IOB out of RBI’s PCA framework
[ad_1]
Read More/Less
The Reserve Bank of India (RBI) has taken Indian Overseas Bank (IOB) out of the PCA restrictions, subject to certain conditions and continuous monito
[ad_2]
Category: Banking & Finance
SBI inks agreement for co-lending to joint liability groups
[ad_1]
Read More/Less
State Bank of India (SBI) has signed a Master Agreement with Vedika Credit Capital Ltd (VCCL), Save Microfinance Pvt Ltd (SMPL) and Paisalo Digital Ltd (PDL), for co-lending to individual members of Joint Liability Groups (JLGs) to undertake agriculture and allied activities, including other income generation activities.
These partnerships will enable SBI to further increase its reach in the rural and semi-urban areas of the country, India’s largest bank said in a statement.
SBI is actively looking at co-lending opportunities with multiple NBFCs / NBFC-MFIs for financing activities such as farm mechanisation, warehouse receipt finance, Farmer Producer Organisations (FPOs), for enhancing credit flow to double the farmers’/indivduals’ income, it added.
Dinesh Khara, Chairman said: “Co-lending will be pursued as an important tool to increase the micro finance, MSME and affordable housing portfolio.
“…This will also encourage entrepreneurship among the underserved population which, in-turn, will provide a boost to the Indian economy.”
Khara observed that SBI will continue to work with more NBFCs / NBFC MFIs, in order to reach out to the maximum number of customers staying at far flung areas and provide last mile banking services.
[ad_2]
CLICK HERE TO APPLY
Edelweiss says open to buying stressed assets from ‘bad bank’
[ad_1]
Read More/Less
Far from seeing the National Asset Reconstruction Company Ltd (NARCL), the so-called bad bank, as a rival, Edelweiss Asset Reconstruction Company Ltd (EARC), currently India’s largest ARC, wants to buy stressed assets from it.
Edelweiss Alternative Asset Advisors (EAAA), EARC’s sister company, is exploring the possibility of raising funds, exceeding the $1.3 billion (about ₹9,200 crore) it raised about two years back, to invest in stressed assets to turn them around.
Raj Kumar Bansal, MD & CEO, EARC, told BusinessLine that EARC and EAAA can join forces to buy some of the assets from NARCL even as they observe the arm’s length principle.
EARC can invest 15 per cent of the acquisition price of the stressed asset, with EAAA investing 85 per cent. EARC and EAAA are subsidiaries of Edelweiss Financial Services Ltd.
Faster debt aggregation
Bansal said the setting up of NARCL augurs well for all ARCs as it saves them a year that it usually takes to aggregate debt from multiple lenders. There are 28 ARCs registered with the Reserve Bank of India.
NARCL has been set up by banks to aggregate and consolidate stressed assets for their subsequent resolution. Public sector banks (PSBs) will have 51 per cent ownership in NARCL, with Canara Bank holding 12 per cent stake, as its sponsor. To begin with, banks have identified 22 fully provisioned stressed accounts, including VOVL Ltd (wholly-owned subsidiary of Videocon Industries), Amtek Auto, Reliance Naval and Engineering, Jaypee Infratech, Castex Technologies, GTL, Visa Steel, and Lavasa Corporation, aggregating ₹82,500 crore, for transfer to NARCL.
NARCL will acquire stressed assets, aggregating about ₹2-lakh crore, from lenders in phases. It will acquire these assets by paying 15 per cent of the acquisition value in cash and 85 per cent as security receipts (SRs).
Bansal, who oversees Assets Under Management aggregating about ₹43,000 crore, said: “It is good for us if they (NARCL) aggregate the debt because then we can buy from them. We don’t have to deal with 20 banks. Depending on the quality of the asset, where there is reasonable scope for us to resolve and where, maybe, we can work with the borrower, we can buy it from NARCL.”
In the first quarter of the current fiscal, EARC acquired assets worth about ₹2,100 crore by deploying ₹380 crore. EAAA had AUM aggregating about ₹30,000 crore as at March-end 2021.
The RBI has also allowed loan exposures classified as fraud to be transferred to ARCs. This comes in the wake of banks reporting frauds aggregating ₹3.95-lakh crore between FY19 and FY21. Stressed loans, which are in default for more than 60 days or are classified as non-performing assets, can be transferred to ARCs.
[ad_2]
CLICK HERE TO APPLY
Auto debit norms: Payments Council of India seeks extension for smooth transition
[ad_1]
Read More/Less
The Payments Council of India has requested the Reserve Bank of India to extend the norms for auto debit mandates for recurring transactions by one to two months.
