Google Pay on Wednesday said it has expanded its network of bank partners offering cards tokenisation on the Google Pay app and added lenders including SBI, IndusInd Bank, Federal Bank, and HSBC India. “After successfully rolling out tokenisation with Kotak Mahindra Bank, SBI Cards, and Axis Bank, Google Pay has now added debit cards by SBI, IndusInd Bank, and Federal Bank and credit cards by IndusInd Bank and HSBC India to its slate,” a statement said.
Tokenisation is a feature that enables users to make debit or credit card payments through a secure digital token attached to their phone without having to physically share their credit or debit card details.
The feature also works with online merchants, delivering more native and seamless OTP experiences without redirecting users to 3D Secure sites.
Google Pay said with tokenisation, it will enable safe and secure omnichannel experiences to help consumers use near-field communication (NFC) capable devices/phones to make contactless payments at over 2.5 million visa merchant locations, scan and pay at more than 1.5 million Bharat QR-enabled merchants, and pay bills and recharges from within their Google Pay app using their credit card.
“We’re committed to offering the most secure payments experience to our growing base of users, and tokenisation helps to replace sensitive data such as credit and debit card numbers with tokens, eliminating any chances of fraud. We are hopeful that the tokenisation feature will further encourage users to transact securely and safely in the current times and expand merchant transactions both online and offline,” Sajith Sivanandan, Business Head at Google Pay and NBU – APAC, said.
He added that the addition of SBI and Federal debit cards, IndusInd Bank debit and credit cards, and HSBC credit cards helps extend this offering to millions of card users on the Visa network.
“We are working closely with other banking partners to further expand the adoption of card-based payments with tokenisation in India,” he said.
Visa India and South Asia Group Country Manager TR Ramachandran said with tokenised, contactless forms of payment, millions of mobile first users will be able to use their credit and debit cards on Google Pay, bolstering confidence in a large segment that is new to digital.
Visa has already issued over two billion token credentials globally and with Google Pay live in India, these numbers are expected to grow significantly, he added.
New Delhi, India‘s credit ecosystem remains resilient despite the pandemic and the consumer credit market is projected to grow at a higher rate than most major economies globally, according to a report by Experian and Invest India.
Titled ‘A Review of India’s Credit Ecosystem’, it noted that the growth would be be driven by a shift in India’s demography, a burgeoning affluent middle class ramping up private consumption, as well as growth in rural populations, all catalysed by technology.
It noted that NBFCs and fintech firms have transformed the lending landscape to cater to the financial needs of the consumers.
The data, which tracks India’s credit ecosystem from March 2017 to February 2021, highlights a v-shaped recovery across Indian markets, with a gradual and steady improvement in sourcing trends.
New sourcing crossed the pre-Covid-19 level in October 2020. However, sourcing volumes declined from January 2021 onwards, due to the second Covid-19wave and lockdowns being imposed.
It said that a remarkable recovery was observed across all unsecured credit products. Recovery of personal loans has been high in both low (sub Rs 1 lakh) and high (above Rs 5 lakh) ticket size segments while the recovery in higher ticket size loans is also improving steadily.
The credit portfolio has been resilient, and in February 2021, growth stood at eight percent year-on-year for the portfolio of key products, lower than the 13 per cent observed for March 2020.
The pace of growth slowed down for all products, however, with unsecured products experiencing a faster year-on-year growth rate compared to secured loans.
Experian India Managing Director Neeraj Dhawan said: “The behavioural shift in Indian population has been tremendous just over the last five years. Consumerism has been growing in the previously untapped semi-urban and rural regions as millennials become the main driving force of the mass market.”
Noting that technological adaption is steep which has, in turn, created acceptance for new financial tools, he said: “The biggest beneficiary of this change is the credit market, which is evolving into a self-generating and self-sustaining one. In line with this trend, the risk appetite of traditionally conservative lenders is growing as the horizon of creditworthiness expands.”
Invest India Managing Director & CEO Deepak Bagla said: “India is making giant strides in financial inclusion. The rise in the affluent middle class and growth in the rural economy is changing consumer spending patterns and driving the bulk of India’s consumption growth.”
Additionally, rapid technological advancements have further expedited the growth of the credit lending ecosystem, he added.
The decision was taken by the board of directors at its meeting held on June 16, 2021, the bank said.
The board also decided to raise up to Rs 4,000 crore by issuing equity shares or other instruments through various modes and Rs 8,000 crore by issuance of debt securities in Indian or foreign currency.
