Author: root

HDFC Bank will issue 3 lakh cards a month, regain lost ground, BFSI News, ET BFSI

Banking & Finance

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HDFC Bank on Monday unveiled its plans to regain the market share it lost in credit cards during an eight-month ban on new issues. The bank said that it will issue three lakh cards a month — its monthly run rate before the ban — for the next two to three quarters, following which it will scale up to five lakh cards a month.

Outlining the plans, the bank’s group head for payments & consumer finance, digital banking and IT, Parag Rao, said, “In the next three to four quarters, we will regain all our lost market share. The bank has lost close to 2% as rivals like ICICI Bank, Axis Bank and SBI Card swooped in to fill the demand.

According to Rao, the fourpronged strategy would be to tweak the products, sell more cards to its six-crore customer base, add more partners like fintech companies, telecom, hospitality and pharma companies. It has also revamped the digital process to allow more do-it-yourself features to customers on the bank’s app.

Rao said that despite the embargo from the RBI, the bank managed to scale up spend volumes by 60% year-on-year during the first quarter. “Our card spend is on an average one and a half times that of the industry,” said Rao. He said in the eight months the bank has been busy analysing industry trends and customer behaviour and now planned to put them to work.



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2 Stocks To Buy As Recommended By Sharekhan for Long-Term Investors

Personal Finance

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Buy Indigo Paints for a price target of Rs 3305

The brokerage sees a rally in the stocks to levels of Rs 3,305 from the current market price of Rs 2,547.

According to Sharekhan Indigo Paints Limited (IPL) is an emerging player, which has created a niche for itself in the highly competitive paints industry by launching differentiated products, creating brand equity through one prominent brand ‘Indigo’ and follow bottoms-up approach to expand its distribution in the domestic market. It has market share of 2% but has strong potential to improve it in the coming years.

“Gross margins are highest among peers at 48% led by Indigo’s locational advantage and healthy mix of revenues from differentiated products. With a differentiated product portfolio and bottom-up approach, Indigo Paints is emerging as one of India’s fastest growing paints companies. Revenues and PAT clocked a CAGR of 22% and 71% over FY2018-21,” the brokerage has said.

According to the firm, better working capital management has kept net working capital cycle low at 13-14 days.

“We initiate coverage on Indigo Paints with a Buy and assign a target price of Rs. 3,305. Differentiated business model, excellent return profile and strong structural growth outlook will keep valuation at a premium of 60x/44x its FY2023/24E earnings versus peers,” Sharekhan has said.

Buy Sundram Fasteners, Says Sharekhan

Buy Sundram Fasteners, Says Sharekhan

Sharekhan has set a target price of Rs 994 on the stock of Sundram Fasteners as against the current market price of Rs 754.

According to Sharekhan the company displayed strong performance in Q1FY2022, beating street expectations, led by robust operational performance, despite tough environment. Export and non-automotive segments remain the top focus areas for the management to de-risk business from cyclicality.

“We expect Sundram Fasteners earnings CAGR to improve by 32.3% during FY2021E-FY2023E, driven by a 26% revenue CAGR during FY2021E-FY2023E and a 20 bps improvement in EBITDA margin to 18.4% in FY2023E from 18.2% in FY2021, with ROCE progressing to 22.6% in FY2023E,” the brokerage has said.

“We continue to retain our Buy rating on Sundram Fasteners Limited with an unchanged price target of Rs 994, led by the company’s strong performance outpacing the automobile industry’s growth through diversifying client and product portfolios, benefiting from its established client relationships, and prudent capital allocation,” Sharekhan has said.

“The company has a strong long-term revenue visibility, given its strong relationships with original equipment manufacturers (OEMs), both in India and globally. We retain our Buy rating on the stock,” the brokerage has added.

Shares in Sundram Fasteners last closed at Rs 754.90.

Disclaimer

Disclaimer

Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. The above article is for informational purposes only and is picked from the brokerage report of Sharekhan. Be careful while investing as the Sensex has now crossed 55,500 points. Investors can invest small amounts and avoid putting lumpsum.