“It is a very positive and consumer centric move. We have written to the RBI for a short extension of one or two months to ensure a smooth transition to the new norms. All ecosystem players have been working hard but it will take some more time,” said Vishwas Patel, Chairman, Payments Council of India and Executive Director, Infibeam Avenues Limited.
At present, the new norms for processing of recurring online transactions will come into effect from October 1.
The RBI had in March this year already extended the deadline for banks to comply with norms by six months to September 30.
Patel said that while major private banks have gone live with the facility, a number of other players are still in the final stages of preparedness. State Bank of India’s debit card will be able to go live in middle of October, he said.
SBI’s credit card systems are ready to meet the norms. Lenders including HDFC Bank, ICICI Bank, Bank of Baroda, Citibank, IDFC Bank and Axis Bank are also ready and others such as IndusInd Bank, RBL Bank and Yes Bank are also geared up to meet the deadline.
However, most public sector banks are still working to meet the deadline.
According to experts, just about 60 per cent of the ecosystem is seen to be ready. “In the long run, the RBI norms are good for the ecosystem and will benefit the consumer. But in the short term, the deadline of September 30 can cause a lot of confusion for the existing mandates that are present. For all cases, where customers have put in the cards which have not migrated to the new system or banks that have not complied, these mandates will not be processed,” said Shashank Kumar, CTO and co-founder, Razorpay, adding that recurring transactions on debit cards will also be allowed.
Also read: New auto-debit rules: Banks, merchants working on a common platform
Razorpay is one of two companies that has an API product to help banks comply with these regulations.
Auto debit mandates
In order to enhance customer safety, the RBI has introduced new auto debit mandates that require an additional factor authentication for cards, wallets, prepaid instruments and UPI during registration and first transaction, as well as pre-transaction notification by banks and facility to withdraw the mandate. For recurring transactions of over ₹5,000 a month, customers will require an additional factor authentication.
[ad_2]
CLICK HERE TO APPLY
RBI lifts PCA curbs on Indian Overseas Bank, BFSI News, ET BFSI
[ad_1]
Read More/Less
The Reserve Bank of India today lifted Prompt Corrective Action restrictions from the Indian Overseas Bank, the central bank said in a release.
The decision came after the bank reported its earnings for the year ended March 31, 2021, and the RBI observed that IOB was not in breach of the PCA parameters.
IOB has also provided a written commitment that it would comply with the norms of Minimum Regulatory Capital, Net NPA and Leverage ratio on an ongoing basis and has said that it would make structural and systemic improvements, RBI said in the release.
The RBI has said that it will continue monitoring the bank.
PCA is triggered when banks breach regulatory norms such as return on asset, minimum capital, among others.
Earlier this month, RBI had lifted PCA restrictions on UCO Bank. Now, only Central Bank of India remains in the list.
[ad_2]
CLICK HERE TO APPLY
CredAvenue raises $90 million in Series A funding
[ad_1]
Read More/Less
CredAvenue, a leading debt marketplace, on Wednesday raised $90 million in Series A equity funding round led by Sequoia Capital India and co-led by Lightspeed, TVS Capital Funds, Lightrock among others.
The equity funding, which also saw the participation of CRED and Stride Ventures as investors, values CredAvenue at approximately $410 million.
“CredAvenue’s goal is to transform debt markets by deepening access to capital for the growing enterprise sector to unlock significant economic growth. We are delighted to welcome the Series A investors to our journey. They will catalyse our mission with capital and guidance, to keep expanding our lead in this market,” Gaurav Kumar, Founder & CEO, Cred Avenue told BusinessLine.
Debt financing platforms
CredAvenue facilitates debt financing for enterprises by connecting lenders and investors with corporate borrowers through a digital platform.
Also see: CredAvenue facilitates ₹337.5-crore debenture issue from Spandana Sphoorty
Its offering includes a wide range of debt products under five platforms — CredLoan (loan platform); CredCoLend (co-lending platform for banks and NBFCs); Plutus (Bond Platform); CredSCF (Supply Chain & Trade Financing solutions) and CredPool (Pool Platform for end-to-end securitization and portfolio buyouts).
“CredAvenue’s platform can provide institutional investors access to larger liquidity pools at market-efficient rates and faster transaction times. The platform is facilitating larger participation of retail investors in the corporate debt market, which is driving financial inclusion in the fixed income category. We are convinced that CredAvenue can be the leader in this transformative journey of Indian debt markets,” Gopal Srinivasan, Chairman at TVS Capital Funds.
$9 billion throughput
Founded in 2020, CredAvenue has already facilitated more than $9 billion worth of transactions on its platform, on-boarding over 1,500 institutional borrowers and more than 750 investors touching over a million end retail borrowers.
