IOB out of RBI’s PCA framework
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The Reserve Bank of India (RBI) has taken Indian Overseas Bank (IOB) out of the PCA restrictions, subject to certain conditions and continuous monito
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Month: September 2021
SBI inks agreement for co-lending to joint liability groups
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State Bank of India (SBI) has signed a Master Agreement with Vedika Credit Capital Ltd (VCCL), Save Microfinance Pvt Ltd (SMPL) and Paisalo Digital Ltd (PDL), for co-lending to individual members of Joint Liability Groups (JLGs) to undertake agriculture and allied activities, including other income generation activities.
These partnerships will enable SBI to further increase its reach in the rural and semi-urban areas of the country, India’s largest bank said in a statement.
SBI is actively looking at co-lending opportunities with multiple NBFCs / NBFC-MFIs for financing activities such as farm mechanisation, warehouse receipt finance, Farmer Producer Organisations (FPOs), for enhancing credit flow to double the farmers’/indivduals’ income, it added.
Dinesh Khara, Chairman said: “Co-lending will be pursued as an important tool to increase the micro finance, MSME and affordable housing portfolio.
“…This will also encourage entrepreneurship among the underserved population which, in-turn, will provide a boost to the Indian economy.”
Khara observed that SBI will continue to work with more NBFCs / NBFC MFIs, in order to reach out to the maximum number of customers staying at far flung areas and provide last mile banking services.
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Edelweiss says open to buying stressed assets from ‘bad bank’
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Far from seeing the National Asset Reconstruction Company Ltd (NARCL), the so-called bad bank, as a rival, Edelweiss Asset Reconstruction Company Ltd (EARC), currently India’s largest ARC, wants to buy stressed assets from it.
Edelweiss Alternative Asset Advisors (EAAA), EARC’s sister company, is exploring the possibility of raising funds, exceeding the $1.3 billion (about ₹9,200 crore) it raised about two years back, to invest in stressed assets to turn them around.
Raj Kumar Bansal, MD & CEO, EARC, told BusinessLine that EARC and EAAA can join forces to buy some of the assets from NARCL even as they observe the arm’s length principle.
EARC can invest 15 per cent of the acquisition price of the stressed asset, with EAAA investing 85 per cent. EARC and EAAA are subsidiaries of Edelweiss Financial Services Ltd.
Faster debt aggregation
Bansal said the setting up of NARCL augurs well for all ARCs as it saves them a year that it usually takes to aggregate debt from multiple lenders. There are 28 ARCs registered with the Reserve Bank of India.
NARCL has been set up by banks to aggregate and consolidate stressed assets for their subsequent resolution. Public sector banks (PSBs) will have 51 per cent ownership in NARCL, with Canara Bank holding 12 per cent stake, as its sponsor. To begin with, banks have identified 22 fully provisioned stressed accounts, including VOVL Ltd (wholly-owned subsidiary of Videocon Industries), Amtek Auto, Reliance Naval and Engineering, Jaypee Infratech, Castex Technologies, GTL, Visa Steel, and Lavasa Corporation, aggregating ₹82,500 crore, for transfer to NARCL.
NARCL will acquire stressed assets, aggregating about ₹2-lakh crore, from lenders in phases. It will acquire these assets by paying 15 per cent of the acquisition value in cash and 85 per cent as security receipts (SRs).
Bansal, who oversees Assets Under Management aggregating about ₹43,000 crore, said: “It is good for us if they (NARCL) aggregate the debt because then we can buy from them. We don’t have to deal with 20 banks. Depending on the quality of the asset, where there is reasonable scope for us to resolve and where, maybe, we can work with the borrower, we can buy it from NARCL.”
In the first quarter of the current fiscal, EARC acquired assets worth about ₹2,100 crore by deploying ₹380 crore. EAAA had AUM aggregating about ₹30,000 crore as at March-end 2021.
The RBI has also allowed loan exposures classified as fraud to be transferred to ARCs. This comes in the wake of banks reporting frauds aggregating ₹3.95-lakh crore between FY19 and FY21. Stressed loans, which are in default for more than 60 days or are classified as non-performing assets, can be transferred to ARCs.
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Auto debit norms: Payments Council of India seeks extension for smooth transition
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The Payments Council of India has requested the Reserve Bank of India to extend the norms for auto debit mandates for recurring transactions by one to two months.
