Category: Banking & Finance

Recurring card payments to be affected as new credit, debit card rules kick in from October 1, BFSI News, ET BFSI

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Cardholders might witness standing instructions for the payment of their credit card, crash from next month. Instructions may include the likes of content platforms, edtech firms and online ad payments.
With the deadline less than a week away, some merchants are yet to be in compliance with RBI’s new requirement of additional factor authentication (OTP) for repetitive payments.

As per a TOI report, about 75% banks have set up the technology required to meet RBI’s directive. Although, some banks are still in the wait-and-see mode.

Banks are intimating customers that some transactions may fail.

“Effective October 1, 2021, the bank will not approve any standing instruction (e-mandate on cards for recurring transacions) given at merchant website/app on HDFC Bank credit/debit card, unless it is as per RBI-compliant process,” the banks are already writing to the customers.

Banks are recommending the user to either pay on biller’s website using OTP or use the bill-pay option for utilities.

A dozen banks, according to Razorpay, have put in place the technology to alert the customer a day in advance in the case of repeat payments while providing them with a link to discontinue the mandate, mentions the same TOI report.

This move by RBI can take growth in recurring payment mandates off the charts even though there might be disruptions in the short term, said Shashank Kumar, Razorpay chief technology officer and co-founder.

He adds that this directive caters to two problems. Discontinuing standing instruction to a merchant was a task earlier while some asked for a letter by post asking for the discontinuation.

Moreover, credit cards were mainly used for recurring payments while debit cards weren’t as much in use.

Eventually, international mandates will operate uninterrupted as neither banks nor the RBI has jurisdiction over international billers, even after October 1.

The inclusion of 900 million existing debit cards could increase Indian markets multifold, said Kumar.

RBI has increased consumer confidence by allowing them to stop payments whenever they want, he added.

Online education and entertainment could become interesting, he said, as it increases affordability of this service by allowing them to have a monthly debit model instead of a recover annual fees.

RBI, additionally, has capped debits at Rs 5,000 per month which indicates that billers would need to increase the frequency to enable auto-debit.



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NTPC REL signs first green term loan pact of Rs 500 cr with Bank of India, BFSI News, ET BFSI

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State-run power giant NTPC on Thursday said its arm NTPC Renewable Energy Ltd (NTPC REL) has signed the first green term loan agreement of Rs 500 crore with Bank of India. The green term loan agreement is for its two solar projects in Rajasthan and Gujarat.

NTPC REL has signed its first Green Term Loan agreement of Rs 500 crores at a very competitive rate with a tenor of 15 years with Bank of India on September 29, 2021 for its 470 MW solar project in Rajasthan and 200 MW solar project in Gujarat, a company statement said.

A green loan is a type of loan instrument that enables borrowers to finance projects that have an environmental impact.

NTPC REL, a 100 per cent subsidiary of NTPC Ltd, currently has a renewable project portfolio of 3,450 MW of which 820 MW projects are under construction and 2,630 MW projects have been won for which PPAs (power purchase agreements) are pending to be executed.

NTPC had incorporated NTPC Renewable Energy Ltd with the Registrar of Companies, NCT of Delhi & Haryana on October 7, 2020, to undertake renewable energy business.

NTPC is taking various steps to make its energy portfolio greener by adding significant capacities of renewable energy sources.

By 2032, the company plans to have 60GW capacity through renewable energy sources constituting nearly 45 per cent of its overall power generation capacity as per its official portal. PTI KKS KKS DRR DRR



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Treasury storm may impact India, Indonesia bonds less than others

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Bonds from the two countries are already leading gains in emerging Asia this quarter, offering 3 per cent-5 per cent returns to dollar-based investors. In comparison, lower-yielding bonds from Thailand and South Korea have handed losses of between 4.5-5 per cent.

The Treasury rout spurred by the Federal Reserve’s indication that it may start tapering bond purchases in November has intensified amid challenges faced by President Joe Biden’s administration in raising the debt ceiling. The wave of global bond sell-off that ensued has weighed on Asian bonds, with hawkish comments from UK and Norway’s central bank adding to jitters.

Indonesia and India’s bonds have outperformed due to their wider spread over Treasuries, softer inflation prints relative to emerging-market peers, positive fiscal developments and the central bank’s bond purchases, said Siddharth Mathur, head of emerging-market research for Asia Pacific at BNP Paribas SA. “We expect these trends to remain intact into the end of the year.”

