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Banks with 95% cards implement RBI order on recurring payments, BFSI News, ET BFSI

Banking & Finance

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A month after the RBI’s fresh rules on mandates for recurring card payments kicked in, banks accounting for over 95% of credit cards in the market are compliant with the new system. Over 20 lakh e-mandates have been registered by cardholders with a host of merchants.

According to payment industry sources, the banks whose credit cards are eligible for new standing payment mandate include SBI, Axis Bank, HDFC Bank, Yes Bank, American Express, Bank of India, Bank of Baroda, ICICI Bank, HSBC, RBL Bank, IndusInd Bank and Kotak Mahindra Bank. Several banks have enabled the mandate for both debit cards as well as credit cards.

Automatic recurring payments also require the merchant to be on-boarded to the new e-mandate framework. The compliant businesses include most of the OTT (over-the-top) streaming platforms, private life & general insurance companies, global IT giants like Google, Facebook, Microsoft and McAfee, as well as some edtech companies.

Interestingly, Indian cardholders who have registered with overseas service providers, having payment gateways abroad, are not subject to the new rules. This is because the RBI has no jurisdiction to impose second-factor authentication in those markets. It is up to the customer to disable international transactions on their cards.

What has facilitated the fast on-boarding of merchants is IT solutions like SI Hub developed by BillDesk and Mandate HQ developed by Razorpay. However, some domestic banks like Canara Bank & Punjab National Bank and Standard Chartered Bank were until last week in the process of making the necessary system changes.

According to the sources, card-based recurring transactions are 2.5% in terms of the number of transactions and 1.5% in terms of the value of the total card payments done in the country. On average, approximately 75% of domestic recurring transactions are of values of up to Rs 5,000. The corresponding figure for cross-border recurring transactions is approximately 85%.



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Banks face pressure on NIM as they lower rates to outsmart rivals, BFSI News, ET BFSI

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An intense price war in retail loans ahead of the festive season has led to a pronounced fall in interest income for banks, putting pressure on their key profitability parameter: Net interest margins (NIM).

Five of the seven state-owned banks that have announced their quarterly earnings so far have reported lower NIM for the September quarter. These banks, however, managed to report a rise in net profit largely on account of bad loan recovery and write-back of provision made in earlier quarters.

Captains in the banking industry said that they would rely on credit growth to boost NIM in the next two quarters since lending rates would likely remain soft until the monetary policy authority continues its accommodative stance to support economic recovery.

The banking sector’s weighted average lending rates dropped 31 basis points in September to 7.20%, the biggest monthly fall since November 2016. Public-sector banks led the race in slashing loan costs. Lending rates were already low as banks followed regulatory signal on softer interest rate regime over the past two years.

Room for further deposit rate cuts is not available for lenders as real interest rate is already negative, keeping the NIM sticky below 3% for most of them.

Punjab National Bank reported the steepest 25% drop in net interest income among state-owned lenders that have announced their quarterly earnings so far. Canara Bank and Indian Bank have lower NII and NIM for the quarter under review.

The market became too competitive with all large banks lowering interest rates, leading to a fall in NIM, said Indian Overseas Bank chief executive Partha Pratim Sengupta last week. IOB, however, clocked 4.6% higher net interest income even as its NIM fell to 2.51% for the quarter ending September 30 from 2.57% in the year-ago period.

Punjab & Sind Bank has had a marginal rise in NII while its NIM dropped. Bank of Maharashtra and Uco Bank, on the other hand, reported a rise in both NII and NIM.

Indian Bank chief executive Shanti Lal Jain expects interest income to rise in the next two quarters with higher credit off-take, in line with expected economic recovery. Uco Bank’s AK Goel shared a similar view.

Public sector banks, however, would likely face a challenge in terms of credit growth from their private sector peers, which are typically more aggressive in retail lending.

Over the last five years, public sector banks’ market share has dropped by around 10% in both deposits and advances. “Clearly, asset quality and the resultant profitability, as well as capital challenges, have been the key factor in the slowdown of the public sector banks,” Acuite Ratings & Research said in a note.



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Here’s what top banks are offering this festive season, BFSI News, ET BFSI

Banking & Finance

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While the COVID-19 and the resultant lockdown affected the celebrations last year, the festive season finally seems to be getting back on track.

