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Instant Cross-Border QR Payment between Indonesia and Thailand begins, BFSI News, ET BFSI

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Bank Indonesia (BI) and Bank of Thailand (BOT) have launched a Cross-Border QR Payment Linkage. This will allow consumers and merchants in both the countries to make and accept instant cross-border QR payments for goods and services.

This is the first initiative between the two countries that links the retail payment system operators within them and is expected to smoothen interconnection and pave the way for customers, merchants, and operators for the full commercial launch in 2022. More participating banks/non-banks are expected to join till then.

The development reflects the commitment of ASEAN member countries towards the ASEAN Payment Connectivity initiative. In April 2021, The Monetary Authority of Singapore (MAS) and the Bank of Thailand (BOT) launched the first ever payment link between two countries. While Malaysia and Thailand launched a similar link in June 2021.

ASEAN member countries aim to achieve cross-border real-time retail payments in the region by 2025.

Mr. Sugeng, Deputy Governor of BI said, “This initiative is a milestone of the Indonesian Payment System Blueprint 2025, especially in retail payments. It links cross-border payments through the interconnection of national QR codes of our two countries. One interesting aspect of this project is the use of direct quotation of local currency exchange rates provided by the Appointed Cross Currency Dealer (ACCD) banks under the Local Currency Settlement (LCS) Framework to improve the efficiency of the transactions, thus lowering transaction costs. The significant expected outcome of this first cross-border payment project is not only to facilitate transactions in the tourism sector but also to assist SMEs in tourist areas. This project will also increase financial inclusion, inclusive digital economy, and e-commerce transactions. This pilot, which BI calls an ‘industrial sandbox’, is on the path to further expansion of cross-border payments in the region.”

While Ronadol Numnonda, Deputy Governor of the BOT said, “The Bank of Thailand underscores the significance of this cross-border payment system connectivity, having continuously pursued similar initiatives in the region recently under the ASEAN Payment Connectivity initiative. We believe that this cross-border QR payment will result in a safer, more efficient, and cost-attractive alternative for retail payments by the general public. Also, this service will assist e-commerce businesses during these challenging times and lay the foundation for the anticipated resumption of tourism and business flows. More importantly, our cross-border payment linkage with ASEAN’s largest country will be another key catalyst in transforming the way ASEAN citizens make payments abroad, thus contributing to regional economic prosperity and digitalization.”



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From Amazon to Zomato, a big crowd at RBI doors for payment aggregator licence, BFSI News, ET BFSI

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Mumbai: A slew of companies harbouring fintech ambitions have made a beeline to the Reserve Bank of India to become licensed Payment Aggregators (PAs) under the central bank’s upcoming regulatory regime for non-bank payment providers.

Firms that have applied for authorisation or in advanced stages of submitting their proposals to the RBI include the Tata group, Amazon, Reliance Industries, Dutch payments startup Adyen, Paytm, BharatPe, PhonePe, CC Avenue, Razorpay, Cred, Zomato, PayU, Worldline, Pine Labs and CAMSPAY, sources involved in the diligence process told ET.

At least 30 firms are learnt to have submitted their proposals, sources said, indicating that the number of applicants could increase before the September 30 deadline for existing and new non-bank firms to apply.

The firms that will be authorised to operate as PAs in India will be under the direct purview of RBI in rendering payment services to merchants, in a step that many industry insiders said would lead towards a more standardised and regulated payments ecosystem.

“For long, the operations of PAs in India have been seen as a blind spot for regulations,” said a payments industry insider. “RBI’s PA/PG rules in this regard were introduced to ensure a standard for those firms offering payment service to merchants.”

“There is a feeling that any internet firm with a mass consumer base will be applying for a PA licence as the eligibility barrier is low and missing out on approval can limit any future expansion in offering fintech services,” the source said.

Under the new rules, any firm acquiring merchants would compulsorily need RBI approval to operate as a licensed PA, the source added.

The central bank’s new Payment Aggregator/Payment Gateway guidelines – introduced formally in March 2020 – mandate that only firms approved by RBI can acquire and offer payment services to merchants. Regulated banks do not need any separate approvals.

As per RBI rules, the eligibility criteria for a firm applying for PA authorisation is a minimum net worth of Rs 15 crore in the first year of application and going up to Rs 25 crore by the second year.

The firm also must fulfil ‘fit and proper’ criteria as well as be compliant with global payment security standards under PCI DSS, an information security protocol maintained by payment firms across the world.

