Month: September 2021

Federal Bank partners OneCard for mobile-first credit card

Banking & Finance

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Federal Bank on Wednesday announced a tie-up with OneCard for a mobile-first credit card that targets the country’s young, tech-savvy population.

It will target young working professionals aged 23-35, primarily representing the millennials and Gen Z, it said in a statement.

Mastercard ban fallout: YES Bank partners with Visa for credit cards

The mobile-first credit card offers in-app on-boarding, whereby the virtual card can be activated and used instantly, while the metal card is delivered to the customer in three to five days, it added. The cards will be powered by Visa.

HDFC Bank, Paytm set to launch co-branded credit cards

The bank is betting on the retail portfolio and anticipates a peak in consumer credit this festive season on the back of an economic revival.

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Axis Bank commits Rs 30,000 cr till FY26 towards sustainable lending, BFSI News, ET BFSI

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The country’s third largest private sector lender Axis Bank has committed Rs 30,000 crore lending till fiscal year 2025-26 under its sustainable financing framework, a senior official said.

These commitments are in line with the Sustainable Development Goals (SDGs), supporting India’s commitments under the Paris Agreement.

“As part of its commitments, the bank has set a target of incremental lending of Rs 30,000 crore over the next 5 years, under wholesale banking towards pertinent sectors included in its Sustainable Financing Framework (SFF),” Rajesh Dahiya, Executive Director (Corporate Centre), Axis Bank told PTI.

Environmental, Social and Governance (ESG) is a measure which investors use as a tool to assess how good the practices of a company are. For the last 3-4 years, the words sustainability and ESG have made people sensitive about the whole idea of a sustainable planet, Dahiya said.

“These are the metrics which have been spoken about for about 3-4 years now. However, with COVID and all its problems, it highlighted the issue of sustainability in a very big and magnified manner.

“In the next five years, we want to lend Rs 30,000 crore more incrementally as wholesale banking towards pertinent sectors including Axis Bank’s SFF. We want to increase our portfolio of green lending,” Dahiya said.

He said the bank’s existing wholesale banking portfolio towards SFF, including green and social sectors, is little over Rs 29,000 crore and it intends to lend to companies where there are green practices.

After five years till 2025-26, the bank will assess these lendings to see positive social and environmental outcomes and increase it further, he added.

Going forward, the lender will also scale down its exposure to carbon-intensive sectors in its wholesale banking business portfolio.

The lender said it is expanding its ESG risk coverage in credit appraisal under its ESG policy for lending.

Axis Bank is building and deploying an ESG risk assessment toolkit, with ESG stress testing and ESG scenario analysis, for its large corporate, SME and agri-business verticals by 2022-23.

The lender will incentivise the borrowers for adopting good practices by offering 0.5 per cent interest waiver on new electric vehicle loans, effective immediately.

“We will make 5 per cent of our retail two-wheeler loan portfolio as electric by 2023-24 ,” he said.

Besides, the bank has set the target of incremental disbursement of Rs 10,000 crore by 2023-24 under Asha Home Loans for affordable housing, and increasing share of women borrowers.

Also, the bank will aim to reach 30 per cent female representation in its workforce by 2026-27, aligned to its #ComeAsYouAre Diversity Charter.

Among others, it will plant 2 million (20 lakh) trees by 2026-27 across India towards contributing to creating a carbon sink.

Dahiya said Axis Bank is probably the first among corporates to constitute an ESG Steering Committee comprising heads of key departments who shall act as ESG champions within and outside the bank.

“Since the day COVID hit, our board got us together and decided…we want to create a practice which is differentiated and which is measurable,” he added.

The bank has announced its commitments ahead of the upcoming 2021 United Nations Climate Change Conference (COP26) at Glasgow, UK from October 31 – November 12.

The participants are expected to talk about enhancing their commitments made at COP21 at Paris in 2015.

In line with its ESG strategy, Axis Bank has recently raised India’s first sustainable USD AT1 bonds of USD 600 million in the overseas markets.



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Lio raises ₹37 crore from Sequoia Capital India, Lightspeed India

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IT start-up Lio on Wednesday said it has raised around ₹37 crore in a seed funding round led by Sequoia Capital India and Lightspeed India.

The company plans to use the investment primarily to expand its engineering team and increase the number of users of the mobile application.