Equity shares up to 104,846,394 at a price of Rs 87.39 each aggregating to approximately Rs 916.25 crore are proposed to be allotted to IFC, IFC Financial Institutions Growth Fund, LP (FIG) and IFC Emerging Asia Fund, LP (EAF), Federal Bank said in a regulatory filing.
Under this, the bank has proposed to issue 31,453,918 shares to IFC; 36,696,238 shares each to FIG and EAF. “There are three investors who are being issued equity shares pursuant to preferential allotment,” Federal Bank said.
Further, the bank said it will raise fund by way of issuance of equity capital up to an aggregate amount of Rs 4,000 crore or its equivalent amount in foreign currencies in one or more tranches through various modes including rights issue, private placement, qualified institutions placement, preferential issue or follow on public offer, GDR, ADR or foreign currency convertible bonds.
Also, the board accorded its approval to raise up to Rs 8,000 crore by issuing debt instruments through various modes including additional tier 1 bonds, tier 2 bonds, long term bonds, masala bonds, green bonds, NCDs.
These instruments are intended to be issued in the domestic or overseas market in one or more tranches on a private placement basis, the bank said.
The fund raise approval decisions by the board of the bank are subject to approval of shareholders of the bank in its forthcoming annual general meeting (AGM).
Bank’s ensuing AGM is scheduled on July 9, 2021 by way of video conference or other such means.
The bank also stated that it had fully provided for Lanco Infratech.
Public sector lender Punjab & Sind Bank has declared Lanco Infratech as ‘fraud’ account, the bank said in a regulatory filing on Wednesday.
The bank has an exposure of Rs 215 crore towards Lanco Indratech. “It is informed that an NPA account Lanco Infratech Limited with outstanding dues of Rs 215.17 crore has been declared as fraud and reported to RBI today as per regulatory requirement,” the lender said .
The bank also stated that it had fully provided for Lanco Infratech. If an account is declared fraud, banks need to set aside 100% of the outstanding loans as provisions, either in one go or spread over four quarters, according to RBI.
Rajiv Anand, executive director — wholesale banking, Axis Bank
By Ankur Mishra and Malini Bhupta
Axis Bank is looking at becoming a leader in the wholesale segment and is betting on a pick-up in capital expenditure. Rajiv Anand, executive director – wholesale banking – Axis Bank, tells Ankur Mishra and Malini Bhupta that private capex should pick up in six months and that the bank will play a critical role as the economy gains momentum.Edited excerpts:
Axis Bank wants to become a leader in wholesale banking while most other banks are looking to go easy. Why is that so?
Corporate banks will play a critical role as the economy begins to pick up steam. We have the franchise, the capital, the risk appetite, the people and products to be able to partner our corporate clients as they grow their business.
When do you see the capex cycle picking up?
Globally, the stimulus that central banks have pumped in, a part of it will go into consumption and a part of it will go into building infrastructure. Therefore, we will see demand across products and services. In that context, India will also see an increase in private capex. We are seeing a pick-up in capex in industries, like steel and cement. We are also seeing capex kick-in, as a result of the PLI (Production Linked Incentive) schemes. The second wave has set things back by about six months. The initial phase will be driven by government spending through its ambitious National Infrastructure Pipeline.
One of the things we have noticed is that you are focused on mid-corporates and have an operations playbook for the same. Is there a strategic shift towards mid- corporates?
We define mid-corporate clients as those that have a turnover between Rs 250 to Rs 1,000cr. Here we have a lower share as compared to the overall share of lending. This is something we are looking to fix. We find this segment very attractive for multiple reasons. The opportunity is large and spread across geographies and sectors. This plays to our core philosophy of granularising risk. We also intend to bring our best in class transaction banking capabilities to this segment.
We will continue to work with large corporates with whom we have been working with for a very long time. We want to offer a full suite of services to them and have invested in people and technology to be able to up our game. We want to become the transaction bank of choice for our corporate clients. We have a new service architecture and we are working on providing end-to-end digital solutions to our clients. The fact that our market share across various products like FX, LCs, GST payments etc, is going up is a testimony to the new strategy. Last year 95% of our incremental lending was to A- and better clients. This will continue.
Do you want to scale down on SME book given the stress might be there due to Covid-19 pandemic?