“PhonePe has been operating as a Payment Aggregator, offering payment services to merchants on our network. In line with the RBI guidelines, we would be applying for the PA licence to continue offering payment services to our merchant partners,” a PhonePe spokesperson said.

According to Ramesh Narasimhan, Head – Digital Commerce, Worldline India, “Ingenico ePayments India – a Worldline brand, is in the process of directly applying for the Payment Aggregator license well before the deadline as we remain committed to deepening the reach of online payment solutions in India.”
Spokespersons for Adyen, Razorpay and Cred did not offer comment. Other firms cited earlier in the story did not respond to ET’s email. RBI also did not comment.

Newly listed Zomato said in exchange disclosure that it had already incorporated a wholly owned subsidiary to handle digital payments and payment gateway services.

Sources told ET that many leading e-commerce marketplaces, global payment firms, existing PGs and domestic consumer internet firms are also in line to apply for authorisations.

ET could not independently confirm these names.

“There is almost a sense that RBI is inundated with the rush of applications,” a second source aware of the matter said. “The indication has been that RBI will take a ‘First In, First Out’ approach in scrutinising different proposals. This means that the overall scrutiny process is likely to take a few months.”

“The regulator will also allow firms to continue their operations until they communicate the fate of the respective proposals. For a PA operating in India whose application has been turned down, the expectation is that RBI will offer a window to wind down its operations,” the source, who is the chief executive of one of the firms applying for authorisation, told ET.

RBI defines PAs as entities that facilitate e-commerce sites and merchants to accept various payment instruments from the customers for completion of their payment obligations, without the need for merchants to create a separate payment integration system of their own.

PGs are defined as entities that provide technology infrastructure to route and facilitate processing of an online payment transaction without any involvement in handling of funds.

The motive of the new PA/PG guidelines could also be to have a better supervisory control over payment operations of internet and e-commerce firms in India.

The applicability for PA/PG authorisation could be made ‘on-tap’ after the initial set of approvals, a third source said.



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Reserve Bank of India – Notifications

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April 14, 2015




Dear All




Welcome to the refurbished site of the Reserve Bank of India.





The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.




With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.




The site can be accessed through most browsers and devices; it also meets accessibility standards.



Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.



Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.



Thank you for your continued support.




Department of Communication

Reserve Bank of India


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NABFID brought under Dept of Financial Services purview

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President Ram Nath Kovind approved placing the National Bank for Financing Infrastructure and Development (NABFID) under the purview of the Department of Financial Services (DFS) in the Finance Ministry for administration purposes.

In a notification issued by the Cabinet Secretariat, “Administration of the National Bank for Financing Infrastructure and Development Act, 2021 and related matters,” has been allocated under Business Rules of the Government to Department of Financial Services. It has been made effective immediately.

New development financial institution

The National Bank for Financing Infrastructure and Development Act was enacted by Parliament in March. With this, a new development financial institution will come into existence. It will have both developmental and financial objectives. Among other things, this would include developing a deep and liquid bond market of international standards for long-term infrastructure financing in India, including through widening of the issuer and investor base.

It will also facilitate the development of markets for interest rate derivatives, credit derivatives, currency derivatives and other such innovative financial instruments as may be necessary for infrastructure financing. The financing objectives would involve establishing a credible framework that attracts equity investments from domestic and global institutional investors as well as debt investments, including green finance, from investors, aligned to their risk appetite and asset-liability profile, in order to cater the financing needs of Indian infrastructure sector.

According to the Act, debt securities, including bonds and debentures, issued by the Institution should be considered as eligible for purposes such as approved investments, securities, etc., as per limits and conditions to be prescribed by Indian financial regulators for their regulated entities. The Institution will also be empowered to lend to, or invest in, infrastructure projects located in India, or partly in India and partly outside India, prioritising systemic risk mitigation, credit enhancement, subordinate debt, debt maturities suited to project life spans and to raise long-term finance for the same.

The act also prescribed that the Institution may be involved in project structuring, monitoring and monetisation of completed projects by itself or through its subsidiaries, etc., promoting innovation in financial products and services including by issuing long-term bonds with explicit or implicit sovereign guarantee, underwriting and dealer services. Overall, “the Institution shall provide a supporting, technology enabled ecosystem across the life cycle of infrastructure projects as a provider, enabler and catalyst for sustainable infrastructure financing in India with the backing of the Government. The Institution shall support the bond market with the aim of fostering complementarity of market raised debt with lending for infrastructure projects,” the Act said.