The country is celebrating Diwali this week, giving an opportunity to companies and banks to incentivise their business by offering discounts on a range of items from jewellery to smartphones.

The lockdown was heavy on most, and affected the finances of several families. However, to ensure that these temporary setbacks do not come in the way of Diwali shopping and celebrations, a number of festive offers are up for grabs this year.

State Bank of India- #KhushiyonKaSwagat

This Diwali, if a customer of State Bank of India (SBI) applies for a car loan through YONO app, then they can get an interest rate concession of up to 0.5%, with zero processing fees, the bank said in a tweet.

Customers can get cash back offers up to Rs 2,500 on every purchase on e-commerce sites such as Flipkart and Amazon. Besides, one can get instant loan approval now.

The bank is offering car loans from 7.25%, gold loans from 7.50%, personal loans from 9.60%.

Additionally, the home loan offer which was started in September is still there. SBI currently offers home loans at only 6.7% for any amount and any tenure without any processing fees.

ICICI Bank- #FestiveBonanza

ICICI Bank launched ‘Festive Bonanza’ with a complete range of offers, heavy discounts and cash back available on a range of products, including luxury items from premium brands and leading e-commerce platforms.

As part of the ‘Festive Bonanza’, the bank is offering up to 20% cash back and discount on every purchase on Amazon, Myntra, Flipkart, Jiomart, Reliance Digital, among other platforms.

Besides, benefits are there for retail and business customers on various banking products and services such as home loan, car loan, overdraft facility and others.

Diwali 2021: Here's what top banks are offering this festive season

HDFC Bank- #FestiveTreats

HDFC bank has partnered with over 10,000 merchants across more than 100 locations to offer special deals specifically created for their personal and business needs in this Diwali time.

Benefits offered to customers include cash backs and no-cost EMIs on premium mobile phones, up to 22.5% cash back and no-cost EMI on electronics and consumer goods such as washing machines and refrigerators on shopping platform Amazon by using HDFC Bank’s credit and debit cards.

Personal loans starting at 10.25% interest with instant disbursal in account are also there. Customers can avail car loans starting at 7.50% with zero foreclosure charges and funding of up to 100% on two-wheeler loans and 4% less on interest rates, the bank said

BOI- #BOIUtsav

Bank of India has announced a 35 basis-point cut in its home loan interest rates and 50 basis-point reduction in vehicle loan interest rates. The minimum rate now starts at 6.50% against 6.85% on home loans and 6.85% against 7.35% earlier on vehicle loans.

This special rate, which was effective from October 18 till December 31, is available for customers applying for fresh loans, and for those seeking transfer of loans. Processing charges have also been waived for both the loans till 2022.

Axis Bank- #DilSeOpenCelebrations

Axis Bank is offering waivers of 12 EMIs on select home loan products in this festive season and providing on-road finance without any processing fees for two-wheelers customers.

To boost local retailers during this season, Axis Bank has roped in more than 2,500 local stores across 50 cities. The bank customers will get discounts up to 20% on shopping from these stores. Besides, one can get 10% or more cash back when purchasing on popular e-commerce platforms such as Flipkart and Amazon.

BOB- #KhushiyonKaTyohaar

Bank of Baroda also extended Diwali offers. This bank has slashed interest rates on both home car loans that start from 6.5% and 7% respectively. Processing charges are also waived for both the loans.



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Yes Bank appoints Sharad Sharma non-executive director, BFSI News, ET BFSI

Banking & Finance

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New Delhi, Yes Bank on Monday said it has appointed Sharad Sharma as a non-executive director with effect from November 1, 2021. “Sharad Sharma has been co-opted as non-executive director of the board of the bank with effect from November 1, 2021, to broad base the board,” Yes Bank said in a release.

The decision comes vide a notification from the Finance Ministry under the ‘Yes Bank Ltd Reconstruction Scheme 2020‘.

Sharma will continue to hold his office until an “alternate board” is constituted by the bank in accordance with the procedure laid down in its Memorandum and Articles of Association, Yes Bank said in a regulatory filing.

He will be eligible to be appointed on the “alternate board” to be constituted under the Scheme with the approval from shareholders in due course, it said.

