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BIS, BFSI News, ET BFSI

June 24, 2021 root Banking & Finance

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Central bank digital currencies can offer “finality, liquidity and integrity”, and could provide strong data governance as well as privacy standards based on digital identities, the Bank for International Settlements (BIS) said on Wednesday. The backing for such currencies by the Switzerland-headquartered BIS, which is also known as the central bank of all central banks, also comes at a time when there are ongoing intense discussions in India and many other countries on crypto currencies.

Noting that central banks stand at the centre of a rapid transformation of the financial sector and the payment system, BIS said Central Bank Digital Currencies (CBDCs) represent a unique opportunity to design a technologically advanced representation of central bank money, one that offers the unique features of finality, liquidity and integrity.

“Innovations such as crypto currencies, stable coins and the walled garden ecosystems of big techs all tend to work against the public good element that underpins the payment system.

“The DNA (Data-Network-Activities) loop, which should encourage a virtuous circle of greater access, lower costs and better services, is also capable of fomenting a vicious circle of entrenched market power and data concentration. The eventual outcome will depend not only on technology but on the underlying market structure and data governance framework,” BIS said.

On Wednesday, BIS released a chapter titled ‘CBDCs: an opportunity for the monetary system’ that is part of its Annual Economic Report 2021.

To realise the full potential of CBDCs for more efficient cross-border payments, BIS said international collaboration will be paramount.

“Cooperation on CBDC designs will also open up new ways for central banks to counter foreign currency substitution and strengthen monetary sovereignty,” it

A few countries, including China, are working on CBDCs.

An analysis BIS found that CBDCs would best function as part of a two-tier system where the central bank and the private sector work together to do what each does well.

From a practical perspective, the BIS said the most promising CBDC design would be one tied to a digital identity, requiring users to identify themselves to access funds. A careful design would balance protecting users against the abuse of personal data with protecting the payment system against money laundering and financial crime, it added.

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RBI penalises three Maharashtra-based co-operative banks, BFSI News, ET BFSI

June 24, 2021 root Banking & Finance

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The Reserve Bank of India on Wednesday imposed a total penalty of Rs 8 lakh on three Maharashtra-based co-operative banks for deficiencies in regulatory compliance. A penalty of Rs 4 lakh has been imposed on Excellent Co-operative Bank, Mumbai, and Rs 2 lakh each on Janseva Sahakari Bank Limited, Pune and The Ajara Urban Co-operative Bank, Ajara (Kolhapur).

The penalty on Excellent Co-operative Bank was imposed for contravention of the directions issued by RBI on ‘Maintenance of Deposit Accounts’ and ‘Know Your Customer (KYC)’.

Janseva Sahakari Bank was fined for contravention of the direction issued by on KYC.

The central bank said the penalty on The Ajara Urban Co-operative Bank has been imposed for contravention of direction on ‘Maintenance of Deposit Accounts’.

The RBI said the penalty was imposed on the three lenders based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by them with their customers.

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3 Banking Stocks To Buy Now With Upside Up To 40% In The Short Term

June 24, 2021 root Personal Finance

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1. Bandhan Bank:

This new age bank has been given a ‘Buy’ rating by Axis Direct in its report dated June 15 at a price of Rs. 355.

The RBI released a consultative paper for the regularisation of norms for the microfinance sector with the primary focus being on (i) Avoiding over-indebtedness and multiple lending and (ii) Issues related to the pricing of microfinance loans for players. The emerging dynamics in the microfinance sector as well as the concerns of customer protection called for a review of the regulations for all the regulated entities (REs) engaged in microfinance. The recommendations attempt to ensure a level playing field between all the regulated microfinance entities., said the brokerage.

Further the brokerage iterated that it was viewed that the harmonization of guidelines for all microfinance entities would cap the margin at 10 percent plus the cost of funds for banks which would negatively impact their NIMs or net interest margin. But such a limit has not been specified for banks or SFBs. Nonetheless it augurs well for microfinance entities as they will be able to stick to healthy spreads thus boosting their return ratios. Surprisingly, the RBI has tweaked the pricing norms for NBFC-MFIs and proposed to align their pricing with other NBFCs, thus withdrawing the margin capping, added the report.

Also, there was seen a possibility of 2-lender cap to be levied on banks or SFBs, nonetheless the non-applicability of such norms work in the favour of Bandhan Bank and others MFIs in the industry.

ICICI Securities has also placed a ‘Buy’ call on the scrip with the target price of Rs. 465 to be realized in a 1-year period. This is a nearly 40% upside from the last closing price of the stock.

The scrip of Bandhan Bank on June 23, 2021 closed over 2% lower at Rs. 333.15 per share on the NSE.