“It is a very positive and consumer centric move. We have written to the RBI for a short extension of one or two months to ensure a smooth transition to the new norms. All ecosystem players have been working hard but it will take some more time,” said Vishwas Patel, Chairman, Payments Council of India and Executive Director, Infibeam Avenues Limited.
At present, the new norms for processing of recurring online transactions will come into effect from October 1.
The RBI had in March this year already extended the deadline for banks to comply with norms by six months to September 30.
Patel said that while major private banks have gone live with the facility, a number of other players are still in the final stages of preparedness. State Bank of India’s debit card will be able to go live in middle of October, he said.
SBI’s credit card systems are ready to meet the norms. Lenders including HDFC Bank, ICICI Bank, Bank of Baroda, Citibank, IDFC Bank and Axis Bank are also ready and others such as IndusInd Bank, RBL Bank and Yes Bank are also geared up to meet the deadline.
However, most public sector banks are still working to meet the deadline.
According to experts, just about 60 per cent of the ecosystem is seen to be ready. “In the long run, the RBI norms are good for the ecosystem and will benefit the consumer. But in the short term, the deadline of September 30 can cause a lot of confusion for the existing mandates that are present. For all cases, where customers have put in the cards which have not migrated to the new system or banks that have not complied, these mandates will not be processed,” said Shashank Kumar, CTO and co-founder, Razorpay, adding that recurring transactions on debit cards will also be allowed.
Also read: New auto-debit rules: Banks, merchants working on a common platform
Razorpay is one of two companies that has an API product to help banks comply with these regulations.
Auto debit mandates
In order to enhance customer safety, the RBI has introduced new auto debit mandates that require an additional factor authentication for cards, wallets, prepaid instruments and UPI during registration and first transaction, as well as pre-transaction notification by banks and facility to withdraw the mandate. For recurring transactions of over ₹5,000 a month, customers will require an additional factor authentication.
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RBI lifts PCA curbs on Indian Overseas Bank, BFSI News, ET BFSI
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The Reserve Bank of India today lifted Prompt Corrective Action restrictions from the Indian Overseas Bank, the central bank said in a release.
The decision came after the bank reported its earnings for the year ended March 31, 2021, and the RBI observed that IOB was not in breach of the PCA parameters.
IOB has also provided a written commitment that it would comply with the norms of Minimum Regulatory Capital, Net NPA and Leverage ratio on an ongoing basis and has said that it would make structural and systemic improvements, RBI said in the release.
The RBI has said that it will continue monitoring the bank.
PCA is triggered when banks breach regulatory norms such as return on asset, minimum capital, among others.
Earlier this month, RBI had lifted PCA restrictions on UCO Bank. Now, only Central Bank of India remains in the list.
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Reserve Bank of India – Press Releases
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The performance of the Indian Overseas Bank, currently under the Prompt Corrective Action Framework (PCAF) of RBI, was reviewed by the Board for Financial Supervision. It was noted that as per its published results for the year ended March 31, 2021, the bank is not in the breach of the PCA parameters. The bank has provided a written commitment that it would comply with the norms of Minimum Regulatory Capital, Net NPA and Leverage ratio on an ongoing basis and has apprised the RBI of the structural and systemic improvements that it has put in place which would help the bank in continuing to meet these commitments. Taking all the above into consideration, it has been decided that Indian Overseas Bank is taken out of the PCA restrictions subject to certain conditions and continuous monitoring. (Yogesh Dayal) Press Release: 2021-2022/953 |
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Reserve Bank of India – Press Releases
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The Reserve Bank of India (RBI) has imposed, by an order dated September 29, 2021, a monetary penalty of ₹2.50 lakh (Rupees two lakh fifty thousand only) on The Madura Sourashtra Co-operative Bank Ltd. (A-336) for non-adherence / violation of directions issued under Supervisory Action Framework (SAF). 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, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI. This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Background The inspection report of the bank based on its financial position as on March 31, 2020 revealed inter alia, violation / non-compliance with directions issued under Supervisory Action Framework (SAF). 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 non-compliance with the directions. After considering the bank’s reply and oral submissions during the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty. (Yogesh Dayal) Press Release: 2021-2022/951 |
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Exotel raises $35 million funding from IIFL AMC, Sistema Asia Fund, others, BFSI News, ET BFSI
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Customer communication platform Exotel on Wednesday said has raised USD 35 million (about Rs 259.5 crore) in funding from IIFL AMC, Sistema Asia Fund, CX Partners, Singularity Growth Opportunities Fund and others.
