The Reserve Bank of India has imposed a monetary penalty to ₹11 lakh on The Jammu & Kashmir State Co-operative Bank, Srinagar.
The penalty, imposed by an order on September 23, is for contravention of section 23 read with section 56 of the Banking Regulation Act, 1949.
“This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949,” the RBI said on Monday.
The statutory inspection was by Nabard on its financial position as on March 31, 2019 and the Inspection Report revealed that the bank had opened branches without obtaining the prior permission of the RBI.
Based on the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for violation of the said directions, the RBI said.
“After considering the bank’s reply, RBI came to the conclusion that the aforesaid charge of contravention of section 23 read with section 56 of the Banking Regulation Act, 1949 was substantiated and warranted imposition of monetary penalty,” it further said.
Nifty on Monday opened positive, but failed to surpass the previous day’s high of 17,947 and witnessed profit-booking decline in the initial half towards the 17,800 level. However, it saw some recovery from the lows but remained consolidative in the second half and closed on a flat note.
The index formed a bearish candle on the daily scale with a longer lower shadow, indicating that declines were bought into. Nifty50 has continued to form higher lows in the last three sessions. Now, it has to hold above the 17,800 level for a bounce towards the 18,000 level, whereas support is placed at 17,777 and 17,650 levels.
India VIX moved up 6.69 per cent from 16.92 to 18.05 level. A spurt in India VIX is causing volatile swings and now it has to cool down below 15-14 zone to continue the smooth ride of the market.
On the Options front, maximum Put Open Interest stood at the 17,000 level followed by 17,800, while maximum Call OI was seen at 18,000 level followed by 18,500. There was Call writing at 18,000 and then 17,900 levels while Put writing was seen at 17,000 and then 17,850 levels. Options data suggested a trading range between 17,600 and 18,000 levels.
Bank Nifty opened positive and touched a new record high of 38,355 in the initial tick. It moved in a consolidative manner thereafter and closed with a gain of around 340 points. Banking stocks outperformed the broader market and gained strength. The index formed a bullish candle on the daily scale and continued to form higher lows for the fourth straight session. Now it has to continue to hold above 38,100 level to witness a rise towards 38,800 level, while on the downside, major support was seen at 37,850 and then 37,500 levels.
Nifty futures closed flat to positive with the marginal gain of 0.06 per cent at 17,865 level. Among specific stocks, the trade setup looked bullish in Maruti, Godrej Properties, Tata Motors, IRCTC, Motherson Sumi, M&M, Amara Raja Battery, Bharat Forge, MCX, Tata Chemical, MRF, TVS Motor, Bajaj Auto, Hero Motocorp and Reliance but weak in Mindtree, Mphasis, Apollo Hospital, Divi’s Labs, Wipro, Metropolis, Dabur, Shriram Transport Finance Company, Lalpath Labs, VEDL, ICICI Pru, JSW Steel and MGL.
NEW DELHI: In the cryptocurrency market, if you go beyond the top 100 or 500 tokens, the volatility spikes to mind-numbing levels. In those dark alleys, if your pick is right, you can multiply your wealth up to 10-fold in a day, or if it is wrong, can lose everything in the same period.
Monday has been no different. The top gainers’ list available on CoinMarketCap shows nine tokens more than doubled their value in the last 24 hours, with one jumping as much as 500 per cent.
ForeverFomo, Rapidz, Gaj Finance, GravitX, WAIV Care, Axion, Pastel, Big League and Power Tool were those nine names as of 16:45 hours (IST). Some of these were priced as ridiculously low as one-thousandth of a dollar.
On the other hand, the list of losers showed one token that is down nearly 97 per cent in the last 24 hours. This list also included coins that gained over 800 per cent the day before. This reeks of a classic pump-and-dump scheme.
The top loser of the day, AquaGoat.Finance, priced at $0.000000000208, fell 96.65 per cent in the last 24 hours. GoldFinX, which surged 800 per cent on Sunday, is down over 80 per cent.
Understandably, the volume of trade remains low usually for these names, but can spike whenever they top the gainers’ or losers’ list. Even then, it rarely surpasses a few lakh dollars.