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M&M ties up with SBI for small CV financing, BFSI News, ET BFSI

Personal Finance

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New Delhi: Mahindra & Mahindra (M&M), one of the top commercial vehicle manufacturers in India, on Monday inked a Memorandum of Understanding (MoU) with the State Bank of India (SBI) to offer financial assistance for the purchase of M&M’s range of small commercial vehicles and PickUps. SBI’s Contactless Lending Platform technology will further ensure uniformity, transparency and a reduced turnaround time in the loan approval process, the automaker said in a release.

Amit Sagar, business head – SCV, automotive division, M&M, said, “Our financing scheme is not just unique, but also very pertinent, given SBI’s reach and trust across the length and breadth of the country. This scheme will provide the desired impetus and confidence to our SCV and PickUp customers and help them prosper.”

The collaboration with SBI will allow M&M’s small commercial vehicle customers to avail of loan in a contactless manner with only 59 minutes loan approval process. This will help customers own a superior product with EMI as low as INR 6666 (for a loan amount of 3.45 lakh) and a lower interest rate of 11.5%, the company said.

It also gives flexibility of extended tenure up to six years including a one-month moratorium period also. The customers can opt for a higher loan amount with up to 85% on-road funding. There is no requirement of any third-party guarantor, M&M added.

Along with MSME, small road transport operators and the first-time-buyers of small commercial vehicles can also take benefit from this breakthrough M&M vehicle financing scheme with SBI, the automaker highlighted.

M&M recently launched the SUPRO Profittruck range which is developed on the SUPRO platform. The SUPRO Profittruck range comes in both diesel as well as CNG fuel options. The Jeeto brand launched in 2015,has thus far gone home to 2 lakh customers. In sub 2-tonne load category, it comes with multi fuel options of Diesel, CNG & Gasoline and in two different deck sizes providing an array of options to customers.

Mahindra Bolero PickUp range has been the market leader for over two decades with more than 16 lakh customers, claims the company. Mahindra Bolero PickUp has a wide range of vehicles – Single cabin, Double cabin, AC, 4WD and CNG options along with multiple payload and cargo sizes suiting the customer requirements.



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Rana Kapoor files recall application against court’s order allowing ED to question him, BFSI News, ET BFSI

Banking & Finance

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A special court here has permitted the Enforcement Directorate (ED) to question arrested banker Rana Kapoor in a money laundering case.

The said case pertains to a loan taken by Oyster Buildwell Pvt Ltd, a holding company of Avantha Realty Limited from Yes Bank Ltd )YBL), and its alleged misappropriation between 2017 and 2019.

The ED had registered a money laundering case based on the predicate offence registered by the Central Bureau of Investigation (CBI) against Kapoor, his wife Bindu Kapoor and promoter of Avantha group, Gautam Thapar for “illegal gratification in lieu of favours extended in connection with official work”. The agency has pegged the loss caused to the bank at Rs.466.51 crores.

While on August 20, the court allowed the federal agency plea to interrogate Kapoor between August 25 and August 27at the Taloja Central Prison, the promoter of Yes Bank Ltd Monday filed an application to recall the order on the ground of not being heard,

Advocate Vijay Agarwal along with Advocate Ayush Jindal appeared for Kapoor, in the said matter. “..in view of the fact that the accused had not been afforded an opportunity to be heard which is directly in contravention with his fundamental rights and as principles of Natural Justice were not obeyed,” Kapoor’s counsels contested.

They also pleaded that Kapoor be interrogated only under audio-visual surveillance and in the presence of his legal representatives.

The ED has contested the application. The court has adjourned the matter for arguments.



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Bandhan Bank to invest in digital capabilities, BFSI News, ET BFSI

Banking & Finance

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Kolkata, Aug 23 (PTI) MFI-turned-bank Bandhan Bank will invest in improving digital capabilities as a part of Vision 2025, MD and CEO of the private lender Chandra Sekhar Ghosh said on Monday. Speaking at the sixth foundation day programme of the bank, Ghosh said the bank will also leverage machine learning and artificial intelligence.

“As a part of Vision 2025, Bandhan Bank will invest in digital capabilities. There is a need for digital transformation and improving the technology backbone,” he said.

