Category: Banking & Finance

SREI Infrastructure Finance Ltd stuck in 5% lower circuit as RBI supersedes co’s Board

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The shares of SREI Infrastructure Finance Limited (SIFL) were locked in the 5 per cent lower circuit during the morning trade on Tuesday after the Reserve Bank of India superseded the Board of Directors of SIFL and SREI Equipment Finance Limited.

The shares of SIFL opened at ₹8.17, down ₹0.43 or 5 per cent on the BSE as against the previous close of ₹8.60 and were locked in the 5 per cent lower circuit post opening.

It was trading at ₹8.20 on the NSE, down ₹0.40 or 4.65 per cent.

The Reserve Bank superseded the Board of Directors of SIFL and SEFL owing to governance concerns and defaults by the aforesaid companies in meeting their various payment obligations, as per a regulatory filing.

Rajneesh Sharma, Ex-Chief General Manager, Bank of Baroda, has been appointed as the Administrator of the aforesaid companies.

“The Reserve Bank also intends to shortly initiate the process of resolution of the above two NBFCs under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 and would also apply to the NCLT for appointing the Administrator as the Insolvency Resolution Professional,” it said.

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Fino Payments Bank gets SEBI nod to float IPO

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Fino Payments Bank has received market regulator SEBI’s nod for launching a ₹1,300 crore Initial Public Offering (IPO).

SEBI has issued its observation letter for the proposed IPO. The issuance of observation letter on October 1 implies SEBI go ahead for the IPO.

Fino Payments Bank IPO is likely to see fresh issue of equity shares worth ₹300 crore and an Offer for Sale of 15,602,999 equity shares by promoter Fino Paytech Limited (FPL). The payments bank may consider a pre-IPO placement aggregating upto ₹60 crore.

It maybe recalled that Fino Payments Bank had in July this year filed its preliminary IPO papers with SEBI.

Fino Payments Bank is a wholly owned subsidiary of FPL, which is backed by marquee investors including Blackstone Group, ICICI Group, Bharat Petroleum and World Bank arm International Finance Corporation (IFC). .

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IMF gets briefing on probe into China rankings at World Bank

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The International Monetary Fund said Monday its board of directors has been briefed by attorneys from the law firm whose investigation found that current IMF Managing Director Kristalina Georgieva and other officials pressured World Bank employees to alter data affecting the business rankings of China and other nations.

The IMF said the 190-nation lending agency’s board of directors met with representatives of the WilmerHale law firm as part of an on-going review of the issues raised by the firm’s investigation into the World Bank’s “Doing Business 2018” report.

The Doing Business report evaluated a country’s tax burdens, bureaucratic obstacles, regulatory system and other business conditions, and its rankings was used by some governments to try to attract investment.

The IMF said in a statement that the board board would soon meet with Georgieva as part of its review of the matter. The statement said the IMF’s board “remains committed to a thorough, objective and timely review” of the issues raised by the report.

The investigation prompted the World Bank to end the annual Doing Business reports. The report found that Georgieva, then the chief executive of the World Bank, and other senior World Bank leaders had pressured the bank’s economists to improve China’s 2018 ranking at a time when she and other officials were attempting to persuade China to support a boost in the World Bank’s funding resources.

The incident has led to calls for Georgieva to resign from the IMF’s top job. It has also served to underscore complaints that China has too much influence over global financial institutions.

Georgieva has denied all wrongdoing. “Let me be clear. The conclusions are wrong. I did not pressure anyone to alter any reports,” she said in a statement issued after the report came out last month.

Georgieva said she was looking forward to meeting with the IMF board to brief them on her actions.

The controversy is coming ahead of the annual meetings of the IMF and World Bank, which will take place next week in Washington. (AP) MRJ

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PFRDA expects addition of 1 crore new subscribers to APY in FY22

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Pension Fund Regulatory and Development Authority (PFRDA) expects to add about one crore new subscribers to the government’s Atal Pension Yojana (APY) pension scheme this fiscal.

The Atal Pension Yojana, a guaranteed pension scheme of the Government of India and administered by PFRDA, continues to attract new enrolments supported by aggressive canvassing by intermediaries such as public sector banks, private sector banks, regional rural banks, small finance banks and co-operative banks among others on the back of growing awareness about future financial planning among the people.