There are around seven crore SMEs and only 10-12% of them avail bank credit. So, first and foremost, you ought to differentiate between SMEs who take credit and SMEs who don’t take credit. What we are seeing at this point in time is that slippages on the SME side, have been well controlled as on March 31, 2021. They are within the range that we want them to be. We may see some pressure because of the second wave, but in general we are very bullish on the SME sector. Ultimately, if India needs to grow, we need the SMEs to grow and provide employment.
Are you focusing more on short-term loans deliberately?
We have traditionally been seen as a term loan lender. What we are looking to do is to bring down term loans as a % of our overall portfolio. Today it will be 70:30, we want to bring it down to 60:40. It is not that we will not do term lending, but we want to certainly increase short term loans, which are typically of working capital in nature. This helps us reduce and at the same time increase engagement with clients while seeking out opportunities for trade finance and other non-credit businesses.
How do you plan to leverage ‘One Axis’ capabilities in the corporate loan segment?
The ability to deliver ‘One Axis’, is a key area of distinctiveness for the corporate bank. Let me give you an example of a transaction we did, where we were the advisor to a company in an M&A transaction. Later when the open offer came, we became the banker to that issue. Then we provided transaction banking capabilities to that client for the open offer. We provided trusteeship through Axis Trustee, and then there was surplus liquidity which was parked in Axis Mutual Fund. Therefore, we are able to provide a one-stop solution through the various arms of the Axis Bank group – taking care of loans and working capital requirements, transaction banking services, investment bank solutions, trusteeship, and working with Axis MF to take in the liquidity. It is the job of the RM to deliver One Axis to his or her clients based on the client’s requirements.
How has your underwriting policies changed during the pandemic?
There were two things which we did. One, we came up with a metric during April of 2020, where we looked at each sector to assess which would bear the maximum impact due to the pandemic and which would take the longest to recover. Just to give you an example, the impact on the pharma industry would be marginal and they would take the least amount of time to get out of it. On the other hand, hotels and airlines would face significantly higher impact and would take longer to recover. Accordingly, we recalibrated our underwriting. We also backed some key clients with whom we had long relationships and were facing an uncertain future. This was important for us because we see ourselves as a relationship bank and long-term relationships are built if you partner with clients when they are most vulnerable.
Overall, do you believe that your wholesale book will do better than last year? Will you be able to see double-digit growth this year?
What we typically guide the Street is that we will grow 500-600 basis points (bps) better than the industry. And we are confident that we will continue to do so.
How do you see the second wave impacting asset quality?
Corporate credit books have gone through a long period of recognition of stress on their portfolios. Corporates, on the other hand, have strengthened their balance sheets by raising and deleveraging. Under these circumstances we don’t see elevated levels of risk on corporate portfolios.
Notably, the PSL dispensation will be valid up to March 31, 2022. However, loans thus disbursed will continue to be classified under priority sector till the date of repayment/maturity, whichever is earlier.
Small Finance Banks (SFBs) are getting fresh credit requests from smaller micro-finance institutions (MFIs) for on-lending after the Reserve Bank of India in May allowed priority sector lending classification to fresh credit extended by these banks to micro-lenders. After getting the proposals from MFIs, SFBs have started the process of offering fresh credit facilities under priority sector lending (PSL).
The RBI, issuing a circular on May 5, said in view of the fresh challenges brought on by the pandemic, and to address the emergent liquidity position of smaller MFIs, it has been decided to allow PSL classification to the fresh credit extended by SFBs to registered NBFC-MFIs and other MFIs, which are members of RBI- recognised Self-Regulatory Organisation of the sector and which have a gross loan portfolio of up to Rs 500 crore as on March 31, 2021, for the purpose of on-lending to individuals.
Ujjivan Small Finance Bank has received proposals from NBFC-MFIs for fresh lending. “We are in dialogue with a lot of MFIs now. But, I think we are likely to take a few calls. Cannot say how many. So far we have not disbursed any. We are likely to take some calls,” the bank’s MD & CEO Nitin Chugh told FE. “Since inception, we have been extending support to MFIs. Now, we are permitted to give fresh lending to smaller MFIs with asset-size of up to Rs 500 crore. Apart from MFIs, we have extended credit facilities to those institutions which support budding smaller MFIs. We have started the process of fresh credit facilities to MFIs under PSL and we are getting fresh credit requests from them,” ESAF Small Finance Bank said.