“The investment by Lightspeed India and Sequoia Capital India helps accelerate Lio’s vision of enabling small businesses to be smarter by leveraging their business data for better decision making. We aim to achieve this by helping people organise their data,” Lio Co-founder and CEO Anupam Vijayvergia said in the statement.

Tools provided by Lio

Lio provides variety of tools for tabulation, calculation and organising needs, such as creating tables of customer, stocks, payment data for businesses or organising to-do lists, class schedules or wedding registries.

It was launched in November 2020, and claims to have recorded 10 lakh downloads on the app store within 9 months.

In July 2021, the app was also launched in Indonesia, and has seen strong adoption.

Currently, the application is available in 10 Indian languages and Bhasha indonesia, with approx 45 per cent usage in vernacular languages, the statement said.

“Lio had raised an angel round from prominent names in the industry including Aakrit Vaish, Anupam Mittal, Ashish Hemrajani, Gaurav Munjal, Haresh Chawla, Kunal Bahl, Kunal Shah, Maninder Gulati, Miten Sampat, Prakshit Dar, Rohit Bansal, Roman Saini, Sachin Bhatia, Siddharth Rao in March 2021,” it added.

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3 Best Government Fixed Deposits Promising Returns Up To 8.50%

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Tamil Nadu Power Finance and Infrastructure Development Corporation Limited (TNPFC)

This is a wholly-owned company by the government of Tamil Nadu and licensed with the RBI as a Non-Banking Finance Company. Regular and elderly people can choose between a non-cumulative fixed deposit and a cumulative fixed deposit. The interest on a non-cumulative fixed deposit is paid on a monthly, quarterly, or annually basis.

These FDs have a two-year, three-year, four-year, and five-year term. Depending on the tenure chosen, current interest rates vary from 7.25 percent to 8.00 percent with an additional rate of 0.50% to senior citizens. Whereas under the cumulative fixed deposit option, the interest is compounded on a quarterly basis and paid on maturity. The cumulative fixed deposit has a tenure of one year, two-year, three-year, four-year, and five-year and based on your specified term the interest rate will range from 7.25 percent to 8.50 percent for the general public and senior folks are also entitled to an additional rate of 0.50%.

Applicable interest rate for Non-cumulative fixed deposit scheme

Period (Month) Quarterly (%)
24 7.25
36 7.75
48 7.75
60 8
Source: tnpowerfinance.com

Applicable interest rate for a cumulative fixed deposit

Period (Month) On Maturity (%)
12 7
24 7.25
36 7.75
48 7.75
60 8
Source: tnpowerfinance.com

Tamil Nadu Transport Development Finance Corporation Ltd (TDFC)

Tamil Nadu Transport Development Finance Corporation Ltd (TDFC)

The reasons to invest in the fixed deposit scheme of TDFC are best interest rates up to 8.00% to the general public and 8.50% senior citizens. These rates are much higher than the rates of SBI, private sector banks and even small finance banks. TDFC offers two types of deposit schemes to the investors i.e. Money Multiplier Scheme (MMS) and Period Interest Payment Scheme (PIPS). Under the MMS scheme, the minimum deposit amount is Rs 50,000 and the applicable interest rates are compounded quarterly and paid on maturity.

Under the PIPS scheme, the minimum deposit amount is Rs 50,000 and interest is paid either monthly or quarterly or annually. TDFC is offering the following interest rates on fixed deposits to both regular and senior citizens which are in force from 18.01.2021.

Applicable interest rates under Period Interest Payment Scheme (PIPS)

Others Senior Citizen
Period (Months) Monthly (%) Quarterly (%) Annually (%) Monthly (%) Quarterly (%) Annually (%)
24 – 7.25% – – 7.50% –
36,48 & 7.75% 7.75% 7.98% 8.25% 8.25% 8.51%
60 8.00% 8.00% 8.24% 8.50% 8.50% 8.77%
Source: tdfc.in/pips

Applicable interest rates under Money Multiplier Scheme (MMS)

Others Senior Citizen
Period (Months) Basic Rate p.a (%) Effective Yield p.a (%) Basic Rate p.a (%) Effective Yield p.a (%)
12 7 7.19 7.25 7.45
24 7.25 7.73 7.5 8.01
36 7.75 8.63 8.25 9.25
48 7.75 8.99 8.25 9.66
60 8 9.72 8.5 10.46
Source: tdfc.in/pips

