Category: Banking & Finance

Ahead of festive season, banks slash interest rate on home loans. Get the details here, BFSI News, ET BFSI

Banking & Finance

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Festive season has commenced and banks as well as non-banking financial institutions have already rolled out a plethora of festival offers like lower interest rates on loans and waiver of processing fees.

Ahead of the festive season, many top banks have announced offers and discounts on home loans.

State Bank of India (SBI), ICICI Bank, Punjab National Bank (PNB), Kotak Mahindra, Bank of Baroda (BoB) and Yes Bank are among the banks offering home loans at attractive rates.

The offer is for a limited time period.

Bank Women Others Effective Rate of Interest Offer valid upto
SBI – – 6.70% onwards –
ICICI Bank – – 6.70% onwards –
Yes Bank 6.65% onwards (salaried) – 6.70% onwards 1-Oct to 31 Dec 2021
Kotak Mahindra Bank – – 6.50% onwards 10-Sep to 8-Nov-21
Punjab National Bank – – 6.60% onwards

Source: Official Websites

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Ahead of festive season, banks slash interest rate on home loans. Get the details here, BFSI News, ET BFSI

Banking & Finance

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Read More/Less


Festive season has commenced and banks as well as non-banking financial institutions have already rolled out a plethora of festival offers like lower interest rates on loans and waiver of processing fees.

Ahead of the festive season, many top banks have announced offers and discounts on home loans.

State Bank of India (SBI), ICICI Bank, Punjab National Bank (PNB), Kotak Mahindra, Bank of Baroda (BoB) and Yes Bank are among the banks offering home loans at attractive rates.

The offer is for a limited time period.

Bank Women Others Effective Rate of Interest
SBI – – 6.70% onwards
ICICI Bank – – 6.70% onwards
Yes Bank 6.65% onwards (salaried) – 6.70% onwards
Kotak Mahindra Bank – – 6.50% onwards
Punjab National Bank – – 6.60% onwards

Source: Official Websites

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Banks’ credit growth gradual in August, industry weakest link, says ICICI Sec, BFSI News, ET BFSI

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The overall credit growth of banks in August has been gradual from July, with signs of improvement only in pockets, ICICI Securities said in a report.

Industry credit continues to be the weakest link, dragging overall credit growth.

The industry, which comprises 29.2% of total non-food credit, was down 0.2% on month. Under-utilisation of existing sanction limits, modest demand outlook and run-down of exposure in few sectors were among the key factors, the brokerage said.

However, the brokerage expects industry credit to revive in the near future, given economic recovery from the COVID-19 crisis.

“We believe India Inc is now better positioned and confident to anvil on the path of re-leveraging. Indian financiers, too, have saddled themselves with ample liquidity to tap the emerging opportunity. Recovery in economic activity and the derivative effect of increased investments and corporate, government spending on consumption will sustain the momentum of more than 15% growth over FY22-FY25,” ICICI Securities said.

Also read: Banks’ credit outlook ‘stable’ for FY22, says Crisil Ratings

Credit extended for home loans has stayed put since March, up 0.8% year-to-date, while vehicle loans moderated to a 1% month-on-month accretion and is likely to pick up during the festive season.

Other personal loans also saw a strong momentum, up 18% on year.

With gradual easing of COVID-19 restrictions, credit card portfolio sales have risen 3.9% on month and 10.3% on year, witnessing the quickest recovery as business activity levels revived, the brokerage said.

Credit to non-food sectors was up a mere 0.5% on month and 6.7% on year, with agri and retail being the main drivers.

Retail credit is sustaining double-digit growth, but has not been robust, despite relaxation of COVID curbs, the brokerage said. The growth in retail credit was primarily due to the traction in vehicle and personal loans, and credit card sales.

Roads, airports, railways, iron and steel, cement, telecom and sugar are among the key sectors that are continuously deleveraging, the brokerage said.

