Category: Banking & Finance

People looking forward to watching their favourite shows on OTT platforms such as Netflix, Amazon and others would not face any disruption in service over non-payment or delayed payment of subscription fee owing to new payment security feature made mandatory by the Reserve bank of India from this month.

Banking sector experts said that most of these merchants offering various bouquet of service have migrated to the new Standard Instruction Platform put in place by the banks in the country. This would mean that payment instruction to these compliant vendors would have to be revalidated once and it would move seamlessly in subsequent months without any hindrance to the service.

As part of measures to secure recurring transactions made by customers using their cards, the Reserve Bank of India (RBI) has mandated new auto-debit rules that have kicked in from October 1. The apex banks directive states that there will be no automatic recurring payment for various services including utility bills, recharge of phone, DTH, and OTT, among others as the additional factor of authentication (AFA) will become mandatory.

This created confusion initially as customers were flooded with messages to update their payment instruction or else such transactions would be declined from the beginning of October.

“We have not experienced any disruption in service or customer complaints over new system of recurring payments. Most banks are already compliant with new security measure and several large merchants have also updated their transaction systems and have joined the standard instruction platform of banks. Some merchants are still non compliant to the changes and customers would have to authorize payments under an additional factor of authentication (AFA),” said a senior executive from country’s largest private sector bank asking not to be named as he was not authorized to speak to media.

The new RBI rules will not impact any standing instructions registered using bank accounts for mutual funds, SIPs, equated monthly instalments. It will also not impact payment to complaint merchants.

Customers will have to go through a one-time registration process, and subsequent transactions can be performed without the additional factor authentication.

While registering, customers can now provide the validity period for future transactions. For recurring payments above Rs 5,000, banks are required to send a one-time password to customers as per the new guidelines.

–IANS

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India’s Exim Bank will tap the overseas market to raise $1 billion to fund overseas project finance with demand picking up this year. The recent upward revision will add to investors’ comfort according to Ms Harsha Bangari, MD of the export credit agency.

“On the whole we would require $2 billion for FY22. We may tap the bond market in January again subject to favourable market conditions,” Bangari added. The export credit agency is looking at raising $1 billion.

Exim borrows $2-3 billion annually on average. The exact quantum would depend on demand. “We have already borrowed around $1 billion, mostly on the bilateral market,” Bangari says. Bilateral market borrowing gives the borrower an advantage of 15-20 basis points over bonds in terms of pricing. Exim has factored in a loan book growth of 8-10 per cent for FY22, higher than its earlier forecast of 5-7 per cent made in May 2021.

“A stable outlook gives us a lot of comfort. I hope investor appetite gets much better. We are getting a pricing that is given to a higher rated entity. Besides, Exim would also be borrowing Rs 15,000-20,000 crore from the domestic market.”

Exim Bank is also seeing some improvement in the asset quality. “It is much better than the last two-three years. There are a few accounts that have slipped and are very much in the bank’s radar,” Bangari says. As part of a consortium, the bank has identified nine accounts worth Rs 700-800 crore to be transferred to the National Asset Reconstruction Company (NARCL).

Exim Bank’s slippage ratio improved to 1.52 per cent in FY21 from 1.94 per cent in FY20. Net NPA stood at 0.51 per cent from 1.77 per cent in FY20. Bangari says the provision coverage ratio was at over 95% last year & will be higher this fiscal.

It has received a capital support of Rs 750 crore from the government of India so far, against the budgeted amount of Rs 15,00 crore.

Old is gold for the Reserve Bank of India (RBI) if one goes by its plan to engage the services of retired officers to strengthen its supervisory framework for both banking and non-banking sectors.

The central bank is planning to hire 29 officers, who retired from its services, on contractual basis as supervisory resource persons/analysts in the Department of Supervision (DoS).

This move comes in the backdrop of the steps taken by the central bank to improve the effectiveness of its supervision and monitoring of supervised entities resulting in supervisory action being taken against them.

In the last one year, RBI has imposed business restrictions on a large private sector bank; stopped a prominent card payment network from on-boarding new domestic customers onto its card network; slapped monetary penalties on a host of urban co-operative banks for non-compliance with its various master directions, among others.

Hiring plans

In view of the large-scale changes in the size, complexity, business model and risks in the operations of banks and non-banking finance companies (NBFCs), RBI is beefing up its supervisory workforce by engaging retired officers.

So, the central bank is planning to hire 26 retired officers in the supervisory examination division (SED) of DoS — 12 in NBFC SED; eight in the urban co-operative bank (UCB) SED; and six in the scheduled commercial banks (SCBs) SED. Further, three retired officers will be hired in the Information Technology (IT) Group.

The officers engaged in SED will undertake onsite supervision and off-site surveillance in a computerised environment and associated duties, including sharing of specialised skills with supervisory resources of RBI.

The officers in IT group will undertake onsite IT examination/ thematic study covering assessment of areas such as application, network and database security, resilience of IT infrastructure; analysis of cyber security/ IT incidents reported by regulated entities and follow-up action thereon, among others.

These officers will be initially engaged for two years, with provision of one-year extension based on review of performance and achievement of intended objectives, subject to a total period of five years.

The move to hire retired officers also comes in the backdrop of serving officers reportedly being reluctant to join the Unified Department of Supervision (for Banking, Non-Banking and Co-operative Bank), which was created in November 2019, due to issues around career progression.