With a present business size of Rs 1.50 lakh crore, Ghosh said the vision envisaged by the bank is having a well-diversified asset portfolio, optimum mix of secured and unsecured assets and geographically diversified.

Former chairman of State Bank of India and present head of Salesforce India, Arundhuti Bhattacharya, said there is a need for the bank to shift data on the cloud from its own premises and the regulatory system should encourage this migration. PTI dc NN NN



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HDFC Bank outlines aggressive play in credit cards to regain lost mkt share in a year, BFSI News, ET BFSI

Banking & Finance

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Mumbai, Aug 23 (PTI) HDFC Bank on Monday said it aims to regain the two per cent market share in the credit card market it ceded to rivals during a recent ban, within a year by aggressively tapping into its existing depositor base. The bank will also focus on forging new partnerships to sell more cards and will not deviate from its conservative approach on taking credit risks as it goes aggressive in the market, its group head for payments and consumer finance, digital banking and IT, Parag Rao, told reporters.

On August 17, RBI lifted the ban on HDFC Bank which had prevented it from issuing new credit cards from December 2020. However, the restrictions on launching new digital initiatives are yet to be lifted. Its smaller rivals, including ICICI Bank and SBI Card, have utilised the opportunity created by HDFC Bank’s absence to narrow the gap with the market leader in the last eight months.

Going forward, HDFC Bank has set specific milestones for itself, which will include ramping up monthly card issuances to the November 2020 level of 3 lakh in up to three months, and going up further two 5 lakh a month in another two quarters, Rao said.

In the next three-four quarters, HDFC Bank is targeting to regain all the lost market share, he added.

When asked about the restrictions on digital launches, Rao said the bank continues to engage with RBI on compliance with remedial objectives. It has closed the short term milestones, is in the final laps on the medium term ones and work is in progress on the long term ones, Rao said, adding that it is waiting to hear from RBI.

HDFC Bank’s outstanding credit cards has declined to 1.48 crore as of June 2021 from 1.53 crore in November 2020 as a result of the ban. The same for ICICI Bank increased to 1.10 crore from 97 lakh, and SBI Card had its number increase to 1.20 crore in June 2021 from 1.12 crore in November 2020.

Rao said while the bank lost market share by number of active cards, it has been able to retain its share by overall spending courtesy specific initiatives to prod customers.

He said overall spends on the credit card portfolio have increased 60 per cent in the April-June quarter as against the year-ago period while the Earnest Monthly Instalment (EMI) option on high value purchases has seen an 80 per cent increase, and the bank is 1.5 times ahead of competition on spends.

When asked about the credit quality, Rao declined to comment on the specifics on the portfolio but asserted that it will not be softening on its conservative stance on extending credit. The bank will make use of more digital and data analytics products while extending credit, he said.

The bank expects a bulk of the new cards to come from existing customers who have deposits with the bank, Rao said, adding that it has 6 crore customers at present.

Serving the existing customers helps from a quality perspective as the bank has a better understanding of the customers, he said, adding that it already has a significant amount of customers with pre-approved credit cards who have not been contacted in the last eight months.

Moreover, customer insights are also pointing to higher affinity to cards with lower credit limits, he said. The bank will start serving such segments as well.

Apart from its own customers, the bank will depend on partnerships and tie-ups with other players, including fintech players, payment companies and corporates to engage new clients. The partnership with Paytm announced earlier in the day is the first such initiative, he noted.

In a statement, the bank said it has 20 such initiatives planned over the next 6-9 months, which will also include co-branded offerings with companies in the pharma, travel, fast moving consumer goods, hospitality, telecom and fintech space.

As it engages more with partners, the ratio of new to bank customers in the incremental credit card customers will increase to 25 per cent of the overall from the present 20 per cent, Rao said.

“The last few months have been spent in readying ourselves for the future. When the restrictions from the regulator were in place, we utilised the time to chalk out a new strategy. With our new offerings as well as our existing suite of cards, we are confident of meeting the needs of our customers and ‘come back with a bang’,” he said.

