Category: Banking & Finance

Banking Sector shows high discrepancy trends in Q2-21, BFSI News, ET BFSI

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The Banking sector showed a high discrepancy percentage at 17 percent, double the industry average of 8.7 percent in Q2-21 as per the Trends Report released by First Advantage – a leading background screening company in India.

Sectors like Banking, BPO, Engineering & Infra, Financial Services, FMCG, Healthcare, Manufacturing, Pharma, and Telecom display discrepancy percentages way above the industry average of 8.7 percent in Q2-21. Both Employment and Address Component (Check level) have contributed to the high discrepancy percentages in these industries.

Alternate modes of verification in the Address component, is a good example of how First Advantage- not only identified but moved swiftly from the standard modes of verification to alternate modes. In Q2-21, 44 out of every 100 Address verifications – were conducted through the alternate modes of verification.

“In the current digital workplace, significance of background verification of a candidate, a vendor or a partner has become crucial to safeguard from any potential risk. As companies compete for the best talent available in the marketplace, it is important to get insights that will help you ‘Onboard Faster. Hire Smarter’,” apprised Amit Singh, Head – Commercial, First Advantage India.

The case level inflow has shown a monumental and historic rise in the second quarter of 2021 – furthermore holding good the theory of recruitment and background screening trends coinciding with the pre-Covid cyclical trends of the job markets. The second quarter of 2021 has shown an increase of 25 percent in volumes as compared to the first quarter.

“With our digital initiatives driven by modern technology and alternate screening solutions, we have transformed our processes to adapt with the changing environmental and economic conditions. Our focus, as always, has been to enhance customer onboarding experiences, reduce delivery cycle timelines and provide improved quality performance,” adds Singh.

This story is provided by PRNewswire. will not be responsible in any way for the content of this article. (ANI/PRNewswire)



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US Bank introduces cryptocurrency custody services, BFSI News, ET BFSI

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US Bancorp, the fifth largest banking institution in the US, announced in a press release on October 5 that its subsidiary US bank is launching cryptocurrency custody services that will be available for global service fund and service clients.

The first sub-custodian for supporting the new services of the bank will be New York Digital Investment Group (NYDIG).

NYDIG is a leading technology and financial services company and an arm of Stone Ridge Asset Management, dedicated to Bitcoin. Other cryptocurrencies like Ethereum will be soon added in the new services.

The new offering was launched to meet the growing demand and interests of the institutional investors and fund service clients in cryptocurrency, CNBC quoted Gunjan Kedia, Vice Chairman of US Bank’s wealth management and investment services division.

Even the legal sanctions and extreme volatility of Bitcoin did not deter big investors from continually investing in cryptocurrencies.

The new custody services will benefit the institutional investors in the following ways:

* The service will help investment managers store private keys for bitcoin, bitcoin cash and litecoin with the help of sub-custodian NYDIG.

* The services would provide the institutional investment managers having private funds in the US or Cayman Islands, safe storage solutions for bitcoins. Additional coin support would be added over time.

US Bancorp, the parent company of US bank has currently $559 billion worth of assets and serves national and global customers. US Bank established its Blockchain and Cryptocurrency Practice in 2015.

The bank had announced the launch of three cryptocurrency offerings in April itself to address the ever expanding investment needs of the clients.

* The first service was the custody service which is live now.

* The second service is regarding investment in Securrency, a developer of institutional-grade blockchain-based financial and regulatory technology.

* The third service that allows the US Bank to administer NYDIG’s Bitcoin Exchange Traded Funds (ETFs) in 2021 awaits regulatory approvals.



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What is co-lending, and how will work?, BFSI News, ET BFSI

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-By Ishwari Chavan

Under RBI’s model, banks can co-lend with all registered NBFCs, including housing finance companies.


The co-lending model has been around in the BFSI sector for some time now, but after the Reserve Bank of India issued guidelines in November 2020, co-lending has become a response to ease the liquidity crisis in non-bank lenders. The method aims to enhance credit flow to productive sectors, and banks and non-banking financial companies (NBFCs) have been increasingly exploring co-lending opportunities.

What is RBI‘s Co-Lending Model, and how will it work?

RBI’s CLM is one wherein two lender firms, in this case a bank and an NBFC, come together to disburse loans. Under RBI’s model, banks can co-lend with all registered NBFCs, including housing finance companies.

