Month: November 2021

Reserve Bank of India – Press Releases

Press Releases

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The Reserve Bank of India (RBI) has imposed, by an order dated November 17, 2021, a monetary penalty of ₹2.50 lakh (Rupees two lakh fifty thousand only) on The Nizamabad District Co-operative Central Bank Ltd., Nizamabad, Telangana for non-adherence / violation of certain directions issued by RBI contained in the Master Circular on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’ and Section 9 read with Section 56 of Banking Regulation Act, 1949(AACS). 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, 2019 revealed inter alia, violation / non-compliance with aforesaid directions. 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)     
Chief General Manager

Press Release: 2021-2022/1215

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RBI may pilot digital currency in Q1 of FY23

Banking & Finance

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The Reserve Bank of India may do a pilot of its central bank digital currency (CBDC) in the first quarter of the next fiscal year.

“We are on the job and looking into the various issues and nuances related to CBDC. It’s not a simple thing to just say that CBDC can be a habit from tomorrow on,” said P Vasudevan, chief general manager at the RBI’s Department of Payment and Settlement, at a banking event here on Wednesday.

“The banking system has been taking the lead in terms of currency distribution as a tiered model, whether the same model should be accepted for CBDC as well, we will have to see,” Vasudevan added.

As now being explored by the RBI for retail and international trade payments, the CBDC could have a much larger impact on the financial ecosystem, according to industry experts. It will be instrumental in promoting grassroots-level financial inclusivity and modernising the banking sector apart from creating a cashless economy.

Digital replica

While many see CBDCs as a legalised replacement of cryptocurrencies, in reality, CBDCs could just be a digital replica of the physical cash in circulation.

Russia, Japan and China are already working on the same.

According to a 2021 BIS survey, quoted in the RBI report, 86 per cent of the central banks surveyed are actively researching the potential for CBDCs, 60 per cent were experimenting with the technology and 14 per cent were deploying pilot projects.

A major use case for CBDCs will likely be in the insurance and lending space and also for managing non-performing assets. Using digital currencies will bring in more transparency and traceability across levels for the financial services sector, according to experts.

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Crypto investments gaining currency – The Hindu BusinessLine

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With cryptocurrency trading booming in the country, the average investment by individual investors is on the rise. Despite concerns around the legality of cryptocurrencies and regulatory uncertainties , the average investment per individual has gone up to ₹10,000 from ₹6,000-8,000 a year or two back.

Targeting next-gen

Sathvik Vishwanath, co-founder of cryptocurrency exchange Unocoin, said the average investment on an industry basis has increased by about 25 per cent within the last two years. This despite, “for most investors, their disposable income not increasing significantly,” he pointed out.

Similarly, CrossTower, which launched operations on September 7, said the average per person investment is ₹6,000 per month. There have been over 1 lakh downloads of its app, it claimed. It also reported a more than 3,000 per cent increase in customers since September 30.

Most players say that crypto trading continues to be dominated by those in the 25-35 age group with limited disposable income. Many are experimenting with investments in this category and prefer to stay cautious. According to crypto industry sources, Indian investors continue to maintain discipline towards crypto investments as they understand that there is some amount of risk associated.

SIP option, too

But some platforms are reporting much higher investments. “At Bitbns, we offer a SIP option to our customers called Bitdroplets. Currently, we have over 2.5 lakh active SIP folios with an average ticket size of investment of ₹22,000. In the last one year, the exchange has seen the average investment ticket-size increase by 120 per cent,” said CEO and Co-founder Gaurav Dahake.

More bourses lining up

With investor interest on the rise, many more exchanges are setting up shop in India even as the government is still undecided on regulating or banning cryptocurrencies.

“Based on our previous operations, the average size ranged above ₹1 lakh but the new investors are in the range of ₹50,000,” said Praveen Kumar, Founder, and CEO, Belfrics Group, which recently relaunched its cryptocurrency exchange in India.