The bank scrip closed 0.60 per cent higher at Rs 1,523.50 a piece on the BSE on Monday as against gains of 0.41 per cent on the benchmark.



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RBI imposes Rs 27.5 lakh penalty on Dhanlaxmi Bank, Rs 20 lakh on a co-op bank, BFSI News, ET BFSI

Banking & Finance

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The RBI on Monday said it has imposed a penalty of Rs 27.5 lakh on Dhanlaxmi Bank, Thrissur, for contravention of certain norms related to the ‘Depositor Education and Awareness Fund Scheme’.

The banking regulator also imposed a Rs 20 lakh penalty on the NE & EC Railway Employees’ Multi-State Primary Cooperative Bank, Gorakhpur, for deficiencies in regulatory compliance.

In a statement, the RBI said penalty on Dhanlaxmi Bank has been imposed for contravention of a section of the Banking Regulation Act, 1949 read with a paragraph of The Depositor Education and Awareness Fund Scheme, 2014 (the scheme).

The RBI said the Statutory Inspection for Supervisory Evaluation (ISE) of the bank was conducted with reference to its financial position as on March 31, 2020, and the examination of the Risk Assessment Report and Inspection Report pertaining to the same, revealed, inter-alia, contravention of the provisions of the Act read with the scheme.

A notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for contravention.

“After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of contravention of aforesaid provisions of the Act read with the scheme was substantiated and warranted imposition of monetary penalty on the bank,” it said.

In another statement, the RBI said the inspection report of the NE & EC Railway Employees’ Multi-State Primary Co-operative Bank based on its financial position as on March 31, 2019 revealed non-adherence/violation of specific directions issued to it under the Supervisory Action Framework (SAF).

In both cases, the RBI said, the penalty 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 banks with their customers.



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HDFC Bank aims to regain cards market share in 3-4 months

Banking & Finance

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Also, there is a larger 60 million-strong base available for customers who are sort of keen on taking credit cards.

HDFC Bank is aiming to hit the credit card issuance run rate it had just prior to the embargo issued by the Reserve Bank of India (RBI). It plans to recover its market share in cards outstanding over the next three-four months, the bank said on Monday.

Parag Rao, group head – payments, consumer finance, digital banking & IT, HDFC Bank, said in November 2020, the bank had hit a run rate of incremental issuance of over 3 lakh cards per month. “So, in a quarter, we plan to hit that milestone and post that it would be half a million cards a month which we expect to happen over the next two quarters. Over the next three to four quarters, our clear aim is to regain the market share (by number of cards) which we have lost and are pretty confident with the plan we have in place,” Rao said.

According to a recent report by Motilal Oswal Financial Services, HDFC Bank has lost nearly 0.6 million cards since the date of the embargo in December 2020. On the other hand, ICICI Bank, SBI Card and Axis Bank added around 1.3 million, 0.75 million and 0.3 million new cards, respectively, over the same period. ICICI Bank and SBI Card’s incremental market share rose sharply to 49% and 28%, respectively, during the period, the report said.

Prior to the ban, HDFC Bank held pole position in terms of both number of cards in force as well as card spends.

The bank’s open market strategy before the embargo was 15-18% of its total card base. With the increase in very selective strategic alliances, the share of open market customers could go up to 22-24% in the long run, Rao said. The strategy will still be to reach out to existing bank customers. “We will always have a set of pre-approved liability customers,” he added.

Rao said during the embargo, the lender looked at a number of issues, which customers were facing and took some commercial and technical decisions to make the experience simpler. The bank focused on its existing card portfolio, connecting with them and looking at detailed patterns of their spends.

Over the last eight months, HDFC Bank had been sourcing in excess of 4 lakh accounts every month and it sees that base as available for immediate sourcing. Also, there is a larger 60 million-strong base available for customers who are sort of keen on taking credit cards.

“So even within the bank’s internal base, we have a significant headroom to grow and that’s the reason I said our strategy will continue to be largely focusing on internal customers, customers who have a liability relation with the bank,” Rao said.

For the time being, all new credit cards issued by HDFC Bank will be on the Visa and RuPay platforms as MasterCard and Diners International are currently barred from issuing new cards.