“Total enrolments have crossed more than 30 million. In this fiscal alone, we have added a little over 4 million new customers to the APY scheme. Every day we see the numbers go up. On an average, we add 30,000–35,000 subscribers on a daily basis. Looking at the kind of growth we are getting, we feel we can add 10 million new customers under APY in 2021-22,” Supratim Bandyopadhyay, Chairperson, PFRDA, told BusinessLine.

Changing mindsets

The APY scheme has seen a growth of about 27 per cent as of September. Last year was also good and this year it was even better. In NPS, the growth is significantly higher at about 60 per cent, Bandyopadhyay said.

Also see: Improved revenue structure for NPS’ Point of Presence coming soon, says PFRDA Chief Bandyopadhyay

“Over the years, the mindset of people has changed positively towards pension schemes. Now people are really thinking about post-retirement and financial plans. I think the Covid-19 pandemic has also been a trigger for people to think seriously about the need to save for a rainy day. In the past couple of years, including the worst pandemic phase, our on-boarding rate didn’t drop. There was no negative rate in any month,” he added.

Unorganised sector

To a question on coverage for the unorganised sector, he said that with the APY scheme, which allows people in the age group of 18–40 years to join through the bank or post office branches through a savings bank account, a decent progress has been made to cover workers in the unorganised segment.

“It is an ongoing process. Because the number of people in the unorganised sector is so huge — about 45 crore. I think we have reached a little over 3 crore people. It may be low. But what gives us hope is that intermediaries such as banks, RRBs, SFBs have taken it as a mission to bring more people under APY coverage. They are doing a great job,” he added.

Different stratergies

He pointed out that while RRBs in Kerala were following different strategies to reach more people, Airtel Payment has done impressive work and has enrolled more than 1 million subscribers. Banks have engaged self-help groups and banking correspondents to reach out to more people.

Also see: Pension fund sponsors: PFRDA to open ‘on tap’ window next year, too

On the Amendment Bill, PFRDA was hoping that it would be considered during the winter session of the Parliament. It is with the Cabinet as discussions with all stakeholders are over and inputs have been incorporated.

We hope it will be taken up during the winter session, added Bandyopadhyay.

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Banks step up credit card sales, offers in festive season as BNPL threatens, BFSI News, ET BFSI

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With the Covid pandemic weakening and consumer confidence rising, banks are betting on credit card spends this festive season. Lenders have launched a slew of new credit cards and offers to solidify their positions and grab a bigger share of the market.

The credit card push comes at a time when buy now-pay later (BNPL) products have become popular with consumers. BNPL essentially offers around 15 days of interest-free funds to small borrowers and are seen as competitors of credit cards.

SBI offering

Banks step up credit card sales, offers in festive season as BNPL threatens

SBI Card is luring consumers with 10% cashback up to Rs 10,000 across mobiles, consumer durables, laptops, kitchen appliances, home décor & furnishing, and fashion & lifestyle purchases, done at leading domestic e-commerce shopping sites. The offerings are not restricted to just one or two e-commerce portals

However, the offer will not be applicable on online spending in some categories such as insurance, travel, wallet, jewellery, education, healthcare, and utility merchants.

HDFC Bank

Banks step up credit card sales, offers in festive season as BNPL threatens

HDFC Bank and digital payments firm Paytm will launch a range of credit cards powered by Visa this month. The partnership aims to provide one of the widest range of offerings across customer segments, with special focus on millennials, business owners and merchants. Under the partnership announced in August, the two will build comprehensive solutions across payments gateway, point of sale machines, and credit products.

The cards announced today will be customised to meet the distinct needs of retail customers, from new-to-credit users to affluent users and offer rewards and cashback for users. The new cards offering will also facilitate small business owners.

Federal Bank cards

Banks step up credit card sales, offers in festive season as BNPL threatens

Kochi-based private lender Federal Bank entered the credit card business in September in association with card network Visa. The bank has partnered with National Payments Corp of India to launch ‘Federal Bank RuPay Signet Contactless Credit Card,’ according to a press release.

The card’s annual percentage rate starts from 5.88% per annum. Cardholders will gain access to a wide range of offers and deals across categories including travel, food, among others, the bank said. The card is currently being offered to existing customers of Federal Bank.