“We believe industry growth will have to emerge as a key driver to boost credit growth in coming years. While it may happen with some lag, revival in consumer demand and rise in government spending can be potential triggers,” the brokerage said.

Credit to micro, small and medium enterprises was up 4% on month and 63% on year, the brokerage noted.

Lending to housing finance companies was up 21% on month, while loans to public public financial institutions was down 1% on year. After running down high risk assets, NBFCs are now pursuing growth opportunities in a risk-calibrated manner, the brokerage said, adding that now bank lending to NBFCs should stabilise.



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ICICI Bank 2nd in card spends, ahead of SBI, BFSI News, ET BFSI

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ICICI Bank has overtaken SBI in credit card spends in August taking the number two spot after HDFC Bank. According to RBI data, ICICI Bank had a market share of 19.6% in August 2020 up from 15.8% in August 2020. SBI Card’s market share in spends, slipped to 18.7% in August 2021 from 20% in the previous year.

In absolute terms, total spending through credit cards in August 2021 was Rs 77,733 crore, up 54% from Rs 50,319 crore in August 2020. The overall number of cards in force has increased from 5.8 crore to 6.4 crore in the same period.

“Looking at total spends, since November 2020, ICICI has gained around 510 basis points market share, while HDFC Bank and SBI cards have lost around 285bps and 90bps market share, respectively. ICICI Bank’s total spends for July 2021 was equal to that of SBI cards despite ICICI Bank’s market share (based on outstanding cards) being lower than that of SBI Cards. We believe, ICICI’s co-branded card with Amazon (1.6 millon as of March 2021), which forms more than 50% of incremental card additions, has helped it to scale up its credit card business in a significant way,” said Suresh Ganapathy, an analyst with Macquarie research.

To boost credit card spending, HDFC Bank on Tuesday launched its Festive Treats 3.0 campaign, which will provide offers on cards, loans and EMIs. The bank has partnered with over 10,000 merchants across 100 locations as it expects customers to return to offline shopping following a dip in Covid cases and increased pace of vaccinations. “This year we have come out with more offline offers including hyperlocal merchants. We will use our ATM platform to inform customers about the offers around their location,” said Parag Rao, group head (payments, consumer finance, digital banking and IT).

HDFC Bank continues to be the market leader with 26.5% of total credit card spending in India. However, the bank’s share has fallen from August 2021, when it accounted for 28.7% of the total spend. Sequentially, HDFC Bank had seen a dip in credit cards in force as the RBI ban was still in force for most of the month. Since the ban was lifted the bank had added four lakh credit cards to its base of 1.47 crore cards as of August 2021.

The biggest loser in terms of share of spending is Citibank, which led the ranking in terms of card spend for many years. The multinational, which had a 7.8% share of spends in 2020 now accounts for 4.9% of spending. IDFC First Bank, a relatively late entrant, has managed to make a dent by increasing its share of card spend to over 1%. American Express is the only multinational bank to grow its share of spending from a year-ago period. However, the US issuer also faces an embargo on issuing new cards until it complies with data localization norms, which is likely to hit growth.



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US-based Arena Investors evinced interest to acquire Srei before RBI took control, BFSI News, ET BFSI

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Arena Investors, a US-based company, had proposed to buy 74% in Srei Equipment Finance, a wholly owned subsidiary of Srei Infrastructure Finance for about Rs 2,000 crore before the Reserve Bank of India (RBI) took control of the non-bank lender on Monday, two people familiar with the matter told ET.

The Srei group had forwarded the proposal to RBI for a review a couple of months ago, the executives said. Arena is an institutional asset manager that provides solutions for those seeking capital in special situations

Singapore-based Makara Capital Partners had also proposed to bring in about Rs 2,200 crore.

ET had sent mails to both Arena and Makara last Saturday on the matter but both companies didn’t respond until Tuesday evening.

Srei’s board of directors and the strategic coordination committee for capital raising, chaired by an independent director, had accepted the proposals and sent them to the regulator for approval, Srei Infrastrcuture’s former chairman Hemant Kanoria said Tuesday.