Notably, the PSL dispensation will be valid up to March 31, 2022. However, loans thus disbursed will continue to be classified under priority sector till the date of repayment/maturity, whichever is earlier.
According to credit rating agencies, as most small finance banks had operated as MFIs before converting into an SFB, they have a good understanding of the micro-finance space and would be in a better position to evaluate the credit profiles of the smaller MFIs to lend. And, the PSL categorisation should incentivise SFBs to on-lend to smaller MFIs, which are currently facing funding constraints following the resurgence of the second Covid wave.
On whether the bank expected revenues from fees or interest income, she said the lender is not looking at it from a line-by-line perspective and expects the initiative to play into overall profits.
ICICI Bank on Wednesday launched a set of banking solutions for corporates and their entire ecosystem, including promoters, group companies, employees, dealers, vendors and other stakeholders.
Terming it as ‘ICICI STACK’, the bank said it would provide customised digital banking services to companies in over 15 sectors such as financial services, IT/ITeS, pharmaceuticals, steel and their entire ecosystem. The bank has opened eight ecosystem branches for this initiative in order to supplement its digital efforts. The lender plans to launch another four branches in FY22.
Vishakha Mulye, executive director, said, “With an objective to cater to the ecosystem of every corporate, we have launched a digital ‘ICICI Stack for Corporates’ with many industry-first features. We look forward to partnering with our customers for the banking needs of their entire ecosystem and unlock the full potential.”
The second-largest private sector lender said corporates were slower in adopting digital solutions compared to the retail segment, and added that the solution focused on tech-based new age offerings. Underlining the importance of the ecosystem approach it has taken, Mulye said corporates needed a trusted partner who would handhold and help manage the business holistically.
“Availing credit for a reasonably good corporate is not an issue today. We are sitting on excess liquidity, credit demand is not much,” Mulye said.
Mulye explained that apart from generating loan demand, the initiative will help get an entire ecosystem of vendors of corporates to the bank, start salary account relationships and result in other banking relationships on trade, finance and transaction banking.
On whether the bank expected revenues from fees or interest income, she said the lender is not looking at it from a line-by-line perspective and expects the initiative to play into overall profits.
Mulye said the bank expected corporate demand to pick up in the next economic cycle. “For India to grow faster post the pandemic, both investment as well as consumption demand will have to fire,” she said.
The bank witnessed a 13% year-on-year growth in corporate advances during the March quarter of the previous fiscal.
Pension Fund Regulatory and Development Authority (PFRDA) in respect of the pension scheme administered by it i.e. NPS has allowed NACH or National Automated Clearing House mandate to overcome the varied problems concerning fund transfer. Now through this advancement or NACH mandate feature, the entire transaction process involved in NPS will become online for PoP as well as other NPS distributors.
PFRDA Allows NACH Mandate For NPS Transactions
Current fund transfer process in NPS
In the current regime, the nodal offices submit NPS contribution of subscribers by working on a subscriber contribution file (SCF) and then uploading it on the “NPSCAN system” after verification of the same. Later, the nodal officer goes to the accredited bank for transferring the funds (the same amount i.e. shown in the SCF) to the trustee bank.
To get rid of the various fund transfer related issues, PFRDA has come up with the NACH mandate that is jointly handled by the trustee bank and CRA (central record keeping agency).
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Story first published: Wednesday, June 16, 2021, 22:17 [IST]
The hallmarking act will only apply to gold sold to consumers by traders. Customers do not need to get their gold jewellery, coins, or other goods hallmarked before selling or exchanging them. There are no consequences for individuals who store and/or utilise jewellery that has not been hallmarked. Customers will also be able to sell their jewellery at market value depending on its purity. It is possible to exchange gold without having it hallmarked. If a trader refuses to exchange gold, the consumer can take legal action against it.
Gold without hallmark can be pledged?
It doesn’t matter if the jewellery is hallmarked when gold is pledged for financial purposes. As a result, the law does not apply to gold loans as well. Get the relevant information regarding the condition of the gold from the dealer before pledging the gold. Customers will receive the current market price for gold based on its purity and grams. Gold has been used as security by lenders that offer gold loans. They do consider hallmarking to be an extra quality assurance. Lenders evaluate the quality and quantity of gold before lending against it.
Jewellers are subject to mandatory hallmarking. The jewellery you purchased before will not be harmed in any way. There are no consequences for individuals who store and/or utilise jewellery that has not been hallmarked.
Which are the items exempted from hallmarking?