“We are proud to share that over 45 per cent of the $9 billion throughput on the platform has come to enterprises which are A- and below,” Kumar said, adding, “Our platform stood the test of the times. The entire asset quality and how things have fared for investors has been simply outstanding. That is what made investors trust us more and more.”
Also see: Exotel raises $35 million in series C funding
“CredAvenue is a unique solution that not only simplifies access to credit for borrowers ranging from a BB to AA rating but also improves access to multiple debt products like bonds, supply chain financing, etc. We believe it has the opportunity to become the platform of choice for borrowers and lenders operating in the debt market,” Sakshi Chopra, MD, Sequoia India, said in a press release.
Expansion plans
The company is planning to use the current funding towards expanding product capabilities and ramping up the platform’s technology and data science infrastructure. The company aims to invest heavily in data science, machine learning and artificial intelligence over the next few months to significantly improve and expand its product offerings, across each of its sub-platforms.
The debt platform is also planning to double its head count to 700 by the end of FY22 besides looking at global expansion and inorganic growth through strategic acquisitions.
Avendus Capital was the exclusive financial advisor to CredAvenue on the transaction.
[ad_2]
CLICK HERE TO APPLY
Rupee falls 8 paise to close at 74.14 against US dollar
[ad_1]
Read More/Less
The rupee fell by 8 paise to close at 74.14 against the US dollar on Wednesday amid a lacklustre trend in domestic equities and strengthening of the American currency in the overseas market.
At the interbank foreign exchange market, the local currency opened at 74.18 and witnessed an intra-day high of 74.08 and a low of 74.26 against the US dollar in day trade.
The local unit finally settled at 74.14 a dollar, down 8 paise over its previous close. On Tuesday, the rupee had settled at 74.06 against the greenback.
“The Indian rupee depreciated amid strong dollar and muted domestic markets. Dollar gained strength on the back of a surge in US treasury yields. Yields are rising on expectation that the US Federal Reserve will start tapering its bond purchases before the end of the year and possibly begin raising interest rates next year,” said Raj Deepak Singh, Head-Derivatives – ICICI Securities.
A jump in commodity prices has also fuelled worries over short-term inflation pressures.
Furthermore, investors remained vigilant ahead of speeches of major central banks to get hints on their future monetary stance.
“Sharp downside was prevented on persistent FII inflows and as crude oil dipped from its high. Rupee may trade in the range of 73.90 to 74.40 in the next couple of sessions,” Singh noted.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.06 per cent higher at 93.82. Meanwhile, Brent crude futures, the global oil benchmark, declined 0.61 per cent to $78.61 per barrel.
On the domestic equity market front, the BSE Sensex ended 254.33 points or 0.43 per cent lower at 59,413.27, while the broader NSE Nifty declined 37.30 points or 0.21 per cent lower at 17,711.30.
Meanwhile, foreign institutional investors were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 1,957.70 crore, as per exchange data.
[ad_2]
CLICK HERE TO APPLY
SBI Card to start three-day festive cashback offer from Oct 3, BFSI News, ET BFSI
[ad_1]
Read More/Less
India’s largest pure-play credit card issuer SBI Card on Wednesday announced its three-day festival to offer cashback benefits for online shopping on all domestic e-commerce platforms beginning next month. The three-day mega shopping festive offer Dumdaar Dus will start on October 3, a one-of-its-kind online shopping festival, offering SBI Card retail cardholders freedom to shop online on any domestic e-commerce site, SBI Card said in a release.
The offerings are not restricted to just one or two e-commerce portals, it said, adding customers can avail 10 per cent cashback on their purchases.
“We rely on and harness the power of data analytics to sharpen our propositions. Over a period, we have observed that an increasing number of our cardholders are shopping online, across a wide range of platforms and product categories, especially during the festive period,” Rama Mohan Rao Amara, Managing Director and CEO, SBI Card, said.
SBI Card also aims to reiterate its brand commitment to offering cardholders convenient, seamless, and secure payment solutions, anywhere, anytime through this offer, he said.
In line with the growing popularity of EMI transactions, the offer will also be available on online merchant EMI transactions.
To amplify the festive offer 2021, SBI Card said it plans to launch a digital campaign featuring actor Jaaved Jaaferi who accentuates the brand message effortlessly with his versatility and humorous characterisation.
The cashback will be on the purchase of a wide range of products such as mobile phones and accessories, TV and large appliances, laptops and tablets, home furnishing, kitchen appliances, fashion and lifestyle, sports and fitness, among others.
