power to propel India to new heights, he said.

Referring to the huge unexplored business opportunities in bamboo sector, the Minister said that Prime Minister Narendra Modi‘s decision to exempt home-grown bamboo from the purview of the Indian Forest Act has helped in bringing ease of doing business in the sector for the young entrepreneurs.

He said that the increase in import duty on bamboo sticks/agarbatti from 10 per cent to 25 per cent, has given a huge boost to domestic Agarbatti manufacturing as nearly 5-6,000 crore Agarbattis were imported every year from countries like South Korea, Vietnam, and China. “But there has been no import of raw batti since September 2019 and local bamboo produce is being used for this,” he added.

The Minister said many agri start-ups, through suitable use of science and technology, are not only providing lucrative livelihood for themselves but also for their peers. On the call given by Modi for doubling the farmer’s income by 2022, he said that the focus of agricultural and allied sectors, and researchers “should be on productivity rather than production”.



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Indonesia revamps banking rules to spur digital transformations, BFSI News, ET BFSI

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JAKARTA, – Indonesia has revised banking regulations to push lenders to speed their digital transformations, the financial regulator said on Friday, as digital banking booms in Southeast Asia’s largest economy.

The regulations unveiled on Thursday will take effect at the end of October and set out requirements for digital banks, ranging from data protection for customers to employing executives versed in technology.

However, there were no additional rules for digital banks to follow as compared with regular banks, a step the regulator said was intended to speed up digital adoption.

“The pandemic has made digital transformation in the banking sector into an inevitability,” Heru Kristiyana, the top banking supervisor of Indonesia’s Financial Services Authority (OJK), said in a statement.

“The OJK does not dichotomise banks with existing digital services, incumbent banks that have transformed into digital banks, and new, full digital banks. After all, a bank is a bank.”

In a document accompanying the new rules that provided answers to frequently asked questions, the regulator commented on acquisitions of existing banks by tech firms in order to transform them into digital banks.

Such acquisitions will support the regulator’s efforts to drive consolidation in the banking industry, it added.

Investors can also set up a new digital bank from scratch as long as they meet the rules, it said, including a new minimum capital requirement of 10 trillion rupiah ($692.76 million), or more than three times the old figure.

Competition is heating up among Indonesia’s digital banks as stay-at-home orders against the coronavirus pandemic drive more customers to the internet.

Transaction value using banks’ digital channels jumped 53% to 3,411 trillion rupiah ($236 billion) in the year to July, central bank data shows.

The biggest lenders, Bank Central Asia and Bank Rakyat Indonesia, are gearing up to launch digital arms this year, while tech firm Gojek’s Bank Jago and Singapore-based Sea Group‘s SeaBank Indonesia have already launched. ($1=14,435.0000 rupiah) (Reporting by Gayatri Suroyo; Additional reporting by Fanny Potkin; Editing by Clarence Fernandez)



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Report, BFSI News, ET BFSI

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SoftBank Group Corp sold 11.4 million shares of food delivery company DoorDash Inc, marketed via Goldman Sachs Group Inc, a source familiar with the matter said on Thursday.

They were priced at around $182.95 each, a Bloomberg report said, valuing the sale at around $2.2 billion. Shares of DoorDash were last down around 5.3%.

The share sale comes a week after DoorDash, in its quarterly earnings report, predicted a seasonal decline in order rates and new customer addition in the current quarter.

The company had reported a bigger loss in the second quarter than expected as it spent heavily to expand internationally and into a crowded market for grocery during the pandemic.

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Bank of Maharashtra waives loan processing fees under special offer, BFSI News, ET BFSI

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State-owned Bank of Maharashtra (BoM) has announced a slew of offers, including concessional interest rates and a 100 per cent waiver on processing fees on retail loans. The bank under ‘Retail Bonanza-Monsoon Dhamaka’ waived the processing fee for its gold, housing and car loan and the offer is valid till September 30, 2021, BoM said in a statement on Friday.

The bank offers housing and car loans with interest rates starting from 6.90 per cent and 7.30 per cent, respectively.

The retail products are backed by several lucrative features like two free EMIs on regular repayment in the home loan; loan facility up to 90 per cent in the car and housing loans; and no pre-payment/pre-closure/part payment charges etc., it said.

Commenting on the special offer, BoM executive director Hemant Tamta said, “We intend to gift our customers an attractive proposition for availing gold, housing and car loans, who will be benefited from lower rates and waiver of processing fee offer”.

The Pune-based lender has also revamped its gold loan scheme, offering loans up to Rs 20 lakh at a 7.10 per cent interest rate, with zero processing fee up to Rs 1 lakh.

The bank has ‘Gold Loan Point‘, a dedicated counter in its select branches to facilitate gold loans within 15 minutes, it said.

Last month, the country’s largest lender State Bank of India (SBI) had announced waiving processing fees on home loans till August-end.



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