Watches, fountain pens, and certain forms of jewellery, such as Kundan, Polki, and Jadau, have been exempted from the necessary gold hallmarking.
Articles meant for export that conform to any specification required by the foreign buyer, articles weighing less than two grammes, articles intended for medical, dental, veterinary, scientific, or industrial purposes, articles made of gold thread, gold bullion in any shape of bar, plate, sheet, foil, rod, wire, strip, tube, or coin have been exempted by the notification. Incomplete articles, as well as articles for export, are free from the requirement to be hallmarked.
What are the charges of gold hallmarking?
According to the Bureau of Indian Standards (BIS) website, hallmarking charges for gold jewelry/artefacts payable to BIS recognised Assaying and Hallmarking Centres by BIS licenced jewellers are Rs 35 per article, with a minimum charge of Rs 200 for a consignment. Services tax and other applicable levies are additional.
Regardless of the weight of the jewellery, the hallmarking prices are Rs.35/- +GST per piece for gold jewellery and Rs.25/- +GST per piece for silver jewellery.
Hallmarking of jewellery is required to increase the legitimacy of gold jewellery and customer satisfaction by providing third-party confirmation of gold purity and fineness, as well as consumer protection.
Mandatory Hallmark is applicable for gold bullion/Coins?
Only 14 carat, 18 carat, and 22 carat gold jewellery can be hallmarked and sold, and the order only applies to gold jewellery and antiquities. Gold bullion/coins with a fineness of 999/995 are allowed to be hallmarked by BIS-approved refineries/mints (39 licenced refineries are in operation at present as on 01 Jan 2021). The list of BIS licenced refineries/mints may be found under the hallmarking category on the BIS website.
The Reserve Bank of India today released the June 2021 issue of its monthly Bulletin. The Bulletin includes Monetary Policy Statement, three Articles and Current Statistics.
The three articles are: I. State of the Economy; II. A Macroeconomic View of the Shape of India’s Sovereign Yield Curve; and III. Fiscal Framework and Quality of Expenditure in India.
I. State of the Economy
The Indian economy continues to wrestle with the second wave of the pandemic, though cautious optimism is returning. By current assessment, the second wave’s toll is mainly in terms of the hit to domestic demand. On the brighter side, several aspects of aggregate supply conditions – agriculture and contactless services are holding up, while industrial production and exports have surged compared to last year amidst pandemic protocols. Going forward, the speed and scale of vaccination will shape the path of recovery. The economy has the resilience and the fundamentals to bounce back from the pandemic and unshackle itself from pre-existing cyclical and structural hindrances.
II. A Macroeconomic View of the Shape of India’s Sovereign Yield Curve
Considering macroeconomic determinants of the yield curve, the study finds that the level of the yield curve has undergone a downward shift from the second quarter of 2019, reflecting the ultra-accommodative stance of monetary policy. The slope of the yield curve is found to have steepened with abundant liquidity depressing short-term interest rates more than proportionately alongside a pick-up in issuances of ultra-long dated paper. Out of sample forecasts indicate scope for moderation of longer-term yields from current levels.
III. Fiscal Framework and Quality of Expenditure in India
The COVID-19 pandemic necessitated an overwhelming fiscal response from governments across the world. As India unwinds the fiscal stimulus and embarks on the path of fiscal adjustment, it is necessary to emphasise on ‘how’ over ‘how much’. This article proposes a few quantifiable indicators, viz., ratios of revenue expenditure to capital outlay and revenue deficit to gross fiscal deficit along with threshold levels for them that can be suitably blended into the fiscal fabric for a sustainable growth trajectory. Some of the highlights of this study are as follows:
Cross-country experience suggests that expenditure reductions, especially the ones associated with permanent reduction in current expenditure, have been found to be more effective in achieving durable fiscal consolidation than revenue raising measures.
The article has analysed the quality of expenditure of centre and states using six indicators of quality of government expenditure, both individually as well as through a composite indicator.
The threshold level of ratio of revenue expenditure to capital outlay (RECO) is found to be around 5.0, while the threshold of share of revenue deficit in gross fiscal deficit (RD-GFD) is found to be 40 per cent for general government (centre plus states) in India.
Finally, the article projects some key fiscal indicators that could be achieved by blending the quality of expenditure considerations with the GFD target of 4.5 per cent of GDP by 2025-26 as outlined in the Union Budget 2021-22.
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