Major cryptocurrencies, which seem to operate in an entirely different world and have gained some legitimacy, were largely in the green. Solana was one of the biggest gainers, climbing 7 per cent.
Data shows the global crypto market-cap on Monday stood at $1.95 trillion, a 2.69 per cent increase over the previous day. The total crypto market volume over the last 24 hours stood at $97.68 billion, marking a 11.53 per cent drop. The volume of all stablecoins is now $78.36 billion, which is 80.22 per cent of the total crypto market’s 24-hour volume.
NEW DELHI: In the cryptocurrency market, if you go beyond the top 100 or 500 tokens, the volatility spikes to mind-numbing levels. In those dark alleys, if your pick is right, you can multiply your wealth up to 10-fold in a day, or if it is wrong, can lose everything in the same period.
Monday has been no different. The top gainers’ list available on CoinMarketCap shows nine tokens more than doubled their value in the last 24 hours, with one jumping as much as 500 per cent.
ForeverFomo, Rapidz, Gaj Finance, GravitX, WAIV Care, Axion, Pastel, Big League and Power Tool were those nine names as of 16:45 hours (IST). Some of these were priced as ridiculously low as one-thousandth of a dollar.
On the other hand, the list of losers showed one token that is down nearly 97 per cent in the last 24 hours. This list also included coins that gained over 800 per cent the day before. This reeks of a classic pump-and-dump scheme.
The top loser of the day, AquaGoat.Finance, priced at $0.000000000208, fell 96.65 per cent in the last 24 hours. GoldFinX, which surged 800 per cent on Sunday, is down over 80 per cent.
Understandably, the volume of trade remains low usually for these names, but can spike whenever they top the gainers’ or losers’ list. Even then, it rarely surpasses a few lakh dollars.
Major cryptocurrencies, which seem to operate in an entirely different world and have gained some legitimacy, were largely in the green. Solana was one of the biggest gainers, climbing 7 per cent.
Data shows the global crypto market-cap on Monday stood at $1.95 trillion, a 2.69 per cent increase over the previous day. The total crypto market volume over the last 24 hours stood at $97.68 billion, marking a 11.53 per cent drop. The volume of all stablecoins is now $78.36 billion, which is 80.22 per cent of the total crypto market’s 24-hour volume.
Online financial services sector fraud attempts dipped 15 per cent in the sector quarter as fraudsters in India are re-focusing their efforts from financial services to the travel and logistics industries according to a study by credit bureau Transunion Cibil.
Though the rate of suspected online financial services fraud attempts have still risen globally by 18.8% globally during April-June quarter over the same period a year ago, it declined in India by 15.35%, indicating stronger fraud control measures being adopted by the financial services industry, a release by the credit bureau said.
The rate of suspected digital fraud attempts on an aggregate rose 16.5% globally when comparing Q2 2021 to Q2 2020. But in India the percentage of digital fraud attempts decreased by 49.20% during the same time period.
The study notes that gaming and travel and leisure were the two most impacted industries globally for the suspected digital fraud attempt rate, rising 393.0% and 155.9% respectively in the last year. For transactions originating in India this rate rose 53.97% for gaming and 269.72%% for travel and leisure, the release said indicating a shift in industry[focus by fraudsters.
“It is quite common for fraudsters to shift their focus every few months from one industry to another,” said Shai Cohen, senior vice president of Global Fraud Solutions at TransUnion. “Fraudsters tend to seek out industries that may be seeing an immense growth in transactions. This quarter, as countries began to open up more from their COVID-19 lockdowns and travel and other leisure activities became more mainstream, fraudsters clearly made this industry a top target”.
The pandemic accelerated community – online dating and online retail transactions which require logistics and fraudsters have recognized this. “In India post the unlocks, travel and leisure has increasingly become a target as the industry recovers and fraudsters are looking to capitalize as more transactions return to this industry,” added Shai. “As fraudsters continue to target consumers, it’s incumbent on businesses to do all that they can to ensure their customers have an appropriate level of security to trust their transaction is safe all while having a friction-right experience to avoid shopping cart abandonment.”