It is not clear at this juncture if RBI finds Arena or Makara fit enough to acquire Srei, a lender to the country’s core sector, or if it prefers a domestic company to take over Srei. RBI has initiated steps to move Srei to the bankruptcy court so that lenders and bond holders can recover their money from Srei. Their cumulative exposure is in the vicinity of Rs 31,000 crore.

As many as 11 investors had evinced interest in Srei, while Arena and Makara submitted non-binding terms sheets to the non-bank lender.

Some of those included Varde Partners, Sumitomo Mitsui Banking Corporation (SMBC) and Apollo Global. They could not be contacted immediately for comments.

The group had approached the National Company Law Tribunal (NCLT) with a repayment scheme aligned to inflows for all its creditors. The scheme had proposed to pay full dues to all creditors in a structured manner. A majority of the lenders did not accept the scheme.

After the scheme was filed in October 2020, banks led by Uco Bank took control of the company’s cash flow. Since November last year, banks have recovered about Rs 3,000 crore.



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Canara Bank cuts MCLR by up to 15 basis points, BFSI News, ET BFSI

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State-owned Canara Bank on Tuesday announced an up to 15 basis points cut in its marginal cost of funds based lending rate (MCLR). The bank has decided to reduce the MCLR for one-year tenor by 10 basis points to 7.25 per cent effective from October 7, Canara Bank said in a regulatory filing.

Most of the consumer loans such as personal, auto and home are priced on the basis of the one-year MCLR.

The bank has lowered MCLR on overnight and one-month tenors by 0.15 per cent to 6.55 per cent.

Meanwhile, DCB Bank also reduced its MCLR by 0.05 per cent across tenors, effective from October 6.

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

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The Reserve Bank of India is expected to soon initiate the process of resolution of Srei Infrastructure Finance and Srei Equipment Finance, and experts expect it to get a high level of interest from potential investors.

“The RBI’s move is a clear statement that RBI doesn’t believe the promoter and management team of Srei is capable of resolving the stress. Also, with the success of DHFL’s insolvency resolution, RBI and lender group must be confident of value preservation and a credible resolution even for Srei,” said Bikash Jhawar, Partner, Saraf & Partners.

Also see: RBI supersedes boards of two debt-laden Srei companies

He added that he expects a reasonably high level of interest in the Srei business with economic outlook, especially in infrastructure and manufacturing, looking good.

“Srei has deep linkages with brick-and-mortar companies and promoter groups in India and those relationships may be quite a draw,” he further said.

Debt obligation

Resolution bound Srei Infrastructure Finance and Srei Equipment Finance have debt obligations of over ₹29,000 crore with bank facilities of over ₹28,000 crore.

“There will be a lot of interest in the Srei companies. DHFL has paved the way for successful resolution of financial services companies,” said another expert who did not wish to be named.

Revised credit ratings

According to CARE Ratings’ recent note in March this year, Srei Equipment Finance has long-term and short-term bank facilities of ₹16,912.21 crore, non-convertible debentures (NCDs) of a little over ₹352 crore, unsecured subordinated Tier II NCDs of ₹109.8 crore and perpetual debt of ₹37.5 crore.

By March, Srei Infrastructure Finance had short-term and long-term bank facilities of ₹11,117.71 crore, long-term infrastructure bonds of ₹20.22 crore, NCDs of ₹95.9 crore and unsecured subordinated Tier II NCDs of ₹594.51 crore.

According to an Acuite Ratings report in March, Srei Equipment Finance had NCDs of ₹3,492.45 crore.

Both CARE Ratings and Acuite had revised their ratings for the Srei companies.

Bank exposure

According to sources, UCO Bank, Punjab National Bank and State Bank of India have among the highest exposure to the two firms.

Also see: Srei Infrastructure Finance Ltd stuck in 5% lower circuit as RBI supersedes co’s Board

However, most banks have been providing for their exposure to the two companies.

