Equitas Small Finance Bank on Tuesday announced its partnership with HDFC Bank, for a co-branded credit card. Equitas said that the partnership will draw on HDFC Bank’s strengths in the credit card market and its substantial reach.
“As India’s largest card issuing and acquiring bank we are committed to accelerating the adoption of digitization in the country by engaging with all players in the banking and payments ecosystem,” said Parag Rao, Group Head – Payments, Consumer Finance, Digital Banking & IT, HDFC Bank said. “This first-of-its-kind partnership for HDFC Bank will enable us to extend our best-in-class offerings in the cards segment to Equitas Small Finance Bank’s customers and provide them with a highly rewarding credit card experience.”
HDFC Bank has a dominant share in both card issuing and acquiring business. With over 5.1 crore credit cards, debit cards and prepaid cards, every third rupee spent on cards in India happens on HDFC Bank cards. HDFC Bank also has over 21 lakh acceptance points, making it among the largest facilitators of cashless payments in the country.
The credit card can be availed in two categories. The first category is the ‘Excite Credit Card’ which offers a credit limit from Rs 25,000 to Rs 2 lakh and the second category is the ‘Elegance Credit Card’ which offers credit of over Rs 2 lakh.
“Over the last five years, we have witnessed a transformation sweeping the industry,” said Murali Vaidyanathan, Senior President and Country Head – Branch Banking – Liabilities, Products & Wealth – Equitas Small Finance Bank Limited. “There have been countless success stories of people borrowing small amounts of money while building financial assets and creating a formal financial footprint.”
The government is working out a roadmap for the third round of financial inclusion, Jan Dhan 3.0, which will focus on doorstep banking, digital financial products and convergence with its flagship pension and insurance schemes.
The government also aims to ensure availability of a banking touch point from any habitat within 5 km. “We are working with banks to develop a broad structure that will improve access, simplify digital loan applications, and ensure quicker response for retail, MSME and agricultural loans,” said a government official aware of the plan.
The government wants banks to also find linkages and converge Jan Dhan accounts with schemes such as the Atal Pension Yojana, PM SVANidhi, Stand Up India scheme and the Sukanya Samriddhi Yojana. “Based on Jan Dhan accounts, Aadhaar and mobile (JAM) framework, banks can look to offer customers new analytics-based offers and expand their coverage,” the official said, adding that banks are further expected to leverage their business correspondent channels for distribution of small credit and other financial products.
Last week, Prime Minister Narendra Modi, in his address at the ‘Creating Synergies for Seamless Credit Flow and Economic Growth’ conference, said banks need to adopt a partnership model and shed the culture of being an approver and the customer being an applicant.
“Banks at branch level can decide to approach at least 10 new youths or local micro, small and medium enterprises in their vicinity to help promote their enterprises,” he said, urging every bank branch have at least 100 clients with 100% digital transactions before August 15, 2022.
The CEO of Commonwealth Bank of Australia (CBA), the country’s largest bank, spoke to Bloomberg on November 19 about fear of missing out (FOMO) when it comes to cryptocurrencies. The CEO of CBA Matt Comyn said that though cryptocurrencies are full of perils, the risks of not engaging with the crypto market could be bigger.
CBA is an Australian multinational bank with its branches in New Zealand, Asia and the US.
What Comyn said:
Comyn said that with the emergence of digital assets as an alternative investment sector, the riskiest thing now is missing on the crypto current.
He said even though the crypto market is highly speculative and fluctuating, banks must work towards incorporating the technology to fulfill the consumer demand.
Banks must get involved in crypto and blockchain technology.
Banks would lag behind and be left out of the market if they don’t do so.
Due to the ever-growing demand among the masses to trade crypto, it has become essential for banks to move in this direction.
He believes that the crypto sector and its technology is here to stay and so the bank wants to provide competitive offerings to customers with right disclosures around risks.
He said that the bank doesn’t have any opinion on the asset class itself that is investing in cryptocurrencies.
Comyn commented on central bank digital currencies (CBDCs) saying that it is willing to participate in the making of Australian CBDC which is currently being designed for a pilot project.
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WASHINGTON: US banking regulators intend to clarify in 2022 what role traditional banks can legally play in the cryptocurrency market, they said on Tuesday.