It plans to offer a total of 25 coins for its traders and expects more than 30 per cent of its monthly volume to come from India. It also plans to open over 200 physical crypto centres in the next six months.

Crypto exchange WazirX reported a trading volume of over $36 billion in the year-to-date 2021, marking an average of 44 per cent month-on-month growth. Sign-ups on its platform from Tier-2 and -3 cities grew 2,648 per cent.

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Reserve Bank of India – Press Releases

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The Reserve Bank of India will conduct a Variable Rate Reverse Repo auction on November 18, 2021, Thursday, as under:

Sl. No. Notified Amount
(₹ crore)		 Tenor
(day)		 Window Timing Date of Reversal
1 5,50,000 15
(November 19, 2021 being a holiday)		 10:30 AM to 11:00 AM December 3, 2021
(Friday)

2. The operational guidelines for the auction as given in the Reserve Bank’s Press Release 2019-2020/1947 dated February 13, 2020 will remain the same.

Ajit Prasad            
Director (Communications)

Press Release: 2021-2022/1214

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Reserve Bank of India – Press Releases

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(Amount in Crore of ₹)
  SCHEDULED COMMERCIAL BANKS
(Including RRBs and SFBs)		 ALL SCHEDULED BANKS
06-NOV-2020 22-OCT-2021 * 05-NOV-2021 * 06-NOV-2020 22-OCT-2021 * 05-NOV-2021 *
I LIABILITIES TO THE BKG.SYSTEM (A)            
  a) Demand & Time deposits from bks. 203185.48 169593.04 205956.6 208097.89 173775.68 210178.54 **
  b) Borrowings from banks 54589.72 60659.55 54007.05 54594.22 60659.71 54012.05
  c) Other demand & time liabilities 16483.17 19964.35 20152.38 16686.81 20286.84 20474.11
II LIABILITIES TO OTHERS (A)            
  a) Deposits (other than from banks) 14403311.87 15713020.89 16048797.14 14818365.47 16135885.11 16476381.15
  i) Demand 1495021.98 1827340.52 1973113.89 1530338.89 1866802.08 2014881.66
  ii) Time 12908289.89 13885680.45 14075683.33 13288026.58 14269083.11 14461499.56
  b) Borrowings @ 258273.62 257033.07 261010.06 262546.1 261680.92 265536.55
  c) Other demand & time liabilities 606654.95 570504.64 633348.22 618043.3 581105.29 644615.34
III BORROWINGS FROM R.B.I. (B) 114463 93603 96985.79 114463 93603 96985.79
  Against usance bills and / or prom. Notes            
IV CASH 85516.38 107400.62 98093.88 87848.9 109997.65 100393.93
V BALANCES WITH R.B.I. (B) 450856.68 638588.93 670135.27 463596.17 655138.3 687427.36
VI ASSETS WITH BANKING SYSTEM            
  a) Balances with other banks            
  i) In current accounts 22416.71 30921.74 45803.72 24562.17 33139.02 48355.64
  ii) In other accounts 135463.06 134408.15 143374.44 166672.81 167845.67 176623.9
  b) Money at call & short notice 11775.22 13913.35 15679.24 32822.71 30115.28 31515.16
  c) Advances to banks (i.e. due from bks.) 21018.15 23913.28 24470.58 21538.12 24296.72 24849.87 £
  d) Other assets 31795.41 29434.9 26798.95 36336.74 32285.68 29647.88
VII INVESTMENTS (At book value) 4476662.44 4638657.96 4687218.95 4608684.6 4780663.2 4830702.87
  a) Central & State Govt. securities+ 4475234.72 4637469.1 4685927.8 4601028.41 4773438.31 4823421.94
  b) Other approved securities 1427.72 1188.85 1291.16 7656.18 7224.87 7280.94
VIII BANK CREDIT (Excluding Inter Bank Advance) 10419270.55 11044619.18 11163569.74 10753340.54 11388360.47 11516102.43
  a) Loans, cash credits & Overdrafts $ 10250983.34 10833854.34 10946453.79 10583086.38 11175625.04 11296985.62
  b) Inland Bills purchased 24203.07 32685.23 33131.2 24475.17 32716.63 33168.62
  c) Inland Bills discounted 99094.76 128560.05 131775.57 100064.86 129834.05 133063.84
  d) Foreign Bills purchased 16555.97 18104.32 19349 16775.73 18267.99 19559.1
  e) Foreign Bills discounted 28433.41 31415.26 32860.14 28938.42 31916.77 33325.22
NOTE
* Provisional figures incorporated in respect of such banks as have not been able to submit final figures.
(A) Demand and Time Liabilities do not include borrowings of any Scheduled State Co-operative Bank from State Government and any reserve fund deposits maintained with such banks by any co-operative society within the areas of operation of such banks.
** This excludes deposits of Co-operative Banks with Scheduled State Co-operative Banks. These are included under item II (a).
@ Other than from Reserve Bank, National Bank for Agriculture and Rural Development and Export Import Bank of India.
(B) The figures relating to Scheduled Commercial Banks’ Borrowings in India from Reserve Bank and balances with Reserve Bank are those shown in the statement of affairs of the Reserve Bank. Borrowings against usance bills and/ or promissory notes are under Section 17(4)(c) of the Reserve Bank of India Act, 1934. Following a change in the accounting practise for LAF transactions with effect from July 11, 2014, as per the recommendations of Malegam Committee formed to review the Format of Balance Sheet and the Profit and Loss Account of the Bank, the transactions in case of Repo/ Term Repo/MSF are reflected under “Borrowings from RBI”.
£ This excludes advances granted by Scheduled State Co-operative Banks to Co-operative banks. These are included under item VIII (a).
+ Includes Treasury Bills, Treasury Deposits, Treasury Savings Certificates and postal obligations.
$ Includes advances granted by Scheduled Commercial Banks and State Co-operative Banks to Public Food Procurement Agencies (viz. Food Corporation of India, State Government and their agencies under the Food consortium).