The 10-year bonds from the two nations have a buffer of around 470 basis points each over similar-maturity Treasuries. Despite the recent moves, the gap is near a five-year average for rupee bonds while it has tightened from a mean of 515 basis points for rupiah debt. The premium offered by won and baht bonds is around 70 basis points or lower on similar notes, making them more vulnerable to Treasury swings.

Indonesia pledged to return the budget shortfall to below 3 per cent of gross domestic product by 2023, while India this week stuck to its borrowing plan for the second half of the fiscal year ending in March 2022. A potential inclusion in global bond indexes is seen as another positive catalyst for Indian bonds.

Foreign funds poured $3.3 billion into Indian bonds in the three months ending September, the most since the third quarter of 2017. Rupiah bonds saw a net outflow over the same period but robust onshore demand, following a reduction in debt supply, and Bank Indonesia’s purchases have kept yields anchored.

Risks ahead

Rupee bonds face the risk that the Reserve Bank of India may tighten its policy soon. The central bank drained cash from the banking system at a sharply higher rate Tuesday after making its bond purchase program liquidity-neutral since last week.

Macro risk from a hawkish Fed still persists for rupiah debt given that nearly 22 per cent of the nation’s sovereign bonds are held by foreign investors. While that proportion has fallen from as much as 39 per cent in January 2020, it’s still one of the highest among Asian nations.

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Treasury storm may impact India, Indonesia bonds less than others

Banking & Finance

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Read More/Less


Bonds from the two countries are already leading gains in emerging Asia this quarter, offering 3 per cent-5 per cent returns to dollar-based investors. In comparison, lower-yielding bonds from Thailand and South Korea have handed losses of between 4.5-5 per cent.

The Treasury rout spurred by the Federal Reserve’s indication that it may start tapering bond purchases in November has intensified amid challenges faced by President Joe Biden’s administration in raising the debt ceiling. The wave of global bond sell-off that ensued has weighed on Asian bonds, with hawkish comments from UK and Norway’s central bank adding to jitters.

Indonesia and India’s bonds have outperformed due to their wider spread over Treasuries, softer inflation prints relative to emerging-market peers, positive fiscal developments and the central bank’s bond purchases, said Siddharth Mathur, head of emerging-market research for Asia Pacific at BNP Paribas SA. “We expect these trends to remain intact into the end of the year.”

The 10-year bonds from the two nations have a buffer of around 470 basis points each over similar-maturity Treasuries. Despite the recent moves, the gap is near a five-year average for rupee bonds while it has tightened from a mean of 515 basis points for rupiah debt. The premium offered by won and baht bonds is around 70 basis points or lower on similar notes, making them more vulnerable to Treasury swings.

Indonesia pledged to return the budget shortfall to below 3 per cent of gross domestic product by 2023, while India this week stuck to its borrowing plan for the second half of the fiscal year ending in March 2022. A potential inclusion in global bond indexes is seen as another positive catalyst for Indian bonds.

Foreign funds poured $3.3 billion into Indian bonds in the three months ending September, the most since the third quarter of 2017. Rupiah bonds saw a net outflow over the same period but robust onshore demand, following a reduction in debt supply, and Bank Indonesia’s purchases have kept yields anchored.

Risks ahead

Rupee bonds face the risk that the Reserve Bank of India may tighten its policy soon. The central bank drained cash from the banking system at a sharply higher rate Tuesday after making its bond purchase program liquidity-neutral since last week.

Macro risk from a hawkish Fed still persists for rupiah debt given that nearly 22 per cent of the nation’s sovereign bonds are held by foreign investors. While that proportion has fallen from as much as 39 per cent in January 2020, it’s still one of the highest among Asian nations.

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InnoVen Capital India Fund announces first close at ₹740 crore

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InnoVen Capital India Fund has announced the first close of its new fund at approximately ₹740 crore ($100 million equivalent).

The fund has a target corpus of ₹1,000 crore, with a green shoe option to raise an additional ₹1,000 crore. The first close was done with anchor investor, InnoVen Capital, a joint venture between Seviora (a wholly-owned subsidiary of Temasek) and United Overseas Bank.

InnoVen Capital is a dedicated venture debt-provider in India. In India, it has executed over 250 transactions with more than 180 start-ups. Since 2017, the platform has disbursed approximately $400 million to Indian start-ups.