In a statement, regulators said they plan to make clear what sort of activities banks can engage in involving cryptocurrency, including holding it on their balance sheets, issuing stablecoins and holding crypto assets and facilitating crypto trading on behalf of customers, among other currently murky areas.
The joint statement from the Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency is an update on work done by an interagency “sprint” team convened earlier this year.
While not providing details, the agencies said the rapid growth of cryptocurrency presents “potential opportunities and risks” for traditional banks. They said regulators want to provide “coordinated and timely” clarity to the institutions they monitor.
“The agencies have identified a number of areas where additional public clarity is warranted,” the agencies said. “Throughout 2022, the agencies plan to provide greater clarity on whether certain activities related to crypto-assets conducted by banking organizations are legally permissible, and expectations for safety and soundness, consumer protection, and compliance with existing laws and regulations.”
Agency officials have been working on identifying risks facing banks engaging in crypto activity, as well as whether existing regulations must be updated to account for that activity.
LONDON, – JP Morgan Chase has become the world’s most systemically important bank once again according to the latest annual ranking of top lenders by global regulators, with BNP Paribas and Goldman Sachs also now deemed more systemic.
The Financial Stability Board (FSB), made up of regulators from G20 countries, published its latest table of the world’s 30 most systemic banks on Tuesday.
Being included in the table means having to hold additional capital and undergo more intense supervision to avoid a repeat of taxpayer bailouts in the banking crisis over a decade ago.
In practice, the lenders typically hold capital buffers that are already above FSB requirements.
The 30 banks are divided between four “buckets” in order of how systemic, interconnected and complex they are, with JP Morgan now in a higher bucket than its nearest peers.
Last year JPMorgan shared the highest bucket with HSBC and Citigroup, but is now alone in the next bucket up, which had been empty. JP Morgan had been the world’s most systemic bank in 2019.
BNP Paribas and Goldman Sachs have also moved up one bucket. (Reporting by Huw Jones Editing by Rachel Armstrong)
Mumbai: ICICI Bank on Monday said that it has made available to all exporters and importers an online platform as part of its strategy to use digital support to attract corporates and their ecosystem. The bank’s ‘Trade Emerge’ platform provides access to comprehensive trade services, including a database of customers and their credit scores, logistics solutions and marine insurance.
“India has emerged a key player in global trade. From April to October 2021, our overall exports and imports are estimated to be nearly $780 billion, recording a rapid growth over the same period last year. Typically, global trade is time-consuming, paper-intensive and process-heavy and requires knowledge of rules and regulations. This platform will make exports and imports hassle-free,” said ICICI Bank ED Vishakha Mulye.
“This one-stop platform eliminates the need for importers and exporters to coordinate with multiple touchpoints,” said Mulye. She added that this would be useful to companies irrespective of their life stage, including those searching for new business, and established corporate exporters.
The value-added services include information services provided through the Federation of Indian Export Organisations and access to a global database of partners from 181 countries in association with ‘The Dollar Business’ — a global export-import data and analytics platform. It also provides credit reports from CRIF and Dun & Bradstreet. In addition, the platform provides end-to-end digital logistics services and marine transit insurance coverage in partnership with ICICI Lombard General Insurance.
NEW DELHI: The government on Tuesday listed the Cryptocurrency and Regulation of Official Digital Currency Bill for introduction during the winter session of Parliament, which will seek to “prohibit all private cryptocurrencies” but provide for certain exceptions “to promote the underlying technology” and “its uses”.
The proposed bill — which will also put in place a framework for Reserve Bank of India (RBI) to create an official digital currency — comes amid a raging debate over whether the government should ban private cryptocash or regulate them like shares and bonds.
A very vocal lobby led by unregulated exchanges has been campaigning for their inclusion under a regulatory system, as opposed to an outright ban the government had earlier proposed.
RBI has been backing a ban on cryptocurrency, arguing it can be used for illegal purposes apart from limiting the central bank’s ability to manage inflation, foreign exchange and the overall economy.
It, however, sees no problems with the use of technology for managing logistic chains or land records but is opposed to its use as a financial instrument.
It cannot be called a currency since the sovereign only enjoys that right,” the apex bank has pointed out. The Centre, however, seems inclined to ban bitcoins, making it clear that dabbling in them carries a clear risk.