However, the offer will not be applicable on online spending in some categories such as insurance, travel, wallet, jewellery, education, healthcare, and utility merchants. PTI KPM BAL BAL
[ad_2]
CLICK HERE TO APPLY
IndusInd Bank inks gold loan co-lending pact with Indel Money, BFSI News, ET BFSI
[ad_1]
Read More/Less
In what could be tagged as a maiden tie-up in the gold loan space, private sector lender IndusInd Bank has entered into a co-lending partnership with Kochi-based gold loan firm Indel Money. This is the first-of-its-kind conventional gold loan co-lending partnership between a gold-loan focused NBFC and a commercial bank, the Kochi firm, known for long-term loans against the yellow metal, said in a statement on Wednesday.
Under the tie-up, IndusInd Bank will offer gold loans at competitive rates to its customers, which will be originated by Indel Money, Umesh Mohanan, chief executive of Indel Money, said on Wednesday.
“We will originate and process gold loans based on mutually formulated credit parameters and eligibility criteria, under this co-lending partnership. We will also service the customers through the entire life-cycle of the loans, including sourcing, documentation, collection and loan servicing,” said Mohanan who is also the executive director of the diversified group.
The group is engaged in the car and two-wheeler retail, media and film production and EPC contracts.
While IndusInd Bank will take into its book 80 per cent of the gold loan generated by the co-lending arrangement, the remaining 20 per cent will be funded by Indel Money, Mohanan told PTI without disclosing how much incremental growth he expects in the AUM under this agreement.
The co-lending partnership as a pilot has been successfully running through this month and a national launch is expected shortly, he added.
Srinivas Bonam, head of inclusive banking at IndusInd Bank, said this collaboration is in line with the bank’s strategy to bring efficient and inclusive lending solutions.
Indel Money entered the gold loan market, which used to offer only up to three months tenor for a loan, offering up to two years loan. Even after many years, Indel is the only gold loan company offering two-year gold loans, even though others have also begun to offer up to one-year loans now.
Indel has a network of 191 branches spread across Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Telangana and Puducherry, and is on course to enter Orissa, Bengal and Maharashtra this fiscal, while Gujarat and Rajasthan next financial year. On the other hand, IndusInd has over 2,000 branches across 760 locations.
Indel closed FY21 with a live gold loan AUM of Rs 580 crore, up from Rs 336 crore in FY20 and is targetting Rs 850 crore AUM in the worst-case scenario and Rs 1,000 crore in the best scenario this fiscal, Mohanan had told PTI recently.
Indel, a part of the diversified Indel Corporation with over Rs 1,000 crore revenue last year, made a foray into gold loans in 2013, offering one-year-long loans against gold pledge first and then for two years in an industry that has never looked beyond three months after which they just auction and force-exit the customer.
The impact of its long-term loan offering forced entrenched biggies like the Muthoot groups and of late Manappuram Finance to follow the firm, moving away from their standard three months tenor.
[ad_2]
CLICK HERE TO APPLY
HDFC bank issues 400,000 credit cards after embargo, BFSI News, ET BFSI
[ad_1]
Read More/Less
After the embargo on HDFC Bank was lifted last month, they have issued over 400,000 credit cards, a report by the Business Standard says.
This signifies the aggressive growth that the private lender has made since then. This record issuance is as of September 21, 2021.
HDFC Bank was looking to get back to its pre-embargo run rate of 300,000 credit cards per month, which they had planned to achieve in the next 2-3 months. After that, they expected to hit 500,000 credit cards per month from February 2022.
“As a leader in the cards space, we promised, we’d be back with a bang. We are now pushing the pedal not only to acquire new customers, but also to enhance offerings of our existing cards,” the Business Standard report quoted Parag Rao, group head – Payments, Consumer Finance, Digital Banking & IT, HDFC Bank, as saying.
The bank expects to achieve growth in the credit cards business on the back of new alliances with a number of industrial sectors.
Pre-embargo, the open market customer acquisition was less than 20 per cent, which may now go up to 22-24 per cent, the bank has indicated. This is because the bank is coming up with several new initiatives in the upcoming months which include co-branded cards with corporate India spanning pharma, travel, FMCG, hospitality, telecom, and fintech.
“Our strategy to re-invent, create and co-create has been crafted based on the analysis of customers’ buying behaviour, the categories they spend on and the spend patterns. The months that we have spent readying and sharpening our strategy are now bearing fruit. We are ready to unveil best in class offerings and experience to our customers, just in time for festive season,” he added.
As of July (latest data), HDFC Bank has 14.76 million credit cards in the market. Its market share in outstanding credit cards dropped by more than 2 per cent due to the restrictions imposed by the regulator.
[ad_2]