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Reserve Bank of India – Press Releases

Press Releases

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Government of India (GOI) has announced the sale (issue/re-issue) of four dated securities for a notified amount of ₹31,000 crore as per the following details:

Sr No Security Date of Repayment Notified Amount
(₹ crore)		 GoI specific Notification Auction Date Settlement Date
1 5.63% GS 2026 April 12, 2026 11,000 F.No.4(3)-B(W&M)/2021 dated August 23, 2021 August 27, 2021
(Friday)		 August 30, 2021
(Monday)
2 New GoI FRB 2034 October 30, 2034 3,000
3 6.64% GS 2035 June 16, 2035 10,000
4 6.67% GS 2050 December 17, 2050 7,000
  Total   31,000      

2. GoI will have the option to retain additional subscription up to ₹ 8,000 crore against above security/securities.

3. The securities will be sold through Reserve Bank of India Mumbai Office, Fort, Mumbai – 400001. The sale will be subject to the terms and conditions spelt out in the ‘Specific Notification’ mentioned above and the General Notification F.No.4(2)–W&M/2018, dated March 27, 2018.

4. The auction will be conducted using uniform price method for 5.63% GS 2026, New GoI FRB 2034, 6.64% GS 2035 and multiple price method for 6.67% GS 2050. Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on August 27, 2021 (Friday). The non-competitive bids should be submitted between 10.30 a.m. and 11.00 a.m. and the competitive bids should be submitted between 10.30 a.m. and 11.30 a.m. The result will be announced on the same day and payment by successful bidders will have to be made on August 30, 2021 (Monday).

5. Bids for underwriting of the Additional Competitive Underwriting (ACU) portion can be submitted by ‘Primary Dealers’ from 9.00 a.m. up to 9.30 a.m. on August 27, 2021 (Friday) on the Reserve Bank of India Core Banking Solution (E-Kuber) system.

6. The Stocks will be eligible for “When Issued” trading for a period commencing from August 24, 2021 – August 27, 2021.

7. Operational guidelines for Government of India dated securities auction and other details are given in the Annex.

Ajit Prasad
Director   

Press Release: 2021-2022/732

ANNEX

Type of Auction

1. For multiple price-based auction, successful bids will get accepted at the respective quoted yield/price for the security. For uniform price-based auction, bids will get accepted at the cut off yield/price accepted in the auction.

2. The auction will be yield based for new security and price based for securities which are re-issued.

3. In case of a Floating Rate Bonds (FRB), the auction will be spread-based for new security and price based for securities which are reissued. At the time of placing bids for new FRB, the spread should be quoted in percentage terms.

Minimum Bid Size

4. The Stocks will be issued for a minimum amount of ₹10,000/- (nominal) and in multiples of ₹10,000/- thereafter.

Non-Competitive Segment

5. In all the auctions, Government Stock up to 5% of the notified amount of sale will be allotted to the eligible individuals and institutions under the Scheme for Non-competitive Bidding Facility in the Auctions of Government Securities.

6. Each bank or Primary Dealer (PD) on the basis of firm orders received from their constituents will submit a single consolidated non-competitive bid on behalf of all its constituents in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system.

7. Allotment under the non-competitive segment to the bank or PD will be at the weighted average rate of yield/price of the successful bids that will emerge in the auction on the basis of the competitive bidding.

Submission of Bids

8. Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system.

9. Bids in physical form will not be accepted except in extraordinary circumstances.

Business Continuity Plan (BCP)-IT failure

10. Only in the event of system failure, physical bids will be accepted. Such physical bids should be submitted to the Public Debt Office, Mumbai through (email; Phone no: 022-22632527, 022-22701299) in the prescribed form which can be obtained from RBI website (https://www.rbi.org.in/Scripts/BS_ViewForms.aspx) before the auction timing ends.

11. In case of technical difficulties, Core Banking Operations Team should be contacted (email; Phone no: 022-27595666, 022-27595415, 022-27523516).

12. For other auction related difficulties, IDMD auction team can be contacted (email; Phone no: 022-22702431, 022-22705125).