Food Credit Outstanding as on
(₹ in Crore)
Date 06-Nov-20 22-Oct-21 05-Nov-21
Scheduled Commercial Banks 83631.04 63697.47 76866.29
State Co-operative Banks 30402.08 35817.5 35817.22

The expression ‘ Banking System ‘ or ‘ Banks ‘ means the banks and any other financial institution referred to in sub-clauses (i) to (vi) of clause (d) of the explanation below Section 42(1) of the Reserve Bank of India Act, 1934.

No. of Scheduled Commercial Banks as on Current Fortnight:135

Ajit Prasad           
Director (Communications)

Press Release: 2021-2022/1213

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Reserve Bank of India – Tenders

Tenders

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A reference is invited to the captioned e-tender no. RBI/Jaipur/Estate/129/21-22/ET/175 which was placed on September 28, 2021 under the “Tenders” link of RBI website (www.rbi.org.in) and MSTC portal (www.mstcecommerce.com).

2. In continuation to this, it is notified that

Sr No. Existing Specification Revised Specification
1. Section III : Scope of Work

List of approved Make

Item Description Preferred Make
Chilled water type Air Conditioning Unit Daikin, Carrier, Caryair
Section III : Scope of Work

List of approved Make

Item Description Preferred Make
Chilled water type Air Conditioning Unit Daikin, Carrier, Caryair or equivalent make.

The last date for submission of captioned tender has been extended to November 25, 2021, 03:00 PM.

Regional Director
Jaipur

Date: 17.11.2021

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No objection certificate from IT dept not required for voluntary liquidation: IBBI

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Insolvency regulator IBBI has clarified that an Insolvency Professional (IP) handling voluntary liquidation process will not be required to seek any No Objection Certificate (NOC) or No Due Certificate from the Income Tax department for compliance with any such process.