While there have been observations that a ban will be tough to enforce, or that it will only drive the entire growing trade underground, those supporting a prohibition have argued that even gambling or drug trafficking are illegal and those found violating the law face strict action.
The divergent views had prompted PM Narendra Modi to recently hold consultations and call for global cooperation on the issue. While China recently banned all cryptocurrencies, El Salvador is the sole country to permit them for official use.
Government sources said the bill has not been finalised yet and is unlikely to be introduced during the first week of the winter session that starts on Monday. But all eyes are on how the government defines the “uses” of cryptocurrency.
In case it allows it to be treated as an asset or a commodity, as a section within the government has argued, it will pave the way for their trading on exchanges. The fear is that trading would allow the instrument to be used as a store of value, although officially it will not be a medium of exchange. There are concerns that the moment trading is permitted, people may use cryptocurrencies such as bitcoins, for making part payment for purchase of property or for overseas transfer.
While the RBI had banned investments in cryptocurrencies, the Supreme Court had held the circular illegal. In the meantime, the government-appointed committee headed by SC Garg, the then economic affairs secretary, submitted its recommendations seeking a ban and the government had planned to introduce a legislation during the Budget session.
But with the session cut short, the bill “prohibiting” private cryptocurrencies could not be introduced, resulting in a fresh round of consultations.
Last week, Union Bank of India raised Rs 2,000 crore via AT1 bonds at an 8.70% coupon, and the issue has seen full subscription. All AT1 bonds were issued based on regulations amended by Sebi earlier this year.
Bank of Baroda, the country’s second-largest state-owned lender, is planning to raise Rs 2,000 crore through the issuance of Basel-III compliant Additional Tier-I (AT1) bonds on Wednesday.
The offer comprises a base issue of Rs 500 crore with a greenshoe option to retain oversubscription up to Rs 1,500 crore, according to the placement memorandum of the bank.
Funds raised will be utilised for regular business activities and are not meant for financing any particular project. “The bank undertakes that proceeds of the issue shall not be used for any purpose which may be in contravention of the regulations/ guidelines,” the bank said in a notice.
AT1 bonds are types of perpetual debt instruments that banks use to augment their core equity base and, thus, comply with Basel-III norms. The coupon on the AT1 bonds will be set during the bidding on Wednesday on the electronic bidding platform of the National Stock Exchange.
“We expect better coupons on our AT1 bonds compared to other banks which recently raised funds through these securities,” bank officials said.
Market participants expect rates between 7.95% and 8.05% on Bank of Baroda’s bonds. The deemed date of allotment and pay-in date on the bonds is November 26, while the minimum bid lot size is Rs 1 crore with a bid value step size of Rs 1 crore.
The bonds have been rated AA+ with a “stable” outlook by Crisil and Icra on November 17 and November 12, respectively. The bank has appointed IDBI Trusteeship Services and KFin Technologies as debenture trustee and registrar to the issue, respectively. The AT1 bonds have a call option after five years.
Last week, Union Bank of India raised Rs 2,000 crore via AT1 bonds at an 8.70% coupon, and the issue has seen full subscription. All AT1 bonds were issued based on regulations amended by Sebi earlier this year.
As per amended regulations, the residual maturity of the AT1 bonds is 10 years till March 31, 2022, and will be increased to 20 and 30 years over the subsequent six months. From April 2023, the maturity of these bonds will become 100 years from the maturity date.
In August, the lender had said it would recoup its share over the next three to four quarters.
HDFC Bank is looking to tap into the customer base of Chennai-headquartered Equitas Small Finance Bank (SFB) with two co-branded credit cards launched on Tuesday. The target is to issue the cards to 20% of Equitas SFB’s customer base over the next 12-18 months.
The two categories of cards on offer will be the Excite credit card, with a credit limit between Rs 25,000 and Rs 2 lakh, and the Elegance credit card, with a credit limit of over `2 lakh.
Murali Vaidyanathan, senior president and country head – branch banking liabilities, products & wealth – Equitas SFB, said close to five lakh customers will be eligible for the cards. “At a product penetration level, at least two in every 10 customers should have our co-branded card one year or 18 months from now — that is the approach within the qualified base with which we are moving forward. That means we are talking 20-25% penetration of the qualified base which incrementally gets added every month,” he said.