According to the Reserve Bank of India (RBI), the total number of credit cards stood at 63.4 million at the end of July.



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BoB step up on super app play, faces a tough competition, BFSI News, ET BFSI

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The race for financial super apps in India is getting hotter.

Bank of Baroda will position its new digital platform bob World as the main bank and all banking channels will be an adjunct to the primary platform. The public sector lender is adopting a strategy similar to SBI, which is working to integrate all services on its Yono platform.

Bank of Baroda MD & CEO Sanjiv Chadha has said that post-pandemic, the bank has seen a surge in digital transactions and twice the number of branch visits are happening on the app. “So rather than being an adjunct to the bank, it will be the bank and the other parts of the lender will become an adjunct. The thought was to enable everything that can be done in the branch within the app,” said Chadha.

Here are other few banks and companies that are building up the super app.

Tata Group

BoB step up on super app play, faces a tough competition

Tata Group is planning to come up with its own super app and bring its various consumer businesses under one digital umbrella and offer a seamless omnichannel experience. It is also making acquisitions such as Bigbasket and 1mg to bolster its digital presence.

“It will be a super app, a lot of apps in apps and so on … We have a very big opportunity … How do we give a simple online experience connecting all of this, and at the same time a beautiful omnichannel experience? That is the vision,” N Chandrasekaran, chairman, Tata Sons had said.

The company is looking to leverage its huge consumer base which is spread across various categories and build a “world-class platform out of India to serve the Indian consumer”.

Tata Group has a host of consumer-facing brands that include grocery items, fashion brands, and electronics brands.

In terms of financial services, Tata Group has an insurance company as well as a consumer finance arm, which can be easily integrated into its super app.

Paytm

BoB step up on super app play, faces a tough competition

Paytm, which lacks services such as ride hailing, food delivery, and online groceries, is the leader in the race at present. The app had 85.49 million monthly active users in March 2020. The company has launched a mini-apps store and partnered with companies like Ola, Domino’s, and Decathlon.

It plans to have a million such apps on its store by 2021. Mini apps are custom-built web apps that give users an app-like experience without needing to download one. The listing and distribution of these mini apps within the Paytm app is free of charge, and users can use the Paytm wallet, Paytm Payments Bank, UPI, or net banking for payments at no charges, and credit cards at a 2% fee. These apps are low-cost and quick to build, using HTML and JavaScript.

The company claims it has 325 million registered wallets, which is higher than the 200 million active UPI handles that have been created in the country.

Now the company has set its sights on using the platform to sell multiple financial services such as digital gold, mutual funds, insurance, and consumer and business loans.

SBI Yono

BoB step up on super app play, faces a tough competition

State Bank of India (SBI) is looking to build its super app Yono into a wider platform that can be used by rival lenders. The bank’s plans to create a platform for Yono that will be integrated with regional rural banks or cooperative banks. The plan is to turn the app into a platform where all banks, including SBI, can offer their products and services. The bank feels that the product will be more valuable to investors once the app is fully built out as a platform.

Yono user base has nearly doubled to 32 million at the end of December 2020 from 17 million a year ago.

SBI disbursed personal loans worth Rs 15,996 crore through more than 1 million Yono loan accounts between April and December 2020. It is now looking to extend it to home loan customers and make the entire process online. It is also planning to go big with its multi-lingual Yono Krishi platform that offers services such as Yono Khata, Yono Bachat, Yono Mitra and Yono Mandi to its farm customers. It wants to expand Yono Business through which it has made it easier for corporate customers to apply for letters of credit and bank guarantees.

Reliance Retail

BoB step up on super app play, faces a tough competition

Reliance Retail Ventures Ltd’s acquisition of a controlling stake in business-to-business (B2B) search engine Just Dial (JD) will provide it with access to a large merchant base for its new commerce platform JioMart. It will also allow it to harness JD’s evolution into a super app that will help book flights, train and bus tickets, cabs and hotel rooms and pay bills, as well as provide other services.

Reliance Retail plans to onboard 10 million merchant partners for its new commerce initiative over the next three years. The acquisition will allow RRVL to leverage JD’s database of 30.4 million business listings and its consumer traffic of 129 million quarterly unique users as on March 31, 2021.

JD’s B2B platform, JD Mart, matches wholesalers and manufacturers with retailers and industrial buyers, according to Credit Suisse.