Kerala Transport Development Finance Corporation Ltd (KTDFC)

Kerala Transport Development Finance Corporation Ltd (KTDFC)

KTDFC also offers two types of deposit schemes to debt investors. The company offers a Periodic Interest Payment Scheme (PIPS) and Money Multiplier Scheme (MMS). The applicable interest rate will be paid monthly or quarterly under the Periodic Interest Payment Scheme (PIPS). The applicable interest rate will be compounded monthly and paid at maturity under the Money Multiplier Scheme (MMS) of KTDFC. With effect from January 1, 2021, the following interest rate on KTDFC fixed deposits is applicable to both regular and senior citizens.

For regular customers

Period Rate(p/a) Approx.Maturity value for Rs 10,000 under MMS Appoximate cumulative Annual Yield
1 year 6.00 % 10,617 6.17 %
2 years 6.00 % 11,272 6.36 %
3 years 6.00 % 11,967 6.56 %
4 years 5.75 % 12,579 6.45 %
5 years 5.75 % 13,322 6.64 %
Source: ktdfc.kerala.gov.in

For senior citizens

Period Rate(p/a) Approx.Maturity value for Rs 10,000 under MMS Appoximate cumulative Annual Yield
1 year 6.25 % 10,643 6.43 %
2 years 6.25 % 11,328 6.64 %
3 years 6.25 % 12,056 6.85 %
4 years 6.00 % 12,705 6.76 %
5 years 6.00 % 13,489 6.98 %
Source: ktdfc.kerala.gov.in



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Trojan posing as IT refund skulking to attack Android phone bank customers, BFSI News, ET BFSI

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A banking Trojan malware has been detected in the Indian cyberspace that is lurking to attack bank customers using Android phones and has already targeted those from more than 27 public and private sector banks, the country’s federal cyber security agency said in a latest advisory.

The phishing (a social engineering computer virus attack to steal personal data) malware is masquerading as an “income tax refund” and it can “effectively jeopardise the privacy of sensitive customer data and result in large-scale attacks and financial frauds”, the CERT-In advisory issued on Tuesday said.

“It has been observed that Indian banking customers are being targeted by a new type of mobile banking campaign using Drinik android malware,” it said.

“Drinik started as a primitive SMS stealer back in year 2016 and has evolved recently to a banking Trojan that demonstrates phishing screen and persuades users to enter sensitive banking information,” it said.

Customers of more than 27 Indian banks including major public and private sector banks have already been targeted by the attackers using this malware, the CERT-In said.

The Indian Computer Emergency Response Team or CERT-In is the federal technology arm to combat cyber attacks and guarding the cyber space against phishing and hacking assaults and similar online attacks.

The advisory describes the attack process.

The victim, it said, receives an SMS containing a link to a phishing website (similar to the website of the Income Tax Department) where they are asked to enter personal information and download and install the malicious APK file in order to complete verification.

“This malicious android app masquerades as the Income Tax Department app and after installation, the app asks the user to grant necessary permissions like SMS, call logs, contacts etc.”

“If the user does not enter any information on the website, the same screen with the form is displayed in the android application and the user is asked to fill in to proceed,” it said.

This data to be filled includes full name, PAN, Aadhaar number, address, date of birth, mobile number, email address and financial details like account number, IFS code, CIF number, debit card number, expiry date, CVV and PIN, it adds.

Once these details are entered by the user, it said, the application states that there is a refund amount that could be transferred to the user’s bank account.

When the user enters the amount and clicks “Transfer”, the application shows an error and demonstrates a fake update screen.

“While the screen for installing update is shown, Trojan in the backend sends the user’s details including SMS and call logs to the attacker’s machine,” it said.

“These details are then used by the attacker to generate the bank specific mobile banking screen and render it on user’s machine. The user is then requested to enter the mobile banking credentials which are captured by the attacker,” it said.

The advisory recommends some counter-measures to guard against such attacks and malware, like always download apps from official app stores, install appropriate Android updates and patches as and when available, use safe browsing tools, do extensive research before clicking on link provided in the message and look out for valid encryption certificates by checking for the green lock in the browser’s address bar before sharing sensitive personal data.