As per the guidelines, NBFCs and HFCs facilitate the origination and collection of housing loans while banks leverage their balance sheet strength to house the majority of the loan. This means that 80% of the loan will reflect in the bank’s balance sheet, while 20% in that of NBFCs or HFCs.

In simple terms, banks will lend to NBFCs, and NBFCs will pass it on to the priority sectors, since they have a greater reach.

NBFCs will be the single point of interface for the customers and enter into a loan agreement with the borrowers. The agreement should contain the features of the arrangement and the roles and responsibilities of NBFCs and banks.

The ultimate borrower would be charged an all-inclusive interest rate.

Considering the lower cost of funds from banks and greater reach of NBFCs, the primary focus is to improve credit flow to the unserved and underserved sectors of the economy, also known as priority sectors, and make funds available to the ultimate beneficiary at an affordable cost.

The agreement should contain the features of the arrangement and the roles and responsibilities of NBFCs and banks.
The agreement should contain the features of the arrangement and the roles and responsibilities of NBFCs and banks.

RBI has prescribed that a portion of bank lending should be used for developmental activities, for the priority sector, which includes agriculture, MSMEs, housing, and so on.

According to norms, both public and private sector banks have to lend 40% of their net bank credit (NBC) to the priority sector and foreign banks have to lend 32% of their NBC.

How is co-lending beneficial for lenders and borrowers?

The partnership allows banks to lend more funds to sectors and regions they do not have reach in. With the greater reach of NBFCs, the model allows banks to meet their total priority sector lending (PSL), while NBFCs get bigger and top rated borrowers on its books.

It also allows NBFCs to source clients, perform credit appraisals and disburse a small part of the loan amount, and enables banks to expand their lending business.

The end borrower gets accessibility to loans at very affordable and competitive rates, and is in turn included in the country’s financial ecosystem.

Recent co-lending agreements

> Last week, U GRO Capital signed a co-lending agreement with IDBI Bank to provide formal credit to underserved MSMEs.

> Last month, Bank of India entered into a co-lending arrangement with MAS Financial Services for MSME loans, IIFL Home Finance signed an agreement with Punjab National Bank, and SBI signed an agreement with Paisalo Digital.

> In July, YES Bank and Indiabulls Housing Finance Ltd entered into a strategic co-lending agreement to offer home loans.



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Equitas SFB launches ASBA facility

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Customers can now directly participate in primary markets through the ASBA facility and avail the benefit of high savings account interest until the date of allotment of shares.

Equitas Small Finance Bank (Equitas SFB) on Wednesday announced the launch of the ASBA facility on its internet banking, mobile banking and UPI interface for its customers. ASBA — applications supported by blocked amount — is a process required by stock market regulator Sebi for applying for IPOs and FPOs.

Customers can now directly participate in primary markets through the ASBA facility and avail the benefit of high savings account interest until the date of allotment of shares. The facility is available at no cost and does not need one to submit any kind of physical documents to activate, the bank said in a release.

In association with Aditya Birla Money, the bank provides the facility of instant trading cum demat account that can be activated digitally in minutes.

Murali Vaidyanathan, senior president and country head, branch banking, Equitas Small Finance Bank , said: “The move will also significantly help retail and HNI investors. With contactless banking becoming the need of the hour and omnichannel delivery critical to future readiness, our continued investments towards building world-class digital assets have become a key differentiator.”

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Foreign banks vie for bigger slice of home loan market

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Balance transfers have turned out to be a preferred option for foreign banks as they are easier to source. They are considered safer, too, as the lender gets a snapshot of the borrower’s repayment track record.

Taking advantage of record low interest rates and higher affordability of homes, foreign banks with presence in India are making an aggressive push into the home loan market. In the run-up to the festive season, some of these lenders have announced lending rates at par with the lowest in the business.

HSBC India reduced home loan interest rates by 10 basis points (bps) to 6.45% per annum. This rate will be applicable on balance transfers by existing customers of other lenders. Citi is offering home loans starting at 6.5% as is South Korea-headquartered Shinhan Bank.

Kunal Sodhani, AVP, global trading center, Shinhan Bank India, said the lender has been offering home loans starting at 6.5% for a maximum tenor of 30 years. The bank has been active in the retail loans segment for the last four years and currently has more than 4,500 customers across six branches in India. “The interest rate trajectory may be at its bottom and also due to festive season being underway, this remains the best time to avail housing loans at such attractive rates,” Sodhani said.