The underwriting for the co-branded cards will be done by HDFC Bank using the processes and algorithms it uses for its other customers. The outstanding amounts will also be reflected on HDFC Bank’s books.
Parag Rao, group head – payments, consumer finance, digital banking & IT, HDFC Bank, said the bank intends to address the under-penetration of electronic payment instruments in India and expand the market in association with Equitas SFB, whose roots lie in microfinance. “We’ve decided that competition and working with competition actually is a merit rather than a demerit and therein comes our strategy of partnerships with other banks,” Rao said.
He said, “Our job, beyond just looking at businesses at HDFC Bank, as market leader is to expand the market and we do believe partnerships and alliances wherein two like-minded entities come together for a co-created product to offer it to a certain set of customers will only deepen the market.”
HDFC Bank leads the credit card market in terms of the number of cards in force, with 1.5 crore cards outstanding at September-end as per data from the Reserve Bank of India. The bank’s incremental issuances took a hit between December 2020 and August 2021 due to a regulatory embargo on new credit card issuances during the period. Rival ICICI Bank took pole position in new issuances during the eight-month period. HDFC Bank is now working to claw its way back to the top. In August, the lender had said it would recoup its share over the next three to four quarters.
The co-branded cards will be issued by Visa. TR Ramachandran, group country head – India, Sri Lanka and Bangladesh, Visa, said credit card penetration in the country stands at about 6% in terms of the number of cards and only 3-4% in terms of individuals owning credit cards.
“There is a large nascent market for everyday digital payments more so on the credit side, because credit is also becoming a day-to-day feature rather than only for luxury and discretionary items, which means grocery, transport, everyday spends particularly —as the line between online and offline payments blurs,” Ramachandran said.
The cards will be issued through application programming interface (API) banking. As a result, there will be no data flow from Equitas SFB into the HDFC Bank system, Vaidyanathan said. “We will let the rule engine decide. We’ll pre-qualify accounts on first sight and then start selling it to our consumers,” he said.
Thereafter, based on Cibil ranking, Equitas will start identifying new-to-bank customers. “HDFC Bank handles only the card side of the issue and they will have the details relevant to the card with them and nothing from liabilities or transactions will be reflected or seen on that side,” Vaidyanathan said.
Plutus has facilitated primary bond issuances in excess of Rs 6,000 crore for more than 20 entities since its inception.
Chennai-headquartered debt markets platform CredAvenue has facilitated market-linked debenture (MLD) issuance of Rs 150 crore for SK Finance through its online bond platform Plutus.
Till date, the firm has raised close to Rs 11,000 crore, and aims to issue another Rs 1,000 crore of debt in the coming months.
SK Finance is one of the leading NBFCs in the country, with over 2.25 lakh customers with assets under management (AUM) of Rs 4,000 crore and a presence in 10 states through more than 375 branches.
In May, SK Finance raised equity capital from marquee investors like TPG Growth, Norwest Venture Partners and Evolvence India. After the latest funding round, the overall capital raised from external investors crossed ₹1,000 crore.
Rajendra Setia, MD & promoter of SK Finance, said, “Plutus — the bond platform of CredAvenue — has been instrumental in providing NBFCs access to a diversified pool of capital. These funds will largely be utilised towards onward lending and further consolidation of our market share and in the process enable generation of livelihoods, meet aspirational needs and improve lifestyles. These are basically individuals & small road and transport operators running small commercial vehicles and micro businesses.”
Plutus has facilitated primary bond issuances in excess of Rs 6,000 crore for more than 20 entities since its inception.
Gaurav Kumar, founder & CEO, CredAvenue, said, “Our bond platform has emerged as a unique platform of choice for retail investors for meeting all their debt investments. Plutus offers a wide variety of fixed income products across various tenors, ratings, and yield spectrums. We are working with a large set of issuers to further broad-base the market and target offshore lenders, major banks and key fund managers.”
CredAvenue recently raised $90 million in equity capital in a funding round led by Sequoia Capital and co-led by Lightspeed, TVS Capital Funds, Lightrock and others. The funding had valued the company at approximately $410 million. The firm has also set up a technology development centre in Bengaluru will house a 200-employee strong workforce by FY 2022-23, accounting for close to 30% of CredAvenue’s overall strength in India.
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