M-cap of the stock is Rs. 53,659 crore, above industry median.

2. RBL Bank:

Emkay Research has placed a ‘Buy’ recommendation for the bank with a target price of Rs 255 for a duration of 12 months.

The brokerage believes RBL has emerged stronger from the deposit scare in FY20, and it has largely dealt with high risk & vulnerable corporate/retail portfolio in FY20/FY21. However, near-term asset quality risk remains with the onset of the second Covid-19 wave, leading to gradual moderation in credit cost in FY22 and going forward, added Emkay Research. Emkay Research takes comfort in the bank’s healthy capital position, improvement in liability profile and gradual uptick in its RoA/RoE to 1.4 per cent/8-13 per cent over FY22-24E from a low of 0.5 per cent/4 per cent in FY21.

The scrip of RBL Bank last traded at Rs. 208.35.

M-cap – Rs. 12,468 crore.

3. Bank of Baroda:

Brokerage firm ICICI Direct has a buy call on the public sector lender for a target price of Rs. 102 in the short term of 3-months. It has seen a gradual build-up of open interest in the last couple of months with the recent price performance. However, there is ample room for further increase in price. We expect further long additions in the stock once it sustains above Rs. 85 levels, said the brokerage.

The stock witnessed noteworthy delivery volume activity in January and May. Fresh delivery based buying was seen around Rs. 70-76. Hence, any declines in the stock can be utilised as a fresh buying opportunity The stock made a 52-week high near Rs. 100 in February 2021. Since then, it has corrected towards its medium term support of Rs. 64 levels. Currently, it has been largely range bound hovering around Rs. 78 and Rs. 86. It failed to sustain above Rs. 85 despite many attempts in the past trading sessions. However, recently, the stock has taken support at lower band level of Rs. 78 and is now witnessing fresh buying momentum.

M-cap – Rs. 42,560 crore

LTP- Rs. 82.3

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Vijay Mallya & PNB cases: ED transfers Rs 9,371-crore assets to banks, govt

June 24, 2021 root Personal Finance

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A substantial part of the assets in question was held in the name of dummy entities, trusts, third persons or relatives of these accused and these entities were their proxies for holding the properties.

The Enforcement Directorate (ED) on Wednesday said it had transferred to public-sector banks and the Central government assets worth `9,371 crore belonging to fugitive economic offenders Vijay Mallya, Nirav Modi and Mehul Choksi.

The agency has attached/seized assets worth a total of Rs 18,170 crore, constituting over 80% of the losses of Rs 22,586 crore incurred by banks due to the alleged frauds committed by these three businessmen. These also include properties worth Rs 969 crore located abroad.

Of these, assets worth about Rs 329.67 crore have been confiscated and those amounting to Rs 9,041.5 crore have been handed over to the PSBs (taking the total to Rs 9,371 crore), the ED said.

Meanwhile, Nirav Modi has lost the first stage of his extradition appeal in the London high court, just over two months after his extradition to India was ordered by UK home secretary Priti Patel in the PNB scam case.

Analysts said the move to attach assets was made substantially easier by the enactment of the Fugitive Economic Offenders Act, 2018. The law empowers authorities to attach assets of such offenders who flee India to escape the reach of law even without a conviction.

Also, this law provides for the attachment of all the assets of the offenders, irrespective of whether these are the proceeds of crime or not. It covers offences with a value of Rs 100 crore or more.

The ED said it had recently transferred attached shares worth Rs 6,600 crore to a State Bank of India (SBI)-led consortium following an order of the PMLA Special Court, Mumbai. On Wednesday, the Debt Recovery Tribunal, on behalf of the consortium, sold the shares of United Breweries for Rs 5,824.50 crore. Further realisation of close to Rs 800 crore through share sale is expected by June 25. With its help, state-run banks had earlier recovered Rs 1,357 crore by selling the attached shares, the agency added.

After the cases were registered by the CBI, the ED unearthed “myriad web of domestic and international transactions and stashing of assets abroad”. “Investigation has also irrevocably proved that these three accused persons used dummy entities controlled by them for rotation and siphoning off the funds provided by the banks,” the ED said.

Complaints were filed against all the three accused after the investigation under the Prevention of Money Laundering Act was completed. Extradition requests were sent for them to the UK (for Mallya and Nirav Modi) and Antigua and Barbuda (for Choksi).

Already, the extradition of Mallya has been ordered by the Westminster Magistrates Court, which has been confirmed by the UK High Court. Since Mallya has been denied permission to file an appeal in the Supreme Court of the UK, his extradition to India is almost final, the agency said.

Choksi, who was recently discovered in Dominica after he disappeared from Antigua, is also facing extradition proceedings.