Th position was laid down in a circular by the Insolvency and Bankruptcy Board of India (IBBI) which held that the process of applying such NOC/NDC from the IT Department is time-consuming and defeats the objective of time-bound completion of process under the Insolvency and Bankruptcy Code (IBC), the IBBI said.

Currently, the voluntary liquidation regulations mandates the liquidator to make the public announcement within five days office appointment, calling for submission of claims by stakeholders within 30 days from the liquidation commencement date. The regulations also obligate all the financial creditors, operational creditors including government and other stakeholders to submit their claims within the specified period. If the claims are not submitted in time, the corporate person may get dissolved without dealing with such claims and such claims may consequently get extinguished.

It has been noticed that even after providing an opportunity for filing of claims, the liquidators seek NOC/NDC from the income tax department despite the fact that the code or the regulations do not envisage seeking such NOC/NDCs.

Experts’ take

Yogendra Aldak, Partner, Lakshimkumaran and Sridharan Attorneys, said “It brings necessary assurance to the stakeholders and makes sure that the stakeholders are not required to comply with a procedure not contemplated under the Code.”

Veena Sivaramakrishnan, Partner, Shardul Amarchand Mangaldas and Co, said “ Negating the practice of seeking a NOC/NDC from the IT department would operationally ease the process of voluntary liquidation. The liquidators can strike off this requirement from their checklist of obligations.”

Maneet Pal Singh, Partner, I.P. Pasricha & Co, said that in recent times we have seen that the objective of time-bound completion of liquidation process gets defeated primary due to the process of obtaining NOC from the Income Tax Department by the Insolvency Professional since that consumes substantial amount of time against the express provisions of the Insolvency and Bankruptcy Code, 2016.

“In order to tackle the same, the IBBI clarified that an Insolvency Professional handling voluntary liquidation process is not required to seek any NOC from the Income Tax Department and with this we believe that the process will be handled smoothly in a time bound manner”, Singh said.

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Banks see robust festival season credit growth

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Banks collectively lent about four times more in the reporting fortnight ended November 5, vis-a-vis the preceding fortnight amid the festival season, indicating further improvement in credit appetite in the economy.

Banks lent ₹1,27,742 crore in the reporting fortnight ended November 5, against ₹32,671 crore in the preceding fortnight ended October 22, according to Reserve Bank of India (RBI) data on Scheduled Banks’ Statement of Position in India.

Brickwork Ratings (BWR) in a report, noted that credit growth has begun to pick up as business activity resumes in full swing, with gross bank credit growth improving to 6.80 per cent year-on-year (y-o-y) in October 2021 against 5.80 per cent y-o-y growth in June 2021.

In a speech at State Bank of India’s Banking & Economics Conclave on November 16, RBI Governor Shaktikanta Das observed that: “There are signs that consumption demand triggered by the festive season is making a strong comeback. This would encourage firms to expand capacity and boost employment and investment amidst congenial financial conditions.”

New investments

Further, with stronger balance sheets, the organised corporate sector is well-placed to make new investments in emerging areas.

“As demand recovers, I am sanguine about corporate sector playing a major role in turning the investment cycle that will facilitate absorption of surplus liquidity for productive investment,” the Governor said.

In this background, Das emphasised that it is incumbent upon a competitive and efficient financial system to identify high productive sectors and reallocate resources to harness the growth opportunities.

He opined that banks, in particular, should be investment ready when the investment cycle picks up.

The Governor said: “Improved vaccination and reduced infections have materially reduced extreme health outcomes like hospitalisation and mortality.

“This has boosted consumer confidence. With additional boost coming from the festival fervour and pent-up demand, numerous high-frequency indicators suggest that economic recovery is taking hold.”

Per the data on Scheduled Banks’ Statement of Position in India, deposit accretion was at ₹3,40,496 crore in the reporting fortnight against a de-growth of ₹38,019 crore.