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HDFC Bank goes abroad for risky bond sale after India clampdown

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HDFC Bank Ltd. sold a riskier dollar bond overseas that helps bolster its balance sheet, in a move that local peers may follow after the market regulator tightened its rules in the domestic market.

The country’s biggest lender by market capitalization priced Additional Tier 1 notes in the offshore market at a yield of 3.7 per cent. Those are unsecured securities with voluntary call options but no set maturity. It’s only the second such deal abroad from an Indian lender after the State Bank of India sold such securities in 2016.

Regulatory changes

The overseas debt market may beckon other Indian banks, after the country’s seizure of Yes Bank last year caused losses for individuals on those securities and prompted regulators to introduce stricter investment rules at home. Sales will be constrained though by regulatory limits on how much foreign-currency AT1 debt that Indian banks can issue.

“We expect further issuance from Indian banks given that the domestic market for AT1 issuance has shrunk following regulatory changes,” CreditSights analysts, Yustina Quek and Pramod Shenoi, said in a note.

While Indian banks have largely met their capital requirements, selling more AT1 notes will help them create cash buffers that will let them absorb any more loan losses in a country with world’s worst bad debt ratio. It could also free up funds to extend more loans and make acquisitions.

The Securities & Exchange Board of India ordered in March that local mutual funds, some of the biggest holders of AT1 debt in the country, treat those notes as 10-year debt from April, 20-year bonds a year later and eventually as 100-year notes from April 2023, forcing them to cut their exposure to these issuances. Valuing these bank bonds as longer-maturity bonds would lead net assets to drop at mutual funds.

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Yes Bank Offers Up To 7.25% Interest On FD Post Latest Revision: Check New Rates Here

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Yes Bank Regular Fixed Deposit

Following the most recent modification, the private lender now provides a 3.25 percent interest rate on deposits maturing in 7 to 14 days, 3.5 percent on deposits maturing in 15 to 45 days, and 4% on deposits maturing in 46 to 90 days. On term deposits maturing in 3 months to less than 6 months, Yes Bank offers 4.5 percent, and on deposits maturing in 6 months to less than 9 months, the bank now offers 5%. Yes Bank offers a 5.25 percent interest rate on FDs with maturity duration of 9 months to less than one year. Term deposits with a maturity of one year to less than two years will generate a 6% interest rate. Deposits maturing in 3 years to 10 years will offer 6.50 percent interest to the general public, while FDs maturing in 2 years to less than 3 years would offer 6.25 percent.

Tenor Regular
Interest Rates Annualised Yield
7 to 14 days 3.25% 3.25%
15 to 45 days 3.50% 3.50%
46 to 90 days 4.00% 4.00%
3 months to less than 6 months 4.50% 4.50%
6 months to less than 9 months 5.00% 5.03%
9 months to less than 1 Year 5.25% 5.32%
1 year to less than 18 Months 5.75% 5.88%
18 months to less than 3 years 6.00% 6.14%
3 years to less than 5 years 6.25% 6.40%
5 years to less than equal to 10 years 6.50% 6.66%
Source: Yes Bank, Rates for less than 2 Crore w.e.f 5th August 2021

Yes Bank Fixed Deposit Rates For Senior Citizens

Yes Bank Fixed Deposit Rates For Senior Citizens

On their deposits of less than Rs 2 Cr, senior citizens will get an additional card rate of 0.50% respectively across a maturity period of 7 days to less than 3 years. For deposits maturing in 3 years to less than 10 years, the bank is offering an additional rate of 0.75% to senior citizens. Post the most recent revision, the private lender is now offering the following interest rates on term deposits to senior citizens.

Tenor Senior Citizen
Interest Rates Annualised Yield
7 to 14 days 3.75% 3.75%
15 to 45 days 4.00% 4.00%
46 to 90 days 4.50% 4.50%
3 months to less than 6 months 5.00% 5.00%
6 months to less than 9 months 5.50% 5.54%
9 months to less than 1 Year 5.75% 5.83%
1 year to less than 18 Months 6.25% 6.40%
18 months to less than 3 years 6.50% 6.66%
3 years to less than 5 years 7.00% 7.19%
5 years to less than equal to 10 years 7.25% 7.45%
Source: Yes Bank, Rates for less than 2 Crore w.e.f 5th August 2021

Penalty Structure On Fixed Deposits of Yes Bank

Penalty Structure On Fixed Deposits of Yes Bank

On all new and renewed FDs made on/ after 5th July 2019 for an amount of less than Rs 5 Crs, a premature penalty will be applied to all categories of customers, including individuals, non-individuals, senior citizens, and others. According to the bank, below-listed premature FD withdrawal penalty interest shall be imposed for partial and full withdrawals, including a sweep in if any.