Also, Facebook and telecom giant Reliance Jio are coming together to figure out the possibility of a super app, similar to the multipurpose Chinese platform WeChat. They are reportedly hoping to develop the app using the WhatsApp platform as well as its huge user base.

The platform would be a place for users to chat, while also letting them shop for groceries from Reliance Retail stores, for clothes and apparel and make digital payments using JioMoney.

WhatsApp

BoB step up on super app play, faces a tough competition

WhatsApp has a vast user base in India, but it has too few services to offer and must build and maintain its fintech muscle. The variety of its product portfolio and the speed of implementation will determine whether it can topple the incumbents in India. It may also have to face regulatory hurdles in India.

Bajaj Finance

BoB step up on super app play, faces a tough competition

Bajaj Finance has recently stepped up its wallet business. Its cross-sell franchise has about 27 million customers with around 70% of all no-cost EMI loans given for offline consumer durable purchases being through it.

Bajaj has recently launched a payments app and looks to be on the way to build a super app. The launch of the digital wallet is part of a broader strategy by the consumer NBFC to expand its digital finance offerings. The company has been rolling out ‘Bajaj Pay’ in phases to expand into the payments segment.



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RBI appoints advisory committee to assist administrator of 2 Srei group firms, BFSI News, ET BFSI

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After superseding the boards of Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL) on Monday, the RBI has appointed a three-member Advisory Committee to assist the administrator of the two crisis-ridden firms. The Reserve Bank of India (RBI) superseded the board of directors of SIFL and SEFL and appointed Rajneesh Sharma, ex-chief general manager, Bank of Baroda, as the administrator.

“The Reserve Bank…has constituted a three-member Advisory Committee to assist the Administrator in discharge of his duties,” the central bank said in a statement.

The members of the Advisory Committee are — R Subramaniakumar (former MD and CEO, Indian Overseas Bank), T T Srinivasaraghavan (former managing director, Sundaram Finance Limited), and Farokh N Subedar (former chief operating officer and company secretary, Tata Sons Limited).

The Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 provide for the concerned financial sector regulator appointing a Committee of Advisors to advise the administrator in the operations of the financial service provider during the corporate insolvency resolution process.

Srei group, which mainly caters to the MSME and infrastructure sectors, owes around Rs 18,000 crore to around 15 lenders, including Axis Bank, UCO Bank and State Bank of India, and another nearly Rs 10,000 crore of external commercial borrowings and bonds. PTI NKD ABM ABM



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IBA CEO, BFSI News, ET BFSI

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The Reserve Bank on Monday gave licence to the Rs 6,000 crore National Asset Reconstruction Company Ltd (NARCL), a move that will help kickstart operations of the bad bank. NARCL was incorporated in July in Mumbai following registration with the Registrar of Companies (RoC).

“Happy to share #RBI has given License to #NARCL on 4.10.2021. The approval has been accorded under Section 3 of #SARFAESI Act 2002,” Indian Banks’ Association (IBA) CEO Sunil Mehta tweeted.

IBA, entrusted with the task of setting up the bad bank, has put a preliminary board for NARCL in place.

The company has hired P M Nair, a stressed assets expert from State Bank of India (SBI), as the managing director.

The other directors on the board are IBA CEO Mehta, SBI Deputy Managing Director S S Nair and Canara Bank’s Chief General Manager Ajit Krishnan Nair.

Finance Minister Nirmala Sitharaman had in Budget 2021-22 said that the high level of provisioning by public sector banks of their stressed assets calls for measures to clean up bank books.

“An Asset Reconstruction Company Limited and Asset Management Company would be set up to consolidate and take over the existing stressed debt,” she had said in the Budget speech.

It will manage and dispose of the assets to alternative investment funds and other potential investors for eventual value realisation, she had said.

Last month, the Cabinet cleared a proposal to provide government guarantee worth Rs 30,600 crore to security receipts issued by NARCL.

NARCL will pay up to 15 per cent of the agreed value for the bad loans in cash and the remaining 85 per cent would be government-guaranteed security receipts.

It will be 51 per cent owned by PSBs and the remaining by private sector lenders.

Last week, SBI, Union Bank of India, Indian Bank picked up 13.27 per cent stake each in the NARCL, while Punjab National Bank acquired about 12 per cent stake.