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Reserve Bank of India – Press Releases

Press Releases

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Auction Results 91 Days 182 Days 364 Days
I. Notified Amount ₹10000 Crore ₹3000 Crore ₹7000 Crore
II. Competitive Bids Received      
(i) Number 122 102 115
(ii) Amount ₹46168.805 Crore ₹14974.150 Crore ₹16395.150 Crore
III. Cut-off price / Yield 99.1295 98.1312 96.0700
(YTM: 3.5222%) (YTM: 3.8192%) (YTM: 4.1020%)
IV. Competitive Bids Accepted      
(i) Number 15 25 70
(ii) Amount ₹9998.961 Crore ₹2999.802 Crore ₹6999.773 Crore
V. Partial Allotment Percentage of Competitive Bids 33.03% 61.41% 94.91%
(1 Bid) (1 Bid) (2 Bids)
VI. Weighted Average Price/Yield 99.1315 98.1337 96.0955
(WAY: 3.5141%) (WAY: 3.8140%) (WAY: 4.0743%)
VII. Non-Competitive Bids Received      
(i) Number 5 2 2
(ii) Amount ₹4251.039 Crore ₹0.198 Crore ₹0.227 Crore
VIII. Non-Competitive Bids Accepted      
(i) Number 5 2 2
(ii) Amount ₹4251.039 Crore ₹0.198 Crore ₹0.227 Crore
(iii) Partial Allotment Percentage 100% (0 Bids) 100% (0 Bids) 100% (0 Bids)

Ajit Prasad          
Director (Communications)

Press Release: 2021-2022/1212

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Velocity.in raises $20 million in funding led by Peter Thiel’s Valar Ventures

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Velocity.in, a Bengaluru-based fintech start-up, has raised $20 million in Series A funding from Peter Thiel’s Valar Ventures along with the participation from Presight Capital, Utsav Somani’s iSeed, Maninder Gulati (Oyo), Zac Prince (BlockFi) and Philippe De Mota (Hedosophia).

Combined with the $10 million seed round announced earlier this year, Velocity has raised a total of $30 million in equity till now. In addition, Velocity has also raised multiple debt lines with NBFCs to scale its revenue-based financing platform.

Launched in early 2020, Velocity offers revenue-based financing to e-commerce businesses as an alternative to venture capital and traditional bank debt. Within the span of 1.5 years, over 1,500 D2C and e-commerce businesses have signed up for Velocity’s revenue-based financing. The fintech player claims to have over ₹1,200 crore fundable revenues connected to its platform and has processed 250+ investments across 175 companies. With the new capital, the start-up aims to deploy over ₹1,000 crore towards 1,000+ e-commerce businesses.

Commenting on the fundraise, Abhiroop Medhekar, co-founder and CEO of Velocity, said, “Our vision is to build the future of business financing in India. Valar’s investment in our Series A has reaffirmed the firm’s belief in Velocity. We are keen to use this funding to build multiple world class products for thousands of new-age businesses.”

Andrew McCormack of Valar Ventures, said: “Since our last investment, Velocity has grown 10x and secured the lead position in this fast-growing market. Despite this exponential growth, their portfolio quality remains strong. We were impressed by their strong customer orientation, tech-product DNA, and ambitious growth plans.”

Velocity leverages digital data to evaluate an application across 50+ parameters and extend up to ₹3 crore of finance within five days. The repayments happen flexibly as a share of the company’s online revenues. Velocity does not take any collateral, personal guarantee or equity dilution and only charges a fixed fee of 4-8 per cent on the deployed capital.

Brands that have historically raised capital through Velocity are said to have grown their revenues by 1.5x within six months of funding and 78 per cent of these brands become repeat customers. Velocity’s portfolio includes companies like PowerGummies, Green Soul, WallMantra, BellaVita, Smoor Chocolates and CrossBeats.

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