It also asked users to immediately report any unusual activity in their account to their bank and also send a complaint to CERT-In at incident@cert-in.org.in.



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ZestMoney raises USD 50 mn funding from Zip Co, BFSI News, ET BFSI

Personal Finance

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ZestMoney, which offers Buy Now Pay Later (BNPL) platform, on Wednesday said it has raised USD 50 million (about Rs 369 crore) from global BNPL provider Zip Co Ltd. This is part of a larger series C fundraise that will see participation from existing investors, a statement said.

Zip will acquire a minority shareholding in the company and a board seat as part of the investment, it added.

ZestMoney plans to deploy the funds to expand the product suite, deepen the transaction network, strengthen its balance sheet capacity and launch new business lines in insurance and savings, the statement said.

The company has raised USD 120 million till date from investors including Ribbit, Goldman Sachs, Quona Capital and Xiaomi.

Zip – which was founded in Australia in 2013 – has a presence in 12 markets across five continents, serving more than 7.3 million customers and over 51,000 merchants.

Founded by Lizzie Chapman, Priya Sharma and Ashish Anantharaman in 2015, ZestMoney allows customers to pay for products over time. Increasing smartphone penetration, cheapest data plans in the world and boom in online shopping has propelled the demand for BNPL offerings in the country.

ZestMoney offers the entire spectrum of BNPL offering from 30 days to 24 months and ticket sizes ranging from Rs 50 to Rs 5 lakh. The digital omnichannel BNPL player allows customers to transact at over 10,000 online sites and 75,000 physical stores across the country. It has 11 million registered users.

Smartphones, large appliances, fashion, travel, home decor, ed-tech are the largest categories on the platform. Electric bikes, ayurveda products, and personal care are popular among customers using the pay later option.

ZestMoney partners with 25 banks and NBFCs to power BNPL transactions for consumers across the country.

“We are thrilled to have Zip come onboard for the next phase in our journey of powering affordability in the lives of Indian consumers. This is a deep validation of our position as market leader in the Buy Now Pay Later category in India,” ZestMoney CEO and co-founder Lizzie Chapman said.

The shift towards pay later solutions is a global phenomenon and represents young digital consumers looking for transparency, honesty and no hidden charges in financial products, Chapman added.

“We believe India will leapfrog traditional products like credit cards, along with many other emerging markets, going straight to digital payment solutions. Over the last year we have seen applications for BNPL go up by 5X on our platform. We continue to invest in deepening partnerships with our merchant network and hiring the best talent,” she said.

ZestMoney strongly believes that India will emerge as the largest BNPL market in the world over the next five years, she added.

Larry Diamond, CEO of Zip Co, said while BNPL is emerging as a preferred mode of payment globally, in India it also plays a crucial role in driving access to credit.

“With deep partnerships with online and offline merchants and lending partners, Zest Money is poised to accelerate growth as the market develops. We have been incredibly impressed with the founders and leadership team and look forward to the next stage of the ZestMoney journey,” he added.

ZestMoney recently secured the Corporate Agent licence from Insurance Regulatory and Development Authority of India (IRDAI) allowing it to offer and enable insurance products to users on its platform.



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Lenders hire specialist agencies to analyse default probability of borrowers, BFSI News, ET BFSI

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Risk-averse lenders wary of large exposures in the post-Covid era are hiring consultants and specialist agencies to analyse the default potential of all proposals in excess of Rs 500 crore.

Lenders want to ensure that they have a clear perspective of the borrower’s future default risks and cash flow situation in light of peculiar challenges brought about by the pandemic.

“The pandemic has disrupted cash flows of businesses in a significant way, and since large value loan proposals are on the rise, we thought it prudent to hire agencies and check the company’s default risk and default probability,” said a lender that has hired one such agency. “These agencies are checking the total debt, debt-service coverage ratio, cash flows and various other metrics to determine whether they will be able to service debt obligations.”

Banks want clear visibility over companies’ subsidiary operations and other activities, especially around the moratorium period. In many cases, companies are also approaching banks with expansion plans and lenders also wish to scrutinise whether firms have a clear strategy in place and what could be the macroeconomic and sectoral drivers.

