Category: Banking & Finance

A shareholder and two others have approached the court against the board’s decision of rejecting their candidature for the office of director, to be placed before members during the annual general meeting scheduled for September 29.

Problems seem to be never ending for Dhanlaxmi Bank, with major shareholders, including NRI Ravi Pillai, engaging in conflict with the board of directors.

A shareholder and two others have approached the court against the board’s decision of rejecting their candidature for the office of director, to be placed before members during the annual general meeting scheduled for September 29.

KN Madhusoodan, a shareholder of the company, P Mohanan and Prakash D L have approached the court seeking a direction to the respondents – RBI and Dhanlaxmi bank – to discharge their statutory responsibilities under Section 160 of the Companies Act to inform the members about the candidature of the petitioners for the office of the director as mandated under Section 160(2) of the Companies Act.

The board of the bank arbitrarily rejected the applications of all five candidates, including prominent shareholder Ravi Pillai ( B Ravindran Pillai) and former independent director PK Vijayakumar, filed under Section 160 of the Companies Act, a highly-placed source told FE.

The petitioners had to move their candidature under Section 160 of the Companies Act after the board decided to defer their candidatures.

“The action of the board has no basis in law as the names of P Mohanan and Prakash were previously cleared by the Nomination and Remuneration Committee during its meeting held on July 23, 2021,” sources said.

“It is a truncated board and they want to keep it that way to have a controlling stake. There are only 8 directors, including 2 RBI nominees, and it helps them to take unilateral decisions against shareholders’ interests,”sources added.

Ravi Pillai holds a 10% stake in the lender and was on the board till May 2020. He had to exit on turning 70. Later, the RBI raised the age limit for non-executive directors, including the chair, to 75. CK Gopinathan and his two family members together hold close to 10% in the bank. NRI MA Yussuffali and Kapil Wadhawan own a 5% stake.

CS Rajan, managing director of IL& FS, hailed the move and said under Kotak’s continued leadership, IL&FS will accomplish the resolution targets.

The government has extended the term of Kotak Mahindra Bank managing director Uday Kotak as the non-executive chairman of the IL&FS group by six months through April 2, 2022.

In a gazette notification, the Department of Financial Services said: “…whereas the Central government, on the recommendations of the Reserve Bank of India, has considered it necessary to grant said exemption to Kotak Mahindra Bank Limited for a further period of six months with effect from the 3rd day of October, 2021.”

According to the Banking Regulation Act, a bank cannot be managed by any person who is a director of any other company. He can be granted a temporary exception for three months or nine months with the approval of the RBI.

The Centre had appointed Kotak as the head of the lender’s board in 2018 to help the debt-laden firm come out of stress, after the government took over the board. He was initially allowed to be at the helm of IL&FS for three months, which was extended by nine months. Subsequently, he got two extensions of one year each.

CS Rajan, managing director of IL& FS, hailed the move and said under Kotak’s continued leadership, IL&FS will accomplish the resolution targets.

In fact, following the Evergrande crisis in China, Kotak had tweeted on September 21 that the trouble at the property developer seems like China’s Lehman moment and reminds him of IL&FS.

He tweeted: “Indian Government acted swiftly. Provided calm to financial markets. The Government appointed board estimates 61% recovery at IL&FS.”

ZestMoney has raised $50 million from the global Buy Now Pay Later provider Zip Co Ltd.

This is part of a larger Series C fundraise which will see participation from existing investors. Zip will acquire a minority shareholding in the company and a board seat as part of the investment.  

Talking about the potential synergies between ZestMoney and Zip, cofounder and CEO, Lizzie Chapman told BusinessLine, “While other global players are fighting it out in the US market, what’s interesting about Zip is that they are following a footprint in the emerging markets or high growth markets, and they have invested in markets like Philippines, Eastern Europe and South Africa. This gives us an opportunity to learn from them, as there tend to be more similarities between Philippines and India, than the US,”

Founded in Australia in 2013, Zip has a presence in 12 markets across five continents, serving more than 7.3 million customers and over 51,000 merchants.

ZestMoney will deploy the funds to expand the product suite, deepen the transaction network, strengthen its balance sheet capacity and launch new business lines in insurance and savings.

Buy now, pay later

Founded by Chapman, Priya Sharma and Ashish Anantharaman in 2015, ZestMoney allows customers to pay for products over time and enjoy them now. Increasing smartphone penetration, cheapest data plans in the world and boom in online shopping has propelled the demand for Pay Later offerings in the country. 

The company uses Artificial Intelligence and Machine Learning data models to approve new to credit customers.

ZestMoney offers the entire spectrum of Buy Now, Pay Later offering from 30 days to 24 months and ticket sizes ranging from ₹50 to ₹5 lakh. It is a completely digital omnichannel BNPL player, allowing customers to transact at over 10,000 online sites and 75,000 physical stores across the country. 

Chapman said, “The shift towards Pay Later solutions is a global phenomenon and represents young digital consumers looking for transparency, honesty and no hidden charges in financial products. India will leapfrog traditional products like credit cards, along with many other emerging markets, going straight to digital payment solutions.  Over the last year, we have seen applications for BNPL go up by 5X on our platform. We continue to invest in deepening partnerships with our merchant network and hiring the best talent. We strongly believe India will emerge as the largest BNPL market in the world over the next 5 years.”

Larry Diamond, CEO of Zip Co, “While Buy Now, Pay Later is emerging as a preferred mode of payment globally, in India it also plays a crucial role in driving access to credit. With more people using digital payments and online shopping, ZestMoney can positively impact hundreds of millions of lives in the coming years. With deep partnerships with online and offline merchants and lending partners, Zest Money is poised to accelerate growth as the market develops.”

ZestMoney has 70 per cent of their customers in Tier II and III markets, majority of whom are accessing formal credit for the first time in their lives. There are several zero-cost pay later offers that customers can choose from. Smartphones, large appliances, fashion, travel, home decor, Edtech are the largest categories on the platform. Electric bikes, Ayurveda Products, and personal care are popular among customers using the Pay Later option.

ZestMoney partners with 25 banks and NBFCs to power Buy Now, Pay Later for consumers. The company recently secured the Corporate Agent licence from Insurance Regulatory and Development Authority of India (IRDAI) allowing it to offer and enable insurance products to users on its platform. 

ZestMoney has 11 million registered users and the merchant network of 10,000 online and 75,000 physical stores. It also provides credit information, financial counselling and options to build a good credit history.