MUMBAI: Some cardholders might see standing instructions for payment on their credit card fail from next month. These could be for subscriptions with online content platforms, edtech companies or standing instructions for online advertisement payments. Some of these merchants are yet to comply with RBI’s new requirement of additional factor authentication (OTP) for recurring payments through cards though the deadline is less than a week away.
According to sources, around 75% of the banks have put in place the technology to meet RBI’s directive. However, there are some banks and merchants who are still in wait-and-watch mode. Banks are writing to customers, warning that some transactions may fail: “Effective October 1, 2021, the bank will not approve any standing instruction (e-mandate on cards for recurring transactions) given at merchant website/app on HDFC Bank credit/debit card, unless it is as per RBI-compliant process.” The bank has recommended that customers use its bill-pay option for utilities or pay on the biller’s website using OTP.
According to Razorpay, which processes close to a third of all recurring payment transactions, a dozen banks have already put in place the new setup where even for repeat payments the bank will alert the customer a day in advance and also provide them with a link to discontinue the mandate. “In the short term, there may be some disruption but, in the long term, this move by the RBI can take growth in recurring payment mandates off the charts,” said Razorpay chief technology officer and co-founder Shashank Kumar.
Kumar says the RBI directive addresses two key issues. Earlier, discontinuing a standing instruction to a merchant could be extremely cumbersome with some asking for a letter to be sent by post asking to discontinue the subscription. Second, debit cards were a grey area and recurring payments were done largely in credit cards. Incidentally, even after October 1, international mandates will continue as neither banks nor the RBI has jurisdiction over international billers.
“There are 900 million debit cards in India and their inclusion could increase the market multifold,” said Kumar. According to Kumar, by empowering customers to stop the payments at any time, the RBI has increased the confidence level. This could also make online education or entertainment more affordable as the availability of this facility will encourage providers to have a monthly debit model rather than recover annual fees.
Besides requiring banks to alert customers, the RBI has capped automatic debits at Rs 5,000 per month. This would mean that billers, like insurance companies, with large instalments, would need to increase the frequency to enable auto-debit. In the case of utilities, many online payers use their bank’s bill payment platform for standing instructions and will have no impact.
Along with NARCL, India Debt Resolution Company Ltd (IDRCL), has also been set up, it will then try to sell the stressed assets in the market. (Representative image)
By Sandesh Dholakia
A few days back, in one of her key announcements Finance Minister Nirmala Sitharaman made good on one of her promises from the Budget 21-22 and announced the formation of India’s first-ever “Bad Bank”. National Asset Reconstruction Company (NARCL) which has already been incorporated as a company and received cabinet approval will acquire stressed assets worth Rs. 2 lakh crores from various banks in order to recover them. Along with NARCL, India Debt Resolution Company Ltd (IDRCL), has also been set up, it will then try to sell the stressed assets in the market. This NARCL-IDRCL structure is the new “Bad Bank of India.”
But why do we really need a Bad Bank ?
Insolvency and Bankruptcy Code (IBC), Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI Act), Debt Recovery Tribunals as well as setting up of dedicated Stressed Asset Management Verticals (SAMVs) in banks for large-value NPA accounts have brought much-needed focus on the recovery of non-performing assets. In spite of such efforts, a substantial amount of NPAs continues on the balance sheets of banks primarily because the stock of bad loans as revealed by the Asset Quality Review is not only large but fragmented across various lenders.
The situation becomes even duller when we benchmark India with other leading G-20 nations. As per World Bank data, the share of NPA to gross loans in Indian banking is significantly higher compared to all other leading G-20 nations with an exception of the Russian Federation. Large unresolved NPAs over a sustained period of time have proven detrimental to policymaking and economic growth for many economies in the past.
How will the new Bad Bank structure function ?
NARCL proposes to acquire Rs. 2 Lakh crores of (gross value) assets. As per the Secretary DFS, blended net realizable value of these assets is likely to be ~18% i.e. Rs. 36,000 crores (Rs. 30,000 crores post-tax). 15% of the net realizable value will be in the form of cash and rest through security receipts(SR).