“The pandemic, loan moratoriums and an uncertain business environment have led to many banks seeking clarity and additional comfort around the financial health of borrowers at the time of fresh loan proposals or renewal of facilities. There is heightened diligence, detailed financial analysis and a deeper assessment of credit risk and default around loan proposals – particularly when the amounts are Rs 500 crore and above,” said Gaganpreet Puri, leader, risk and regulatory, Alvarez & Marsal India, a turnaround specialist.

In several instances, the lenders claim that they have no visibility on operations of the companies. Many companies have seen a spurt in their valuations, especially the listed ones, but banks are concerned of the underlying assets and impact on future profitability and revenues.

“Many companies have even approached the banks as they are looking to undertake mergers and acquisitions and require financing. In these cases, banks want a rationale behind such manoeuvres,” said a person in the know.

Firms specialising in this segment say that they are being asked to give objective and automated credit analysis and rating based on the company’s financial metrics.

“AI driven automated predictive credit analysis tools are being increasingly adopted by banks and financial institutions,” said Amit Maheshwari, Strategic Advisor to FinMind – a start-up offering automated financial insights.

FinMind claims its predictive analytical capabilities enable early identification of potential credit risk events and has successfully predicted credit weakening of several companies in the past.

Bank credit growth has been languishing for the last few years. Central bank data showed that credit rose 6.61% for the fortnight ended August 13, from 6.2% in the previous fortnight. Loans to the corporate sector continued to remain weak and grew a meagre 1% during the same period.



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Reserve Bank of India – Press Releases

Press Releases

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I. T-Bill 91 days 182 days 364 days
II. Total Face Value Notified ₹9,000 Crore ₹4,000 Crore ₹4,000 Crore
III. Cut-off Price and Implicit Yield at Cut-Off Price 99.1732
(YTM: 3.3439%)		 98.3240
(YTM: 3.4185%)		 96.5355
(YTM: 3.5987%)
IV. Total Face Value Accepted ₹9,000 Crore ₹4,000 Crore ₹4,000 Crore

Ajit Prasad
Director   

Press Release: 2021-2022/902

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Imitating a fintech firm not the right business model: Former RBI Deputy Gov

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Banks should avoid ‘imitating’ fintech companies in their attempt to re-imagine themselves but should look for meaningful co-operation with such companies to enhance their business.

According to SS Mundra, Former Deputy Governor, Reserve Bank of India (RBI), the process of re-imagination of business models for banks has already started. However, increasingly a number of banks have been evolving like fintech companies.

“Banks have to realise that fintech companies are competitive and nimble. So a bank trying to imitate a fintech company in totality is not the right approach to my mind and it is not the right business model. I think what is beneficial for both of them is to have a meaningful co-operation,” he said at the 14th edition of the two-day Banking Colloquium organised by CII, held virtually on Tuesday.

Such co-operation would help them both leverage on their respective strengths, Mundra said. While fintech companies have the strength of being nimble, innovative and fast-footed banks have the advantage of having a good resource base, reach, faith and trust of people and these can be complementary.

Banks should further avoid the temptation of introducing too many products or too many processes at too short an interval as it tends to leave both their staff and customers confused.

Rationalise branches

“There has to be a well-designed and well-decided pace at which such changes are introduced. Otherwise we have seen in some cases it may lead to unforeseen problem or a regulatory displeasure so one has to be conscious,” he pointed out.

At a time when digital has become a way of life, it is very important to take a “hard look” at the traditional branch-led business model, he said, talking about the need to rationalise branches.

“I am not suggesting that branches should go away but there is a need to reimagine the business model. One has to see which are the branches that are loss-making, contributing positively, can be downsized and can be completely done away with, and where you can rely completely on technology and where you can rely on agency arrangement. For every bank, it is important to do a complete holistic assessment of their branch network and how to derive maximum value from this,” he said.

According to Mundra, corporate lending, which once constituted the biggest chunk in banks’ loan book, has shrunk, with corporates deleveraging and finding alternative methods of financing themselves.

It would no longer be profitable for a bank to sell only a product to a corporate, as most corporates are now expecting “solutions” from banking system. “You need to adopt a solution-based approach if you want to do corporate banking,” he said.

One of the sectors which banks could look to ramp up is the MSME portfolio as there is more availability of information, date and GST has changed the entire landscape of the sector, Mundra said. “But here again the gradual movement would have to be from product to solution. In the retail sector, banks should leverage on the co-origination model,” he added.

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