Multiple Bids

13. An investor can submit more than one competitive bid in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system.

14. However, the aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.

Decision Making Process

15. On the basis of bids received, the Reserve Bank will determine the minimum price up to which tenders for purchase of Government Stock will be accepted at the auctions.

16. Bids quoted at rates lower than the minimum price determined by the Reserve Bank of India will be rejected.

17. Reserve Bank of India will have the full discretion to accept or reject any or all bids either wholly or partially without assigning any reason.

Issue of Securities

18. Issue of securities to the successful bidders will be by credit to Subsidiary General Ledger Account (SGL) of parties maintaining such account with Reserve Bank of India or in the form of Stock Certificate.

Periodicity of Interest Payment

19. Interest on the Government Stock will generally be paid half-yearly other than in case of securities with non-standard maturities. The exact periodicity of coupon payment is invariably mentioned in the specific notification for the issue of security.

Underwriting of the Government Securities

20. The underwriting of the Government Securities under auctions by the ‘Primary Dealers’ will be as per the “Revised Scheme of Underwriting Commitment and Liquidity Support” announced by the Reserve Bank vide circular RBI/2007-08/186 dated November 14, 2007 as amended from time to time.

Eligibility for Repurchase Transactions (Repo)

21. The Stocks will eligible for Repurchase Transactions (Repo) as per the conditions mentioned in Repurchase Transactions (Repo) (Reserve Bank) Directions, 2018 (Reserve Bank) Directions, 2018 as amended from time to time.

Eligibility for ‘When Issued’ Trading

22. The Stocks will be eligible for “When Issued” trading in accordance with the guidelines on ‘When Issued transactions in Central Government Securities’ issued by the Reserve Bank of India vide circular No. RBI/2018-19/25 dated July 24, 2018 as amended from time to time.

Investment by Non-Residents

23. Investments by Non-Residents are subject to the guidelines on ‘Fully Accessible Route’ for Investment by Non-residents in Government Securities and Investment by Foreign Portfolio Investors (FPI) in Government Securities: Medium Term Framework (MTF).

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Reserve Bank of India – Tenders

Tenders

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A Pre-bid meeting on E-tender for Supply, Installation, Testing and Commissioning of X-Ray Baggage Scanner System for Bank’s Office Building at RBI, Jammu issued on MSTC and RBI website on July 29, 2021 was held at 11.00 am, at RBI, Jammu, on August 23, 2021 via WebEx. The names of firms and their representatives who participated in the meeting are as under:

Sl. No Name of the representative Name of the organization
1. Shri Samir Bhatt M/s D.B. Impex
2. Shri Karthik Mudliar M/s Astrosonic Imaging Systems
3. Shri Ashish Sumrani M/s Vehant Technologies
4. Shri Sunil Kumar Pandey M/s Evolve IT Solutions Pvt. Ltd

2. Bank’s side was represented by following officials:

Sl. No Name of Bank’s Official Designation
1. Shri Bhaskar Choudhury DGM–Electrical-PMCNZ
2. Shri Sanjeev Sharma AGM
3. Shri Himanshu Bhatt AM-Electrical
4. Shri Sumit Jain AM

The queries raised by the representatives and the clarifications thereto are as under:

S.No Query Raised Clarifications
1. Government of India has come with circulars on Performance Bank Guarantee (PBG) Security where a PBG of 3 % is applicable instead of 5%. The requirement for Performance Bank Guarantee has been reduced from 5% to 3% for tenders to be invited on or before December 31, 2021 as per RBI circular dated June 28, 2021 on Performance Bank Guarantee – Review of Instructions. However, as per above CO circular, PBG of 5% would continue to remain applicable for specialized/ technology based works like lit UPS, X-Ray Baggage scanner etc.
2. MSEs are exempted from submission of EMD for the captioned work. Registered MSEs are exempted from submission of EMD for works having an estimated cost of up to Rs.10 lakh (including all taxes, duties etc). However, there is no exemption of submission of EMD for the captioned work as the cost of work is beyond the permissible limit.

Note: All other terms and conditions of the captioned tender remain unchanged.

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