Existing investors, Blume ventures and A91 capital along with angel investors also participated in the series C round, a statement said.
Arun Sarin, former CEO of Vodafone, has also joined the round as an angel investor and a mentor, it added.
The fresh funds will be used primarily to boost the growth of the company, it said.
“We’re investing heavily in building the market’s first vertically integrated full-stack engagement suite with interoperability of channels and convergence of customer data to enable enterprises to have multimodal conversations with customers. We are going to be expanding our team and doubling our headcount over the next 12 months,” Exotel CEO and co-founder Shivakumar Ganesan said.
Exotel, which had recently announced a merger with Ameyo, said the organisation is currently growing at 70 per cent year-on-year and is at an ARR (annual run rate) of USD 45 million. Exotel is looking to hit an ARR of 200 million USD over the next five years.
“CPaaS (Communications Platform as a Service) is a USD 6 billion market in India and SEA (South East Asia) and one of the fastest growing technology areas in the post-COVID world. Exotel has quietly emerged as the CPaaS platform of choice in India through their market-best reliability and comprehensive product suite,” Sumit Jain, Senior Partner at Sistema Asia Fund, said.
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Exotel raises $35 million funding from IIFL AMC, Sistema Asia Fund, others, BFSI News, ET BFSI
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Customer communication platform Exotel on Wednesday said has raised USD 35 million (about Rs 259.5 crore) in funding from IIFL AMC, Sistema Asia Fund, CX Partners, Singularity Growth Opportunities Fund and others.
Existing investors, Blume ventures and A91 capital along with angel investors also participated in the series C round, a statement said.
Arun Sarin, former CEO of Vodafone, has also joined the round as an angel investor and a mentor, it added.
The fresh funds will be used primarily to boost the growth of the company, it said.
“We’re investing heavily in building the market’s first vertically integrated full-stack engagement suite with interoperability of channels and convergence of customer data to enable enterprises to have multimodal conversations with customers. We are going to be expanding our team and doubling our headcount over the next 12 months,” Exotel CEO and co-founder Shivakumar Ganesan said.
Exotel, which had recently announced a merger with Ameyo, said the organisation is currently growing at 70 per cent year-on-year and is at an ARR (annual run rate) of USD 45 million. Exotel is looking to hit an ARR of 200 million USD over the next five years.
“CPaaS (Communications Platform as a Service) is a USD 6 billion market in India and SEA (South East Asia) and one of the fastest growing technology areas in the post-COVID world. Exotel has quietly emerged as the CPaaS platform of choice in India through their market-best reliability and comprehensive product suite,” Sumit Jain, Senior Partner at Sistema Asia Fund, said.
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Exotel raises $35 million funding from IIFL AMC, Sistema Asia Fund, others, BFSI News, ET BFSI
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Customer communication platform Exotel on Wednesday said has raised USD 35 million (about Rs 259.5 crore) in funding from IIFL AMC, Sistema Asia Fund, CX Partners, Singularity Growth Opportunities Fund and others.
Existing investors, Blume ventures and A91 capital along with angel investors also participated in the series C round, a statement said.
Arun Sarin, former CEO of Vodafone, has also joined the round as an angel investor and a mentor, it added.
The fresh funds will be used primarily to boost the growth of the company, it said.
“We’re investing heavily in building the market’s first vertically integrated full-stack engagement suite with interoperability of channels and convergence of customer data to enable enterprises to have multimodal conversations with customers. We are going to be expanding our team and doubling our headcount over the next 12 months,” Exotel CEO and co-founder Shivakumar Ganesan said.
Exotel, which had recently announced a merger with Ameyo, said the organisation is currently growing at 70 per cent year-on-year and is at an ARR (annual run rate) of USD 45 million. Exotel is looking to hit an ARR of 200 million USD over the next five years.
“CPaaS (Communications Platform as a Service) is a USD 6 billion market in India and SEA (South East Asia) and one of the fastest growing technology areas in the post-COVID world. Exotel has quietly emerged as the CPaaS platform of choice in India through their market-best reliability and comprehensive product suite,” Sumit Jain, Senior Partner at Sistema Asia Fund, said.
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