NARCL will take over identified bad loans of lenders.

The lead bank with an offer in the hand of NARCL will go for a ‘Swiss Challenge’, wherein other asset reconstruction players will be invited to better the offer made by a chosen bidder for finding a higher valuation of a non-performing asset on sale.

The company will pick up those assets that are 100 per cent provided for by the lenders. Banks have identified around 22 bad loans worth Rs 90,000 crore to be transferred to NARCL in the initial phase.



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Delhi govt asks banks to integrate their vehicle loan data with VAHAN portal, BFSI News, ET BFSI

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Delhiites who have taken loans on their vehicles need not visit a bank or the transport department‘s office after October as the city government has asked the banks, financial institutions and NBFCs to integrate their vehicle loan data with the VAHAN portal of the Ministry of Road Transport and Highways. Any applicant who has taken a vehicle loan from any financial institution need not visit the bank or physically submit any document, according to a statement issued by the transport department on Monday.

“No physical documents needed for hypothecation of vehicles in Delhi after October 31,” it said.

Hypothecation is the process whereby the ownership of a vehicle taken on loan and held as collateral by a bank or a lending agency is restored to its buyer.

“We had, in the last month set a strict deadline to take all banks on board for integrating their data with VAHAN to allow termination on hypothecation services and I am happy to see that the process has picked pace and is nearly complete,” Delhi Transport Minister Kailash Gahlot was quoted as saying in the statement.

With this circular, the “no-objection certificate” (NOC) for hypothecation termination from banks and other financial institutions will be received only in the digital format at the VAHAN platform of the National Informatics Centre (NIC), the statement said.

Hypothecation services, including addition, continuation and termination on vehicle loans, are one of the most availed services of the transport department under its “Faceless Services” initiative launched in August.

Private banks HDFC and ICICI together account for 70-80 per cent of all the vehicle loans in Delhi and have already integrated their loan-related data with the VAHAN portal, according to the statement.

Delhiites need not visit a bank for the NOC as they can directly apply for hypothecation removal on the transport department’s website under “Faceless Services”.

Earlier, after the foreclosure of a loan, an applicant had to apply for termination of hypothecation and submit Form 35 and an NOC from the bank within 90 days.

The circular says from November 1, the banks or financial institutions that fail to integrate the data with the VAHAN portal would not be allowed to enter their data of hypothecation into the transport department’s database. PTI VIT RC



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Reserve Bank supersedes boards of Srei Infrastructure, Srei Equipment Finance, BFSI News, ET BFSI

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The Reserve Bank of India said on Monday it has superseded the board of directors of non-banking financial companies Srei Infrastructure Finance Ltd and Srei Equipment Finance Limited due to governance concerns and defaults, adding that it will initiate bankruptcy proceedings against them.

Rajneesh Sharma, the former Chief General Manager of the Bank of Baroda, has been appointed the administrator.

Last week, a consortium of lenders led by UCO Bank sought central bank directions on pursuing recovery of dues from the Srei Group after loans worth about Rs 30,000 crore to the Kolkata-based financier officially qualified to be moved to the list of non-performing assets (NPA) this quarter.

Srei Infrastructure, and its subsidiary Srei Equipment Finance, together owe lenders and debenture holders a total of Rs 30,000 crore. Kolkata-based UCO Bank is the lead lender, with more than Rs 2,000 crore of exposure. State Bank of India (SBI)’s exposure to the group is also more than Rs 2,000 crore.

The bank loans have turned non-performing assets after the end of the September quarter, two senior bank executives told ET.

The company had earlier announced that Arena Investors, Makara Capital and others had evinced interest to invest in the company to the tune of Rs 2,200 crore. The company had formed a strategic coordination committee to coordinate, negotiate and conclude discussions with the investors.

Till date, it received expressions of interest from 11 investors and has signed non-disclosure agreements with nine of them. Two Investors — Makara and Arena — had submitted non-binding term sheets indicating their intent for investment.

Srei Infrastructure, which is a listed entity, reported a net loss of Rs 971 crore in the June quarter as against Rs 23 crore net profit in the year ago period as provisions on loans rose nearly seven times to Rs 439 crore over the same period as repayment collections were hit due to the impact of the Covid 19 pandemic.

with inputs from Atmadip Ray



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