Superseding of boards

The RBI had, on October 4, superseded the boards of Srei Infrastructure Finance and Srei Equipment Finance (SEFL), paving the way for their resolution. It also appointed Rajneesh Sharma, Ex- Chief General Manager, Bank of Baroda, as the Administrator of the companies under Section 45-IE (2) of the RBI Act.

On Tuesday, Srei Infrastructure Finance was down 5 per cent to ₹8.17 apiece on the BSE.

Covid impact

Hemant Kanoria, former Chairman of Srei Infrastructure Finance, in the Annual Report, had said that the company was primarily dependent on borrowings from banks and other lenders for deployment of funds towards financing for asset creation. The Covid pandemic has had an adverse effect on its customers, which has affected cash flows, resulting in muted collections, he had said.

The company had also been reducing its infrastructure portfolio and realigning the equipment financing business to the extant regulations, but it was “derailed” to some extent by the pandemic.

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HDFC AMC files paper for 9 passive funds

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HDFC Asset Management Company has filed papers with Sebi for launching nine passive funds including exchange-traded funds on Nifty Growth Sectors 15, Nifty IT, Nifty Next 50, Nifty Private Bank, Nifty 100 Low Volatility 30, Nifty 100 Quality 30, Nifty 200 Momentum 30 and NV 20.

Being the market leader and one of the early entrants into the asset management business, the fund house has few options to launch a new product on actively managed funds category as per Sebi scheme Categorization and Rationalization of Mutual Fund.

The fund house has few passively-managed funds on Nifty and Sensex, one banking sector-linked passive fund and a gold ETF.

In June, the fund house launched an actively managed Banking and Financial Services Fund which has assets under management of ₹ 2,181 crore as of last month-end. It also came out with a passive fund on Asset Allocation Fund of Funds and has an AUM of ₹ 1,731 crore. Investors have been showing more interest in passive funds with concern on unrelentless run-up in equity valuation.

Navneet Munot, Managing Director, HDFC AMC in an investor’s conference call after the quarterly results said there are few gaps in categories such as sector and thematic funds, passive products, both ETF and index funds, international funds and some of the fund of funds.

“Over the last couple of quarters, we have launched a few products. We are going to have some more products over the next several quarters. We believe that all of these efforts, including the performance improvement, would be noticed by the market and we should be able to see a gradual improvement in the market share,” he added.

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Merchants hit by revision in payment norms form an alliance, BFSI News, ET BFSI

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Hit by a revision in payment norms by the RBI, online merchants like Netflix, Facebook and Future Generali on Tuesday announced the formation of a grouping to take up common causes. The changes on e-mandates effected by the RBI from October 1 are intended to make the ecosystem more robust but with only six banks complying with the revised norms, the preparedness of the banking sector is questionable and there is bound to be value erosion in the merchant-customer relationships as the latter face inconveniences, as per an official statement from the body.

The Merchant Payments Alliance of India (MPAI), which also has other members including Disney+Hotstar, Bookmyshow, Microsoft, Spotify, Times Internet and Zoom, will work towards such causes by addressing and constructively engaging with the payments regulator and industry.

“The MPAI sees itself as a collective, using the operational experience of merchants, to engage on policy matters such as the e-mandate issue, which will help reduce transaction-related frictions and improve the efficiency of digital markets,” Vivan sharan from its secretariat, said.

The alliance will enhance the value of India’s digital markets, provide public interest research and thought leadership on digital payments, and build consumer awareness, the statement said.

The MPAI statement said it also aspires to become a resource platform for merchants and the payments ecosystem “to contribute to policy conversations involving matters that help reduce transaction-related frictions and improve digital markets’ efficiency” while ensuring data protection and fraud prevention.

“The group’s purpose is to be a collaborator to the digital payments policy discourse and Microsoft is excited to be part of this initiative,” the American tech giant’s Vishal Mehta said.

The alliance is open for memberships to merchants that use digital payments and align with the alliance’s vision in India, the statement said.



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