Sharma is a career banker with 40 years of experience in the banking industry.

He was Managing Director of State Bank of Mysore during the period from August, 2012 to April 2016, where he was seconded from State Bank of India (SBI). He joined Union Bank of India as a probationary officer in 1975 before joining SBI as PO in September, 1977.

Sharma held various assignments across all fields of a banking organisation, including exposure to international banking, when he was posted in SBI’s 100 per cent owned Canadian banking subsidiary.

His major interest has been primarily in the corporate and SME banking segment. PTI KPM MR MR



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RBI, BFSI News, ET BFSI

Banking & Finance

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Unity Small Finance Bank Limited, a joint venture between Centrum Group and Bharatpe, has commenced operations as a small finance bank with effect from Monday, according to an RBI release.

On October 12, the Reserve Bank gave the final licence to Unity Small Finance Bank, a consortium floated by Centrum Financial Services and Resilient Innovations, an arm of the digital lending platform Bharatpe, four months after giving it an in-principle nod to establish a small finance bank and then takeover the scam-ridden Punjab and Maharashtra Cooperative (PMC) Bank, which was under direct RBI control since mid 2019.

In June, the Reserve Bank had given the in-principle approval for the 12th small finance bank licence to the consortium provided its takes over PMC, the city-based cooperative lender under restrictions for more than two years after a massive over Rs 7,000-crore fraud.

The Centrum group owns 51 per cent in Unity Small Finance Bank and the remaining equity is held by the Gurugram-based Bharatpe.

While giving the in-principle, the RBI said it has been accorded in specific pursuance to the Centrum Financial Services Limited’s offer in February in response to the Expression of Interest published by the Punjab & Maharashtra Co-operative Bank Ltd, Mumbai. PTI NKD MR MR



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Punjab & Sind Bank Q2 rises 25.29% sequentially

Banking & Finance

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Punjab & Sind Bank (PSB) on Monday reported a net profit of ₹218 crore for the quarter-ended September 30 as against a net loss of ₹401 crore in the same quarter last fiscal.

On a sequential basis, net profit for the quarter under view grew 25.29 per cent as compared to net profit of ₹174 crore in the first quarter this fiscal.

S Krishnan, Managing Director & CEO, PSB expressed confidence that the public sector lender will be able to sustain this bottomline performance in the subsequent quarters as well.

Operating profit rises

Operating profit of the bank for the quarter increased 20.29 per cent to ₹249 crore as compared to ₹207 crore in the same quarter last fiscal.

Gross non performing assets stood at ₹9,823 crore as on September-end 2021 as against ₹9,055 crore in June-end 2021. It stood at ₹8,673 crore as on September 2020.

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HDFC reports 31.7% jump in standalone net profit in Q2

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Housing Development Finance Corporation (HDFC) Ltd on Monday reported a 31.7 per cent jump in its standalone net profit for the second quarter of the fiscal, led by higher dividend income as well as a drop in expenses.

It said that the individual approvals and disbursements grew by 67 per cent and 80 per cent, respectively, during the half-year ended September 30, 2021 compared to the corresponding period in the previous year. “Individual disbursements in the month of October 21 were the highest ever in a non-quarter end month,” it further said.

Spike in total income

For the quarter ended September 30, HDFC had a standalone net profit of ₹3,780.5 compared to ₹2,870.12 crore in the corresponding quarter last fiscal. Its total income increased by 4.2 per cent to ₹12,226.39 crore in the second quarter of the fiscal as against ₹11,732.70 crore in the same period last fiscal.

The net interest income for second quarter of the fiscal rose by 13 per cent to ₹4,108.51 crore from ₹3,646.54 crore a year ago. The net interest margin was 3.6 per cent for the quarter under review as against 3.7 per cent for the first quarter of the fiscal. Dividend income shot up to ₹1,171.26 crore in the July to September 2021 from ₹322.97 crore a year ago.

Home loans demand

“The demand for home loans continues to remain strong. Growth in home loans was seen in both the affordable housing segment as well as in high end properties. The increasing sales momentum and new project launches augurs well for the housing sector,” HDFC said in a statement on Monday.