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3. On a review, it has been decided as under:

i) Banks shall provide an option to the borrower to repay a part of the GML in physical gold in lots of one kg or more, provided:

the GML has been extended out of locally sourced / GMS-linked gold;
repayment is made using locally sourced IGDS (India Good Delivery Standard)/ LGDS (LBMA’s Good Delivery Standards) gold;
gold is delivered on behalf of the borrower to the bank directly by the refiner or a central agency, acceptable to the bank, without the borrower’s involvement;
the loan agreement contains details of the option to be exercised by the borrower, acceptable standards and manner of delivery of gold for repayment;
the borrower is apprised upfront, in a transparent manner, of the implications of exercising the option.

ii) Banks shall suitably incorporate the above aspects into the board-approved policy governing GML along with concomitant risk management measures. Banks shall continue to monitor the end-use of funds lent under GML.

4. All other instructions issued on GML shall remain unchanged.

Yours faithfully,

(Manoranjan Mishra)
Chief General Manager

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Reserve Bank of India – Tenders

June 23, 2021 root Tenders

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Reserve Bank of India invites E-Tender for Electrical Renovation of 16 Nos. of Class III Flats in KNSQ, Reserve Bank of India, Kanpur. The tendering would be done through the e-Tendering portal of MSTC Ltd. (http://mstcecommerce.com/eprochome/rbi). All Bank’s empaneled electrical contractors /agencies/firms enlisted for works more than 10 lakhs must register themselves with MSTC Ltd through the above-mentioned website to participate in the tendering process. The Schedule of e-Tender is as follows:

E-Tender No	RBI/Kanpur/Estate/02/21-22/ET/02
a. Estimated cost	Rs.17 Lakh
b. Mode of Tender	e-Procurement System (Online Part I – Techno-Commercial Bid and Part II – Price Bid through www.mstcecommerce.com/eprochome/rbi)
c. Date of NIT available to parties to download	June 23, 2021
d. Pre-Bid meeting	Offline at 11:30 AM on July 14, 2021 Venue: Reserve Bank of India, 2nd Floor Estate Department, Mall Road, Kanpur.
e. i) EMD through DD//NEFT or Banker’s Cheque issued by a Scheduled Bank and intimate/forward the transaction details (UTR number OR scanned copies (in PDF) of DD to estatekanpur@rbi.org.in and upload www.mstcecommerce.com/eprochome/rbi	Rs. 34,000/- by NEFT paid through NEFT/DD/Banker’s Cheque issued by a Scheduled Bank only to in our A/c No. 186003001, IFSC RBIS0KNPA01 (where ‘0’ represents zero) to Reserve Bank of India Kanpur.
ii) Tender Fees	NIL
f. Last date of submission of EMD.	July 26, 2021 till 01:00 PM
g. Date of Starting of e-Tender for submission of on line Techno-Commercial Bid and price Bid at RBI Kanpur www.mstcecommerce.com/eprochome/rbi	June 23, 2021
h. Date of closing of online e-tender for submission of Techno-Commercial Bid & Price Bid.	July 26, 2021 till 01:00 PM
i. Date & time of opening of Part-I (i.e. Techno-Commercial Bid) Part-II Price Bid: Date of opening of Part II i.e. price bid shall be informed separately	July 26, 2021 at 03:00 PM
j. Transaction Fee (To be submitted separately by the vendors to MSTC vide MSTC E-Payment Gateway for participating in the E-Tender)	Rs. 1,180/- inclusive of GST @ 18% Payment of Transaction fee through MSTC payment gateway /NEFT/RTGS in favour of MSTC LIMITED

Intending tenderers shall pay as earnest money a sum of Rs. 34,000/- by way of NEFT to Reserve Bank of India, Kanpur or by a Demand Draft or Banker’s Cheque issued by a Scheduled Bank in favour of Reserve Bank of India payable at Kanpur or Bank Guarantee as given in the Annexure-I. Alternatively, the tenderer may also furnish an irrevocable Bank Guarantee from any scheduled bank for an equivalent amount towards EMD in the Proforma enclosed.

Applicants intending to apply will have to satisfy the Bank by furnishing documentary evidence in support of their possessing required eligibility and in the event of their failure to do so, the Bank reserves the right to reject their bids. Tenders without EMD will not be accepted under any circumstances.

The Bank is not bound to accept the lowest tender and reserves the right to accept either in full or in part any tender. The Bank also reserves the right to reject all the tenders without assigning any reason thereof.

Any amendments / corrigendum to the tender, if any, issued in future will only be notified on the RBI Website and MSTC Website as given above and will not be published in the newspaper.

Regional Director,
Reserve Bank of India
Kanpur

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