Tenure of Fixed Deposit (Completed) Penalty
Less than equal to 181 days Nil
182 days and above 0.50%
Source: Bank Website



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2 Small And Midcap Stocks To Buy For Returns Of 33% In 1-Year

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Sudarshan Chemical Industries: Buy with a price target of Rs 795

Current market price Rs 596.95
Target price Rs Rs 795
Gains % 33%

ICICI Direct sees gains in the stock to Rs 795 from the current market price of Rs 596.95, thus implying profits of nearly 33% from the current levels. The time period to achieve the target is 1-year. Sudarshan Chemical Industries is a leading player in the Indian colour pigment industry with 35% market share and is also among the top four players globally.

According to ICICI Direct, the upcoming capital expenditure bodes well for speciality pigments revenue growth. “Higher share of value added business portfolio to improve margins profile of the business. Allocation of incremental FCF towards organic and inorganic growth likely to expand return ratios further,” the brokerage has noted.

“The stock appreciated at 30% CAGR in last three years. We retain our BUY rating on the back of better growth outlook from speciality pigments. We value Sudarshan Chemical at 25x P/E FY23E EPS to arrive at a revised target price of Rs 795 per share (earlier Rs 775 per share),” the brokerage has said.

Buy Indoco Remedies

Buy Indoco Remedies

Current market price Rs 463
Target price Rs Rs 575
Gains % 24%

ICICI Direct is also bullish on the stock of Indoco Remedies and sees an upside of 24% in 1-year. The brokerage has set a price target of Rs 575 on the stock as against the current market price of Rs 463. Indoco is a pharma player and manufactures and markets branded formulations and APIs for the domestic and export markets.

In domestic formulations, through its nine marketing divisions the company serves a range of specialties. According to ICICI Direct restructuring exercise for improvement in MR productivity & therapy calibration is likely to yield productive growth in Indian formulations business.

Also, the clearance from UK-MHRA & lifting of USFDA warning letters for Goa plant II and III is likely to improve operating leverage for export formulation. Indoco will benefit as domestic sales normalise while export formulations are likely to grow with a strong pipeline and visible launch schedule,” the brokerage has said. “We retain buy on the stock of Indoco Remedies and value Indoco at Rs 575 i.e. 24x P/E on FY23E EPS,” ICICI Direct has said. We wish to inform readers that the stock markets have rallied sharply over the last few months and therefore it is better to invest in small amounts. At 56,000 points on the Sensex the markets are highly overvalued. Therefore, buying into dips would be the right way to go about investing.

Disclaimer

Disclaimer

The article is informational in nature, which is taken from the brokerage report of ICICI Direct. Please do consult a professional advisor before buying into any of these stocks. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in the article.



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GDP to grow by deceptively high 20% in Q1, says Icra, BFSI News, ET BFSI

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Mumbai: The GDP growth is estimated to come at the “deceptively high” level of 20% for the April-June 2021 quarter but is far below the same in the pre-Covid times, rating agency Icra said on Wednesday. Icra said the low base of the last year, when the GDP had contracted by close to 24%, “conceals” the impact of the second wave of Covid-19 infections.

Economic activity is boosted by robust government capital expenditure, merchandise exports and demand from the farm sector, it said, estimating the GDP to grow by 20% and the gross value added (GVA) will register a growth of 17% for the June quarter. The GVA is estimated to contract 15% when compared to the preceding March quarter, which shows the impact of the second wave.

“The double-digit expansion expected in YoY terms in Q1FY22 is deceptively high, as it benefits inordinately from last year’s contracted base. We forecast GVA and the GDP to have shrunk by around 9% each in Q1FY22, relative to the pre-Covid level of Q1FY20, highlighting the tangible distress being experienced by economic agents in the less formal and contact-intensive sectors,” its chief economist Aditi Nayar said.

The RBI expects the GDP to expand by 21.4% in the quarter as per its revised estimates released earlier this month. The official data on economic activity from the central statistics office is expected by end of the month. Nayar said based on its assessment of volumes and available earnings, it is forecasting a GVA expansion in industry at a considerable 37.5%. agencies



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Smallcase raises $40 million from Amazon, others, BFSI News, ET BFSI

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Fintech startup smallcase Technologies has raised $40 million in series C round led by Faering Capital with participation from Amazon and billionaire Azim Premji’s Premji Invest at an undisclosed valuation.