The collection efficiency for individual loans on a cumulative basis improved to stand at over 98 per cent during the quarter ended September 30. The provisions as at September 30, 2021 stood at ₹13,340 crore

As per regulatory norms, the gross non-performing loans as at September 30, 2021 stood at ₹10,341 crore. This is equivalent to 2 per cent of the loan portfolio compared to 2.24 per cent as on June 30, 2021.

Expected credit loss was ₹452 crore for the second quarter of the fiscal, marginally higher than ₹436 crore a year ago. This was however, a 34.1 per cent drop from the expected credit loss of ₹686 crore as of June 30, 2021.

As at September 30, 2021, loans restructured under the RBI’s resolution framework for Covid-19 related stress (OTR 1 and 2.0) was equivalent to 1.4 per cent of the loan book compared to 0.9 per cent as at June 30, 2021.

Of the loans restructured, 63 per cent are individual loans and 37 per cent are non-individual loans. Of the total restructured loans, 35 per cent is in respect of just one account. Assets under management increased by 10.6 per cent to ₹5.97-lakh crore as of September 30 from ₹5.4-lakh crore a year ago.

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Yes Bank appoints Sharad Sharma as Non-Executive Director

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Yes Bank has co-opted Sharad Sharma as Non-Executive Director on its board of directors.

The appointment is with effect from November 1 and will help broad base the board, it said in a statement on Monday.

Sharma is a career banker with forty years of banking experience. He was the Managing Director of State Bank of Mysore from August 2012 to April 2016, where he was seconded from State Bank of India.

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Bandhan Bank gets empanelled as agency bank of RBI

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We are indeed grateful for this opportunity,” said Chandra Shekhar Ghosh, managing director and chief executive officer.

The Reserve Bank of India (RBI) has authorised private sector lender Bandhan Bank as its agency bank for undertaking government businesses. The appointment would allow the Kolkata-based lender to undertake government businesses on behalf of the RBI. With this, Bandhan Bank joins ranks with a few other scheduled private sector banks to be empanelled as agency banks of the RBI, the lender said in a release on Monday.

As an agency bank of the RBI, authorised to undertake government business, the bank will be able to handle transactions related to collection of state taxes and revenue receipts such as the GST and VAT; collection of stamp duty and pension payments on behalf of the central and state governments.

“The bank’s extensive branch network, especially in rural and semi-urban areas; state-of-the art products and services; and digital banking capabilities will help it discharge its duties effectively by bringing governments and citizens closer to each other,” the release said.

“Since its launch six years ago, Bandhan Bank has been dedicated towards bringing millions of Indians into the fold of formal financial services and catalysing the creation of sustainable livelihoods. The RBI’s decision to authorise Bandhan Bank to undertake government business as an agency bank will further help us contribute to nation building; and we thank the RBI for this approval. Bandhan Bank enjoys the trust of over 2.4 crore customers, and now, we have the opportunity to serve the government with our banking services. We are indeed grateful for this opportunity,” said Chandra Shekhar Ghosh, managing director and chief executive officer.

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RBI approves Bandhan Bank as ‘agency bank’ to conduct govt biz

Banking & Finance

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The Reserve Bank of India (RBI) has authorised Bandhan Bank as an agency bank for undertaking government business. With this, the bank joins ranks with a few other scheduled private sector banks to be empanelled as agency banks of the RBI.

The announcement comes close on the heels of a RBI guideline earlier in May this year that authorises scheduled private sector banks as agency banks of the regulator for the conduct of government business.

The guidelines were revised by the Central bank following the lifting of embargo put in place by Department of Financial Services, Ministry of Finance in 2012 on further allocation of government business to private sector banks through a communication dated February 24, 2021.

Handle transactions

As an agency bank of the RBI, Bandhan Bank will be able to handle transactions related to collection of State taxes and revenue receipts such as GST and VAT, collection of stamp duty and pension payments on behalf of the Central and the State governments.

The bank’s extensive branch network, especially in rural and semi-urban areas, and its digital banking capabilities would help bring governments and citizens closer to each other, the bank said in a press statement.

“The RBI’s decision will further help us contribute to nation-building and we thank the RBI for this approval. Bandhan Bank enjoys the trust of over 2.4 crore customers. We now have the opportunity to serve the government with our banking services,” Chandra Shekhar Ghosh, MD & CEO, Bandhan Bank said in the statement.

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