Balance transfers have turned out to be a preferred option for foreign banks as they are easier to source. They are considered safer, too, as the lender gets a snapshot of the borrower’s repayment track record.

Besides, the migration to an external benchmark-linked pricing regime has led to better transmission of lower rates through banks. Forced to link their home loan rates directly to the repo rate or to other external benchmarks, banks have turned more competitive in terms of pricing than their non-bank counterparts. This is another factor driving the rising trend in balance transfers.

Of course, muted credit demand in other segments is also playing a part. Prakash Agarwal, director and head – financial institutions, India Ratings and Research, said while some foreign banks were always active in the home loan market, their presence is increasing for two reasons. “One, there is a limited offtake in other segments. Secondly, this asset class has proven its resilience over time. The credit cost and delinquencies in this segment were among the lowest even during the pandemic. That is an added incentive for lenders to get into this segment.”

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CoinSwitch Kuber is India’s 2nd crypto unicorn

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Notwithstanding the regulatory uncertainty over the legality of cryptocurrencies, India now has two crypto unicorns.

On Wednesday, CoinSwitch Kuber announced raising over $260 million in Series C funding round from a clutch of investors, valuing the company at $1.9 billion.

This makes the Bengaluru-based start-up more valuable than rival CoinDCX, which became India’s first cryptocurrency unicorn after it raised $90 million in August.

Indian cryptocurrency market likely to reach up to $241 million by 2030: Nasscom

Investments flowing in

Indian start-ups in the crypto space have received 73 per cent more funding in the first six months of calendar 2021 compared to the whole of 2020, according to data from Tracxn.

These investments are coming from some of the top names in the private equity and venture capital space.

For instance, CoinSwitch Kuber’s latest funding is from Andreessen Horowitz (a16z), Coinbase Ventures, Paradigm, Ribbit Capital, Sequoia Capital India and Tiger Global.

The investment comes even as the government is yet to spell out its stand on whether cryptocurrencies are legal.

The Reserve Bank of India has expressed its reservation on cryptocurrencies. Even China’s central bank has announced a blanket ban on all cryptocurrency transactions and mining in that country.

Ashish Singhal, Co-founder and CEO, CoinSwitch Kuber, said, “There is some worry over regulations in the short run but we are confident that in the long run there will be positive developments in the cryptocurrency and blockchain segment.

“This is the reason why marquee investors are also putting their bets on India.”

Cryptocurrency — the time to act is now

Upbeat on India

According to a report by US-based blockchain data platform Chainalysis, India’s cryptocurrency market this year grew 641 per cent over the past year.

Large institutional-size transfers above $10 million worth of cryptocurrency represent 42 per cent of transactions from India-based addresses, the report said adding that the numbers suggest that India’s cryptocurrency investors are part of larger, more sophisticated organisations.

Ajeet Khurana, founder of crypto funding consortium Genezis Network, said the perception that something could go wrong is not shared by investors.

“Investors believe cryptocurrency is too big to fail. Further, Indian companies are now large enough and have a global presence to withstand any adverse action in India,” he said.

Rameesh Kailasam, CEO, Indiatech.org, explained that the crypto industry is in a scenario where a product or commodity is moving freely in a market and people are trading in it without being classified under any regulatory body.

“This is like a free animal moving around without a named regulation. While the RBI is in a hurry to work on the regulations, the government is keeping the door partly open. This has emboldened users and investors trading on these platforms to invest freely. One would like to believe that if the sector becomes large and significant enough, it will be difficult to shut it down entirely,” he said.

CoinSwitch Kuber’s Singhal is hoping that the fresh investments would help him scale up.

“Our average user age is about 25 years and we are adding 1-2 million users to CoinSwitch Kuber every month, of which 60 per cent are new users. There is a huge demand and interest and we believe that India can become No 1 in crypto adoption from the No 2 spot at present,” he said.

JOINING THE UNICORN CLUB

Pips its rival CoinDCX to become the most valuable crypto company in India

Began operations in India in June 2020

User base is at over 10 million; plans to onboard 50 million Indians on its platform

 

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Srei promoters move Bombay HC

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Promoters of Srei Infrastructure Finance and Srei Equipment Finance have moved the Bombay High Court challenging the Reserve Bank of India’s decision to supersede the boards of the Kolkata-based NBFCs.

RBI supersedes boards of two debt-laden Srei companies

According to sources, the promoters have sought a stay on the proceedings. The case is expected to come up on Thursday.