GOI guarantee on SRs will be good between net realizable value and actual realized value. In a normal Asset Reconstruction Company (ARC) transaction, cash realization is recorded upfront and flow to profits and SRs are subject to MTM. Due to uncertainty on recovery, these SRs are illiquid hence locked capital for banks. Under the scheme, SRs are guaranteed by GOI so it will provide liquidity to SR and free up capital on immediate basis post conclusion of sale.
Let’s understand through an example : –
Let’s say a loan of Rs. 10,000 was written-off by a bank –
The book value of asset in bank’s balance sheet is zero
If the bad bank determines the recoverable value at 30% or Rs. 3,000 then:
Bad bank will have to pay 15% of Rs. 3,000 = Rs. 450 (or 4.5% of original loan value) – this will be paid in cash by bad-bank, which may source funds from banks themselves as equity. From accounting perspective, banks will report Rs. 450 as profit from recoveries of written off loans that gets added to net worth.
For the balance 85% of Rs 3,000 = Rs. 2,550 – bad bank will issue securitisation receipts (SRs) which will be partly guaranteed by government and partly non-guaranteed. For the guaranteed part, banks will recognise the value as investment but that will not require any capital for 5yrs as there is Govt. guarantee. For non-guaranteed part, banks might not recognise value until actual recovery is made.
What does the Global Experience say about Bad Banks?
Way forward for Bad Bank of India –
Aggregation of stressed assets at one entity’s hand is undoubtedly expected to speed up the process for finding interested buyers, transfer of assets, restructuring of debt etc. but more than anything else the quality of such asset will matter the most. Historically we have seen proven examples of formation of Bad Banks working, most of it were in the cases where not only a law was passed but the enforcement of it was done properly. A plenty of it also relied on the evolving socio-economic and political conditions of the country.
As India recovers from its hardest ever economic hit due to Covid-19 the challenges going to be faced by the Bad Bank are not going to be easy but if tackled properly this could provide a much-needed moment of renaissance to the entire Indian Banking Sector.
(The author is founder & CEO at Case Ace and Asia-Pacific chairman at International Finance Students’ Association. Views expressed are personal.)
Please refer to tender: RBI/Thiruvananthapuram/Estate/98/21-22/ET/132 uploaded in RBI website and MSTC Portal. In connection with this, Last date of submission of tender has been extended by one day. Eligible bidders can submit their bids up to September 28, 2021 till 2:00 PM.
India’s cryptotech industry is likely to create an economic value addition of $184 billion by 2030, in the form of investments and cost savings, according to a study by the National Association of Software and Services Companies (NASSCOM) and crypto exchange WazirX.
More than 60% of the states are adopting cryptotech, and there are over 15 million retail investors. As of now, India has more than 230 startups operating in the space, the study said.
The Indian market is growing four times the pace of tech industry in the last two years, while institutional funding for startups has seen eight times the growth. The cryptotech market size in India is $74.2 million so far in FY21, up 39% in last five years.
It is one of the fastest growing technology sub-sectors in India, in terms of revenue.
“CryptoTech industry in India has not only demonstrated a positive impact at the grassroots levels but is emerging as one of the fastest growing technology sub-sector. India provides the most unique ecosystem to CryptoTech to play a transformative role in strengthening key priority areas such as healthcare, safety, digital identification, trade and finance, and remittances and help in addressing pandemic-induced challenges,” said Debjani Ghosh, president at NASSCOM.
The market has the potential to create over 8 Lakh jobs by 2030. The cryptotech industry includes crypto applications in trading, P2P payments, remittances, and retail among others.
“A consultative and enabling regulatory approach towards Crypto technologies can help drive the growth of CryptoTech ecosystem and innovation in India,” Ghosh added.
According to Nischal Shetty, chief executive officer of WazirX, crypto has immense potential to contribute to India’s vision of being a $5-Trillion economy. “In the coming years, we’ll see crypto shatter the financial barriers for rural India, create more opportunities and access to jobs, investment and capital,” he said.
Globally, the cryptotech industry is estimated to cross $1.6 billion by 2021, and $2.3 billion by 2026, according to the study.
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