InnoVen has backed some leading start-ups in the country including Byjus, Swiggy, Oyo Rooms, Eruditus, DailyHunt, PharmEasy, Infra.Market, Zetwerk, Moglix, FirstCry, BharatPe, boAT, Licious, Blackbuck, Rebel Foods, and Ofbusiness, among others.

Focus of the fund

While the fund is stage and sector-agnostic, the primary focus will be on sectors such as Consumer Internet, B2B Commerce, Enterprise Software, Fintech, Health-Tech, and Logistics. Ashish Sharma, Managing Partner, InnoVen Capital India Fund, said, “India is now home to over 50 unicorns and the third-largest venture eco-system globally. Over the years, we have been fortunate to partner with some of the best founders and start-ups, including 17 that have achieved a unicorn status. Our portfolio companies have raised over $20 billion of external capital and now valued at over $70 billion.”

Tarana Lalwani, Partner, said, “At InnoVen, we continue to champion the rise of entrepreneurship and be an active participant in the growth of the venture eco-system. The new fund will help us to engage with even more start-ups and to continue to build out a truly, unique platform which collaborates with the best founders and investors”.

Sameer Mansukhani, Partner, said, “With record fund raising and a vibrant IPO market, we expect a multi-fold increase in formation of new start-ups, which will lead to higher demand for venture debt in the future. Venture debt is now an integral part of financing rounds and founders have a good appreciation of the product. We have built a robust pipeline and expect to start disbursing from the fund soon”.

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Indian Overseas Bank shares jump 20% as RBI removes it from PCA framework

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Shares of Indian Overseas Bank on Thursday jumped 20 per cent after the Reserve Bank removed it from the Prompt Corrective Action Framework (PCAF).

The stock zoomed 20 per cent to ₹24.60 on the BSE. At the NSE, it gained 19.80 per cent to ₹24.50.

The Reserve Bank on Wednesday removed Indian Overseas Bank from the Prompt Corrective Action Framework (PCAF), following improvement in various parameters and a written commitment that the state-owned lender will comply with the minimum capital norms.

On a review of the performance of the IOB, the Board for Financial Supervision on the basis of the published financial results for 2020-21, found that the bank was not in breach of the PCA parameter, the RBI said in a statement.

Also read: IOB’s profitable march: Asset quality improves further in Q1

The bank has provided a written commitment that it would comply with the norms of Minimum Regulatory Capital, Net NPA and Leverage ratio on an ongoing basis, it added.

The lender has also apprised the RBI of the structural and systemic improvements that it has put in place, which would help the bank in continuing to meet these commitments. “Taking all the above into consideration, it has been decided that Indian Overseas Bank is taken out of the PCA restrictions subject to certain conditions and continuous monitoring,” the central bank added.

IOB was placed under PCA in 2015.

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KLM Axiva Finvest comes out with NCD issue

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KLM Axiva Finvest, the Kochi based NBFC, has come out with an NCD issue with a face value of ₹1000. The issue, fifth in the series, opened on September 30 and will close on October 26. The minimum investment starts at ₹5,000.

There are 10 deposit plans and various schemes ranging from 12 months to 80 months, offering interest rates ranging from 10 to 11.25 per cent. The issue also consists of a scheme where the deposit amount will be doubled in 80 months.

The company in a statement claimed that the last issue was oversubscribed. With the new NCD issue, it aims to raise ₹200 crore and the entire amount raised will be used for the expansion of gold loans, J Alexander, Chairman of the firm, said.

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AU Small Finance Bank signs pact with NABARD to boost rural development projects in Rajasthan

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Private sector AU Small Finance Bank on Wednesday signed a pact with the National Bank for Rural and Development (NABARD) to boost ongoing rural development initiatives in Rajasthan.

According to a statement issued by the bank here, the Memorandum of Understanding (MoU) was signed in the presence of NABARD Chairman G R Chintala, Jaideep Srivastava, Chief General Manager, Rajasthan, and Sanjay Agarwal, Managing Director, AU Small Finance Bank.

Joint initiative

The memorandum envisages a joint initiative to benefit farmers, Farmer Producer Organisations (FPOs), Self Help Groups (SHGs), rural artisans, agri-entrepreneurs, and agri-startups in the State.

“This MoU between NABARD and AU Bank will provide institutional credit support to the ongoing development schemes in the State, which will lead to further prosperity in the rural areas.

“This tie-up will give a boost to the process of lending in the state, especially in areas related to agriculture and rural development,” Agarwal said.