Srei Infra and Equipment Finance have debt obligations of over ₹29,000 crore

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Visa launches CoF tokenisation service for Grofers, BigBasket and MakeMyTrip

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Visa has launched a Card-on-File tokenisation service for e-commerce players Grofers, BigBasket and MakeMyTrip. The Reserve Bank of India’s CoF tokenisation guidelines mandate replacing the actual card data with encrypted digital tokens, which are then used to facilitate and authenticate transactions.

“Card-on-File (CoF) tokenisation provides two key benefits — consumer and ecosystem security and an enhanced checkout experience. Launched in partnership with Juspay, India’s first CoF tokenisation service is now available across e-commerce leaders such as Grofers, BigBasket and MakeMyTrip,” it said in a statement on Wednesday.

Secure payments

“Having launched CoF tokenisation services in over 130 countries globally, we are confident of the technology’s ability to build a safe, secure and seamless environment for digital payments. This will be critical in building consumer trust on merchant platforms and reassure them of the safety of their payment credentials on these platforms,” said TR Ramachandran, Group Country Manager, India and South Asia, Visa.

Also see: ADIF is hopeful of further consultation with RBI on tokenisation

Visa has enabled all its banking partners for tokenisation and is working closely with merchants, payment aggregators and gateways to ready the ecosystem for CoF tokenisation rollout, he added.

Tokenisation guidelines have to be met by January 1, 2022.

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Moody’s raises rating outlook to stable for 18 corporates, banks, BFSI News, ET BFSI

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Moody’s Investors Service on Wednesday raised the rating outlook for 18 Indian corporates and banks, including Reliance Industries, Infosys, SBI and Axis Bank, to ‘stable’ from ‘negative’. This follows the upgrade by the US-based rating agency in India’s sovereign rating outlook to ‘stable’ from ‘negative’ on Tuesday. The agency had affirmed the sovereign rating at ‘Baa3’.

The nine companies whose rating outlook has been revised upwards are RIL, TCS, Infosys, ONGC, Petronet LNG Ltd, UltraTech Cement, Oil India, Indian Oil Corporation and Hindustan Petroleum Corporation Ltd (HPCL).

The agency also affirmed the rating on privatisation-bound Bharat Petroleum Corporation (BPCL), but maintained the ‘negative’ outlook.

The nine banks whose outlook has been revised to ‘stable’ are SBI, Axis Bank, Bank of Baroda, Canara Bank, Axis Bank, HDFC Bank, ICICI Bank, PNB, Union Bank and EXIM Bank.

“Stabilization in asset quality and improved capital are the main drivers of this rating action,” Moody’s said.

Also, the rating outlook has been revised to ‘stable’ from ‘negative’ on 10 Indian infrastructure issuers, including NTPC, NHAI, PGCIL, Gail, Adani Transmission and Adani Ports and Special Economic Zone Limited (APSEZ). PTI JD ABM ABM



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Moody’s raises rating outlook to stable for 18 corporates, banks, BFSI News, ET BFSI

Banking & Finance

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Moody’s Investors Service on Wednesday raised the rating outlook for 18 Indian corporates and banks, including Reliance Industries, Infosys, SBI and Axis Bank, to ‘stable’ from ‘negative’. This follows the upgrade by the US-based rating agency in India’s sovereign rating outlook to ‘stable’ from ‘negative’ on Tuesday. The agency had affirmed the sovereign rating at ‘Baa3’.

The nine companies whose rating outlook has been revised upwards are RIL, TCS, Infosys, ONGC, Petronet LNG Ltd, UltraTech Cement, Oil India, Indian Oil Corporation and Hindustan Petroleum Corporation Ltd (HPCL).

The agency also affirmed the rating on privatisation-bound Bharat Petroleum Corporation (BPCL), but maintained the ‘negative’ outlook.

The nine banks whose outlook has been revised to ‘stable’ are SBI, Axis Bank, Bank of Baroda, Canara Bank, Axis Bank, HDFC Bank, ICICI Bank, PNB, Union Bank and EXIM Bank.

“Stabilization in asset quality and improved capital are the main drivers of this rating action,” Moody’s said.

Also, the rating outlook has been revised to ‘stable’ from ‘negative’ on 10 Indian infrastructure issuers, including NTPC, NHAI, PGCIL, Gail, Adani Transmission and Adani Ports and Special Economic Zone Limited (APSEZ). PTI JD ABM ABM



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