With this, the total capital raised by smallcase has crossed $60 million, the Bengaluru-based startup said on Wednesday.

The round marked the first investment by Amazon in a wealth management fintech in India. The US technology major made the investment through its $250-million early stage tech fund Amazon SMBhav Venture Fund (ASVF) launched in April.

The round also saw participation from existing investors including Sequoia Capital India, Blume Ventures, Beenext, DSP Group, Arkam Ventures, WEH Ventures, HDFC Bank Group and Utpal Sheth, chief executive of Rare Enterprises.

Sameer Shroff, cofounder and managing director of Faering Capital, will join the board of smallcase once the transaction is closed.

“Globally, we have seen a trend of increased retail participation in equity markets and in India smallcase is pioneering digital access for retail investors through their innovative products and channel partnerships,” Shroff said.

The newly infused capital will be used to launch a wider suite of investment products for retail investors as well as enhancing the platform and its capabilities, the Bengaluru-based company said in a statement.

“The last two years have seen remarkable interest from Indian retail investors in the equity markets, and we are inspired to see smallcase become the primary gateway to stocks and ETFs for millions of new investors,” said Vasanth Kamath, founder and CEO of smallcase.

Founded in 2015 by Kamath and fellow IIT-Kharagpur alumni Anugrah Shrivastava and Rohan Gupta, smallcase specialises as an investment ecosystem of over 250 businesses in the capital markets space including brokerages, advisors, investment managers and digital wealth platforms.

“We are focused on expanding our offerings to cement smallcase’s position as the premier portfolio investing layer across asset classes for the retail investor and are excited to welcome our new investor partners with extensive experience in scaling technology and financial services businesses,” Kamath said.

Since Bengaluru-based startup’s Series B raise of $14 million in September 2020, its user base has doubled to cross 3 million and the volumes transacted have grown 2.5x to Rs 12,500 crore, the company said in its media statement.

Amazon has previously invested in insurance player Acko General Insurance Ltd and credit provider Capital Float. ET reported earlier this year that the US tech major is in talks to close a funding round in neo-bank startup Open as well.

“We are excited to partner with smallcase in their journey to offer innovative consumer investment products,” an Amazon spokesperson said. “By increasing product selection and convenience, this will provide an additional channel for consumers to participate in the equity markets.”

India’s retail investment segment has seen considerable traction over the pandemic as low bank deposit rates and abundance of liquidity has helped indices gain rapidly even as fintech firms such as Zerodha, Groww, Upstox, and Paytm Money have witnessed significant growth on their respective platforms.



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FM Sitharaman on LIC IPO, BFSI News, ET BFSI

Personal Finance

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While all eyes are on India’s biggest issue of the year, Finance Minister Nirmala Sitharaman said she’s yet to disclose the proportion being sold off in the IPO of Life Insurance Corp. (LIC). Sitharaman exclaimed, in an exchange with ET, that LIC did not have an ’embedded’ valuation mechanism.

ET asked her if she commits that the government stake would stay above 51% with general insurance companies to which she attested that she will have ‘government’s presence’ in that area and that it will obviously hold stake.

“We will have a fix obviously, but I will tell you only when I’m ready to tell you. The time which has been consumed for this is only to get the mechanisms put in place. You will know how unprepared public sector companies are for even facing their own realities. They (LIC) did not have an embedded valuation mechanism. Will you believe it!,” she replied on being inquired about there being a fix on how much stake the government will divest in LIC.

“Yes, it is an IPO,” validated Sitharaman on whether the government will maintain its stake at about 51% in case of the LIC IPO too.

‘Bare minimum’ presence of government will be there in all three segments of Insurance- life insurance, general insurance and reinsurance, the Finance Minister confirmed while adding that insurance is also a part of core and strategic sector listed items.

Companies that can’t either be merged or brought in for a bigger scale will be disposed of.

LIC IPO is important for the government to meet its yearly disinvestment target of Rs. 1.75 lakh crore. Government has plans to privatise two public sector banks and one insurance firm.

Rs 1.75 lakh crore is expected to come from selling of government stake in state-run banks and financial institutions. While Rs 75,000 crore is projected to flow in through CPSE disinvestment receipts.

The size of the share sale will be decided by a commission led by Finance Minister Nirmala Sitharaman. For the proposed IPO, the government has revised the LIC Act of 1956. The LIC has appointed Arijit Basu, the former MD of State Bank of India and former MD & CEO of SBI Life, as a consultant to help execute the IPO.



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