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SBI exploring ways to back startups with debt financing, BFSI News, ET BFSI

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State Bank of India is trying to work out a way to debt finance startups as current rules allow banks to fund only profitable companies.

Startups raise equity funds to run their business. Promoters are forced to dilute stake as debt funding is not available to them because their companies are loss-making in the initial years, a senior SBI official said.

“We are struggling to debt fund startups. Bank norms and rules allow debt funding to only profitable ones. As initially startups are loss-making, they are to be funded based on the viability of the idea only. We are trying a way out,” Ashwini Kumar Tewari, managing director – international banking (technology and subsidiaries) at State Bank of India, said at the annual general meeting of The Bengal Chamber on Wednesday.

He said the bank was doing equity funding through SBI Ventures and recognised that the country needs to support the startup culture.

The number of government-recognised startups under the ‘Startup India’ initiative, launched by Prime Minister Narendra Modi in January 2016, has grown nearly 85 times. Their number has increased from 504 in 2016 to 42,733 in 2020, according to commerce ministry data.

Speaking about the economy, Tewari said despite a healthy recovery the country’s growth will be lower than 2019 due to the pandemic. “Large businesses are doing well. The problem is in the SMEs and the small sector. Large corporations are repaying more. Credit growth is driven by retail,” he said.

Referring to gold loans, he said that they are not popular in India but there are a lot of them which indicate the pain the normal people have suffered. “If gold loans are increasing, it is good for business but it is also a sign of the helplessness of normal people,” Tewari said.

The Bengal Chamber launched its Ease of Doing Business app during the day for industry stakeholders. Subscriber members as well as non-members can now make queries and take the benefit of experts of the chamber in diverse areas.



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Bombay HC refuses interim relief to Yes Bank in a case against Asit Koticha, ASK Group, BFSI News, ET BFSI

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The Bombay High Court has refused to grant any interim relief to YES Bank in the ASK Group transaction involving founder Asit Koticha.

The bank wanted the court to direct Koticha to deposit about Rs 379 crore from the proceeds he is receiving after selling his stake in flagship group company ASK Investments to private equity major Blackstone.

In August, Singapore-based BCP Topco XII Pte Ltd, an investment vehicle of Blackstone, had entered into share purchase agreements with Koticha to acquire his majority shareholding in ASK Investment Managers Ltd.

“I have no manner of doubt that the balance of convenience is not with the plaintiff (Yes Bank),” observed the court in its 17-page order. “The prejudice that is likely to be caused to one or more of the many defendants far outweighs any possible prejudice to the plaintiff.”

Justice GS Patel, in his order of September 24, has now posted the hearing of the case to November 29

The genesis of the dispute lies in the credit facility of Rs 330 crore extended by Yes Bank in 2015 to Lily Realty Pvt Ltd, a company owned by Asit Koticha. At the time of securing the loan facility, Koticha had extended ‘Shortfall Security’ under which if the realty firm fails to pay its dues to the Yes Bank, he will pay the shortfall.

Later, Lily Realty was classified as NPA in February 2020.

Munaf Virjee, Managing Partner of law firm ABH Law that appeared for Asit Koticha, and Senior Advocate Ravi Kadam declined to comment.

A mailed query to Yes Bank did not elicit any response. Rohan Dakshini, partner at Rashmikant & Partners, who appeared along with Senior Advocate Dinyar Madon for the bank, also did not comment.

On August 30, 2021, Yes Bank issued a shortfall demand notice to Koticha asking it to fund the shortfall to the extent of over Rs 379 crore. When Koticha declined, the bank approached the court.

Koticha agreed to sell his majority stake to BCP Topco at Rs 707 a share, for a total consideration of over Rs 606 crore. However, from this amount about Rs 307 crore and Rs 145 crore would be paid to IIFL Wealth Prime and IDBI Trusteeship, respectively, under various debt obligations.

Lawyers for Yes Bank argued that whatever remains after paying both IIFL Wealth Prime and IDBI Trusteeship should be put in an escrow account or should be deposited in court.

However, countering this, Koticha, through his lawyers argued that this is nothing but a recovery suit.

“It cannot be that the attachment before judgment is obtained against Koticha here (High Court) and the final relief that is sought is to be obtained in the Debts Recovery Tribunal (DRT) against Lily Realty and possibly also against Koticha as a personal guarantor,” argued the counsel for Koticha.



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